Odd little corners of the Budget and of my mind

Stuffed away in the Byzantine depths of the Budget is $10 million for the National Animal Identification and Tracing (NAIT) scheme, basically RFIDing all our livestock.

This is a good thing, so consumers can have trust in NZ food, and so we can track and solve disease outbreaks faster. It means better and cheaper information back to farmers about how their stock are doing. It’s also going to get more important, coz we’re not just producing food here, plenty of nations can do that. We’re trying to produce in particular ways, whether that’s organic, grass-fed, low pesticide or whatever rich people want. This helps us show that the product on their plate meets those standards.

So what is Federated Farmers’ response? Grumpy and negative, just like always. This doesn’t help anyone, let along farmers. So why do Fed Farmers keep shooting themselves in the foot like this?

In other news, I have too much hair, and 86% of NZ’s population now counts as urban. Admittedly, ‘urban’ includes towns with more than 1000 people, so Shannon counts as urban, but even ignoring that, it’s around 75%.

Also, only 2% of people live in 50% of the land. Plenty of room for more suburbia then?

I’d post the plucking song, but I’m at work. It’s on youtube, and thanks to for introducing me, though I’m still planning on waking him up at god-awful times of the day, in revenge.

26 thoughts on “Odd little corners of the Budget and of my mind

  1. Why does your link go to my friends page?

    Uh.. anyway, I can guess what the response is.

    “Too expensive.”

    “Too much hassle”

    “Stoopid administrator tie-wearing, Khandallah-tractor-driving politicians who know nothing about the realities of farming.”

    “Show us the benefit to us in doing this, and I mean real money now benefit not wankspeak about marketing that only lines the pockets of the middlemen.”

    “What’s the government doing about all those dopeheads anyway?”

    “Have you seen Coro lately?”

    “About time the bloody government did something about the exchange rate instead of hitting us again and again and again with compliance costs and trying to tell us that one day it’ll be good for us.”

    “Fukkit, let’s go to the pub.”

    1. Also, Marks and Spencer are going to be selling NZ lamb with the name, website and a photo of the farmer on the pack. I reckon there’ll be a cult following for tatjna’s produce, when she gets her sheeplets together.

      Federated Farmers are the union of the set of farmers and union leaders – are you surprised they’re grumpy? Why anyone listens to them I have no idea – Helen could just ask her mum & dad what farmers think instead.

      1. That kind of fine-grained information about lambs could backfire:
        “Fluffy was born on a sunny morning in Whakamaru, and lived a carefree life of grazing and gambolling, in a field with all his friends. He attended Kiwiburn in 2009, smoked some awesome grass from a dreadlocked hippy named Sunchild, and resolved to break free of his chains and lead a glorious revolution, freeing the flock from tyrany and establishing the ‘Free Republic of the Third Paddock on the Left, By the Big Tree’. He was slaughtered a week later, as an example to the others, and is now on your plate. Enjoy.”

    2. [Link fixed]

      At which point, the government looks at the 2007 World Bank survey, sees that NZ is the second-best nation in the world for ease of doing business, concludes that Fed Farmers will be grumpy and negative no matter what the government does, and then stops listening. And that’s an outcome that helps neither government or farmers.

      …sigh…

      And as for exchange rates, NZ imports more than it exports, so high exchange rates are good for everyone (and good for any farmer that wants to buy a new tractor, or diesel. But if they want to do without tractors or diesel, then I’ll be willing to be more sympathetic.) If farmers want everyone in NZ to pay $3+ per litre for petrol just so they can make a profit on sheep and beef, then they’re risking the goodwill of the rest of the nation. And there’s more of us than them, by a factor of quite a lot.

      1. I am less conversant with macroeconomics than you are. However, one thing I know is that the lower the NZ dollar is vs everyone else’s, the better the price that farmers get for their produce. Thus, if they are relying on their produce for their income, a high dollar = lower income = lower buying power and less money for them to spend on stuff like tractors and implants for their livestock/compliance costs in general.

        If compliance costs are increased by a government scheme that shows little likelihood of increasing their income in the right-now (which is apparently an issue if stud 2-tooths are going for $20 at sale, as someone mentioned to me happened in Otago recently), at a time when the dollar is creating lower returns for farmers, then the farmers will naturally be grumpy about it.

