Speeches

Combining efforts to support farmers

Tuesday, April 5, 2016 - 10:24
Primary Industries

Today’s event is about acknowledging the tough season dairy farmers are facing, bringing together all the support from different sectors into one place, and focussing on the broader outlook for the dairy sector.

There is no shortage of advice, guidance and support out there – from both Government and the wider industry.

So today we’re here releasing this new brochure on combining support for dairy farmers.

Outlook

I want to start by saying a few words on the wider outlook for the dairy sector.

Clearly, dairy farmers are doing it tough again this season. The reason is simple: the world is awash with milk right now, and the oversupply is taking some time to work its way through.

We have increased supply from Europe, uncertainty in China’s economy, Russia’s sanctions are still in place, and low oil prices have limited the purchasing power of many economies.

By and large, these are things we can’t do anything about. What we can do is deal with what’s in front of us.

And it’s important we don’t lose sight of the longer term outlook.

We know the world population is growing and as they get wealthier, diets change and they will want more and more of the protein we produce. Much of this is happening on our doorstep in Asia.

In China the one child policy has been relaxed and there is growing acceptance of dairy as part of their regular diet. As a result there is predicted to be a 30 percent increase in their consumption within the next 10 years.

Some forecasts predict global food demand may increase by 40-45 percent in just the next 10 years.

Ultimately though, my optimism for the dairy sector is because we have the best farmers in the world who are resourceful and innovative.

Industry support

The brochure we’re launching today includes some good examples of this through Dairy NZ’s “Tactics” programme. This provides tools, tips and case studies on how to survive and thrive in a low price season.

There is dedicated information for farmers and sharemilkers on things like managing cashflow and finances, making good decisions and learning from others.

It also involves one-on-one visits, pasture workshops and budget case studies.

A good example is Martyn and Mark Sing’s farm we’re on today, who we’re going to hear from shortly.

To give you a couple of other examples - Dairy Women’s Network are holding ‘Dairy Dates with Coffee and Cake’ and Farmstrong are running their Fit4Farming programme, encouraging farmers to get in physical shape.

Rural Support Trusts also have an important role to play. They provide free, confidential support to rural communities through events like drought, floods and now economic challenges.

They are a great example of rural people helping rural people. They can sit down around the kitchen table with families, providing good advice and pointing people in the right direction. They help build social cohesion in what can sometimes be a lonely profession.

It’s also great to have the five major banks here today showing their support. Banks have a vested interest in farmers succeeding – they have made long term investments, and they know that downturns don’t last forever.

The important message they are sending is to keep communicating – talk to them early and often, and with your accountant or financial advisor.

Another good example is Chartered Accountants Australia New Zealand offering one hours free accountancy advice to farmers. This is available to all farmers around the country.

Immediate Government support

There is also a wide range of support from the Government available.

By and large, most farmers are not asking for handouts. But they want to know the Government cares, is aware of what’s happening, and is providing practical support.

A good example is the $500,000 we announced last year to support rural mental health. As a result of this so far, we’ve:

  • Recruited and trained 62 additional Rural Support Trust facilitators.
  • Appointed 12 regional mental health ‘clinical champions’ and a Medical Director to help Rural Support Trusts’ clients in accessing support.
  • Held 40 suicide workshops run by Rural Health Alliance Aotearoa New Zealand.

In last year’s Budget we announced $800,000 towards the MPI Farming Systems Change programme, looking at ways to boost the performance on farms by learning from the strongest performers.

This work is important because we know that the top 20 percent of farmers achieve returns approximately four times higher than those of the average, irrespective of land class and location.

As part of this, MPI is currently evaluating proposals on innovative high performing dairy farming systems. Around $175,000 has been allocated for an independent provider to do an in-depth study on innovative low cost, high performing farm systems. These successful farms are increasingly data driven as they carefully measure different indicators.

The Farming Systems Change programme is already funding two other programmes - $80,000 towards a stock water reticulation study for hill country farms, and a Sheep and Beef Land Productivity Programme in the Manawatu-Whanganui region.

MPI also convened a ‘Dairy Coordination Group’ last year with DairyNZ, Fonterra, Federated Farmers, Rural Support Trusts, Ministry of Social Development, Inland Revenue, NZ Banking Association, and Rural Women. The aim is to share information, identify opportunities and ensure communities are getting the support through the tax and welfare systems they are entitled to.

Research & Development

In the longer term, there is a huge amount of work going into research and development by both Government and industry.

The Primary Growth Partnership is our flagship programme and there are projects focusing on the dairy sector.

The biggest is ‘Transforming the Dairy Value Chain’ which is a $170 million project co-funded by industry and Government. The aim is to shift the industry from commodity to value-added markets, delivering higher profits and insulating us from price fluctuations.

A tangible result of this is new technology developed by Fonterra that can produce mozzarella cheese in one day rather than the traditional two months, without sacrificing any quality. Earlier this year Fonterra opened a new mozzarella plant in South Canterbury to produce this product for export.

There is also management training for farmers and building the capability of rural professionals. Already, over 1,600 trainers and 17,000 farmers have been upskilled through the programme.

Another key focus of the programme is a $3 million workstream to develop support networks to reduce fatigue and stress on dairy farms. As a result of this, over 400 rural professionals have been trained in stress and mental health awareness and response, and over 100 physical and mental health assessments have been delivered throughout New Zealand.

Another part of this project is $1.5 million for the SMASH programme - Smaller Herd Farmer Businesses. This is helping these farmers find the most effective way of using their resources through forums and regional conferences, and has reached 2389 farmers so far.

MPI”s Sustainable Farming Fund has also invested over $15 million in small scale targeted projects aimed at improving on-farm productivity since 2012.

Government policies to support future growth

At a wider level, we’re also supporting the dairy sector (and the wider primary industries) by investing in irrigation and water storage projects.

In the last three Budgets we’ve allocated $145 million towards this and we’ve signalled up to $400 million will be made available over time.

A reliable source of water has major potential to increase production, grow exports and create jobs. You only need to look at areas like Ashburton in the South Island to see what a major boost it provides to regional economies.

It also protects us against climatic events. Just last Friday I announced $520,000 towards the Hurunui Project in North Canterbury, which has suffered through a terrible drought over the last 18 months.

And finally, we are strongly pushing for better trade access for our dairy farmers. The dairy sector is the biggest winner from the TPP with tariff savings of around $96 million a year once implemented.

In the last few years we’ve signed FTAs with Korea and Taiwan, and we’ve begun talks with the EU, which I’ll be reinforcing when I meet with many EU Agricultural Ministers at an OECD conference in Paris later this week.

Of course the China FTA shows us what a major boost these trade deals can provide to the dairy sector.

Conclusion

The message I want to leave with today is that there is no shortage of support out there for dairy farmers.

You are not alone – there are many other people in the same situation, and there is good advice and guidance available. Don’t be afraid to pick up the phone, and talk through any thoughts and worries you might have. 

We should be proud of our dairy farmers. They are our single biggest export industry and have a proud history of innovating and succeeding. 

We will get through this tough period and prices will rebound – as they always do. We have a real opportunity to come out the other side leaner, more productive and more successful than ever.

Thank you again to everyone here today from all sectors who have come together to show their support.