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Ian Proudfoot, Head of Agribusiness, KPMG in New Zealand:

It was only a couple of months ago. A beautiful summer’s day in New Zealand’s Bay of Plenty. I was presenting to kiwifruit growers on how taking strong principled positions in relation to a range of sustainability issues (including water, climate, packaging, labour and community engagement) was of critical importance in ensuring New Zealand’s food and fibre industry maximises the value that it returns from the products that we grow and sell to the world. 

However, that was a couple of months ago – before the disruption, before the uncertainty, before travel stopped, shops closed and economies were locked down by governments trying to protect their populations from the COVID-19 pandemic. 

My work is now focused on how the food system has changed as a result of COVID-19. How will mass unemployment and lockdowns play out on the demand for food? How does the pivot towards digital affect our storytelling? What product formats should we be producing, and which markets should we target our products at if the food and fibre sectors are going to lead New Zealand’s economic recovery? 

Blanket coverage of the pandemic has left no airtime for any other story. Climate change, the issue that dominated the World Economic Forum in January, has vanished from the airwaves despite our prime minister, Jacinda Ardern, describing it as the challenge that would define her generation, or in New Zealand speak, provide their “nuclear-free moment” (referring to David Lange’s government in the 1980s which declared New Zealand a nuclear-free nation). 

In fact, the only recent mentions of the climate have come in comfortable, smug puff pieces telling us how much less carbon we are burning as our planes are not flying and our cars no longer sit in traffic jams on Auckland's streets.

With the massive economic consequences of a five-week hard lockdown and months of gradual unlocking of the economy still to come, people are starting to realise how much less money we will have as a country, as businesses and as individuals, and the choices this takes away from us. 

Surprise

It has been no surprise that groups within New Zealand's food and fibre sectors have already started to argue that now is not the time to load cost on to farmers in relation to new regulations around climate, water, packaging or labour. 

They suggest that the best response to the economic crisis we now face is allowing farmers and growers to get on with maximising production volumes so that we can export ourselves out of trouble as we have done countless times before. 

It is fair to say 2019 was a confronting year for many agricultural producers in New Zealand but not for the usual reasons. 

The weather largely played ball. Prices for most of our core commodities were at good, and in some cases, record levels, which would usually suggest a year with strong producer confidence, rising land prices and a general view that the industry was successfully creating wealth for all involved. 

However, farmer confidence was at unusually low levels for much of the year, something I believe was connected to the level of structural change that farmers were facing. 

The Reserve Bank of New Zealand had proposed new capital requirements for banks which would make rural lending harder to come by and more expensive (although the implementation of the rules has been deferred because of the pandemic). 

Government policy continued to restrict the availability of foreign migrant labour and overseas direct investment to all businesses, but particularly agribusinesses that had used both as lifeblood for several years. 

In addition, generational regulatory reforms in relation to water and greenhouses gases were coming and everybody expected material impacts on the day-to-day operations of the industry (including potential forced land use change and the emergence of new carbon-neutral farming sector). 

New Zealand will take actions to see it become a carbon-zero country by 2050

Outcomes

What eventuated towards the end of the year was two quite markedly different outcomes. While everybody agrees that improving water quality is key to maintaining the industry’s social licence to operate the mechanism the government has proposed for achieving this will make farming uneconomical for many. 

It is not unreasonable to suggest that the proposed regulations probably delivered the worst possible outcome to the industry after decades of consultation and farmers’ concerns about regulatory change were well-founded. 

In respect of greenhouse gases, we got the Zero Carbon Act, which passed unanimously through Parliament. The act legislates that New Zealand will take actions to see it become a carbon-zero country by 2050. 

While the initial drafts of legislation gave rise to industry concerns about how methane emissions would be handled, the final legislation provided the industry with an ability to set its own course towards zero carbon through a process called He Waka Eke Noa – The Future is in our Hands. 

This gives the industry a blank piece of paper and time to plan its own transition focused more on the outcomes achieved than the starting line. The industry did not get a free pass but it did get more than it could ever have hoped for from a government where the climate change minister is the co-leader of the Green Party.

Towards the end of 2019, the industry also received an overarching vision for the first time called “Fit for a Better World”. 

The vision, developed by the Primary Sector Council (a body established by the Minister of Agriculture), utilises the Maori principle of Taiao to  articulate an approach to producing food, fibre and other biological products in a way that balances the land, water, climate and living things (including our people and communities) in a regenerative manner so that they can be used indefinitely. 

Consequences

COVID-19 is undoubtedly an event that will have dramatic consequences on countries, businesses and people but like other shocks it is something that over time we will solve and ultimately recover from. 

If history is anything to go by, the global recovery is likely to be led by government-funded stimulus into carbon intensive infrastructure and fuelled by low oil prices. I would not be surprised to see a world in 10 years’ time where our climate challenges have amplified to such an extent that they become unsolvable. Again, not everything has changed. 

Our belief that to be the world’s best food producers means that we need to be good for the world is still correct and true. In fact, it’s more vital today than ever. Coronavirus has reconnected people to the importance and scarcity of food in ways we could not have even imagined at the start of this year. 

As a country that needs to create our wealth from selling food and fibre products to the world for the foreseeable future (as tourism, our second largest export earner, will take years to see life let alone recover) we need to be proud in sticking to our purpose and continuing to work to deliver on our goals in an economically sustainable manner. 

How we look after our land, our water, our climate, our people and our communities is more important today than it was on that beautiful summer’s day in the Bay of Plenty in February. 

Being the first carbon-zero food system in the world will give us a market positioning many will take decades to achieve. Now is the time to push harder and realise our vision for the good of all New Zealanders; today and for future generations. To do anything else would be to fail at the very time bold and transformational leadership is required. 

Sustainability

Coming into 2020 we had an industry aligned around a vision. A vision that was centred on creating a more sustainable and prosperous future for all New Zealanders. Our pathways were clear.

Our goals were bold and organisations had started to make strong commitments around the contribution they would make to a more sustainable future as Zespri did at its growers’ conference in February, that I referred to in my introduction.

Then, in February, we saw the first signs of the coronavirus carnage start to roll in and everything changed. China, our number one export destination, closed for the new year’s festival, as it does every year, but this time it did not reopen. Then Japan, then Europe, then Australia and then the US.

The tourists left New Zealand, our borders closed and everything was different. Except not everything changed.

Our planet continues to warm at unsustainable levels. Some of our rivers are still not swimmable. Many in our community still believe that farmers are not the kaitiaki, or guardians, of the land that they need to be. The food system around the world continues to exploit labour and leave hundreds of millions of people without the access to the nutrition that they need to fuel fulfilling and constructive lives.

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