        Whether they are right or not, I don’t know based on my limited knowledge. But I understand the grump.

        1. All true, but we buy more from overseas than they buy from us, where “we” means the nation. So a stronger dollar means cheaper imports and more expensive exports, but we import more than we export, so our overall buying power goes up and, on average, we’re doing better than before. It’s a net win.

          Obviously, within that “on average” is some industries doing worse than before and those ones are complaining, but should we be doing economic damage to 90% of the nation to help 10%? Well, that depends on who you ask…

          1. I guess that would depend on how much of NZ’s export industry is based around the activities of that 10% huh?

            I don’t think (personally) that the exchange rate should be interfered with, but I totally understand that in the current economic situation, the farmers are very vulnerable, and for the government to impose compliance with (from their viewpoint) unnecessary and expensive new requirements on them while they are vulnerable is worthy of being grumpy about.

            Yes, the Feds are always jumping up and down, and they are not always right. But fuck, if folks in power are thinking the way your comment comes across, I’m not surprised the farmers feel they need a pack of noisy grumpy buggers shouting about their welfare, be it right or wrong.

          2. What’s a stud 2-tooth when it’s at home? Not the same as a stud finder, or a stud extractor, I’m guessing.

            You know this doesn’t apply to sheep? You can I’m sure enlighten us on how the cattle market is, but the Fonterra payout seems to be rising to new levels for dairy farmers. What sort of price are we talking about for a cattle beast against the quoted $4 for a tag?

          3. On the price of a cattle beast – I checked the current Taylor Preston beef schedule, and from what I can gather, the prices are almost exactly the same as they were when I was working in freezing works 12 years ago. No I am not accounting for inflation. If you took into accound inflation, they are going for quite a bit less.

            Farmers are making their money by running more stock, not by better prices.

            (yes, dairying is somewhat of an exception, but how long do you reckon that fancy payout will last? until fonterra decides it can’t afford to pay that much anymore, that’s how long. not a secure position for the producers really)

            A stud 2-tooth is a ewe that has just reached breeding age, from a recorded flock which has been selected for breed traits. Most high quality farms have a commercial flock and a stud flock, and the stud flock is the one in which they concentrate their attempts at improvement of the breed. Therefore, a stud 2-tooth is the creme de la creme of the sale sheep world, and under normal circumstances should be worth around $100.

            Whenever the exchange rate goes up, the sale price goes down. Unfortunately for farmers, whose return on capital is pretty small compared to most business, and who don’t have the option of leaving their stock sitting in a warehouse with no input through a low season, the fluctuations in price hit them hard.

            I wonder about the lack of application to sheep. The TB tagging system currently in place (which requires all beef and deer to be tagged if they are moved off-farm regardless of age, and takes a $5 levy for every beast killed, to pay for the possum eradication scheme and TB testing of livestock) identifies the movements of all cattle and deer from birth to death in NZ anyway. If this new system is on top of the TB tagging requirements, I’m not surprised the farmers are unhappy. They’re already doing it, why ask them to do more.

            And yes, while sheep aren’t involved in this, the 2-tooth price is a reasonable indication of how livestock is selling generally in the current economic climate.

          4. They’re doing cattle & deer first coz this is an upgrade to the current system, not a new system.

            Even for dairy farmers, farmers are making their money by owning land, not by producing anything. It’s from capital appreciation and has been for a very long time. Yes, this makes, cash flow tricky. Yes, sheep and beef farmers are in their fourth year of a world of hurt, unless their land is suitable for dairy conversions, in which case they’ve still got cash flow problems but their land prices are still going up. (see MAF’s Pastoral Monitoring Report 2007 for the details.)

            Given that this is the economic situation of the industry, what is to be done about it? Given that we are a nation that imports more than it exports, how do we find an overall positive-sum solution to helping that industry? Coz lowering the exchange rate hurts the nation overall more than it benefits farmers and that’s a negative-sum response to pleading by a special group. That’s what Fed Farmers are calling for and hence that’s why their credibility isn’t too high round these parts.

