Agriculture + Outwards Looking

It's easy to become inward looking when you live a long way from other countries. Our population density is low, we have low profitability, the country depends on our exports, we work long hours and our children have been to more countries than we have. We are involved in NZ agriculture. Let's see if we can learn to be outward looking.


Agricultural jobs are the most dangerous in the world. Out of 335,000 annual workplace fatalities, 50 per cent occur in agriculture. Tractors cause 125 deaths per year in the USA. Tractor safety belts look like something we are going to read more about. In Sweden, livestock accidents are a major killer. In Kenya, it is toxic corn fungus.


The population of USA spends on average 10 per cent of their disposable income on food, the lowest of any country. For every $1 spent on food US farmers get less than 12 cents of it. This is similar to NZ.


California is the largest US state for agricultural output (about 12 per cent of the US total). Nearly 78,000 farms earn US $42.6 billion in revenue. The key issue is water – water storage, water application, water distribution, water costs, water usage.  Enormous progress in water management has been made in the last 30 years but the core problem is still there. There is not enough of it.


The average farm size in India is five acres. India is the second-biggest cotton producer in the world but only about 1 per cent of the population pay income tax. However, India is looking at a GST type tax.


The world’s fresh water is used 70 per cent for irrigation, 22 per cent for industry and 8 per cent for domestic use. Much of the irrigation water is involved with longstanding water licenses / consents / contracts initiated 30 – 40 years ago. Around 20 per cent of the world’s cropland is irrigated (277 million hectares).


California is the major dairy state in the USA and has 1.8 million dairy cows.  These are kept  indoors with an average per head production of 800 – 850 kg/ms.  But why don’t we hear about dairy milk price issues in California?  Because since 1935, the milk price has been regulated by the Californian Dairy Farmers’ Association. The agency monitors issues  from the producer, processor, and consumer and establishes the minimum price that must be paid by the processors to the producers. The agency regulates four classes and does not calculate a maximum price, only a minimum.  This system is being looked at by other countries. It only applies to California, not in the other US States.  There are 1,450 dairy farm families with an average of 1,230 cows, and 44 per cent of the Californian milk goes into cheese.


NZ sheep numbers are now down to 28.3 million – a drop of 43 million or 60 per cent since the peak of 71 million in 1980.  Further drops will cause 'works’ closures. Only Australia and NZ are big producers of lamb and within five years we may see both countries unable to supply the world market.  The average cost of closing a freezing works is $25 million.


Worldwide agriculture is still taking 70 per cent of the world’s fresh water at a cost well below the market value of the water. An increase in cost to this would cause instability in many countries.


Pita Alexander is an accountancy and agribusiness director at Alexanders

23 August 2016