Friday, December 8, 2023

Using military training to strategise around farming’s risks

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Spending time in high-pressure military environments gave Hawke’s Bay farmer and new Farmers Weekly columnist Ben Anderson a unique perspective on farming in NZ.
Hawke’s Bay deer velvet farmer Ben Anderson receives around 3% of the end value of the deer velvet he grows, which he says doesn’t add up given the amount of capital he’s invested and the risk he’s taken on.
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More than a decade spent working throughout the Middle East in high-pressure military environments left Ben Anderson with a keen ability to accurately assess risk.

Once he returned to New Zealand and used his capital to buy his Hawke’s Bay “deer, cows and trees” farm, which he farms with his family, it was the huge imbalance of risk and reward in the sector that struck him.

“I grew up on a sheep and beef farm in the King Country, in a pretty remote area. I grew up in that environment and always enjoyed it, but there wasn’t really a pathway for me into farming that way, and I wasn’t really interested at that point anyway ’cause I wanted to go out and do stuff,” Anderson says. 

“So I went and joined the army, and did that for about 10 years, and did all those sorts of things. When I left the army, I got into the private security game, running around the Middle East, and then went on to do a bit more crisis and emergency, and risk management into oil and gas. 

“You’re assessing risk, and managing risk the whole time. But the thing is with that, though, is that you only assess risk when there is a degree of reward or return commensurate with the level of risk you are accepting. 

“So what really struck me when we got back into farming was that the returns in farming were not commensurate with the level of risk that we accept.” 

This prompted Anderson to try to figure out where the sector was going wrong, and he ultimately completed a Nuffield Scholarship on the subject. 

“What really drives everything that I am about right now, is ‘How can we change this?’” he says. “How can we prevent ourselves from just accepting all the risk that someone else pushes onto us? “So what I ended up doing was I looked at environmental and economic sustainability. It was basically about how we can monetise sustainability.” 

His Nuffield Scholarship research showed him how deep and complex the issue is – and that sustainability isn’t the be-all and end-all. 

“What I got from my report is that you can’t really just monetise sustainability. You can get first-mover, short-term advantage from environmental accreditations and all that sort of thing, but … quickly that will become a societal expectation, so you will lose your potential margin.  

“What it ultimately came down to is that we need to dramatically change the way we take NZ’s product to market if we are to shift away from environmental degradation. 

“Because essentially there is a direct link between countries that are commodity dependent, and the environmental degradation that occurs in those countries.”

With this in mind, Anderson found everything comes down to the question of how the sector can create more market power, and move away from being a commodity-dependent industry. 

He gives the example of deer velvet.

“With our deer velvet, we get around about 3% of the end value of the product. 

“Sometimes that will go up to 10%, depending on how it is sold, but in the Korean market it’s about 3%. 

“Now I fully accept that there’s shipping and there’s marketing and packaging and that sort of thing, but don’t bloody tell me that’s 97% of the end value.”

The reason farmers get such a relatively small return is that “we exercise no market power. We sell to roadside traders, we don’t do any product development at our end and we’re completely dislocated from our customer. 

“And the reason that happens is because we just sell a raw undifferentiated product that can be easily substituted by competitors.” 

The complexity of an economy, Anderson says, often has a direct impact on how wealthy that economy and its farmers are. 

At present, the majority of NZ’s products are exported to become complex through overseas manufacturing, with producers getting little reward for that.

“So if your stuff is just non-complex, then you’re not going to get much money for it, but if you add a bit of complexity to it or differentiation, then you’re going to add more value to it and you’re going to exercise more market power,” he says. 

Looking ahead, Anderson says for these issues to be addressed, industry groups and leaders need to focus their energy beyond the farm gate rather than behind it. 

And for that to happen, he says, the industry needs to come together as one, rather than operating in silos.

This is a driving factor in his getting behind the Eating the Elephant initiative with three other Nuffield Scholarship alumni, Phillip Weir, Daniel Eb and David Eade, who share the Eating the Elephant column in Farmers Weekly.

The co-columnists are motivated by a determination to see real change, though they may approach it differently.

 “We’d all been having these different thoughts, and I’d been having these thoughts from a farmer’s position, about my dissatisfaction about how we’re taking stuff to market, particularly within the deer industry, with velvet in particular,” Anderson says. 

“Dan Eb had his own drivers as well as the others, so we decided that maybe the best and most efficient way would be to join forces and that would be more sustainable. 

“We’re four different people with four different perspectives. All four of us think we’d like to see some real change, though we’re not necessarily all agreed on what that change might look like.”

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