Early Bird I Friday August 15th 2024

Kiwi milk protein exports face billion-dollar threat from Canadian policies, Government boosts aid for drought-stricken North Canterbury farmers, and green shoots appear as honey industry navigates challenges. Welcome to Proud Country's Early Bird - The top things you need to know that impact rural New Zealand delivered to you by 5am, because who doesn’t need better chat beyond the weather! Terms of reference revealed for Government inquiry into banks rural and business lending practises New Zealand's dairy industry is rallying for government action against Canadian trade practices, warning of a looming threat to high-value milk protein exports. The Dairy Companies Association has urged Trade Minister Todd McClay to initiate urgent World Trade Organisation proceedings, aiming to counter Canadian dairy exports undercutting Kiwi producers in global markets. The core issue centres on Canada's Milk Class 4(a) system, which New Zealand dairy leaders argue unfairly subsidises milk production. This policy has generated surpluses of subsidised milk protein, now encroaching on markets for premium milk protein concentrates and isolates. Industry concerns have intensified following Canada's recent pledge of $400 million to bolster its dairy factories over the coming decade. New Zealand dairy executives fear this investment will further erode their market share, particularly in the United States. The dairy association outlined immediate risks to $500 million in sales of milk protein concentrates and isolates to the US market, and $400 million in casein sales could eventually face similar challenges. These figures underscore the substantial economic impact at stake for New Zealand's dairy sector, with total dairy exports to the US reaching $1 billion in the year leading to May 2024. Trade Minister McClay has acknowledged the industry's concerns, having raised the issue with his Canadian counterpart at a recent WTO meeting. However, he emphasized the need for a comprehensive assessment before committing to legal action, stressing the importance of quantifying and demonstrating harm to build a robust case. This dairy dispute adds to existing trade tensions between New Zealand and Canada. The countries remain at odds over Canada's non-compliance with a ruling under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which mandated Canada to open its domestic dairy markets to New Zealand exporters. Government boosts aid for drought-stricken North Canterbury farmers The government has unveiled additional assistance for North Canterbury farmers grappling with ongoing drought conditions. Rural Communities Minister Mark Patterson announced the new measures during a visit to affected farms in the Hurunui District. The latest aid package includes $20,000 from the government, complemented by an $18,000 contribution from the Farmers Adverse Events Trust, Veterinary Association, and Boehringer Ingelheim. These funds will provide much-needed specialist veterinary support to drought-affected farmers in the Hurunui District. Additionally, the government will allocate $30,000 to the Hurunui Mayoral Fund, ensuring targeted assistance reaches those farmers identified as most in need. This new support builds upon earlier measures implemented in March when extremely dry weather conditions were classified as a medium-scale adverse event across multiple regions. The Ministry for Primary Industries' On Farm Support service continues to work closely with farmers and growers to identify areas where additional help may be required. Minister Patterson encouraged farmers across the district who need support to reach out to their local Rural Support Trust. New Zealand's fruit and vege growers welcome RSE amendment Horticulture New Zealand (HortNZ) has thrown its weight behind the government's recent changes to the Recognised Seasonal Employer (RSE) scheme, hailing them as a major boost for the country's rural economy. The modifications aim to help the industry achieve its goal of doubling horticultural value at the farm gate by 2035. HortNZ has expressed strong approval for these updates, viewing them as a balanced approach that addresses long standing industry concerns. The changes are expected to ease pressure on growers who have grappled with rising costs since 2019 when the accommodation cost increase halt was implemented. The revised scheme enhances mobility for RSE workers, allowing them to move more freely between regions and employers, and to return home more easily during emergencies. Additionally, workers may now undertake training beyond their immediate roles, a change long requested by Pacific nations participating in the program. While embracing the RSE scheme modifications, the horticulture industry maintains its commitment to prioritising New Zealand workers. However, industry leaders acknowledge the need for both local and overseas workers, especially during peak harvest seasons, to reach the sector's full potential. The wage adjustment, which now applies the 10% above minimum wage requirement only to more experienced RSE workers, addresses concerns about pay equity between local and migrant labourers.  This change aims to level the playing field and ensure fair compensation across the industry. Lincoln University expert highlights need for unified food strategy Urgent calls for a national food strategy are being made to address the many challenges facing New Zealand's agricultural sector. Lincoln University Professor Alan Renwick describes the current situation as a "food system in disarray," and points to issues of waste, declining productivity, and environmental costs. Professor Renwick says that up to one-third of food produced is not consumed, while the sector grapples with high input costs and declining productivity growth rates since 2000. Environmental hidden costs are estimated at 83 cents for every dollar of output in the food system, not accounting for biodiversity loss. Recent food inflation has exacerbated challenges for food-insecure families, with New Zealand experiencing higher price spikes than other countries. Renwick questions whether this is due to lack of supermarket competition or the country's export-focused primary production. To form a national food strategy, Renwick suggests starting with building a more resilient system. This includes diversifying away from specialisation, which has made New Zealand vulnerable to extreme weather events. Addressing climate change is also crucial for both resilience and emissions reduction. Renwick is also calling for government leadership in developing the strategy, with involvement from all stakeholders. He emphasises the need for a coordinated approach that considers all aspects of the food system - from farm level to environmental, trade, health, and nutrition concerns. Renwick also stresses the importance of moving away from traditional policymaking that focuses on individual aspects of the food system. Instead, he advocates for a framework that understands the interrelations between different facets, ensuring that improvements in one area don't negatively impact another. Green shoots appear as honey industry navigates challenges New Zealand's honey industry is weathering a challenging period marked by rising input costs and falling demand, but industry leaders are cautiously optimistic about emerging positive trends. Apiculture New Zealand, the sector's main industry group, reports that while difficulties persist, there are signs of recovery in some key markets. The industry's struggles were highlighted earlier this week, when major honey company Comvita announced management changes and potential job cuts due to declining sales in China.  Beekeepers are grappling with increased operational expenses, including higher fuel costs, treatment expenses, and regulatory compliance fees. Simultaneously, slower growth in key markets has stunted sales, as consumers worldwide feel the pinch of rising living costs. Export figures illustrate the industry's recent difficulties. Honey exports, which reached around $550 million during the Covid-19 period, have now declined to approximately $410 million. This downturn has affected not only the Chinese market but also sales in the United States, European Union, and United Kingdom. The sector has seen significant consolidation, with the number of large-scale beekeeping operations falling by 34% since 2022. Overall hive numbers have also decreased dramatically, from about one million five years ago to roughly 526,000 today. Adding to the industry's challenges is a substantial honey inventory backlog from previous bumper seasons. Estimates suggest between 30,000 and 50,000 tonnes of honey are currently stored in facilities around New Zealand. Despite these hurdles, there are encouraging signs. The U.S. market has shown notable improvement, with exports of monofloral honey rising 34% for the July to March period. Additionally, recent free-trade agreements with the EU and UK have removed tariffs for honey exporters, potentially opening new opportunities. As the new honey production season approaches in September, industry watchers anticipate lower output due to reduced hive numbers. However, reports indicate that existing hives have weathered the winter well, providing a foundation for cautious optimism. See omnystudio.com/listener for privacy information.