Tag: survival of the small grower

The Role of Government

Coat of Arms

2014 is election year in New Zealand. These events come around too often for my liking here anyway – every three years. The first year is wasted deciding who is going to govern with whom as under the MMP system it is highly unlikely that one party is able to govern alone. Understanding where the dirt the prospective coalition partners’ ‘sensitive’ areas also takes time. In the second year  election policies get rammed guided through Parliament and the third year is spent scheming planning re-election for another term. Surely there must be a better system.

This year’s campaign got kicked off early. Prime Minister John Key and his campaign manager Barack Obama met on a golf course in Hawaii, as one does, to set the scene. Go figure. Because the electoral system sucks is not as balanced as it ought to be given the diversity of the nation,we end up in a real mess every thirty years or so. The last major occurrence came after the 1984 election which saw Rob Muldoon evicted defeated and David Lange elected. Our foreign exchange reserves were so low that the country just about went bankrupt.  And then the restructuring started… The acronym SMP got replaced with a new one; SOE.  The civil service was slimmed down, Roger Douglas was in full flight changing the tax regime and Fay Richwhite made enough dough earned sufficiently from the sale of NZ Rail to the State Railway of Wisconsin, to afford comfortable retirement in Switzerland and on Great Mercury Island.

Let’s stick with SMP.  Have you looked it up yet?  Yes, there is that dirty word….subsidies…and successive New Zealand governments have done their darndest to ensure that our producers were lily white at all times since the mid eighties to ensure we were competing on a ‘user pays’ basis on world markets. Pity that many of our trading partners did not follow suit straight away…and in some cases not for thirty years….

The New Zealand Herald recently ran an article entitled “Reform in wind for farmers”. The topic of discussion was the farm subsidy system Japanese micro farmers have enjoyed until now. I hasten to add that the NZ Herald did, of course, not research and write that article itself – the story had been run by Bloomberg in mid December. It is certainly an interesting read. How about this for starters?

“Takashi Nakajima earns $120,000 a year growing lettuces, employs Chinese labourers to harvest them and has four months off in winter to indulge his passion for speed skating. He’s the result of a protected farming system that Japanese prime minister Shinzo Abe is about to dismantle.”

Naturally, Nakajima is fuming less than impressed.

“I don’t trust the Government at all. They want to streamline Japan’s farming business. Small farmers won’t be able to survive and the community will die.”

When the New Zealand Government removed SMP payments in the mid eighties, they killed off discontinued the MAF Advisory Service for good measure. This service was staffed by very skilled horticulturists and applied scientists who formed the link between the universities and research institutes and growers, to ensure that new advances in science found their practical application. The service was free. Ever since then, ‘user pays’ rules.  How many small farmers do we have left?  We are down to about 120 potato growers, for example, compared to several hundred a decade ago. Not sure about lettuce growers. And our rural communities? Those who have survived sure do not have an easy time.

The article is one of the better ones I have read, as it not only looks at the situation today, but also takes a historic perspective, citing land reforms instituted by Douglas MacArthur after World War II, when he broke up the Japanese feudal landlord based system where land ownership was the privilege of few and most farmers were tenants on the land they farmed. I guess that is where the American concept of bringing US style democracy to conquered nations originates and someone now needs to clean up the mess. And not stopping there, this piece of excellent journalism then touches on retailers taking charge of their upstream supply chain by purchasing farms, academics uttering stern warnings about cheap imports from abroad, food self-sufficiency in terms of calories ratios, crop substitution and the definition freshness.

The second to last ‘word’ belongs to lettuce grower Nakajima…

“Our lettuce is good and when it comes to freshness, foreign products won’t be able to match us. But I sometimes wonder whether people see the difference.”

Well spoken for a lettuce grower and part-time speed skater and welcome to the “what constitutes freshness?” debate.

So – what is the role of Government – in New Zealand, in Japan or elsewhere? And what should Government’s relationship with the agricultural sector be?

Bloomberg is quoting Japanese Prime Minister Abe as saying , “Agriculture is the most difficult sector to reform”. How much reform is needed though? Are farmers business people? They sure are and if they are not, they need to become so quick smartly. But surely food production ought to maintain a link with the place where the people live, even if some of our food can be easily exported or imported these days. And equally as surely, food production and land are inextricably intertwined.

Even greenhouses and factory farms do not float on air!

