Clarky's Comment - Our NZ Inc. Strategic Advantage

During July I spent a week in each of China and Malaysia. These visits and discussions with business leaders in each nation reinforced the opportunity we have in New Zealand to capitalise on increasing wealth in those countries and the changing preferences of those wealthier populations. In particular:

  • Tourism focused on clean natural landscapes and adventure activities.

  • Safe food exports, including organics and animals reared in clean and humane environments.

  • Logs and wood products from sustainably managed forests.

To date our tourism and primary sectors have focussed on volume, and this is coming at a cost of sheer numbers of tourists and agricultural intensification that is starting to destroy the very quality of the experiences and the environment that underpins these overseas earnings. We need to realise that we can never accommodate all the tourists that might like to experience the NZ great outdoors, and we can never feed the world, no matter how much safe food we produce.

So why not get a bit strategic and position both our tourism experiences, and our safe wholesome foods as “top-end” products for those prepared to pay? We should make larger margins on lower volumes. Some NZ companies have been doing this for years with ANZCO being a standout example.

But for the NZ environment to support a significant move from commodity to high-end, high-price niche branding and marketing we really do need to get serious about expansion of tourism support infrastructure, funding of the predator-free initiative, and cleaning up our rivers and lakes. We are fast running out of our natural capital that has enabled clean-green branding to date. The KPMG 2017 Agribusiness Agenda suggests that most of our agribusiness leaders get this: “The takeaway from our research for this year’s Agenda is really simple; it must be sustainability first in everything that every organisation in the agri-food sector does every day and we cannot continue to debate this.”

But some sectors, some leaders, some industry bodies and some regulators do continue to debate it. The most obvious evidence of this is the lobbying that goes on in support of grand-parenting Nitrogen pollution rights.

While I understand that grand-parenting of pollution rights is necessary as a transitional measure to allow adjustments to farming and land use, it must be seen as a 10-year maximum transition, not a permanent right to pollute. The current application of grand-parenting pollution rights actively encourages landowners to intensify land use in order to establish high baseline N discharges allowances. Furthermore it devalues forested land and discourages forestry investment. Why would anyone plant trees when there is evidence that regulators will either limit future N discharges of that land at much lower levels than neighbouring pasture, or worse still, mandate that once in trees it must stay forever in trees?

Those advocating for, or responsible for regulating, grand-parenting on any long-term basis need to think long and hard about the behaviours they are seeking to change. Otherwise we will end up scoring an own-goal.

In the forestry space we face similar challenges as the food sector in converting commodity logs into higher value products that have sale prices higher than the cost of producing and distributing them to customers. But we are at least an environmentally positive industry.

The single biggest negative environmental impact we have is stream sedimentation during and immediately following harvest. This can be minimised by following best practice in road and skid construction. Without education and application of proper engineering the threat to our license to operate, and/or costly prosecutions and fines will increase as we expand the harvest of smaller non-corporate forests established on steep hill country during the 1990s. Forest owners, managers and harvesting contractors need to pay serious attention to this risk.