Keith Newman finds evidence that a land-based economic revival may be based on more than hot air and fertiliser.
Patch protection and endless reports are finally giving way to action, as Hawke’s Bay’s primary-sector movers and shakers agree on important ground work to give our flagging rural economy a boot up the proverbial.
When 20 influential farming, processing and production outfits, related industry groups and central and local government agencies sat around the same table early this year it was considered a minor miracle. The fact they agreed on common objectives, including the formation of a Pan Sector Leadership Group with Hawke’s Bay Regional Council tasked to drive things forward, was enough to make you want to read this sentence again.
The existence of such a group, alongside HBRC’s all-consuming passion, the Ruataniwha water storage project, and the formation of Business Hawke’s Bay, has heightened the buzz that something of substance is brewing.
Although hi-tech offers great opportunities for growth in all sectors, it’s generally agreed that quicker returns will come from adding value to what we already do well, leveraging our land-based industries.
The challenge is to translate the marketing hype of ‘added-value’ into serious revenue streams by applying science and technology, smart thinking, processes and marketing to what would otherwise be commodity products and services. Rather than shipping carcasses, raw product or bulk fruit and vegetables, to use our local knowledge and expertise to transform, process, label and market something greater than the sum of the parts.
The pan-sector group will support pastoral, dairy and arable clusters that feed into new projects and technology transfer. It’s already working on a high-level strategy, contributing to policy development around land-use intensification, plan changes and farm-irrigation budgets, and peer reviewing feasibility reports for the dam.
Strategy refresh imminent
Along with work being done by Business HB this will feed into a refreshed Regional Economic Development Strategy with plans to improve Research and Development (R&D) capabilities and upskill around best practice farming and irrigation, for example.
“The region has been challenged about being fragmented and Business HB is an example of things coming together, being supported and working well. There are good results already,” says HBRC’s economic development manager Michael Bassett-Foss.
So who’s sitting round the table in this Pan Sector Leadership Group? Fonterra, Silver Fern Farms, McCain, Watties, MAF, Beef + Lamb, DairyNZ, Zespri, Pipfruit NZ, Irrigation NZ, HB Fruitgrowers, the Foundation for Arable Research, Federated Farmers, local councils, the CRIs, Plant & Food, AgResearch, Massey and Lincoln … and the list goes on.
“They’re all doing really good stuff; some are the best in the world in their field, but they’re working in silos, fighting for the same resources, people and often funding. There hasn’t been a coordinated approach before,” says Bassett-Foss.
“This is a really a big deal for us, with the big irrigation project it’s important we build a more robust foundation of R&D and a strategy that identifies strengths and weaknesses, gaps and opportunities and what projects are needed to fill the gaps.”
Positioning for value
In reality we’re bit players on the world stage competing with so many other producers for a slice of the primary sector export pie. Essentially there are two options, differentiate and do it better and smarter, or exhaust ourselves in a commodity price war we can never win.
The export bar is being raised all the time by compliance and consumer expectations. We have to grow, process and deliver to meet increasingly stringent international requirements and more refined consumer taste, or we’re not in the game.
Science and technology are pivotal for enhancing and adding value to our produce and providing its journey to market with track and trace capabilities so we can receive the credit when it goes right or the blame when it goes wrong.
What’s needed, says farm consultant Dan Bloomer, is for the highest value to be added locally, which means selling ready-to-market goods not ingredients. If we continue to see ourselves as primary producers “we’re at the whim of the market, as price takers, market forces mean we get what’s left.”
The only way to change that is to remain in control as long as possible. “The biggest environmental impact happens at the extraction and primary growth stage. The highest value is added just before final sale.”
Bloomer says the key to adding value is efficient factory processes, but he likens the current situation to the supermarket duopoly rather than true competition. While Watties and McCain add value by processing bulk peas and corn into TV dinners or packaged soups, he believes one or two more processing plants would be good for local growers.
The wine sector model is an example of what works best for Hawke’s Bay. “They don’t just sell grape juice or grapes, they sell a processed product inside a bottle with an extremely sophisticated label and branding for
a lot of money.”
