Thursday, December 7, 2023

LAND CHAMPION: Well placed to meet demand

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At the end of the year Mike Petersen is stepping down as New Zealand’s special agricultural trade envoy. He spoke to Colin Williscroft about his time in the job and what the future might hold for farmers and growers.
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THERE’S no doubt New Zealand farmers are among the most efficient food producers in the world but reitiring special agricultural trade envoy Mike Petersen says there’s more work to be done to keep up with demands from changing world markets.

He has seen plenty of changes on NZ’s agricultural trade landscape since he was appointed six and a half years ago and before that the more than 10 years he spent as Beef + Lamb chairman.

As special envoy he represents the agricultural sector rataher than the government despite being appointed by the ministers of agriculture and trade after his name was put forward by the industry.

He works on behalf of five key export sectors, the sheep, beef, dairy, horticulture and wine industries, with a focus on trade and market access along with agricultural policy.

When Petersen began as envoy many countries were trying to sign bilateral trade agreements to remove or reduce market barriers.

And as a nation that exports 90% of what it produces, it’s critical NZ has wide-ranging market access.

A few years earlier NZ had signed a free-trade agreement with China and two-way trade between the two countries has increased from $7 billion in 2008 to $30b today.

Trade with China will continue to be important for NZ’s primary producers and Petersen believes it is possible for NZ to continue to tread a fine line between maintaining a healthy trading relationship with China and a strong security relationship with other countries.

“People say we have to choose but I don’t think that’s the case.”

While China has become a very important market for NZ primary produce it’s important not to have too many eggs in one basket.

“If you have more than 30% of your product going into one particular market you need to diversify.”

NZ’s agricultural exporters do not get enough credit for what they do, Petersen says.

That includes dealing with increasing consumer requirements, keeping on top of competition, developing new products and new markets and increasing the efficiency of processing and supply chains.

“When export prices are good the reason given is the market but when they are not it’s the sector is not doing enough.”

Petersen was in Europe recently when farmers were protesting about low beef prices but at the same time NZ beef farmers have been enjoying record high prices.

Farming in NZ has reached an environmental ceiling so the focus must be on increasing the value of what’s produced here.

The industry is already on the right track. 

In 2012 primary industry products were worth $32b and that’s now $46b. That’s a 44% increase in seven years, largely thanks to increases in value rather than volume.

One of the next big challenges for NZ agricultural exporters is developing verifiable attributes to encapsulate the impact farming has on fresh water and greenhouse gas emissions along with best practice nutrient management.

It’s something the sector has to get right because there’s a growing number of high-paying customers internationally who will demand that information.

Despite some pessimism among farmers about how that might be achieved Petersen is confident it can be done.

“There’s a lot of gnashing of teeth, people saying ‘this is impossible’ but I have huge faith in the innovative ability of farmers.”

He is also excited about the abilities of emerging farming leaders and is confident they have the talent, skill and and attitude to make tough calls for the good of the industry.

He gives the example of the primary sector climate change commitment signed by 11 industry groups. 

On his last trip to Europe Petersen spoke to farming groups there who were amazed at the ability of organisations across the NZ agricultural sector to work together, find common ground then come up with a unified climate change commitment that was accepted by the government.

Though there are some clouds on the international trade horizon NZ primary exporters are in a good position to deal with any problems, he says.

Not only are NZ farmers and growers renowned for the quality and integrity of their produce, that’s backed by trusted food safety systems.

“People love doing business with us.”

That does not mean farmers can rest on their laurels.

Though NZ likes to promote itself as one of the best sustainable food producers in the world other countries, such as Norway, which earlier this year launched a sustainable food action plan, and Ireland are promoting themselves along similar lines.

Future demand for food will be closely tied to the way it is produced and the values of the people producing it and if NZ food producers cannot prove they are ethical environmental stewards then other countries will step up.

He does not think the recent decision by Waitrose in Britain to move away from selling NZ lamb and stock only British produce is anything to worry about for NZ farmers.

“It won’t be noticed here.”

There’s such a strong demand for NZ lamb around the world that there will be other markets for it.

The disappointing aspect of the Waitrose decision is it will mean the end of a longstanding partnership between the retailer and its NZ supplier that allowed the retailer to sell the best in-season lamb year-round, capitalising on complementary counter-seasonal supply.

Instead, Waitrose will not be able to sell fresh lamb year-round because British producers won’t be able to supply it.

“The sad part about that is that it will lead to a decline in lamb consumption. People won’t be able to buy fresh year-round so will choose other proteins.”

Incoming trade envoy Mel Poulton accompanied Petersen on his trip to Europe, his last as special envoy.

It provided a chance for her to see what the role entails and meet some of the people she is likely to form relationships with.

Poulton’s focus will not be the same as his because every person who has held the envoy role has shaped it according to the expertise they bring, he said.

For Petersen that was NZ’s trade agenda but Poulton, with her strong connections to catchment groups in Tararua, is likely to work more on farmer-to-farmer engagement, with an emphasis on the environment and climate change.

The special envoy role has traditionally involved about three or four international trips a year but Petersen spent more time overseas than that, partly because he was closely involved in the Comprehensive and Progressive Trans Pacific Partnership, attending all the ministerial negotiation rounds.

That meant he was travelled eight to 10 times a year though over the full term of his appointment he averaged about six to eight trips a year, each lasting about 10 days.

He estimates he spent about 140 days a year doing work directly related to the role, with other tasks including speaking engagements and keeping up to date with trade developments.

There was a lot of reading of subjects involving agriculture policies so he was up to speed not only with what’s going on in the farming sector worldwide but also aspects of international trade and their implications for NZ agriculture, including Brexit, the European Union’s Common Agricultural Policy, the EU-Mercosur trade deal and trade between Europe and the United States as well as trade in Asia, including the Japan/Korea trade dispute, trade between Japan and China and the recent Japan/US trade deal.

He’s been fortunate his 82-year-old father Snow has been able to keep the family farm near Waipukurau running smoothly while he’s been away, he says.

Petersen did not want to employ a farm manager, instead preferring to maintain a hands-on role as much as possible.

With that in mind the farm has been set up to keep its operation relatively simple and while Petersen is away his father shifts stock while also keeping an eye on water supply and electric fences.

He also has a son and two daughters who have all, at various times, stepped up to take on a variety of tasks around the farm while the wider family has also pitched in when needed.

It’s been a rewarding time as special envoy but Petersen says there are a couple of areas where progress hasn’t gone quite as he would have liked.

The first of those involves the World Trade Organisation.

Given the importance of trade to NZ it’s important for this country the WTO functions well, he says.

Unfortunately, the US has undermined its authority and effectiveness rather than strengthened it.

He would also have preferred to have seen negotiations for a free-trade deal with the EU through to the end.

It was initially thought those negotiations might have been completed by the end of this year but Petersen suspects they could take another 12 months.

On the upside he’s seen the increasing importance of the China deal to NZ agriculture, a large increase in NZ/ASEAN trade, the signing of the Korea deal and the CPTPP.

“That’s a massive part of NZ’s trade profile.”

He’s confident NZ’s agricultural exporters have a bright future with talented and tech-savvy young people looking at challenges such as climate change with a different lens to the older generation.

“We’re also incredibly well served with the people we have working in trade and agriculture on and offshore.

“They never get any headlines but they’re there working away, trying to make things better for NZ, often making significant sacrifices.

“They go under the radar and they should be celebrated more.

“I’ve loved interacting with them.

“People need to think about some of the gains that have been made and the hardworking people on the ground who have helped them happen.”

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