Two reports with challenging news for Hawke’s Bay growers and farmers have surfaced recently.

Boston Consulting Group (BCG) issued an update on the economic effects of Cyclone Gabrielle on the HB horticultural sector, while Rabobank, NZ’s only specialist food and agri bank, published a white paper warning that NZ farmers must move firmly to reduce their on-farm emissions.

Boston Consulting Group

The BCG report noted that little cash support had come into the Bay for individual farmers from Government in response to the cyclone, while loan support was not widely picked up as farmers were reluctant to increase debt with their futures uncertain and interest rates high.

Shortly after the cyclone, an initial BCG report prepared for the sector estimated cumulative losses for HB hort would total $3.5 billion from 2024-2030, with $920 million needed for critical response to replant crops and reinstate production. But since May 2023 the government has provided only $240 million in grants (roughly $80 million) and concessionary loans.

BCG estimates the sector needs at least $410 million more in government funding, at least $345m for replanting and reinstatement and $65m for on-farm clean-up, concluding: “Without this support, the sector is unlikely to recover its pre-cyclone state by 2030.”

The report noted differing impacts across the sector:

“Annual crops (e.g. onion, squash) have recovered better than perennial crops (e.g. apples, pears, peaches) due to their ability to move off damaged land after one year’s lease. Some annual crops also have a higher resistance to silt, waterlog and related diseases.

“Larger corporations rebounded better than small or medium businesses (SMEs) due to the large corporations’ better access to resources, talent and capital. SMEs cited more difficulty acquiring bank loans than before the cyclone.”

Commenting further: “In addition, emotionally drained, many small farmers who were near retirement age chose to exit early rather than rebuild their land. While corporatisation is not in itself a bad thing, more support is needed to help small farmers navigate the transition.”

BCG also comments on the need to factor in climate change, recommending: “Assessing the risks of climate change on New Zealand’s regions by modelling different climate scenarios, assessing the costs of potential damage and identifying the current funding gap for adaptation actions in each region. With this information government can develop a heat map of climate risk to guide prioritisation.”

Rabobank

While BCG focused specifically on the Hawke’s Bay situation, and horticulture within that, the Rabobank paper addressed the bigger ‘external’ challenges posed by overseas market expectations regarding GHG emissions and sustainability practices. Indeed, the paper is titled: Maintaining our emissions edge: Protecting New Zealand’s position as an emissions-efficient food producer.

Rabobank observes: “While the Coalition Government has taken steps towards a regulatory ‘breather’ for under-pressure farmers, other drivers such as international sustainability targets and new obligations within trade agreements will continue to provide strong incentives towards more emissions-efficient production … it would be unwise for farmers and the government to ‘coast’ during this respite.”

Rabobank cites a major report prepared by Chapman Tripp that found “over 80% of NZ’s exports are headed to countries with mandatory climate-related disclosures in force or on the way, while free trade agreements are increasingly laden with enforceable obligations on emissions and other sustainability targets.” Rabobank discusses these growing obligations at length.

Rabobank’s blunt warning: 

“There are other voices at the table that are getting louder. These are the voices of customers (with increasing expectations of the world’s most powerful food processing and marketing companies) and from the wider supply chain, including investors, who also face significant regulatory pressures to minimise Scope 3 emissions.

“This growing web of international obligations will not afford New Zealand producers the same patience that the New Zealand Government has extended to them. While regulatory pressures may have temporarily abated, Rabobank’s view is that farmers and the the government should not get complacent and should use the rest of the dialogue and the timeframes to move forward to protect its pre-eminent role in global food production.”

At a practical level, Rabobank recommends: 

“We need to establish a comprehensive national framework of standards and guidance of good practice along with quantifiable benchmarks. Within this, a consistent and trusted approach to obtaining farm-level data on GHG emissions will be a key enabler to reduce emissions within the agricultural and land sector. 

“At farm level, this starting point is essential in allowing farmers and producers to measure and effectively prove where individual farms’ overall environmental impact stands. At a national strategic level, a clear understanding of the range and average of emissions in a particular sector and region is important to see which farms are already performing well and need further support and which farms are lagging and require assistance to improve on the spectrum of emissions intensity.”

In short, in addition to all the other ‘in their face’ challenges, NZ farmers need to lift their game with respect to sustainable, emissions-reducing practices. Or get left behind. A tough message to take aboard, especially in a cyclone-afflicted region like ours.

The BCG report is here. The Rabobank white paper is here.