With the recent announcement of Hastings plant closures by McCain and Heinz Watties, serious handwringing has begun on the part of our local political leaders.

The challenges facing our region’s agbiz future are essentially beyond their influence, however, so perhaps we can excuse them from being late to the party.

To date, our local political leaders’ attention to the region’s agribiz potential has been monopolized by a singular obsession with water security. The notion being that with more water available more reliably Hawke’s Bay could literally grow into a more prosperous future.

Business as usual, just more of it claim a variety of voices ranging from advocates of two competing dams for Hawke’s Bay to the vaunted Hawke’s Bay Economy report prepared for the now-dead HB Regional Economic Development Agency (REDA). That report basically said the region should double-down on growing stuff, even though productivity in that sector was second lowest of all HB sectors save accommodation and food services, the other stalwart of the HB economy.

But the reality is that HB’s agribiz sector is export-driven – led in dollar value by sheep & beef, then food & beverage, then horticulture, then logs.

So it’s overseas customers and their tastes and product stewardship expectations that determine the economic viability of what we produce. Moreover, as we now see starkly with local McCain and Heinz Watties (both of which have been unprofitable for years), that viability in pure business terms for commodity foods is being judged rather negatively by overseas corporate and investor owners.

Nothing like a war to cause global conglomerates to take stock!

The local managers of McCain and Watties are simply carrying out directives delivered by Zoom/Teams or overnight emails from afar. It’s nice that they’ll meet with our mayors, but that will have zero impact on these or similar future outcomes, such as the fate of the rest of Watties (that shoe will surely drop) or the sale of hort giant Turners & Growers, whose owners reside in Germany and Hong Kong.

Our agribiz problems are bigger than water and external to the region … external to NZ for that matter (i.e., uncontrollable) – geopolitics, energy costs, shipping costs/uncertainties.

Hawke’s Bay grapes aren’t being left on the vine (and the wine industry isn’t virtually dead in Marlborough) because of too little water.

Fertiliser won’t run short because someone at Ravensdown goofed in calculating a projection.

Diesel fuel prices won’t skyrocket and ripple through to the export price of our food products because of Z Energy price gouging (T&G’s latest Fuel Adjustment Factor, reflecting diesel cost, is 41.17% over base as at 23 March, compared to 17.54% on 1 February).

HB veggie growers won’t tank because they forgot how to grow corn and peas, but because they – and the rest of the processing and marketing chain – together can’t produce those cheaply enough to return a profit to all involved. With no reason to believe they ever can again.

Even on the good news side, with currently robust prices for our meat exports, the situation is externally driven and ephemeral, caused by temporary pause in US production and the extremely low value of the NZ dollar, making our exports especially inexpensive for now, while our stock numbers actually decrease. 

So, is there any reason to feel bullish about the prospects for HB’s primary production sector? 

• Fully 31% of our region’s economy is driven by exports, with virtually all of that by dollar value related to agribiz production. According to the REDA report, horticulture’s contribution (wine included) to regional GDP has been “static” over the last 10 years. And still, the Report predicted employment in the hort sector to grow 4.8% or around 1800 jobs between 2024 and 2029. Oops!
  
• Meantime, other major HB fruit players like Rockit and KiwiCrunch are struggling financially, with McCain and Watties closures yet to ripple through their grower ‘partners’.

• We have no regional energy strategy that might offer resilience to externally driven shortages and pricing … although, to its credit the REDA report called for one back in 2024.

• Our regional thought leader on agribiz prospects, Foodeast, has so far been thought-less on any of the above issues.

• And if there’s any spare local capital lying around the Bay that might be used to somehow innovate and improve productivity in the sector, where is it and is it best used if sucked up by water storage schemes that hope to produce more stuff we can’t sell?

In short, HB agbiz challenges are no longer ‘seasonal’ and not fixed by a dollop of water. They are deeply systemic and largely out of our control.

Meantime, what systematic thinking is underway regarding opportunities to diversify the region’s economy? None. The REDA report utterly failed at this. Maybe REDA’s next iteration will do better, but past history with HB ‘regional economic development’ agencies doesn’t give reason for optimism.

All in all, good luck HB mayors with your McCain and Watties meetings … hope you’re holding them in Canada and the US!

I welcome dissenting views!