KEY POINTS:
Fruit growers are looking to the Government to help head off a looming labour crisis this season which at its worst could see fruit not picked and left to rot.
An official labour shortage has been declared in Hawkes Bay in anticipation of difficulties when the major part of the harvest gets under way in February.
Hawkes Bay needs about 12,000 workers during the harvest and Dianne Vesty, executive officer for the Hawkes Bay Fruitgrowers' Association, says the region currently could be short by about 40 per cent, although it is hard to predict.
Low unemployment and the replacement of the seasonal work permit with a new recognised seasonal employer policy (RSE) are central to the looming crisis.
The industry has been relying heavily on overseas holidaymakers in recent years to meet the labour shortage.
The RSE was introduced last year to enable qualifying employers to access the same overseas workers repeatedly for several seasons. The industry is generally supportive of the RSE, which will provide greater stability, improve skills and remove the need every season to train holidaymakers. But Vesty says it will take time to build up, with the full benefits felt within five years.
Holidaymakers already in New Zealand who wanted to earn money picking fruit used to be able to get the Seasonal Work Permit and follow the harvest trail around the country.
A transitioning to recognised seasonal employer policy was introduced for employers to access the same holidaymaker workforce while working towards the RSE. The problem is that under the old seasonal work permit holidaymakers could work for multiple employers but under the transitioning scheme they can only work for one.
"So where we used to have a good harvest trail last year and those people could work when there was a seasonal labour shortage in Central Otago and then when the work dried up there they could move on to Hawkes Bay and re-permit themselves, that's not possible [this year]."
Pipfruit New Zealand chief executive Peter Beaven says out of 500 pipfruit orchardists not more than 50 were part of the RSE scheme. The majority of the industry is made up of smaller operators, some of whom would might need only a few workers and lacked the resources to administer the policy, he says.
The transitioning scheme aimed at bridging the two systems and enabling the continued employment of holiday makers had severe limitations, Beaven says.
"You can't follow the harvest and what they've found in Central Otago is that people were most reluctant to enter into it firstly because it cost $200 to do it and secondly because you might only get three weeks work," he says. "That's your shot gone and that's just lunacy, I mean that's just crazy."
It is hard to gauge the precise scale of the problem but the worst case scenario could be fruit left to rot, he says.
"We're sitting here wetting ourselves as to what might happen," he says. "I don't want to raise the spectre of fruit rotting on trees but if we can't get this resolved that's got to be a possibility."
A meeting between industry representatives and officials from several government departments will take place tomorrow.
"I've got to say the officials have some sympathy for the position we find ourselves in and they certainly want to talk it through," Beaven says.
The solution could be simple - give holiday workers on the transitioning scheme the ability to transfer between employers.
This could be done until the preferred option of a regular supply of skilled foreign workers under the RSE meets the demand.
Labour shortage has been a recurrent call in recent years but the fruit industry has always appeared to get through.
The harvest window at any given site is only 10 to 12 days.
Beaven says pipfruit exports are worth about $400 million, while wider horticulture exports total about $2 billion.
We can not wait for the dam to break before we plug the gap.
DAIRY BOOM SLOWS
The boom in dairy commodity prices has been long and hugely valuable but everyone knew it couldn't last forever.
Fonterra's forecast payout to farmers this season is a record $6.90/kg of milksolids compared to $4.46 the previous season - potentially worth $8.8 billion.
This year the market could be seeing the first signs of a correction, although the rise was so meteoric that dairy prices can stand a significant reduction and still look rosy.
The ANZ Commodity Price Index for dairy products has risen dramatically from 127.6 in August 2006 to hit 291.9 by November 2007.
The international dairy commodity boom came on the back of reduced supply, drought in Australia, biofuel production driving up the costs of feedstock, world economic growth and demand from emerging markets.
In December the ANZ dairy products index slipped back to 286.6 - the first drop in 15 months.
National Bank rural economist Kevin Wilson says the trend is of more interest than the number.
"Yes the trend is down, supply is growing, the high price of the commodity is now starting to reflect in consumer prices and the profitability of companies using dairy products - they've shortened up their buying terms," Wilson says.
Internationally some dairy product commodity prices had been falling for two or three months.
"It's starting to look like it [a trend] but it's very early days to say that it's going to keep falling," he says. "It could go down, it could stabilise, it could turn and go the other way again."
It is hard to predict how far prices could eventually fall.
"If you look at the history of commodity food price booms ... the median fall has been around 50 per cent," Wilson says.
Fonterra chief executive Andrew Ferrier says the fundamentals of the sector are still strong.
"There's still very strong demand, there's still underlying very strong cost pressure on all foods ... and so there's nothing to signal that there'll be any drop to levels that we saw say 18 months ago."
MEAT TASKFORCE
A new taskforce chaired by TVNZ chairman Sir John Anderson has been set up by Meat & Wool New Zealand to look at strategies for advancing the cause of the red meat industry.
Meat & Wool chairman Mike Petersen said the industry needed to look at strategic direction, supply, structure and governance.
"Meat & Wool New Zealand has been concerned how New Zealand farmers and the wider industry can obtain greater sustainable returns for our premium product," Petersen says.
"We must develop a plan that sheep and beef farmers and the wider industry can have confidence in."
FONTERRA SAVING
An energy saving project at Fonterra has completed its first operational year with annual savings of about $1.9 million.
The Whareroa heat recovery project saw products previously heated by steam and cooled by chilled water indirectly heated and cooled by each other.
General manager of New Zealand manufacturing Brent Taylor says Fonterra wants to continue making progress in its energy efficiency programme.
"We are making headway in reducing the environmental impact of our manufacturing operations," Taylor says.
"But we are a business and with energy our second highest variable cost after wages, a project like this also makes good business sense."
The project is being repeated at other sites.
Fonterra says it has cut energy consumption per unit of production by 10 per cent in four years resulting in an annual energy saving equivalent to the electricity consumed by a city the size of Hamilton or emissions of 150,000 tonnes of carbon dioxide.