We need to find other high-value niches if we want to get wealthy. “If we want to compete at a basic commodity level with Third World countries then we should not expect to have a First World economy or lifestyle,” he says.
The pipfruit industry is better geared for this than some other sectors. They can sell container loads of apples or add value by selling five mini apples in a tube, slicing and dicing and pulping or preparing for specific markets.
That’s exactly the process Enzafoods is championing in the apple industry. It’s invested $7 million into the region this year to expand its core processing capabilities to turn second- grade apples into dices and purees for baby food, apple sauce and other food ingredients.
It’s also adding pouch-pack production for diced apples, pears and other fruit for bakery, food service and industrial markets in Australasia and Asia. Essentially that’s leveraging what used to be called the waste stream, using increasingly capable processing plants.
The great push forward needs strategic market thinking to match markets with opportunities, focusing more on what the consumer wants rather than what we want to push out the gate.
Rather than the gate-to-plate metaphor you start with what customers want in a restaurant, which could go right back to the genetics.
A perfect example would be the joint venture between Hawke’s Bay companies Brownrigg Agriculture and Firstlight Foods to produce high-quality marbled beef for premium local and international markets.
The Ministry for Primary Industries has committed $23.7 million over three years into the Firstlight Wagyu project which crosses Wagyu beef with Kiwi dairy cows and Angus beef.
Rather than grain feeding penned cattle, the marbling in the Hawke’s Bay initiative is based on genetics, breeding, specialist pastoral farming and processing.
Leader of food pack
The high cost of getting to market can be an obstacle, particularly for smaller players. The Chamber of Commerce is working hard to facilitate collaboration to share the cost of processing, transport costs and containers. It says more businesses could create savings by competing “in market rather than on the way to market”.
Food Hawke’s Bay, a cluster group formed about seven years ago, already facilitates the sharing of productivity techniques, warehouses, technology, expertise and commercial kitchens between ten participating companies.
It’s just received a funding boost from local councils to expand its approach to more of Hawke’s Bay’s niche food producers. A deal has also been signed for R&D sharing through the Ministry of Science and Innovation and Massey University. That might mean access to science and technology to enhance taste, flavours or colouring or the sharing of food technologists and specialist processing machinery.
HBRC’s Bassett-Foss says Food HB is already seen as a leader of the pack around food clustering. He sees a raft of other clustering opportunities in primary sector support, including packaging and design and engineering.
Murray Douglas has a lot of confidence in Hawke’s Bay’s export producers: 308 at last count, with a hundred of the larger ones exporting regularly and 30 under the wing of New Zealand Trade and Enterprise. It’s the next tier the Chamber wants to see ramped up for export success.
Hal Josephson, an international economic development advisor, now based in Hawke’s Bay, argues we need to specialise and tightly focus on what we’re trying to achieve.
He says exporting intellectual property (IP), services or licences based on our expertise could be a winner for Hawke’s Bay, perhaps food safety, food security knowledge or even sending viticulturalists to China. Relationships with China are all about reciprocity. “It’s in the grape zone and doesn’t have expansive knowledge about making great wine.”
Josephson believes knowledge transfer can open up huge export opportunities. “It’s about being cooperative and building models and scenarios that make sense.” The gating factor, however, is having access to business capital to develop those markets and the knowledge and expertise to expand globally.
Thirst for success
While most modern farmers use computer systems to track stock and land use, there’s reluctance in some areas to keep up the momentum.
Hawke’s Bay based Sam Robinson, chairman of Crown research group AgResearch, says the modern dairy farm, typically with some form of equity or share farmer partnership, puts more thought into its practices than a lot of sheep and beef farmers.
There’s plenty of scope for improvement, but rather than his organisation driving things forward, he wants to see farmers taking the lead. He says scientists need to know whether they’re packaging things acceptably and correctly assessing the risks. “Farmers always look for quite a high reward for adopting new technology because there’s always the risk of climate, market, biological and implementation failure.”
Having to learn the new technology and make some adjustment to farm systems can curb progress. “There has to be a real thirst for success, a hunger for growth and I honestly don’t know how you move that.”