          5. Really? They actually are calling for messing with the exchange rate? And here was me putting that in to be facetious and to wind you up (and me thinking you were rising to the bait like a well-trained bureaucrat).

            Haha! I think messing with the exchange rate purely for the benefit of farmers would be a bit short sighted. However, when attempting to implement costly and seemingly unnecessary schemes that cost farmers money for no apparent gain, one ought to take into account the fact that they are hurting already before calling them a pack of whinging obstuctors for objecting to said scheme.

            And sadly, the tone of your comments does come across as “Actually, we bureaucrats really don’t give a shit about your livelihood while we’re considering our imports vs exports equation. If you don’t like the decisions we’re making for the benefit of everyone except you the good of the country, get into another business.”

            And, since I like my steak quite a lot, I’d thank you and your colleagues to consider being polite and selling the unnecessary and costly schemes to the farmers in a way that actually shows them some benefit instead of saying “It’ll be good for you long term because of this this and this empty reason” like they’ve heard many times before, just before the value of their land has plummeted and they’ve had to struggle to avoid foreclosure. They don’t believe this thing will do them any good. Why not let them decide for themselves, or at least have the respect to consider their opinion instead of bulldozing it as if they count for nothing.

  2. Damn those farmers, spurning the costly ‘gifts’ strewn upon them by the technocratic elite!

    Especially when the people running the scheme already admit that the current regime is adequate for food safety purposes (the stated aim).

    As for possible non-safety-related economic benefits, I tend to agree with the farmers that that decision would be better made by those who will share the costs and benefits – the farmers, processors and marketers.

    1. It might be adequate now, but food safety is an always-moving target. Given that it can take five years to roll out a system, what are the standards going to be in five years time?

      Yes, the benefits should go to the farmers and producers, so they have an incentive, overall, to do it right themselves. However, there’s two problems with that approach. Firstly, there’s incentives for all farmers to do this, but no incentive to be the first. There’s a first-mover problem, coz farmers have up-front costs only benefit when the majority of other farmers are doing it already. It’s the classic situation where market forces alone don’t get you to the preferred equilibrium outcome. Secondly, we’re talking about low probability, high-impact events, where the costs are variable, widely spread and hard to predict – we’re probably not going to get foot & mouth here, so the benefit of spending to prevent it is zero, until it happens, in which case every farmer will be hurt, so each farmer will be no worse off than their neighbour, so why should any one farmer contribute to solving the problem?

      Ok, that’s putting a bleak spin on it, but there’s good reasons why this is happening at a national level, not at a sector level.

      1. So what’s wrong with the current tracking system then? And if the government can cough up Xmillion for scientific research and Xmillion to develop the fancy scheme, where’s the Xmillion to be an incentive for farmers to adopt it? If it’s as wonderful as everyone except the farmers thinks it’ll be, then I’m sure the government will recoup their investment after that five-year rollout, in the wonderful future time that the government is trying to sell to the farmers.

        What I’m reading here is that govt wants this so that everyone will potentially benefit, but there’s a risk that it’ll just be an expensive insurance policy, and they want the risk to be at sector level not at national level. How do you expect anyone with a brain and a $1,000,000 mortgage, whose livestock just halved in value, to buy into that?

        1. I’m assuming that this is being put in place so that if there were some sort of food/disease/biosecurity issue in the future, we’d be in a better position to deal with it as a nation. For instance, by being able to track where animals have been, etc.

          Now one could argue that thats unnecessary. Which would be fine, except that when the problem does happen, the farmers are going to want some form of bail out. So it’s better to put the system in now to try and avoid problems.

          If farming is such a bad business to be in, why does the price of land keep going up?

          1. Partly, it’s for tracking disease outbreaks, coz the better tracking you have of a disease, the better you can jump on it. Compare foot & mouth in the UK between the 2001 and 2007 outbreaks:

            2001 – spotted after four days, 10 million sheep and cattle had to be culled, total cost over a billion NZD
            2007 – spotted within two days, 3 farms of cattle culled, total cost meh

            And as you mentioned, partly it’s for when Tescos wants to say, on every pack of meat, which farm it came from, complete with picture of smiling farmer and bucolic landscape. And they’re pushing towards that now.