Railway Waggons, TV Shows & Produce

A couple of news items on National Radio caught my attention this morning.  The first one related to Kiwi Rail’s intention to buy more rolling stock from China instead of having the waggons built from scratch in its own workshops in Lower Hutt and Dunedin .  The second item concerned the intended sale of TVNZ’s Avalon Studios.  They also are in Lower Hutt.  Predictably, the supporters of those facilities are getting ready to head for the barricades, suggesting not building one’s own railway waggons or not producing one’s own TV shows makes no economic sense whatsoever, given that a) the competence exists and b) the economic necessity to preserve as many jobs as possible should be obvious to even the most dimwitted inexperienced politician. The counter argument suggests that it makes perfect economic sense to buy goods and services offshore if one’s own capacity is insufficient or if one’s own cost of production cannot match cheaper labour sources offshore.  Chuck a couple of accusations related to xenophobia into the mix, interview a minister or two and the debate takes on a life of its own.

As I was pondering what I was hearing, I could not help but think that there is a connection with the produce industry.   The old colloquial term of market gardener, for example, implies something doesn’t it?  It implies that the individuals concerned produces his or her produce for a market.  Where could one traditionally find market gardeners?  Around the towns.  Where were the markets located? Inside the towns!  Being a market gardener therefore suggests a degree of proximity to the locality where the produce meets the consumer.

Is This Really The Solution?

At the beginning of the 20th century Auckland’s market gardens used to be where the Ellerslie racecourse is today.  As the city grew the gardens shifted to Mangere.  Evidence of that can still be seen between the airport and the Manukau motorway. After the second World War, Pukekohe increasingly gained in importance as Auckland’s fruit and vegie bowl.   These developments played out all across the country to a greater or lesser degree.  A lot of Wellington’s vegetables used to come from Otaki initially.

The produce supply scene is changing on two planes.  Firstly, the corporate supply chains at wholesaler or retailer level distribute parcels of produce around the country based on what is the most efficient source on the day.  Gisborne lettuce can be found all over the country as can South Auckland tomatoes. Growing produce locally is therefore no longer a necessity. Secondly, the volume of imported produce, particularly imported vegetables destined for the process industry, is rising drastically.  On the other hand I saw a Turners & Growers press release recently which announced the company is now the largest exporter of Peruvian asparagus into Japan.

What does this mean?  Ask an economist and he will suggest that the sensible way of going about business is to produce goods and services in the most cost effective way.  And if that is China, so be it.  Sociologists will argue that basic functions like food production need to conducted within spittting distance of the people the food is intended for.  Governments are beginning to to grapple with the concept of Food Security.  History tells us that as societies progress, its members no longer want to perform the more basic job function but are looking for more complex tasks to take on.  Germany invented the term Gastarbeiter in the sixties, guest workers, for the mainly Southern European unskilled labour force which was imported to do the jobs Germans no longer wanted to do.  The Communist regime suffered from the same malaise.  East Germany brought in thousands of North Vietnamese workers for exactly the same reasons.  New Zealand did the same with Pacific Islander in the seventies – and today our industry has the RSE scheme for very similar reasons.

Helen Clark called agriculture and horticulture sunset industries ten years ago and substantially reduced government investment into our industries, wishing us to concentrate on developing high tech export solutions instead.  And yet – horticulture and agriculture are part of the very fabric of our society.  We need to eat to survive.  We need food. How much responsibility do we need to take for this individually apart from doing our hunting & gathering in the local supermarkets? 

The answer, I suggest, lies somewhere in between. As a country we cannot afford to be too reliant on commodity exports.  Yes, prices might be good for a few consecutive weeks, months or even years – but low entry barriers, over- supply and changes to demand will always create a  roller coaster effect .  It is just a question of “when.”  Conversely we cannot afford to go exclusively high tech altogether and import all our food. We can afford this neither financially nor as a society.

What we need then is a mix of sensible commodity production, value adding processing industries and mechanisms which allow us to generate, harvest and market intellectual property along our entire value chain.

Has Walmart Become A Respectable Produce Merchant?

Still don’t know how serious consumers take their produce shopping these days?  Can’t get your head around whether organic produce offers work? Well, in the absence of intelligent news reporting in this country, we have to revert to this other place where English is spoken, the good US of A.

When a shopping reporter (or was that reporting shopper?) spends his time inspecting the produce displays of Walmart and compares them with those of his local icon Whole Foods, you know America is on the move. And where America leads (having followed the UK), we in turn follow.  Eventually. To a point.  But nevertheless.

Especially when the themes sound  familiar.  Locally sourced, organically grown, attractively merchandised, survival of the small grower.  Now, where have we heard this before?