Robinson says farming communities need to present much clearer ideas of their needs so AgResearch and others can deliver the goods. Rather than a group of Hawke’s Bay farmers getting together at the local hall this should come through Beef + Lamb, Dairy NZ or similar representative groups.
Robinson says they may discover their thinking and market plans align with others as part of a national strategy, which would have a much greater impact on local and international markets.
Raising the level
Who better to understand market trends than the bigger processing companies and niche players who are part of the Pan Sector Leadership Group? They write the supply contracts for the growers and drive land use, and their input is invaluable in determining the way forward.
The group is gearing to respond to the knowledge and skill gaps in our land-based industries; it’s estimated only 20% of farmers are creaming it, and technology-transfer levels are around the same. The challenge is to motivate and upskill the other 80% with appropriate educational packages. If the industry is savvy to its own needs there’s a greater chance for successful market-led R&D.
While it’s all down to Plant & Food currently, that’s about to change. A deal has been signed with Massey University, with funding in place for a primary sector R&D resource to fill specific gaps, and to develop capacity through tailored courses and exposure to IP.
Hawke’s Bay Federated Farmers is leading a ‘farming within limits’ initiative, where limits on water and effluent management and environmental constraints are viewed as challenges for science to overcome, rather than barriers to growth.
Again, this is to be farmer led, based on productivity improvement, leveraging work done in Waikato and Canterbury, and not just around dairying. “This is important for the region and for New Zealand because of the discussion about land-use intensification and degradation of the environment,” says Bassett-Foss.
While everyone’s still waiting on the sustainable numbers to determine whether the Ruataniwha Dam will go ahead, HB Chamber chief Murray Douglas says it could drive precision land-use, including new crops and the farming systems behind that.
The cost-benefit of crops for bio-fuels is being looked at along with more intensive fat lamb raising. “You run much higher stocking levels and get the protein content of the grass up. It’s all based on science.”
Douglas says precision agriculture and better management of nitrogen, water, fuels and hydrocarbons could add value along the Heretaunga Plains where water has been over-allocated.
In fact good farming practice will become a pre-requisite if we’re going to continue pursuing lucrative markets in Europe and Asia.
“They’re going to demand less residue on our products and to see some justification for carbon emissions. That will bring huge changes over the next 20 years and our use of science and technology will be enablers.”
The wineries are well advanced in this, having made good use of science for years. “Some of our local wineries will go carbon zero in the next few years. That’s got to be a selling point.”
Soil and water consultant Dan Bloomer, insists there are some common sense solutions to increasing productivity; for a start taking greater care of the physical soil so the nutrients and minerals take care of themselves. That can be as simple as rotating crops medieval-style: “pasture, peas, cereals, potatoes then back into pasture for a couple of years.”
A number of paddocks around Hawke’s Bay show evidence of the practice he’s championing called permanent bed farming: zebra strips straight as a dye sprayed on the land, guiding the cultivation of designated seed beds. Basically he’s saying don’t wreck your soil by driving all over it and compacting it, or hoeing up everything in sight, or it won’t produce reliably. “You only cultivate the piece your seeds grow in, not the whole lot.”
If the wheel span of cropping, cultivating and spraying equipment is the same width you stick to the same tracks with assistance from GPS, now standard on most cropping tractors, to ensure you drive a straight line. He claims significant benefits, including fewer tractors, less fuel consumption and staff, and improved soil quality, particularly for larger farmers and croppers. He hasn’t found a crop it doesn’t work for, including sweet corn, maize, lettuce, potatoes, onions, cereals, salad leaf plants …
Will farmers embrace new methods like this, and other R&D?
Demographic challenges mean many traditional dairy and sheep farmers are reaching what city folk call retirement age and wondering about ‘farm succession’.
That places an awkward and often unspoken uncertainty about the future of significant land holdings around the Bay, where farming practices haven’t changed much in the past 40 years, but also presents opportunities for a new generation of owners or partners, more aligned with market trends and innovation opportunities, to inject new life and diversity into the heartland.
Leveraging expert knowledge and leading-edge technology to add value to what the Bay does best, and a long overdue ‘whole of sector’ strategy, are encouraging signs that the region may yet return to an era of land-based prosperity.