          2. The same reason the price of everything keeps going up? I don’t know. Also, I’m not saying that farming sucks to be in, simply that it’s vulnerable to the vagaries of the exchange rate, the weather and many other factors, the profits are not huge (although in a good year farmers ‘do well’), and the farmers, currently, are not having an easy time of it. It’s a crap time to be expecting them to foot the bill an expensive insurance policy that the government just dreamed up.

            The main problem being that if they want to track the movements of stock from birth to death – well, they’re doing that already. So now it’s an expensive, unnecessary insurance policy.

          3. Asking around, the general consensus is that land prices are going up faster than inflation for three reasons:

            1) There’s an expectation of high future returns. Dairy prices (*cough* $7.30 *cough*) are hoped to remain high, and that pulls up the prices of convertable grazing land and even land that isn’t suitable for dairy but can support dairy by growing forage or cattle.

            2) There’s decreasing supply of land to a higher-value use, namely lifestyle blocks.

            3) Consolidation of farms, especially as farmers tend to buy neighbouring land. They know that land better than an average market buyer, so are more willing to pay over the odds for it.

            The relative effect of each factor is not something that people wanted to guess at, it’ll vary by region anyway.

        2. This year, big UK supermarkets have been coming over and asking what the carbon footprint of our products are? It’ll take five years to get that monitoring system in place and debugged. Did we start five years ago? Nope. Whoops, and that tries the patience of our big customers.

          So, there’s nothing wrong with the tracking current system, yet. But safety standards get stricter each year, and it takes five years to roll this out. So, do we wait until the current system isn’t good enough, then stop farming for five years? Yes, it’s an insurance policy.

          Feds are calling for less government spending (on everything except farming) to reduce inflation to reduce exchange rates. Coz apparently the current price rises are due to increased government spending (*cough* oil prices, world commodity prices, ffs!). Seriously, point that shotgun at your own feet and blast away, both barrels, Feds.

          And this is after six months when there’s been $700 million, not for science, but for agricultural science, $75 million for rural broadband, $10 no… $25 million for the tracking scheme and a free trade agreement getting rid of the 15% import tariff between NZ farmers and a billion Chinese consumers. It sounds just like they’re saying “but apart from all that, what have the Romans ever done for us?”.

          As says, the benefit of the tracking scheme goes to farmers, processors and marketers. So why shouldn’t they pay for their own insurance? Or do we want to get into a situation like the US beef farmers, where there’s currently riots in Korea coz the Koreans don’t think US beef is safe to eat? Instead of paying for their own insurance, the taxpayer is stumping up $25 million to sweeten the deal. And still they’re objecting.

          It’s the business of any industry body to get the best deal for its own industry. So they should, that’s their job. But there’s ways and means to do this constructively. And then there’s the Fed Farmers way. Given that there’s other bodies representing farmers, why should goverment still listen to Fed Farmers?

          (Coz that’s our job, that’s why. Fed Farmers have been part of the governance group for the tracing project all along, along with Dairy Insight, Meat & Wool, Meat Industry Association, and Dairy Companies Association NZ. So they are involved, despite their attitude.)

          1. The benefit of the scheme is as yet arguable, the government dreamed it up and expects the farmers to pay for it, you’re saying it benefits these three groups of people but I’m seeing the cost falling on (or being passed on) to only farmers, and the work involved definitely only farmers.

            I wonder, if this kind of thing were aimed at women only, what your argument would be? Kind of an aside, and maybe pointless, but try to imagine a situation where the national export market could be ‘improved’ by some change to women’s health processes. Would the women then be expected to do the work and foot the bill? Would you expect the feminists to keep quiet about it, and just listen to the rhetoric of those that ‘know best?’ Would you call them a pack of whingers for not being happy about it, and would you get away with it if you did? Especially if you backed it with “Look at all these other things we’ve done for you, STFU.”

            Hmm.

            Not convinced.. I’m still seeing an expensive insurance policy, for which the payment is coming from one group of people to cover a bunch of other people.

            I will be interested to see what comes back out of Australia as far as the benefits to farmers of the scheme there. If it’s so great, why have the marketers (supposedly at the forefront of trading trends) not insisted on it before now to give them the market edge?

