Rabobank NZ believes the Government’s proposed freshwater reforms will have significant implications for New Zealand’s food and agribusiness sectors, with a likely impact on production costs, operational complexity and future land-use development opportunities.
In its submission this week to the Ministry for the Environment, New Zealand’s only specialist food and agribusiness bank says the proposals as they stand are unnecessarily harsh and would have a detrimental impact on the rural sector, which is already facing pressures from regulatory change.
“We support the Government’s goal of improving the quality of New Zealand’s freshwater and reducing pollution entering waterways from cities and farms,” Rabobank New Zealand chief executive Todd Charteris says.
“We also support the relevant Ministers’ stated goals of ensuring the pace of change is manageable and that appropriate transitional support is in place. However, for the reasons outlined in our submission, we are not confident the proposed freshwater reforms, in their current form, will achieve those stated goals in a fair and balanced way.”
Rabobank says New Zealand food and agribusinesses have proven themselves to be resilient, innovative and adaptable.
“They are among the most successful and efficient food producers in the world, they are fast adaptors of new technology, they operate without subsidies and are a long distance from their main markets,” Rabobank says in its submission.
“At the same time, our farmers and growers have made significant strides forward in improving the management of freshwater on their properties – and this is often played down or overlooked in some quarters.”
In its submission, Rabobank says the proposals most relevant to farmers and growers include the introduction of more stringent nutrient bottom line requirements, new national practice standards and interim controls on land use intensification.
“Our assessment, based on direct feedback from our clients and wider industry conversations, is that the overall impact of the proposed freshwater reforms on the New Zealand farming community will be significant.
“These impacts will vary considerably from farm to farm, depending on location and farming system. For some, meeting these new requirements will represent a major challenge and come at a considerable cost.”
Rabobank describes the proposals as both complex and demanding, with the consultation timeframe being extremely tight during a busy time in the farming calendar.
“In addition, these proposals must be seen alongside the cumulative impact of other regulatory proposals currently affecting the food and agribusiness sector.”
Overall, these series of reforms represent a substantial challenge for farmers and growers.
“The proposals also appear to underplay the significant progress many farmers and growers have already made in improving freshwater management on their properties and in stepping up their environmental sustainability practices,” Rabobank says.
“From Rabobank’s perspective, we remain committed to supporting our food and agribusiness clients, along with their communities, through these and other challenges. In doing so, we recognise the importance of this sector to New Zealand’s wider economic success and future prosperity.”
Rabobank says a thriving food and agribusiness sector is vital for both New Zealand’s national economic progress and the continued wellbeing of the country’s rural communities. The reputation of New Zealand farmers and food producers as among the most successful, competitive and efficient in the world should be both welcomed and celebrated, it says.
“Therefore, we encourage the Government to ensure implementation of the proposed freshwater reforms does not lead to a substantial land use shift away from farming and horticulture, and towards non-food producing forms of land use such as forestry,” the bank says.
“Specifically, given that New Zealand is a large net exporter of food and agricultural products, Rabobank urges policy makers to recognise and protect the role New Zealand plays in contributing to global food security and sustainability. It would make no sense, for example, for a supply gap created by a reduction in New Zealand food production to be filled by products from countries with less environmental integrity.”
In its submission, Rabobank identifies some key issues that should be considered to meet the Government‘s objectives of setting a manageable pace of change and achieving enduring environmental improvements.
- Uncertainty and low rural confidence: Despite healthy commodity prices, a competitive exchange rate and generally encouraging growing conditions, rural sector confidence is at a low level. This is due to a number of converging factors, but particularly uncertainty and anxiety generated by several material regulatory and policy initiatives either underway or planned.
- Transitional support and provisions: While the freshwater proposals include a commitment to work with the primary sector through the transition towards more sustainable land and water use, farmers would welcome more clarity about exactly what that would look like. Rabobank considers high quality farm environment plans to be valuable tools that can help improve both the environmental and economic performance of farming businesses. Given the significant implications for many farmers and growers, and the on-farm changes required, we recommend the Government explore funding (or contributing to) individual farm environment plans out to 2025.
- Busy pipeline of regulatory change: The cumulative impact of the proposed freshwater reforms on food and agri producers should be considered alongside other proposals affecting the sector, including the Climate Change Response (Zero Carbon) Amendment Bill, the Government’s proposal to put a price on primary sector emissions from 2025, whether through the Emissions Trading Scheme or a new
alternative mechanism which has yet to be agreed, the National Policy Statement for Indigenous Biodiversity, the Government’s One Billion Trees Programme and the review of the Dairy Industry Restructuring Act.“
The cumulative impact of these proposals, in association with the freshwater reforms, will significantly influence New Zealand’s future land use and farming systems and contribute further to the rural sector uncertainty we have highlighted,” Rabobank says.