Strategy 2.0: Profitable and Sustainable Farming

By Bruce Wills

There may be uncertainty around the global economy as farmers head into the 2012/13 season, but Bruce Wills is confident Federated Farmers has the right strategy to help its members achieve a profitable and sustainable future.

This year, Wills and the Federation's chief executive Conor English headed a project to review the organisation's strategy and policy objectives.

"Our mission has always been to look after the interests of our farmer members and to be their voice, but we wanted to sharpen the focus," Wills says.

"Resources are limited so we needed to make sure we have our priorities clearly defined, so we know we are delivering the best service and value."

"Volatility and uncertainty are the new normal in a world struggling to adapt to the global financial crisis," English says.

"At the same time we have significant demographic change locally and internationally, which is both a threat and an opportunity.

"Successive Governments have worked hard to get access to new and growing markets. Food and water are becoming scarcer, so at a macro level our medium-term outlook is positive.

"However, there are plenty of policy risks and issues that need to be managed at international, national, regional and sector level."

Wills and the board have worked to build bridges between the rural heartland and urban New Zealand. This has included being open and upfront about agriculture's environmental responsibilities and communicating what farmers are doing to increase their environmental sustainability.

The Federation will continue to push the environmental message, but Wills is equally focusing on the financial sustainability of farming and its importance to the economy.

"The New Zealand economy is hugely reliant on agriculture. The primary sector produces more than two-thirds of our exports, which helps pay the bills.

"Yes, we need to focus on environmental issues, but farm profitability is absolutely critical as well. Federated Farmers exists 'to influence decision-makers to create better outcomes for profitable and sustainable farming'. That is our focus," Wills says.

In June, Wills and English attended global events which reaffirmed the Federation's path.

Wills participated at the World Farmers Organisation (WFO) forum in Rome, with food security high on the agenda.

He said listening to global concerns reaffirmed New Zealand's place as a global farming leader, from the environmental to production efficiency.

Of the 40-plus countries represented, few support free trade but being there showcased how an open market economy is beneficial for agriculture, encouraging innovation and productivity.

"Many countries are looking for ways to increase food production because they are reliant on food imports to feed their own populations. That is where New Zealand agriculture has a lot of valuable intellectual property."

Rome also proved the adage that poor countries are not green. Rubbish piled up in the city's parks and the Tiber River was very polluted. The lesson for New Zealand was clear.

"A thriving country has more money to advance and support environmentally-friendly projects. Thriving farmers are more able to invest in environmental protection works such as riparian planting and retiring land for regeneration of bush. You must be in the black to be green," Wills says.

English was part of the World Farmers Organisation group and an official delegate of the New Zealand Government at the Rio+20 United Nations Conference on Sustainable Development.

"Sustainability can mean many things to different people, but one thing was clear - money matters," English says.

"There was debate around whether food security meant self-sufficiency and was anti-trade or pro-trade. Fortunately, we got the free trade message in there.

"One issue there was no debate on was growth. Here, we seem to be arguing over whether growth is good or not. At Rio they are past that - they all want growth. The question is how you get that."

Complex political environment

"Many people don't quite understand the complex political environment the Federation operates in," says English.

"New Zealand has 4.5 million people, 3m of whom are voters and 35,000 are commercial farmers. Central and local government involves about 54,000 people in administration. There are 121 MPs, 28 Cabinet Ministers, 14 Cabinet committees, 13 select committees and 212 central Government entities."

At local government level, New Zealand also has 78 councils, including 11 regional, 12 city, 54 district and 6 unitary councils.

Wills says Federated Farmers works with nearly all of these and is represented in more than 60 groups at national level, and many more at regional and sector level. There is international work as well.

"We deal with 300 to 500 issues at any one time," Wills says.

"We work with all political parties and views, to get good outcomes. Farmers may not realise we are the largest policy shop outside of Government departments. Last year we presented 100 submissions in 100 days."

"As well as identifying problems, we are very focused on solutions. When the issues are actually very complex, this is not easy," English says.

Federation is 'a business'

While lobbying and running a farm are different, English points out that like any other business Federated Farmers needs a solid strategy.

The new plan focuses on four critical areas of the Federation:

Policy and advocacy success: Policy development, advocacy, visibility/communications.

Pan-industry leadership: Provincial strength, celebrating success, leadership capability.

Provide farmer support:

Farm business products and service, adverse events, foster support organisations. Ensure Federation's financial strength: Membership growth and retention, efficient organisation, non-membership revenue.

"We just have to stay focussed and get on with it. We have over 60 staff and thousands of passionate elected and volunteers, so it's quite a machine," English says.

