Agribusiness Report: Keeping the fish bowl clean

Ian Proudfoot says farmers must get out and tell their own stories.

The contribution that the primary sector is making to the economic wellbeing of New Zealand is greater than ever. Strong returns for our dairy, beef, kiwifruit, timber and wine output has seen the value of exports grow significantly, generating income that ultimately helps pay for the schools, roads and hospitals that we expect as New Zealanders.

However, our discussions with industry leaders highlight a significant concern that the industry is currently losing a critical battle; the ability to convince the country's wider population that farmers are committed to balancing the needs of their business with the requirement to preserve the environment for the future in a sustainable way.

There is real concern that the perception of the industry has been downgraded in the minds of many urban New Zealanders. The effective work of environmental lobby groups has meant that the overriding messages most of the population receive about the sector are negative; leaving many people worried about farmers' stewardship of the environment. Allegations of dirty dairying, water quality degradation, damage to native flora and fauna and animal welfare abuse tend to proliferate in mainstream media stories about the primary sector.

The traditional links many urban New Zealanders had to a family farm have eroded with the growing diversity of our urban populations. As a consequence, the understanding people have of the realities of farming have progressively reduced, leaving many with unanswered questions on whether we really do have the world class operating practices the industry claims. These concerns are driving the regulatory framework the sector will be required to work within; with regulations being introduced in response to widely held perceptions that will restrict the industry's ability to continue to grow and contribute to the future of New Zealand.

Industry leaders recognise the industry is operating under intense public scrutiny; some suggesting it feels like they are constantly farming in a fish bowl. This makes it more important than ever that every farm operator does the right things on their farm all day, every day. The industry needs to be clear about what is expected and prepared to take action against operators who fail to meet the standards; this must include in the most extreme cases excluding them from participating in the industry.

Historically, the most significant constraint on investing in improved environmental outcomes on-farm has been the lack of a payback on the investment. Price premiums for a sustainably sourced product are rare, which has made it difficult for many to justify an investment with no direct link to enhanced returns. However it has become clear that though customers are not prepared to pay more for a sustainable product, they are increasingly unlikely to buy a product that has not been sustainably produced; particularly customers in the premium market segments the New Zealand industry targets.

The industry is getting a clear and consistent message from the wider community, regulators and its customers that it is expected to deliver sustainably produced products to the market. The conversations we have with industry leaders suggest that this message is clearly understood and being acted on by the majority of business owners. However the significant investments that are being made are not well understood by the wider population or regulators and the industry is being given little credit.

It is up to the primary sector to explain what it is doing to meet the expectations that have been placed on it. It is not the Government's or mainstream media's role -- the obligation falls squarely on the industry to get out and tell its stories in a compelling and interesting way so the wider population are prepared to engage and improve their understanding of the contribution the industry makes to the country and how this is being derived.

Recent debate surrounding the proposed development of the Ruataniwha Dam in Hawkes Bay has highlighted clearly the perception challenges the industry faces.

The dam has the potential to create significant value for the wider community through increasing production, creating new jobs and unleashing investment that the risk of drought has constrained historically. Though the benefits have featured in the discussion, there has also been a strong undercurrent in the debate that when water becomes available to farmers this will directly lead to production intensification and environmental degradation.

This has resulted in the scheme receiving approval but with some significant constraints that may make it uneconomic. The progress of the Ruataniwha proposal has highlighted the need for the industry to really focus on engaging with the wider community to ensure it has the ability to expand into the future.

The industry needs to ensure it is open and honest in communicating with the community. Primary production, by its nature, involves the consumption of natural resources and it is important that this is recognised at the same time as the benefits of a development are highlighted. The Ruataniwha proposal has highlighted that getting the best outcome for New Zealand relies on a balanced discussion that provides an objective assessment of the benefits and impacts of a proposal and mitigates some of the more extreme claims that may be promoted by single issue lobby groups.

If the primary sector wants to effectively influence its future it must make real and substantive progress in informing and engaging with the urban population. It needs to tell the story about how it operates, the progress it is making in enhancing its sustainability, the contribution it makes to the economy and the areas where more progress is needed. The industry must recognise it must keep its fish bowl clean and constantly look to do things better; it cannot afford to keep swimming in the same old circles.

Ian Proudfoot is KPMG Global Head of Agribusiness.