The impact of carbon-only forestry, supply chain issues and the war in Ukraine were some of the topics covered during a panel discussion in Wellington organised by think tank Diplosphere.
Entitled Inflation, Food Insecurity and the Coming Global Food Order, the panel included Federated Farmers Chief Executive Officer Terry Copeland.
Copeland spoke about the challenges the rural sector may face from carbon forestry – planting trees and not harvesting them. He said the returns from carbon forestry are “astronomical”.
“If you look at what an average sheep and beef farm will earn over the next 30 years, it’s about the equivalent of $240 a hectare return. If you plant the same farm in trees that you never harvest, the same farm will return $880 per hectare. If I was a farmer I would think very seriously, if I wanted to make money, about doing that.
“What happens if we do lose all of our land to carbon only forestry? There will be no jobs, there will be no requirement for there to be any schools because there won’t be any people. Eventually rural New Zealand dies and becomes unproductive,” he said.
Copeland also spoke about global supply chain issues, pointing out that New Zealand imports nearly 40 per cent of its food. These food imports include rice, bananas, pork, citrus and seasonal products.
So, what happens when environmental policy goes too far when it comes to food production?
Copeland shared the example of Sri Lankan President Gotabaya Rajapaksa, who in April 2021 decreed a ban on synthetic fertilisers and pesticides, wanting the country to transition more quickly to organic farming. Unfortunately, 85 per cent of farmers experienced crop losses, rice production fell 20 per cent and prices increased 50 per cent in six months.
“They went from being a net self-sufficient producer of rice to having to import half a billion dollars’ worth of rice in March this year,” he said.
“We have to be careful to get the settings right between environmental policy and producing enough food for people to eat.”
War and wheat
The Ambassador of Egypt, Her Excellency Dina el Sehy, talked about the impact of the war in Ukraine on her country’s wheat supply. Figures from S&P showed that in 2021, the Ukraine exported 3.62 million tonnes of wheat to Egypt.
“Egypt is counted as the largest importer of rice, which represents 40 per cent of the food components of about 105 million Egyptians. To give you an idea, the consumption of Egypt is about 22 million tonnes of wheat per year, 80 per cent of this comes from Russia and Ukraine. So, this is the dilemma we work in.”
Egypt also imports about 2 million pounds of sunflower oil, 95 per cent of its needs for cooking oil. It also imports 10 million tonnes of corn annually, which is used in the production of animal products.
“The decision of some countries to bank food exports naturally led to a huge increase in the price of cooking oil, meat and poultry,” she said.
On the other hand, the hike in oil prices led to elevated freight prices. Inflation has reached 14 per cent in in Egypt.
Costing times for meat industry
Increases in production and export costs continue to be an issue for the NZ meat industry, Meat Industry Association CEO Sirma Karapeeva.
For example, container costs have increased by some 400 per cent while shipping disruptions mean that meat companies have had to devalue some of their product offerings.
“The UK is our largest and most lucrative market for value-add chilled lamb exports, particularly around Easter and Christmas. However, the shipping disruptions and the uncertainty of getting perishable product on shelves in good time has meant companies have chosen to export frozen product at a lower value. In March this year, for example, we saw our chilled exports to the UK drop by a whole 80 per cent, which is very significant for us.”
Karapeeva added that consumers are shopping for cheaper products and cutting back on discretionary spending. She said this would have an impact on exports, both in terms of the retail product offering and the food service channel it supplies.
“In simple terms, despite the strong global prices, it is likely that it will become harder to capture that and pay farmers and suppliers the high prices they expect for their stock.”
The impact of technology on agricultural supply chains is only going to increase, Sprout Agritech CEO Gil Meron told the Diplosphere event.
Where farmers once used pen and paper to create spreadsheets, he estimated that an average farm generates 500,000 data points per day.
“The forecast is that it will grow within 10 years to 4 million data points per day. What you do with these data points is improved farming. So it’s productivity, it’s environmental impact and it’s management of the supply chain,” Meron said.
According to Meron, 30 per cent of food waste happens in the supply chain in developing countries between the farm and the retailer.
“But in our country, and in the developed world, 30 per cent is actually lost in our fridge. It’s past the expiry date. And data will make that work. So, waste reduction, traceability, animal health, all that’s just incredible development that can change the cost and the environmental costs of farming.”