Rick Powdrell: Tough times will test our resilience

Meat and fibre farmers are being buffeted by world events but they need to focus on what they can influence.

Meat and fibre farmers are facing the most challenging economic conditions for some years.

A combination of low returns for sheep meat and wool, an easing-off of the previously high beef returns, increasing costs and a challenging season are all contributing to this scenario.

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.

For years, industry leaders have talked about a positive outlook for sheep-meat 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.

Admittedly three years ago, nobody would have foreseen that the UK would be leaving the EU and Donald Trump would now be leading the United States.

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

Coupled to this is the flow-on to world currencies; the NZ dollar being higher than that of many of our key trading partners, which puts pressure on farm returns.

Following a period where trade barriers were being increasingly eliminated, it appears the unrest in world markets is seeing governments reviewing their stance.

Trade barriers in varying forms may once again present challenges for our exporters.

Farmers must concentrate on the elements of our business we can influence, leaving the uncontrollable factors beyond the farm gate 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.

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 this situation prevails, the ability of industry participants to reinvest in the industry declines and more foreign investment becomes likely.

I spoke earlier of farmer resilience and those in the earthquake regions have certainly had plenty; we admire your fortitude and get-on-with-it attitude.

These people will continue to need assistance for some time so thank you to all who have been able to help in whatever shape and form.

Other key issues for the meat and fibre sector in 2017 will be increasing regulation, particularly in the water and environment space, rising costs and the increasing influence of activist groups.

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

- Rick Powdrell is meat and fibre chairman for Federated Farmers