There's nothing like a biosecurity scare to remind us that New Zealand's economic prosperity is still - for better or for worse - tethered to the farm gate.

The instant that news of the Mycoplasma bovis outbreak in South Canterbury hit the headlines last Tuesday the dollar plunged.

Luckily it only dropped 20 basis points (0.2 per cent) before it became apparent that this was a more benign disease than foot and mouth.

But it was enough to put a deep V shape in the daily dollar chart and illustrate how quickly a more serious outbreak could take this country to the brink of recession.


The Ministry of Primary Industries' official estimates are that foot and mouth would cost the country about $16 billion.

But it might be worse.

Outside of agriculture our economy is dependent on tourism. That's unlikely to fare well in a widespread foot and mouth outbreak as the British found out in 2001 - piles of burning cattle aren't a great visitor attraction.

That outbreak forced the UK to suspend all meat and livestock exports and slaughter 10 million cows and sheep.

The countryside became an apocalyptic mess of complex travel restrictions and bovine funeral pyres.

Last week's event was sobering simply because something got through - and if one thing can than why not the other?

As much as we'd like to think New Zealand has diversified its economy in the past 10 years - our progress in the eyes of global currency traders at least has been minimal.

For all tech and innovation stories we love to champion it's really only basic farm gate stuff that global currency traders care about when they think of New Zealand - dairy prices and biosecurity risk.


It has been a timely reminder because the disassociation between rural and urban New Zealand seems to be growing ever wider.

Conflict over irrigation, land use and river pollution has framed farmers as environmental villains.

Farmers are feeling under appreciated for the role they play in underpinning New Zealand's economy - and by association the wealth and prosperity of urban New Zealanders.

Regardless of the best efforts of Fonterra, Federated Farmers and Dairy NZ to push environmental improvement, it's just a fact that many of our rivers and lakes are no longer up to an acceptable standard. And that degradation has coincided with the expansion of dairying in the past 20 years.

As a very urban, vegetarian greenie I took on the job of agriculture editor at NZ Herald 15 years ago.

It was an eye opening experiencing and largely a positive one. I was hugely impressed by the science innovation and technology that drives New Zealand agriculture and by the passion and dedication of our farmers.

We've been world beaters in dairy and sheep farming to an extent that probably surpasses even our sporting achievements.

In the 1980s when it became clear that the country couldn't subsidise its way to prosperity, farmers were forced to face a dramatic shift in political policies.

They were left to sink or swim on the free market. The way the industry adapted was an incredible success story - particularly around dairy.

Farmers are feeling under appreciated for the role they play in underpinning New Zealand's economy - and by association the wealth and prosperity of urban New Zealanders.

Without that agricultural success New Zealand would simply not have been able to maintain the infrastructure and standards of living we're used to.

I'm realistic enough (some would say cynical enough) to accept that this has enabled powerful pro-dairying forces in this country. Milk in New Zealand now is as oil is in Texas.

But despite dairy's great success, we can't keep adding cows to grow the industry.

Fonterra and the Government need to accept that there is a geographic limit to dairying. If we haven't already reached it then we must be very close.

The push back from the public is only going to get stronger.

You don't even need to dwell on the environment to see that we need to diversify land use and push our production up the value chain. There are solid economic arguments.

"Added-value" has been a mantra in the industry for years but progress has been undercut by good commodity prices and ongoing increases in production.

Internally Fonterra knows that we simply don't need to produce more milk powder.

This is not where the economic future lies. In fact, the sheer volume of milk Fonterra needs to process is often a millstone around its neck.

But Fonterra's head office is beholden to farmer shareholders, many of whom (although not all) retain a very conservative outlook on the world.

Instead of fancy PR campaigns to convince city folk that NZ dairy is environmentally pure, they would be better served turning their communications toward farmers, preparing them for a future built on quality not quantity.

More broadly, this country needs to diversify land use to ensure we are not vulnerable to single commodity price shocks and biosecurity risks.

All over the country there is a new generation of farmers pushing in new directions and producing new high value crops for niche consumer markets.

In many cases they are doing this in tandem with traditional dairying or sheep and beef farming.

Let's hear more of those stories, because the tension between rural and urban is a shame.

New Zealand should be proudly celebrating agricultural success.
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