April 2010
Edited
by:
Dennis Scott BVSc MACVSc
Ethical
Agents Ltd 54 Hobill Ave Wiri PO Box 97-110
Manukau City Manukau 2241
Ph 09-262-1388
Fax 09-262-1411 Freephone
0800 800-624
email eage@xtra.co.nz
website www.ethicalagents.co.nz
The last couple of years have been turbulent times for the dairy industry, and hence the NZ economy, and it appears the roller coaster ride is not yet over.
Just as in 2008 the dry conditions in our largest dairy area, the Waikato, seem to have impacted on commodity prices with the result that, due to shortage of product, the Fonterra auction system this month has seen prices, hence payouts, rise dramatically.
No final figures are available yet but it looks as though loss of production from drought may be offset by a higher payout, similar to 2008.
However, hot on the heels of that announcement is a grim prediction from accounting and advisory firm KPMG who claim it could be only five years before underdeveloped agricultural regions including South America, Western China and Central Asia's large-scale intensive methods eroded New Zealand's advantage in making bulk commodities.
While we have always been able to produce exports at
a lower cost than other nations the report states, “the expectations that a global food shortage is looming as the world's population continues to expand is opening up historically marginal agricultural regions such as South America, areas within the former Soviet Union, Mongolia and Western China, and large tracks of Africa to large-scale intensive farming."
It appears these regions have lower cost land and labour and generally less complex regulatory regimes.
They also have the advantage of being much closer to key markets so they can deliver food at a significantly lower cost.
KPMG believe New Zealand companies have a short buffer, maybe as little as five years, before low-cost regions are producing bulk commodity products in significant volumes and undercutting New Zealand's pricing in our traditional commodity markets.”
The report said investment in connected rural communities
was essential to put the country at the forefront of global agribusiness, and there had been under-investment in animal traceability compared to other nations.
Measures advocated by KPMG are;
1) Maintain clean, green image.
2) Focus on premium products.
3) Better management of water resources.
4) Investment in science, technology and infrastructure.
5) Investment in animal traceability.
6) Adopting sustainable practices.
