Anthony Scott: Lesson on the link from farm to city

The foot-and-mouth disease scare has brought home with a jolt the link between the working farm just beyond the lifestyle blocks and the latte-sipping urban lifestyle.

In 2003, the Reserve Bank calculated that even a limited outbreak would put at risk 20,000 jobs, cause a 4 per cent drop in economic output almost overnight, with a reduction of $10 billion by end of year two, and cut export receipts by 12 per cent ($5.5 billion) in the same time.

Tax revenue would decline by $1.5 billion and welfare spending increase. It would take years to recover.

That adds up to a lot of lattes, cars, DVDs or coastal second homes.

We have had foot-and-mouth scares previously. But this is the first since we have become so decisively urbanised, not just in where we live but in how we live.

Our rural hinterland is now mostly the scenic background en route to beach, skifield or airport. This makes the reminder that cows and sheep comprise our national wealth so much more unsettling.

So how will we respond to this crisis, albeit a hoax?

No doubt there will be a review to evaluate the judgment calls and the operational effectiveness of the response, so as to be better prepared for the real one.

But let's also use the heightened awareness of how close we are, always, to such catastrophe to ensure that everyone supports appropriate biosecurity, and that sufficient investment is being made in these areas.

The link between farm, forest and fishery and our urban comfort is tenuous for many people now, and needs reinforcement.

Strengthening border controls, improving biosecurity investment and processes, and enlisting all citizens in the vigilance are necessary actions to consider.

Are there long-term lessons as well? Yes, there are - but not the too easy, superficial one of "we must get out of agriculture", an approach summarised as more The Lord of the Rings and less dairy.

Such analysis, reviving disparaging references to "sunset industries", will lead to damaging policy and investment decisions and potential loss of key capabilities.

In fact, the limitations of what we trade and where we see wealth creation provide the real vulnerability. Our primary sectors will, if we play the game right, be a source of our future wealth to an extent even greater than in the past.

The primary industries need continued investment to improve processes and products. In none of these sectors can we stand still against global competition.

While commodity trading in meat, butter, wool and logs will never again put us at the top of the OECD, new sources of wealth lie within those sectors to spill over into new sectors.

The key has two parts: how we do things (New Zealand has a rich tradition of innovation in processes and technology); and seeing the raw material (be it meat, milk, wool, trees, marine and freshwater resources, fruit, and even our grass) as a source of high-value products.

The rewards are potentially huge. For example, the global market for functional foods is estimated to be worth $55 billion this year. Even Coca-Cola is investing in this area.

New Zealand has a natural advantage in terms of our people, culture of innovation, and our science quality and ability to commercialise. That knowledge and skill set is rooted in the industry/science nexus.

For example, HortResearch, Pipfruit New Zealand, and Australian and American growers are collaborating on new plant varieties and a long-term research programme.

Why? Because we have the world's best apple varieties, and a track record in research and growing processes leading to further desirable plant varieties; and because New Zealand will never have enough apples (or access to some markets) to supply demand.

This deal unlocks the wealth implicit in the creation and production of an apple, minimises the growers' fear of hailstorms or blight, and maximises benefit to New Zealand.

The knowledge we have in our processes and machinery is not susceptible to overnight loss from foot-and-mouth. And the value per kilo is a lot higher than from even our premium lamb.

The forestry sector is another pulling new wealth opportunities from the primary industry/science nexus. The mission of Forest Research was to "grow better trees, faster". It has been doing this with stunning success since 1947.

Today, it has an additional mission - to create high-performance biomaterials, such as biopolymers and plastics. It does so by building on New Zealand's expertise in sustainable plant production, including growing better trees.

Other examples abound: Crop & Food Research developing a precision breeding technique for plants using the tools of genetic modification but without introducing foreign DNA; AgResearch introducing genetic tests for milk production, and its research contribution to Ovita, which has delivered products to improve meat production and reduce the impacts of internal parasites.

In our dairy industry, Fonterra and Tatua are now creating high-value products even less related to the original than, say, casein is to milk. The base is, of course, high-quality dairy herds, and the most educated and innovative of agricultural workforces.

We will best develop diversity by continuing to underpin the base, and also fostering new knowledge and development. We cannot continue to do tomorrow solely what we do today - but we must use today as the springboard for the future.

* Anthony Scott is executive director of the Association of Crown Research Institutes.