Added value must make dollars and sense

By Glenys Christian

Most farmers will have little truck with the argument that they should add more value to their export products.

The stream of advice is continual, castigating those in agriculture for not moving far enough and fast enough in the added-value direction.

It comes very largely from people ranging between the "ill-informed" and the "should be better informed."

Act leader Richard Prebble is the latest to join the procession. He conveniently ignored that the Wool Board sells no wool when he blamed it for supposedly undermining a Marlborough farmer's contract with a European manufacturer.

While the Minister for Food and Fibre, John Luxton, says added-value products are less likely to attract import restrictions overseas, wool is one commodity that tells a different story.

So is manufacturing beef. New Zealand regularly does not fill its United States quota and is even less likely to in the immediate future because of the East Coast drought.

Farmers' added-value strategy is simple: pay them an added-value price and they will deliver the product to match. But do not expect that to occur if a commodity return is on offer.

The example here is prime beef for Asia. Meat companies, despite their protestations about upmarket moves, still pay as much if not more for bull beef used in American hamburgers.

Bull beef is the ultimate commodity product. And until price signals are changed, this is exactly what farmers will continue to produce whatever their added-value philosophy.

Not only does bull-beef farming make economic sense, it allows a continuation of minimal inputs such as fertiliser, which would need to be boosted before the first prime-beef returns arrived in farmers' pockets.

Dairy farmers, too, want better price signals.

They take pride in producing the finest quality raw material, and argue rightly that their industry is already well down the added-value track.

As Dairy Board chief executive Warren Larsen says, the commodity-dominant product mix of a decade ago would, at the present international prices and exchange rate, be offering a milksolids payout prospect for the coming season of $2.50 a kilogram.

Instead, the board's mid-point prediction is $3.10.

No one in the dairy industry is content to rest on their laurels, though. Most want the added-value thrust of the board's strategic plan to be implemented without delay.

They also need no convincing of the value that technological advances can deliver if they remain the industry's and the country's property.

A pertinent reminder of this was given at last week's Dairy Technology Conference.

A distinguished service award was presented to Dairy Research Institute engineer Selwyn Jepson. He said in his acceptance speech that working for the dairy industry had been a challenge and pleasure, but also a frustration as good ideas needed money to put them into practice.

His work on farm concentration of milk has been presented overseas but not in this country. While money to develop the idea further now looks likely to be forthcoming, the dairy industry is not the funder.

Yes, we can do things smarter and some of that smartness has to be in keeping our successes to ourselves.

Added-value champions will then have much less ammunition, real or imagined, when they attack farmers.

* Glenys Christian can be contacted on e-mail at glenysfarm@xtra.co.nz