Good news for agriculture

05-07-2010 | Alan Emerson

I read the KPMG Agribusiness Agenda report last week and believe it provides an excellent overview of the challenges and opportunities facing New Zealand agriculture.

Not only should all farmers read it but all politicians and bureaucrats should have a copy as well.

It is easy to read, backs up statements with facts and pulls no punches.

Further, in an industry becoming largely ignored in the political process the fact that a company the size and influence of KPMG decided to make the investment it did in agribusiness is, I believe, good news for our sector.

KPMG estimates the cost of the report at around $250,000 which is a substantial investment.

There were 35 interviews with industry leaders that provided the depth the report has.

I'm not going to summarise the document here except to say that there are very few times I read a report and agree with it to the extent I did with the KPMG Agribusiness Agenda.

Mind you, it started well for me with the statement: The ability of New Zealand to produce safe, sustainable food has been ignored in the past in favour of other wealth creation strategies. However, many have concluded that the agribusiness sector will be a core contributor to the prosperity of the economy as we move into a post crisis world.

Amen to that.

It talks about, amongst other things, removing regulatory blockages, the need for traceability, the need for additional investment in water, education and

communications and the need for rational debate on genetic modification.

KPMG says the efficient producer of the future will invest heavily in "science technology and infrastructure to gain a competitive advantage in producing quality functional food products our customers in premium markets are demanding".

The report goes on to talk about supplying products 12 months of the year as Zespri does so now.

I believe the rest of the sector needs to follow.

So well done and here's hoping it achieves a greater profile than it has to date.

Another substantial entity to move into supporting the rural sector is the Westpac Bank.

Ian Blair, Westpac's general manager, business banking, understands agriculture, is supportive of it and is prepared to put his money where his mouth is.

Whereas, according to Treasury, general lending to agriculture dropped by $144 million between October 1 and May 30, Westpac increased its loans by $155 million over the same period.

That was, according to Blair, "mainly refinancing other banks".

Blair says Westpac was "open for business all the way through the recession" and that the bank had "employed an additional 20 agricultural managers in the last year".

They are "after good farming businesses who are having bad times with their existing banks".

With the sectors Blair believes that the outlook for dairy is positive and that "the bank will take a role in not perpetuating the boom and bust cycles".

Regarding sheep and beef the issue, according to Westpac, is the imminent reduction in processing facilities and an ongoing focus with on-farm costs.

It believes from the farm gate back farmers are efficient but it's still hard to make a dollar.

The issues are beyond the farm gate where more value needs to be added.

I agree.

Westpac has increased its penetration in the farming sector by 20% over the last two years and is in expansion mode.

What impressed me with the KPMG report and Westpac Bank was their knowledge of the farming sector, our threats and opportunities and what needs to be done to move forward.

Both organisations have invested considerable time and money to get a real grip on the issues facing farmers. They are to be congratulated for that.

I found the actions of both companies really positive for the rural sector and, heaven knows we need it.

I only hope they can convince the government of the vast potential of agriculture in New Zealand thereby lifting the current ennui.

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