Help Wanted
Only competent farmers need apply

According to the Regional Council, there’s only one way its proposed dam scheme for Central Hawke’s Bay can be commercially viable.

And that’s if 70% of existing farmers in the footprint of the irrigation scheme vacate their premises.

The financial feasibility analysis (presented in the long-withheld Macfarlane report) for the scheme establishes that farmer productivity is the key factor determining whether the investment in water storage is viable or not. You see, if only ‘average’ farm productivity is achieved in the irrigated areas, the return on capital drops from 12.5% to 5.4% … not enough to warrant borrowing and/or investment.

For the scheme to work (i.e., be profitable to farmers while meeting minimal pollution mitigation requirements), each individual farmer must be a superstar performer.

But apparently that’s not the case currently in CHB … although it’s not clear the Regional Council and its consultants have broken that grim news to under-performing farmers in the area.

Current farmers are too old, too stuck in their ways, too lethargic, too focused on retirement, and/or too indebted to seize the pot of gold at the end of the Regional Council’s rainbow.

So the Regional Council posits that 70% of will be, must be, replaced.

Most CHB farmers need to trade in their gumboots for boat shoes and sail into the sunset.

The consultants are confident this will happen. Their report says:

“We wish to reinforce the sensitivity of the outcomes to productivity. Experience has shown us that farmer productivity after irrigation development is almost always in the top 20%. We are therefore very confident modelling on that basis.”

And again:

“We note the severe impact on profitability incurred if the investment generates only average productivity. For that reason farmers not wishing or able to generate top 20% performance will either need to decline participation, sell, or transfer management of their property to another person (intergenerational transfer, leasing, manager, sharemilker etc).”

[Parenthetically, I note that when the Environment Court in its ‘One Plan’ decision recently suggested that farmers who couldn’t cope with required environmental standards might need to consider exiting the farming business, cries of outrage ensued, with Federated Farmers and HortNZ appealing the decision to the High Court.]

So, if the current CHB farmers can’t cut the mustard, who will the new team be and how can we be certain they will turn out to be the All Blacks of farming?

Say the confident consultants:

“Farms taking up new irrigation water will be at the top end of productivity because of:

  • Younger farmers taking over management through family succession or change of ownership
    [What’s preventing this from happening now?]
  • Top performers buying more land and expanding
    [Ditto]
  • High debt levels sharpening performance
    [Farmers are already at record debt levels … how much more ‘debt incentive’ can they stand?!]
  • Leveraging new technology, e.g. new centre pivots compared to older technology such as gun irrigators or even flood irrigation
    [Wouldn’t it be cheaper to simply subsidize speedier technology uptake? The way HBRC plans to subsidise the tree planting that farmers should do anyway to control erosion?]
  • A management mind-set of accepting new ideas
    [Speculation]
  • Confidence to push the boundaries knowing climate variation is less likely to limit potential
    [Ditto]
  • Associated leadership in productivity growth
    [??]

Sounds great — we shift from Club Rugby farming to All Black farming.

And all because of irrigation?

The reality is that the gaps between better and worse performers in every type of farming, having nothing to do with water, already exist — and to read the farm press — always will. Just as there are gaps between better and worse lawyers, teachers and artists.

Still, it always worth a crack at farmers’ ‘professional development’. But it’s well-known in farming circles that today farmers get woefully inadequate support to understand and embrace better methods. Mostly they get advice from accountants and fertiliser salesmen.

If the issue is that CHB farmers need to improve their productivity, then let’s develop and fund a comprehensive program to accelerate and ensure that outcome.

Meantime, don’t erect a house of cards — aka, a dam — on the speculative assumption that benevolent, superstar farmers will somehow materialise to save the day.

Tom Belford

P.S. This same report —Ruataniwha WSP Review of Farm Profitability — makes clear that if environmental mitigation measures are more demanding than assumed (I would say more adequate to the need), the house of cards also falls. If you can read one report on the scheme, read this one. Note that it was only released on 5 September!

Reminder, the deadline for submissions on Tukituki Choices is Monday the 15th. I urge you to make a submission. Be clear about the values you want to see protected and advanced via management of the Tuki catchment.

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3 Comments

  1. Tom, personally I think you’re being a bit unfair with this one, having a crack at the CHB farmers (or at least some will take it that way) and discounting productivity gains with irrigation.

    Better to focus on the land capacity/suitability for irrigation, because what will drive uptake is the responsiveness of CHB farming gross margins to additional water. To me the great question is just how suitable the land is to take advantage of the extra water is, given the nature of the soils, river/aquifer systems and climate. Not a question I’m qualified to answer.

    Cheers, Xan

  2. Xan @ 1:42 – CHB farmers are just like any other group. There are excellent, good, average and poor performers. This has always been the case.

    The point of Tom’s blog is that for the dam to be justified economically every farmer who signs up to the scheme has to be an excellent performer (or as good as the current top 20%). This is a HBRC pipe dream that will never happen.

  3. Xan,

    What you term the ‘great question’ is precisely that … given other growing conditions (wind, temperatures, frost), how responsive might the soils be to the addition of more water (and supporting chemicals)? Many folks experienced with farming in CHB say that water is not necessarily the main or only limiting factor for CHB farm productivity.

    As for a ‘crack’ on CHB farmers, I’m simply relating the assessments being proffered in private conversations with the HBRC scheme’s staunchest advocates.

    Tom

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