          2. Meat and Wool:

            “While this system might not deliver premiums to farmers in the short-term, it is an important risk management tool to protect ourselves in the future if our food safety is questioned.”

            PPCS like it, despite having to upgrae their readers at meat works:
            “”Large international customers, within the European market in particular were becoming impatient with the livestock industry, which they feel is dragging its heels in comparison to other food industries in terms of identification and traceability.”
            and they have a few interesting things to say about Fed Farmers:
            “It is appalling that Federated Farmers are not grasping that the supply chain must change, and that’s about inovation and leadership in our aspiration to protect and improve returns.”

            And here’s some farmers who like it:
            Farmers Weekly

            I’m not complaining about Fed Farms for moaning, I’m complaining coz they’re moaning with very little reason, about something that everyone else in the industry thinks is in the industry’s interest.

          3. So let’s sum up the discussion so far:

            Government wants to implement an ID scheme to ‘improve’ the existing scheme. This scheme will enable tracking of livestock from birth to death, and the storage of information about individual animals (at least until they are killed, at which point they go into mixed boxes as a ‘pile o meat’ – a day’s kill may be able to be identified, but not individual animals).

            The benefits are twofold: 1) the ability to potentially ensure that if the current biosecurity measures NZ has fail, and a disease like foot and mouth enters the country, it can be stopped more quickly. 2) the ability to potentially retain markets if they start demanding pictures of farmers on packets of meat, and to potentially open new markets if such demands are made by those new markets.

            The costs are twofold: 1) immediate cost to the farmer. Let’s say there are 15 million cows in NZ currently (and ignore the deer for ease of stuff). That means the (10? 25?) million dollars the government is putting into the scheme is going to cover less than half the cost of the tags alone – at best. I’m assuming the rest of the cost will be covered by the farmers. 2) the work involved in tagging new stock/replacing existing tags, and the administration of such. Which will also be covered by the farmer.

            So, the farmers have an immediate cost of minimum $2 per head of livestock they own, plus administration cost, plus work involved. If you have 500 cows, retagging them all will be a few days’ work at a guess. The immediate benefit to farmers is nothing. The long-term benefits all contain ‘if’ statements, and ‘potential’ statements, and are therefore not solid and guaranteed benefits.

            “Here, spend this money and time now, and in the future you might get to keep your markets and if we stuff up and let disease into the country, you might get it sorted out faster.”

            Federated Farmers is an organisation that’s supposed to question the validity of government schemes on behalf of farmers – that’s their job. And they are doing that.

            I am not saying that the scheme is wrong. I am not saying that the Feds are right. I am saying, and will continue to say, that I can understand why they aren’t just going “YAY THE GOVERNMENT!” and can sympathise with the farmers who’ll be shelling out for no immediate income benefit, and only potential future income benefit.

            And the reason I’m arguing this at all, is because the original statement of ‘grumpy and negative’ smacked of exactly what said in his comment – “Damn those farmers for not being overjoyed at the costly gifts bestowed on them by the technocratic elite.”

            If this scheme is so wonderful, the way to sell it to farmers is not to tell them they are a pack of grumpy negative bastards who should take their medicine. Farmers do not want to listen to guys in suits telling them how it should be, especially if it’s backed with a tone of superciliousness. Tell them what they stand to gain from it, and make it real, not ‘maybe, and not ‘if’. If that can’t be done, don’t attack them for questioning it.

          4. This is not a scheme thought up by a bunch of bureaucrats that we’re now trying to sell to farmers. This is a scheme that’s been developed with industry coz most of industry sees the need for it. It upgrades a scheme that already exists, already has costs and already doesn’t work as well as some farmers want it to. Feds have been involved in the development from the start.

            There’s “questioning the validity of government schemes”, then there’s throwing all of your toys out of the crib, in a way that other industry representatives are publicly calling “appalling”.

            There’s no immediate income benefit and only potential future benefit to insurance on farm buildings and vehicles. Most farmers don’t stand to gain from insurance, but if the Feds came out and said that farmers should stop paying for that insurance then they’d be rightly laughed at. This scheme is insurance on livestock, against problems that might devastate the entire industry. And the tax payer is paying half the costs for them. Bitching about that isn’t going to get them credibility or sympathy.

