Regulars » Federated Farmers
Challenging times
Wednesday, 20 August 2008

By Don Nicolson, President, Federated Farmers

In a world of rising food prices, the question must be asked: Who is profiting? Some New Zealand families are struggling to put basic food items on the table, and worldwide malnutrition is a major problem.

The pressure is on food producers to get more out of the land – and in a way that does not damage the environment.

Prices for basic farming inputs such as fertiliser and fuel have almost doubled recently. On top of that, ever-increasing electricity, wage and compliance costs are squeezing margins, so there are unavoidable costs impacting on food production systems. I know this is no consolation to families under pressure, but the reality is that the farmer’s or food producer’s share of profit has generally not increased.

Earlier this year, Federated Farmers commissioned the New Zealand Institute of Economic Research to produce a food prices report. It calculated the percentage farmers receive from the retail price. In simple terms, farmers get the equivalent of three slices of a 20-slice loaf of bread, one of three lamb chops and one of four pieces of steak.

This year’s high returns to dairy farmers have fuelled the perception that all farmers are ‘creaming it’. That is a myth. The reality is that before this year, dairy farmers have also been through some hard times and the gains this year will pay for past losses. A similar story exists in the arable sector too. As for sheep and beef farmers, many are borrowing against their equity to feed their family and farm while they sit out years of low market prices, which are made much worse by this year’s drought.

I think most city folk understand the anguish that farmers go through with a severe drought or flood. Television images tell the tale. But what they fail to show is that the effects of a single adverse event can live on for several years and affect profitability.

It’s also important to remember that New Zealand farmers – unlike their colleagues in Europe – have long shrugged off the shackles of farm subsidies. Kiwi farmers live by the ebb and flow of the market and don’t seek handouts.

Finally, the issue that has aroused a great deal of controversy is that of the environment. In the minds of some people, the cow is a greater polluter than a steel mill in the days of the Industrial Revolution. I would like to assure everyone that farmers have been and remain committed to creating a clean and pristine environment.

Farmers, just like everyone else, enjoy swimming and fishing in rivers and lakes. Clean water is essential to farming businesses as well. Farmers are passionate about their businesses and need to use their resources effectively and efficiently.

The reality is that all New Zealanders – not just farmers – take from the environment, every moment of every day. And we all benefit from this harvest. The success of New Zealand food producers flows on to all New Zealanders. I only wish more knew it.

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