Comment: New Zealand's drive for innovation in the agrarian sector has not gone unnoticed on the world stage and it is essential that investment in R&D continues and regulations are both fit for purpose and flexible, writes Dr Jacqueline Rowarth.
In 2017, New Zealand was identified as The model for farms of the future.
The Economics Review (New York University) published an article by Taber Brown, now a finance analyst, stating that in New Zealand the agrarian sector is as sexy as the financial sector.
He stated: "New Zealand, although geographically small, and often overlooked, humbly boasts one of the most efficient and productive industries. It's an industry that's, arguably, more essential than finance and manufacturing, and of paramount importance given our burgeoning global population. This industry is agriculture."
The analogy with a sexy finance sector reflects his background (possibly only a finance person would regard the financial sector as sexy), but the words should stir the hearts of all New Zealanders – and Covid-19 has shown that they are true.
Competition drives innovation
Taber Brown went on to explain that while the governments of most developed countries subsidise their farmers and growers, in New Zealand the removal of subsidies in the 1980s created innovative new and efficient farming and livestock methods.
Developments enabled New Zealand farmers and growers not only to survive, but also to compete on a national scale.
"This is a perfect example of how competition drives innovation," he said. "Innovation is the key to a prosperous economy."
Part of New Zealand's success has been specialisation in the pastoral agriculture that fits with the climate, environment, resources and knowledge.
"By investing time, energy and resources, they have created one of the most efficient agricultural economies in the world."
Brown also highlighted the role of innovation and R&D in agri-technology, describing it as a pinnacle of the industry.
Despite offshore approval, and the ongoing desirability of products from milk powder to honey and kiwifruit, the general feeling from New Zealand society seems still to be that farmers and growers should do better.
Analysis suggests they do so all the time.
Not just with the value that is added before the farm, orchard or market-garden gate, but because of the productivity gains that are reported every year by StatsNZ. The uptake of technology and precision agriculture has been phenomenal.
Change is happening
And while the rhetoric in some sectors is "farmers are too old to change" the evidence – the dairy boom including sheep and goat, expansion of kiwifruit and grapes, and uptake of precision irrigation and fertiliser application – shows quite the opposite.
The changes have been supported by R&D, with ideas coming from people all along the innovation value chain – from farmers and growers through rural professionals and processors to marketers and consumers – some of whom are farmers and growers.
But innovation is suppressed by regulation and the cost of compliance in New Zealand is affecting the time available to imagine a different future.
Last year the New Zealand Institute of Economic Research reported that manufacturing and construction firms say that in some cases compliance is taking up half of the time of people at management level.
In the primary sector, data is scarce but stories numerous. The Southland winter grazing debate is just one – pay for resource consent or put that money into something positive for the environment?
The big issue of bureaucracy
The big issue, however, is how fighting and complying with bureaucracy has a negative effect on innovation, which in turn can have implications for productivity and economic growth. It is economic growth that enables environmental protection.
Matt Ridley, British journalist and businessman, made this clear in a recent article on the Genetic Literacy Project.
"Why is the wolf population increasing, the lion decreasing, and the tiger now holding its own? The answer is simple: wolves live in rich countries, lions in poor countries, and tigers in middle-income countries."
Various analyses, such as the Yale University Environmental Performance Index and OECD, show that New Zealand has much better economic performance than predicted from income.
This reflects the fact that the primary sector is doing everything it can to continue being the best in the world, using smart approaches based on R&D.
The key to success
In some cases, environmental regulations have provided a nudge in the right direction, and farmers and growers have embraced the challenge.
The key to further success, not just in New Zealand but globally, is ensuring that investment in R&D continues, and regulations are both fit for purpose and flexible.
When regulators design regulations which minimise the compliance burden while maximising the probability that innovation will enable compliance, success follows.
US research has shown that this approach gives flexibility which allows the firm and market to decide the optimal path to implementation.
Fit for purpose and flexibility enable a win for all parties. With smart farmers and growers operating within fit-for-purpose and flexible regulations, New Zealand could continue to be the model for food production in the future.
This month, UK farmers were invited to a webinar hosted by the Farmers' Guardian.
The invitation blurb states: "Working smarter, not harder is the ethos of New Zealand farmers who treat food production as an expert profession, leaning on data to drive results. So how could you embrace the same ethos?"
Obviously, New Zealand farmers are showing the way. We can all feel proud.
• Dr Jacqueline Rowarth has an agricultural science degree, with honours in environmental agriculture, and a PhD in soil science. She has held professorial positions in pastoral agriculture and agribusiness and is now a farmer-elected director of DairyNZ and Ravensdown. The analysis and conclusions above are her own. firstname.lastname@example.org