Whenever one goes to a regional economic discussion (usually a hand wringing) in the Bay, or a regional “futures” workshop, or hears from the Chamber poobahs, everybody talks the “primary production” gospel. As in …
“The Hawke’s Bay’s economy is grounded in primary production (40% or so the region’s one economic expert says) … always has been, always will be. Next topic.”
Except that most of the indications seem to be that farming — or big chunks of it — is actually on the ropes … punch drunk, if not down for the count.
For example, the headlines these days are full of dire predictions and hard data about the meat industry. Hawke’s Bay’s own Bruce Wills, Federated Farmers’ meat and wool chairman, says: “There’s absolutely no question that the meat industry in New Zealand is broken.” The meat industry board says the before-tax average farm profit for 2010 will be $39,800, down from $58,800 a year earlier. Rural indebtedness to banks has almost quadrupled in ten years, from $12 billion to $45 billion. Farmers are budgeting for a cash surplus of $4,400 in 2010/11. The predicted export lamb slaughter will be down 4.5% over the previous year (even with welcome attention to the Bay from Sainsbury’s and Marks and Spencer). And on and on.
Meantime, our wineries win banks of awards, but, with profits declining since 2007 most bank little or no profit (industry-wide, only the bigger — $10 million plus — players appear profitable). And I haven’t seen many orchardists cracking open the champagne bottles lately.
But then you see McCain Foods announce a $19 million investment in plant modernization in Hastings that will increase processing capacity a bit over 10%. High-fives for vegetable growers, seasonal pickers, maybe a few plant workers and — for a short time — some building contractors and tradesmen (the latter probably earning the highest hourly wage of the lot).
I’m happy for all of them … and for every new job they bring, or old one they save.
But is this Hawke’s Bay’s future? If so, it’s a future of unending economic volatility, decreasing margins, and permanently suppressed personal incomes … all grounded in the region’s largest sector. All while farming factions and experts argue over whether “the problem” is inside the farm gate, in the rapacious middlemen, or in uncontrollable global forces. And not even factoring in whether global warming is going to worsen our production environment.
Just cyclical? I think not!
Average incomes in Hawke’s Bay suck. 45% of HB earners make less than $20,000 per year; only 14% make more than $50,000 per year. And that’s when they’re employed. Here’s the distribution …
And that’s largely due to the primary production sector.
To our tired Regional Council, which is supposed to envision — at least in some intellectual sense — our region’s economic growth, if not abet it, the solution is apparently … more farming! As in water harvesting and “land intensification” in Central Hawke’s Bay.
I say we’ve got to explore and develop other options if we want sustainable prosperity in Hawke’s Bay. The good news is that we’ve got the right, appealing location and we’ve already got a nucleus of thriving businesses here that don’t live off the land. More to come on this theme.