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.

Tom Belford

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11 Comments

  1. Excellent story Tom. Where would you see tourism in a future mix to get Hawke's Bay back on the right track?

  2. According to a recent FAO report, global food production needs to increase more than 40% by 2030 and 70% by 2050, compared to average 2005-07 levels. (http://www.agri-outlook.org/dataoecd/2/31/43040036.pdf)
    Sheep, apples, wine…they've all been here before but the future looks bright for those that can survive the present and innovate for the future. It seems foreign investors fancy our farms as a long term play and I don't blame them.

  3. In the near 40 years since I came to Hawkes Bay from a rural environment in Southern UK where many of the first migrants came from there has been a fixation on farming exports.

    The exploitation of the land to intensive use because of avalability of water aids the entrenched thinking that began when the first land was cleared for export wool from Romney lowland sheep.

    The sheep came with the migrants from the area where I was raised in a village on the inland edge of Romney Marshes river delta in Kent.

    It has many similarities with the Heretaunga Plains other than a harsher winter climate and shorter summer that enforces natures curbs on over exploitation of land and water resources.

    This has resulted in a diversified economy

    to lucrative wetland native and migratory

    bird habitat presevation, heritage buildings and history tourism.

    NZ regions were opened by workers born to the land. It is all they could envisage and have remained in the time warp until recent times due to isolation and ties with Mother England who up to 3 decades ago took NZ primary produce regardless creating a false standard of living on farm produce subsidies

    The fixation with farm production and rape of the seas bounty has over ridden the thing many come as tourist to see to find depleted by inbred myopic vision.

    How one reverses entrenched thinking when so many in elected governance are products of it is beyond my comprehesion.

    As Ray de Silva a former lecturer on fresh water protien production (Grass Carp)now passed on said to me 15 years ago when we were discussing what was happening to our rivers

    Quote " Why does NZ insist on reinventing the wheel rather than learn from others mistakes"?

  4. Tom, as someone who lived in Hawke's Bay throughout the 80's and 90's I can certainly say that there actually is a strong cyclical effect.

    There have been many ups and downs for the primary sector throughout this time, a key example was the closing of the Tomoana freezing works. Did this event mean the whole industry was broken? No it didn't, it meant that the economic environment had changed and we needed to look at things in new ways, we needed to innovate and in the process become more productive.

    So to simply say that having primary production as an economic pillar is unwise, I feel is a rather one dimensional and unrealistic view. I am not for one moment suggesting that we should be solely reliant upon this sector, we should absolutely foster a culture of innovation (quite different from the usual kiwi culture of invention) but primary production will always play an important part in New Zealand's economy.

    Furthermore the primary production sector can actually play a key role in innovation through the development of added value products. Fonterra have done this masterfully and in the process have transformed dairy farmers from being price takers (as apple growers and lamb farmers now are) to price setters.

  5. The good old Havelock North cafe anti-farming sentiment doesn't lie far below the surface does it?

    If farmers aren't polluting the rivers they are out there wilfully lowering everyone's standard of living!

    While Hawke's Bay as one of the main primary production regions of the country will inevitably suffer from the cycles of boom and bust that go with said primary production, it is hard to see another industry (or group of them) that will replace it.

    That is not to say that alternatives (that aren't dependent on the whims of overseas supermarket chains) shouldn't be encouraged.

    Having not long given up farming after nearly 40 yrs of hearing every decade or so about how primary production should be replaced in the New Zealand economy, it will be interesting indeed to hear what theme Tom has up his sleeve.

    One would hope it will provide widespread high income employment, and not tax our water and sewerage systems too much!

  6. My, haven't we hit a nerve!? First of all, I didn't invent the farm or income stats that anchor the article … they're all from govt sources. Second, yes, there are cycles … and therefore, "we've heard all this before" is understandable. But many commentators believe more systemic changes are occurring, which we can choose to disregard or not. And guess what, when HB comes out of this "cycle", its income profile will still suck. Finally, I didn't suggest abandoning farming (nor do I dispute looking for ways to add value to what we do produce), I suggested some serious exploration of diversification. That's just plain common sense.

  7. No nerve hit here either but I do object to the "inbred myopic" label from Mr Williams somewhat!

    Perhaps an in depth article on why farmers and growers are pushed into intensifying their operations to stay in business while the rest of the community demands cheaper food produced more "sustainably" which they pick up from the supermarket wrapped in plastic bags and take home in their urban assault vehicles would balance the job a bit!

  8. Tom, you never miss an opportunity to have a go at farming, do you? Whether you like it or not the land-based industry of Hawkes Bay is the fountainhead of the region’s wealth. But more than ever today it is integrated into our urban industries, food processing (now including meat) and wine being the obvious examples, but you can include tourism with it’s dependence on food/wine and rural landscape. So each is dependent on the other.

    The economic destiny of Hawkes Bay may be tracking in a way to which you disapprove, and that tired old Regional Council may be the culprit, but if you haven’t noticed, industry in this country, both land-based and secondary, is virtually entirely unprotected and unsubsidised, making us unique in the developed world. Even central government has little influence over it, notwithstanding that it invariably takes the credit when times are good – in fact our prosperity is dependent on what the world pays for our produce. So, fundamentally free commerce determines our economic destiny. This is as it should be; we have tried the ‘government knows best’ policy and it cost us plenty, not least environmentally.

    An old American politician (William Jennings Bryan) once said, “Burn down our cities and they will grow again [we’ve proved that in N B] but destroy our farms and grass will grow in the streets”. The manicure of our city streets is not only due to the pride of the inhabitants, but also the prosperity, as faltering as it is at times, of those who produce from the land – the most skilled in the world – and unsubsidised too, don’t forget. They owe you nothing Tom, but I suggest you owe them a greater acknowledgment than what little you concede.

  9. A little background, as I enjoy reading and understanding, and respecting "farming talk"

    I was born in Napier in September 1926, with my first job.working for the late Sir Lois Harris at Mangatutu Station,(with 18 gates to open, and shut. before "one hit ones bunk")

    As a result I fell in love with the back country of Hawkes Bay.

    My Whanau now have a crib and 15h, of regenerating native bush. at Puketitiri.

    The point I wish to share with Baybuzz readers, is. how fortunate we have in Tom. Belford,( with his BayBuzzz.H.B) "a platform for debate" where all this wide experience, from rural and urban contributers to BayBuzz, continues to amaze and stimulate thought,with action, as we attempt to clean up our rivers, ocean, and land, from mostly past ignorance with greed.

    Thanks again Tom, and your team."You have put your money where your mouth is. Keep Well, Kia Kaha.

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