Bruce Bisset: Ditch bulk and add value

Fonterra has become globally the the leading dairy export company.

Farming in New Zealand is at a crossroads and the choice it faces is stark: to produce cheap "industrial" bulk product or premium quality organic-branded niche goods. In short, to sink or swim.

Until now, producers have had the luxury of a foot in both camps, because in general the things we grow have been in demand world-wide, regardless of quality.

And when technology and consumer trends have impacted on an industry most notably with synthetic fibre on wool, once our number-one export farmers have been able to adapt because our traditional pasture-based methods coupled with a ready water supply made switching from sheep to cows relatively easy.

Not cheap, not without pain, but adaptable all the same. And the change to intensive dairying has worked because the vast emerging markets of Asia and South America have soaked up as many milk products as we can produce.

That has allowed Fonterra to become, globally, the leading dairy export company controlling some 20 per cent of dairy trade - and for dairy to become our leading export product.

But apart from the environmental damage intensive dairying threatens, NZ Dairy's biggest problem is that the markets it feeds are rapidly expanding their own production base and, by inherent size and scale, we cannot continue to compete.

While corporations like Fonterra may continue to succeed because they have, ironically, been instrumental in helping expand other countries farms, individual farmers find themselves merely adding a few drops to the global supply chain, without any real distinguishing of where those drops come from or their relative quality.

This is the "industrial" model we are in danger of becoming locked into, with no distinction of the NZ "brand". After all, milk powder is milk powder; so transformed it's irrelevant whether the milk came from happy open-pasture cows or some caged commercial feedlot.

Moreover our farmers are becoming entirely reliant on global prices, with no room for added premium value; and, as we're seeing this year with prices dropping 35 per cent as bumper yields overseas impact the market, we are too small and relatively cost-inefficient to survive a glut.

Add to that the emerging threat of synthetic production for both meat and milk and our chances of coping as participants in industrial farming are negligible.

So the real question for dairy and pastoral farming in general is not "should we do this", but "how do we do this better".

Cheap bulk product is untenable. Forestry is a classic example of an industry that was geared up for added-value production, yet when challenged forsook innovation and reverted to selling unprocessed bulk logs. Now our timber is barely worth cutting.

Despite being a farmers' co-operative, Fonterra at corporate level only cares about quantity. But because it's a co-operative, farmers have the ability to change the company's mindset and add value to New Zealand-made product.

This they must do. Of course in tandem they must change their own mindset. Because in order to be distinguished as a premium product, you must first make one and the obvious (indeed I suggest only) option for Kiwi growers of any description is to go organic.

Clean green New Zealand may be half myth, but it sells. Certified organic produce from here is the top-end of the range, as it should be.

The challenge for dairy, as for all our primary industry, is to embrace that label and be - and be seen to be - the best in the world. Then we can guarantee a profitable future for our farming communities.

That's the right of it.

Bruce Bisset is a freelance writer and poet