The door is always open for discussions and the government will listen to the industry’s advice “but you can’t just expect us to solve that challenge”.
That was Agriculture Minister Damien O’Connor’s answer to a question about the thorny issue of progression and succession at last month’s Federation Farmers National Council meeting.
“We know it’s a major problem for people in the sector. We want to see the best people come in, and we’d like to help develop that pathway but ultimately it has to come from your sector,” O’Connor said.
To a suggestion of some sort of rural bank being set up by government, his response was blunt: “Like bloody hell”.
The Minister acknowledged the reduction of opportunities through changes to the sharemilking system and suggested land values were a big part of the problem.
There are entities now with five or 10 farms that are worth $80m-$100m – “maybe more”.
Their owners, or perhaps their children, may want to sell. With effectively negative interest rates in Europe for a number of years there are trillions of dollars looking for a safe place to park and get some sort of return.
“We’re ripe for the plucking. When we [Labour] came in, the door was open and we changed that. No foreigners buying farms, except for a few for forestry and we’re dealing with that. We closed the door [on foreigners buying] houses as well.”
O’Connor said 2 percent for some of those overseas investors would be considered a good return “yet a young Kiwi or someone else looking to buy that farm can’t compete with that low cost of capital”.
The government was open to sitting down with bankers and anyone else to try and come up with different equity structures that provide pathways “but ultimately, it’s at the top end of your sectors where those decisions have to be made.
“There will be some people wanting to get out who are seeking $10 million or $15 million for their farm but it might not be worth that. They might have to take the cut because the young person coming in, even with an appropriate level of equity, might find that the figures simply don’t stack up.”
Answering another Feds’ delegates question, the Minister said he was certainly in favour of enabling young people looking to buy their first farm to use their Kiwisaver funds.
O’Connor had another piece of advice on the topic of getting new blood into farming and that was to use the platform that younger generation had grown up with – social media.
“I want to say thanks to the people in agriculture who tell their positive stories, their work for the environment and so on, on social media, even just the stories about what you do on farm every day.
“There’s a lot of misunderstanding about what happens on farms, even among New Zealanders. The more we can explain it, the better off we’ll be.
“From what interaction I’ve had with the younger generation it’s clear they don’t want to be around negativity. If all they’re hearing is the negative side of our industry, they won’t want to know us.”
As “the most noble industry”, producing food vital to human existence, we’ve got great stories to tell and O’Connor suggested it was past time that Team Ag co-operated on a strategy to tell our stories more effectively.
Other messages from the Minister:
On freshwater regulation…
It’s hard to point to any on-farm practice that’s not far better than it was 15 years ago. But we’ve had intensification of land use and the quantum of the load of nutrients in some areas has got to the point where it is affecting waterways, O’Connor said.
“That’s what we’re trying to address. The proposals rolled out had a number of flaws in them, that’s all I’ll say….We’re going to work through those and get to a sensible position.”
Ever higher stock rates is not the answer, “it’s getting more for what you do. If you have less but produce the same returns, then that’s good for everyone. How you do that is something I don’t think any government wants to intervene in more than is absolutely necessary.
“There were a couple of things we over-reached in in the water proposals. We accept that. Watch this space.”
On research and development…
O’Connor said the competitive model set up for R&D, with LandCare, Agresearch and all of the other crown research institutes having to spend a lot of time bidding for funding for projects “quite frankly is inefficient. It’s not collaborative; we have duplication.”
The government is considering the report from the review of the CRIs done last year. The Minister was confident agricultural R&D would continue to get its share of funding.
Part of the challenge was to get out to industry – to farmers – the knowledge and research already gathered. The Minister said he sometimes asked questions to do with soil and water and officials can’t answer him. “I think the information is probably at Lincoln but it has to be able to be accessed.”
On Federated Farmers…
Describing himself and his siblings as “Federated Farmers orphans” at times, with their dad often away at Feds meetings, O’Connor said he has been criticised in the past for saying he didn’t want to be the farmer’s friend. “No, I want to be your staunchest advocate for a sustainable system, that encourages young people to look to us for a future.”
Acknowledging the delegates who had travelled to Wellington for National Council, the Minister said he’d had his “scraps” with Feds from time to time, “and still will.
“But this is a really crucial organisation. It is the pre-eminent organisation representing farmers. We’ve got industry bodies and they do a really good job too. It’s not either/or, it’s all.”