Friday, March 29, 2024

Time to deliver

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A tough outlook for meat and fibre farmers facing the most challenging economic conditions for years means it is time for industry research projects to deliver results, Federated Farmers meat and fibre chairman Rick Powdrell says.
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And more big bumps in the road ahead called for unity among farmers and industry leaders.

The industry was the meat in the sandwich of global ructions and wool was the biggest victim.

“We all know that wool is at a very low point at the moment with trade to China pretty much non-existent and we are monitoring that very closely,” Powdrell said.

China was a primary market for New Zealand but with the politically unstable state of the world, China was very mindful of the trade disruption, not just for wool, so was running all its stocks down.

“That uncertainty is making other players cautious and wool has been caught right in the middle of it all,” Powdrell said.

“The high level of global uncertainty is really affecting farmers and listening to the Reserve Bank governor (Graeme Wheeler) it, too, is sitting on the fence due to the unstable global trading environment.”

The industry had a number of Primary Growth Partnerships (PGPs) under way.

“But to date farmers would say they have not seen any results as yet.

“Both industry and Government have given a substantial level of funding support to these PGPs and they need to deliver,” Powdrell said.

“Hopefully they will look at the fundamentals of how and what we do in the industry and those results will see benefits for everyone.

“The big questions is how long do we wait?”

Farmers were forever hearing the medium term looked promising.

“But at the moment the medium term keeps running away into the distance and we are not catching up and that is of concern to farmers.”

For a number of years leaders had talked about a positive outlook for industry returns in the medium term.

“I believe the medium term continues to run in front of us with the risk of a significant industry not existing when we catch up to it.

“I always find it interesting to witness the different response from the powers that be to severe economic stress in the dairy industry as against meat and fibre – perhaps the meat and fibre farmers are more resilient,” he said.

“Admittedly, three years ago nobody would have foreseen that the United Kingdom would be leaving the European Union and Donald Trump would be leading the United States.

“These two events have and will continue to influence world trade markets for some time.”

After increasing elimination of trade barriers it appeared unrest in world markets was prompting governments to review their stance and barriers once again presented various challenges for NZ exporters.

But farmers must concentrate on the elements of their business they could influence, leaving the uncontrollable factors beyond the farmgate to others.

“It will be vitally important that our industry leaders approach the big bumps ahead of us in a unified manner.

“As an industry, from farmers up, we have not been as good at being unified as we will need to be going forward,” he said.

“Without unity we run the risk of not achieving the best outcomes for all participants.

“The future of sheep and beef production in NZ will struggle if we continue to see declining numbers as loss of scale continues to pressure returns at all steps of the value chain.”

The longer the situation prevailed, the more the ability of industry participants to reinvest in the industry declined and opened more opportunity for foreign investment, Powdrell said.

At the same time farmers faced increasing regulation, particularly for water and the environment, rising costs and the increasing influence of activist groups.

“The key to knuckling down in 2017 to face all the issues will be our ability to engage, be unified and move in the same direction.”

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