            Frankly, if a few dollars extra per head is going to break the industry, then the industry is already in a deep hole, and beef and lamb are. So from a government point of view, what’s to be done? Well, who in the industry are we going to want to talk to find out what they would like us to do for them?

          5. The thing is, I didn’t see bitching in that article. I saw concerns, and these concerns are ones that I share, and from the sounds of things, so do several other organisations – those being that the payoff isn’t guaranteed, and the cost is something that farmers don’t currently need.

            Yes, the industry is in a hole – at which point I go back to the bit where I said I enjoy a good steak and would like to continue to do so. Will I get to, if compliance costs keep increasing in order to pre-empt the whims of the export market, while the return to farmers keeps decreasing?

            The difference between this scheme and your insurance analogy is that building and vehicle insurance comes with an element of individual choice – the farmer gets to not only choose his level of insurance, but which company he goes with. And if his building does burn down, he gets compensated. Where is the compensation clause in this livestock insurance if MAF fucks up and foot and mouth gets here? So only half the number of farmers get bankrupted? I’m sure they’ll be rapt to know they are all paying for such good odds on their ‘insurance.’

            It’s interesting, the insurance parallel. Insurance is one of the great mainstays of neoliberal ideology – everyone should have it, and if they don’t, it’s their own silly fault because of choices they made. But when the government steps in and says that everyone has to have it, that belies the principle of freedom of choice.. so, is this Third Way business simply the ‘you’re on your own’ approach of neoliberalism, combined with the ‘we know what’s best for you’ approach of social democracy? And if so, tell me again why the farmers should be so happy about it?

            I know it’s a difficult balance to strike – do we help out the farmers or do we accept that the world’s moved on and start eating tofu? I know what your answer would be.

          6. The insurance parallel only goes so far, it’s actually more like another collective action problem – vaccination. There’s benefits to farmers (or parents of sprogs) for every other farmer to spend money on vaccinations. In an ideal nation, every other farmer has vaccinated their livestock against whatever, so you don’t need to pay that cost yourself.

            So tell me, if every individual farmer has an incentive to not pay and hope every other farmer does, then how do we make this happen without it being enforced, one way or another?

            As for food & mouth, it’s not a case of whether MAF fucks up. Did MAF “fuck up” by not spotting farmers illegally smuggling rabbit haemorrhagic disease into the country? The only way to be certain of keeping diseases out is to close the borders and that’s not going to happen. There is a risk for agriculture and there will continue to be a risk. That needs to be balanced against the risk to tourism and other trade from tighter border controls. This scheme is about being able to respond rapidly and stop a disease once it’s got here.

            The larger point is how do organisations with different timescales work together? Yes, Feds are concerned with costs right now, government is concerned with supporting the industry for the long-term, as a part of the overall economy. The deeper farmers are in a hole, the harder it is for them to look at the horizon. But the future gets here just as fast, whether you’re looking at it or not.

          7. If you are looking to MAF to keep the biosecurity of the country safe, then yeah they fucked up by not spotting a disease being smuggled in. Of course the risk is there – the question is how many safety nets are realistic?

            On the ‘how do we get buy-in’ question, I’ll hark back to the bit where immediate financial incentives to do so seem like a plan. You know, the bit where they are spending Xmillion on it? Xmillion could be increased to cover the cost of getting it set up and running, since everyone’s so adamant that the long term benefits will make it more than worthwhile. If those long term benefits come to fruition, the government will more than return its investment.

            You see, at the moment it looks like this: “Here’s this thing, it could be awesome long term, not only for us (in tax revenue) but for you too (in income). But there’s a risk it’ll be nothing but an expensive exercise in technowankery, and so we (who have money to spend) would prefer it if you (who’ve had a rough run these last few years) would kindly take that financial risk on our behalf. Then if it doesn’t work, we won’t be beleaguered by non-farmers going “WTF did you spend our money for nothing”. If it does work, we’ll be lauded for doing something to drag farming into the 21st Century and saving the backbone of the nation. See? Any way, we don’t lose. So please2b spending that money now kthxbye.”

            So yeah, my suggestion is to minimise cost and hassle to the farmer, while maximising the potential returns for them.

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