Expect NZ food and fibre to be a campaign battleground in 2023 - KPMG

KPMG expects food and fibre to be at the forefront of next year's general election. Photo / File

New Zealand can expect food and fibre to be a campaign battleground at next year’s general election, consultant KPMG says.

In its latest issue of Agri Agenda, timed for the start of New Zealand’s biggest agricultural event, Fieldays, KPMG’s global head of agribusiness Ian Proudfoot said 2023 was shaping up to be a difficult year.

“As we move into Election 2023, we can expect battlegrounds to appear around areas of political tension,” he wrote in the foreword of Agri Agenda.

“It is reasonable to expect our food and fibre sector will become a campaign battleground given existing tensions in the sector (particularly in relation to climate policy) which brings with it the risk of entrenching divisions amongst farmers and growers across the country and between urban and rural communities,” Proudfoot said.

“We have seen the consequences of a fragmenting society here in New Zealand this year, particularly in the occupation of the parliamentary grounds and the subsequent riots,” he said.

“New Zealand is not immune to the societal pressures that are encouraging people around the world to look for candidates offering MAGA (‘Make Anything Great Again’) promises and solutions.”

Proudfoot said the global data pointed to high inflation, rising interest rates, employment levels and the issues central banks are facing taking stimulus out of over-stimulated economies.

“These challenges are being faced by many countries around the world and are being compounded by the very significant cost and geopolitical implications arising from Russia’s invasion of Ukraine.”

The trouble was the Covid-19 pandemic was not over as quickly as hoped and the stimulus stayed in place for years rather than months.

“The consequence is that 2023 is looking like it will be a tough year economically as the world goes through a much more traditional demand-driven recession which will be longer lasting than the initial supply side shock the pandemic created.

“With China’s transformational growth increasingly looking like it is in the past, this will shift the dynamics of the Chinese market, its relationships with both international customers and suppliers, and is a trend that needs to be carefully monitored by our exporters,” he said.

“Food and fibre organisations will have to adapt quickly to the likely changes any sustained recession will bring to the purchasing power of consumers around the world to ensure the resilience of their businesses.”

Current labour shortages would change the way the sector works forever, he said.

“The industry will face continuing competition for talent making the economics for automation of repetitive roles more compelling; long-term certainty around seasonal labour programmes, more critical; and the investment in future talent pipeline into schools and universities more urgent than ever.

“We have two food systems in New Zealand; a world-class export system and a domestic system that has demonstrated its frailties over the last two years.

“We need different business models to lift the resilience of domestic food producers.

“A failure to provide accessible, quality, nutritious food to all New Zealanders will ultimately impact our ability to continue to generate the export returns we enjoy today.”

Proudfoot said COP27 highlighted the real concerns around climate change.

“The journey towards a zero-carbon future is inter-generational, there is technology we need that we do not yet have, collaborations across the industry and with international partners that are still to be formed, and many stretch milestones.

“The claims we make about our journey and our products should be based on the reality of the opportunities and challenges in front of us rather than trying to gain a short-term market advantage through strategies such as poor-quality carbon offsetting, that do little to transition us towards the future we need,” Proudfoot said.

“Our policy settings should reflect this, our reputation will be harmed not boosted if we continue to accelerate towards becoming a South Pacific carbon equivalent of a tax haven.”