Policy objectives

Wills says there are many issues which impact farming, both positively and negatively, so the Federation needs to focus on its job. To help define this, it has two major policy objectives with a high-level list of issues. These are:

1. Profitable Farming - New Zealand needs a viable, profitable farming sector to remain a First World country and to increase its wealth. The Federation focuses on influencing decision-makers regarding; Expenses: inputs, rates, banks, tax, immigration Incomes: farm gate returns, supply chain, trade access, market structures, fiscal/monetary policy Compliance and regulatory frameworks.

2. Sustainable Farming - Farming is the backbone of the nation's development and progress. The Federation focuses on the frameworks needed to ensure future generations can farm. These include: Environmental sustainability Urban rural relationships Infrastructure - roads, data/broadband, electricity lines Water - ownership, allocation, management, quality, storage Farm succession Energy Bio-security Safe food Animal welfare Skills/ human capability Research /innovation Rights in property Capital availability and cost Local government reform Adverse events

"Of course, each issue has many strands to it and they vary. What is pleasing is we have had significant and material wins," Wills says.

Policy promotion

Many farmers don't realise that, as well as arguing against poor policy proposals, the Federation also promotes good policy outcomes.

"One example is the Rural Broadband Initiative (RBI)," English says.

"It is critical for rural communities to have broadband infrastructure in place if farming is to continue to compete in overseas markets, encourage people to live in the countryside, enhance learning, social cohesion and health outcomes. Politicians need to understand - rural people are people too."

Originally, the Government only allocated $48m for the rural sector. After significant lobbying, rural gained an additional $250m. Also, through the tender process, tenderers committed further investment. The result is rural areas now have a similar investment level as the urban.

Climate change, global warming

The recent announcement of the Government's proposed changes to the Emissions Trading Scheme (ETS) deferring any decision on biological emissions until 2015 is a win for the Federation, for farmers, and the environment, after three years of lobbying. While the Federation lobbied against the ETS, it lobbied for and supports other, potentially better, solutions for farming and the planet.

"The Federation supported Government setting up the Productivity Commission to examine how, as a country, we can improve our productivity which would reduce emissions," says English.

"We lobbied hard for water storage which saw the Government commit $435m to feasibility and potential storage projects."

Projects such as the proposed Ruataniwha Water Storage project in Hawke's Bay would bring certainty to drought-prone areas, securing farmers' incomes so they can invest in better infrastructure and environmental improvements.

"We supported the Government's climate change coalition of 33 countries investing in research on emission reduction and we lobbied successfully to get more money into the Primary Growth Partnership to improve farmers' productivity, reducing emissions."

Other policy work

Other issues include working with the Ministry of Transport to review the Motor Vehicle Registration and Road User charges. There have been commonsense changes to cut down paper-work and costs for agricultural vehicles. Federated Farmers successfully argued against logbooks for tractors and buntings around all diesel tanks.

At the local government level, the Federation is the only organisation submitting annually to over 90 per cent of the country's local authorities.

"Also, after sustained lobbying, a package of reform for the local government sector should see positive outcomes," Wills says.

There is also a watching brief on what banks are up to with regard to farm lending levels and interest rates. Back when the OCR reduced from 8.5 to 2.5 per cent, the Federation fought for benefits to be passed on to farmers. With $47 billion of farm debt, every 100 basis points is worth $470m cash.

To help farm succession, the Federation lobbied for the removal of gift duties.

Federated Farmers is proactive on water management, participating in the Land and Water Forum (LAWF) to ensure realistic expectations around farmers' capacity to enact any regulations.

The Federation's message is, while there are no one-size-fits-all solutions for farming's challenges, farmers will work to get satisfactory outcomes to suit all.

The Federation encourages other industry sectors and society to acknowledge their part in ensuring future generations have clean water.

Industry sector success is another priority. "Four years ago, when lamb prices slumped to an all-time low, Federated Farmers started the T150 campaign, targeting an average $150 value on mid-season lambs," Wills says.

"This set an aspirational target for the sector and pleasingly, over the last season many farmers achieved these prices, though this year appears more challenging."

Federated Farmers lobbied successfully for Fonterra's second vote on the Trading Among Farmers proposal. "It is important farmers are treated with the respect of any shareholders and given all the information they need to make an informed decision."

There are many more issues the Federation is working to influence decision-makers for better outcomes for farming.

The future

While on-farm sentiment may have dipped in the last six months, Wills is very upbeat about agriculture's future.

"We have the water, we have the land and we have innovative and highly-educated people. The demand for high-quality food will only increase. Federated Farmers is on a strong growth path, we are achieving good results for farming and New Zealand."

- Hamilton News

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