ADVOCATE COLUMN 2nd WEEK JULY 2015
Our region’s economy has always been based on agriculture. Provinces and provincial towns by their very nature were established to support and prosper from the primary sector. There are about 965 dairy farms in Northland, about 330,000 dairy cows and every year the industry earns the region about $790 million. The impact of even minor changes in the performance of this sector cannot be ignored. When you think that the working expense for the farmer is about $1300 per cow you get some sense of the money these business people spend in the wider Northland business community.
For these reasons alone the recent downturn in global dairy prices should be of concern to everyone, particularly given that many commentators are predicting that due to changing conditions resulting from increased production in the United States, our main market China becoming less dependent on imports and less demand from the European market, mean this downturn may be prolonged. However given the volatility of the global commodity market and foreign exchange I guess anything could happen.
Which brings me to the thought that while we cannot ignore the economy we have at present and what drives it, and that most of our economic centres have grown out of supporting the rural sector, it would be prudent to understand the vulnerability this entails and ask what we can do to lessen the risk in the future? Regardless of advances in technology, increased inputs into systems and realising the potential of currently unproductive land, at some stage we will reach the limit of how much milk we can grow before the laws of diminishing returns kick in.
For this reason as a region we need to aspire to create an environment that supports innovation, research and development and that is underpinned by a strong, well performing education system. This is not about ignoring the fact that we are really good at growing things but rather looking at how we add value to the things we grow, what is our real competitive advantage and how can we use this to offset global vulnerability to commodity prices by creating a more diverse economy. The farming sector has often lead the way in innovation and technology, we need to recognise their contribution and the role they play in Northland’s business community and ensure they have access to the right support so they can build their capability to meet future demands.