Stephen Ward: Finding balance key to growth

If you feel a slight tremor in the ground it might not simply be the latest small seismic event to rattle our shaky isles.

Rather, it may be past generations of farmers and growers turning in their graves at the thought of townies not knowing just how important the rural sector is to the national economy.

Growing up in Nelson in the 1960s and 1970s, it was pretty hard to ignore the evidence: apple and berry orchards dotted the countryside, the smell of the meat works made you pinch your nose as you drove past. Fishing boats chugging in and out of the harbour, and giant piles of wood chips sitting at the port awaiting export bore further testimony to the primary sector's primacy.

But now there's news the Ministry of Agriculture and Forestry is studying people's views on the rural sector and whether there's a gap between town and country.

The study comes amid clear concerns that the values and needs of "urban" New Zealand could impinge on the primary sector's productivity and national economic growth.

New Zealanders - urban and rural - take pride in being pragmatic and tolerant.

Both qualities will be required when it comes to finding a fair balance between competing interests in the years ahead.

Farmers and growers are unlikely to expect it'll all be one-way traffic in their favour as rural-urban issues are sorted out.

But, as recent farmer activism demonstrates eloquently, the rural sector won't be an easy touch either.

Solid facts and figures about the issues involved - and a clear, common understanding of what's at stake - will be a key to striking the balance fairly.


Compliance costs

Fresh from raising concerns that over-the-top environmentalism can hurt the rural economy, Federated Farmers says new figures highlight how its members pay higher compliance costs than other businesses.

The farmer-specific numbers - reported for the first time - are in the 2006 Business NZ-KPMG compliance cost survey.

They indicate the average cost of compliance per full-time employee of a federation member was $1548, more than double the $691 average for all respondents.

Farmers had particular concerns about costs associated with the Resource Management Act, hazardous substances and local government.

One farm noted it had been waiting eight months for a resource consent that should have been processed in 20 working days. The federation said improving RMA processes was its current top priority.

These figures are a useful addition to the debate about where to strike that fair balance between the interests of town and country.


Growing together

The theme of rationalisation hangs over two new horticulture sector developments.

First out of the blocks last week was the announcement that NZAX-listed, grower-controlled co-op Satara was merging its avocado packhouse operations with another Bay of Plenty firm Aongatete Coolstores.

The pair's Bravo Avocado joint venture is aimed at stripping costs and positioning themselves for an expected boom in production over the next five years.

Any boom could reduce prices, so cutting costs is aimed at helping sustain grower income and keeping fruit coming into the joint venture's packhouses.

Further down the east coast in Napier, juice firm Simply Squeezed announced a multimillion-dollar capital injection from Australian private equity firm Crescent Capital Partners.

The money will help expand the business and develop new orange orchards.

But Simply Squeezed founder Steve Brownlie also says the money could fund "strategic acquisitions" and Crescent is eyeing a couple of other food and beverage opportunities in New Zealand.

So all sorts of juicy deals may be looming.


Wool movements

AgResearch is spinning a new approach to wool research.

The Crown research institute is planning to pay $6.5 million to buy the assets of loss-making textiles research company Canesis Network from listed Wool Equities and the Wool Research Organisation of New Zealand Trust (WRONZ).

AgResearch's CEO Andy West insists the deal - subject to due diligence and shareholding minister approval - is a good one despite Canesis' losses, which have weighed on Wool Equities' results.

The money will pay for Lincoln-based Canesis' intellectual property and equipment, while a separate deal will be done with WRONZ for land and buildings.

AgResearch currently does a lot of research on sheep and wool production - as well as dairy and meat - while Canesis looks at what is done once wool is off the sheep.

West sees potential benefits from AgResearch combining "pre- and post harvest" wool research. He also believes pooling the two organisations' research resources will benefit dairy, meat and wool research.

Meanwhile, Wool Equities CEO Mark O'Grady is leaving the company without a lot of notice after resigning recently.

He says it's not as a result of any problems between him and the company - rather it was time for him to look for something new after a period of significant restructuring.

Wool Equities, a farmer-controlled wool research firm, reported this month that it had posted a $2.7 million loss in the year to June, compared with one of $7.2 million the year before. The losses are said to reflect new technologies still being in the product and market development phase.