Farmer resilience will be tested

While there are good things happening for farmers, there are significant headwinds to navigate for New Zealand’s most critical sector heading into 2023. This includes well-publicised rising costs, market and regulatory uncertainties and the familiar ever more acute problem of labour shortages.

While I’d love to be more upbeat, the uncomfortable reality is that we face headwinds – some of which are self-inflicted and some external. But wherever they are coming from, there are strengthening undercurrents holding the sector back.

While there is an inordinate international focus on the Ukraine situation, the big story for New Zealand lies elsewhere. China is our story because China pays our bills. If we look at that country, it is still struggling with its own internal issues, from still strictly enforcing Covid restrictions through to confidence in its own economy.

From far away to close to home, farmers face multiple artificial constraints impacting their productivity and performance. Local politics and regulation are causing uncertainty, with issues such as He Wake Eke Noa and other environmental laws combined with bewildering immigration settings causing headaches.

Access to capital has been a long-running challenge for the sector. Labour’s OIO changes dried up the supply of foreign capital. The RBNZ screwed the scrum against business and agricultural lending in favour of fast and easy money for home loans and may do more if they revisit their stalled capital overlay changes.

Now rising interest rates are piling on additional pressure.

The resulting uncertainty in outlook means that within this capitalintensive industry, investment becomes limited, retarding development and – ultimately – productivity.

Without question, the Government’s apparent reluctance to let workers in is the most serious source of frustration. Every time they say they are listening, they are fixing immigration, our clients tell us: ‘we can’t get [people] through, but we have to readvertise the job’.

Something is going on that isn’t being said: this is a known problem with a known solution, but the workers needed are being kept out.

Beyond productivity and frustration, a lack of staff is in fact a health and safety issue as farmers are overworked.

I don’t think many in Wellington appreciate this fact.

Yet, despite these challenges, most farmers are still paying tax as profitable operators. This attests to incredible resilience in the face of substantial artificial constraints – along with the general difficulties associated with rendering land productive.

There is a lot to be positive about in terms of farm performance. They are paying debt down and if the Government wasn’t so tough on beating up our industry, we probably would have had three or four of the best years in recent memory. Yes, farmers are resilient, but that resilience is being tested.

Looking ahead, we are still the cleanest, most efficient producer of protein in the world, and there is a shortage of protein through southeast Asia. Over the next 4-5 years, we are well placed to meet this demand. Supporting this, dairy futures look solid for the next three years, however, they recently slipped under $9, which needs to be watched.

Finally, for those who consider agribusiness a ‘sunset industry’, unless eating goes out of fashion, the New Zealand farmer’s place in the future is assured.

We’re still here, despite being beaten up year after year. We are still the best in the world with strong demand for our products. And we have a wonderful story to tell.

Hayden Dillon is Findex managing partner for the Waikato.