Rabobank flags rising global dairy prices, warns of downside risks ahead
While global dairy commodity prices continue to climb in most key exporting countries, the second half of the year is expected to bring increased downside risks.
The report says with the country’s agricultural sector facing increasingly tougher environmental constraints, its decisions on investment and land use will need to take account of how these constraints impact on their farming businesses.
Rabobank says that despite the significant investments made by many New Zealand farmers over the past decade to improve performance of their farming operations, the increasingly tougher environmental reforms relating to water quality and climate change will progressively require farmers to account for a greater range of environmental impacts resulting from their farming operations.
The report says this will create a “new economic cost for farming systems that are unable to operate within those constraints”.
This latest Rabobank study, along with the raft of changes proposed by the Government – to carbon, water and environmental regulations – is no doubt behind the low morale now seen in farming. Last week’s rally in Wellington, organised by lobby group 50 Shades of Green, can be viewed as a culmination of rural sector uncertainty and an opportunity for the sector to clearly voice its concerns.
It seems incredible that in times when – on the whole – commodity prices are strong, interest rates low and even climatic conditions favourable there should be so much angst and concern in rural NZ. However, that is the current reality and it can be fairly and squarely sheeted home to policy changes being proposed by the Government and policymakers.
The policy-change pattern to date appears to be for the Government to propose radical and unworkable reforms which scare the bejesus out of the sector, then to refuse or seriously limit any proper engagement, to shout down any criticism and to stay quiet for months then suddenly release seriously dialled-backed proposals. This is hardly the model for quality policymaking and getting sector buy-in.
History has shown that NZ’s rural sector is excellent at adapting to change and excelling. As the Rabobank report says: “New Zealand farmers are used to, and adept at, adjusting to changes outside their control....”
But for farmers to be able to do this, politicians and policymakers have to be far more transparent, honest and open with the farming sector on what is proposed and when. Like farmers, they also need to be prepared to listen, change and adapt to ensure the best outcome for everyone.
