About

Fonterra is a global dairy nutrition company owned by 10,000 farmers and their families. Read about our company and about our farmers and markets.

explore this section

Investors

Are you an investor with Fonterra? Read about our current performance with our financial results, or find information on our dividend programme.

explore this section

Collaboration will deliver better outcome than one size fits all regulation

  • September 27, 2018
  • min read

Ian Proudfoot, KPMG’s International's Global Head of Agribusiness based in Auckland, New Zealand, discusses the challenges and opportunities for NZ’s ‘producers’.

Every New Zealander benefits from the food, fibre and timber products that farmers, growers and foresters produce and sell to the world.  New Zealand is the only developed country that secures most of its export earnings and, as a consequence, wealth from growing and selling biological products. Put another way, what we grow and sell to the world pays for the schools, roads and hospitals our community expects to have available to them.

Our conversations while researching the KPMG Agribusiness Agenda 2018 highlighted a real concern amongst farmers, growers, fishermen and foresters ('producers') about the relationship between the wider community and our primary industries.  The natural environment became a central issue in the 2017 election campaign on the impacts farming systems are having on the country's soil, biodiversity, waterways and oceans. Industry leaders now recognise the license to farm is not a right but a privilege granted by the wider community. That privilege can be constrained or withdrawn if the industry is not acting, in reality or perception, as an adequate custodian of our natural environment.

The simple way to restrict that license is for Government to implement one size fits all legislation. The wider community can see that the lawmakers have responded to their concerns and simple, understandable rules are good politics in a world dominated by unreliable news. However, the reality is that cookie cutter regulation damages good producers as well as poor ones, constrains investment and innovation and is, ultimately, unlikely to deliver the environmental improvements all New Zealanders want to see.

Recognition that the license to operate is no longer assured has focused the minds of industry leaders on how their organisations can proactively engage with the wider community on the long-term enhancement of the country's environmental and economic position.

Kickstart Breakfast awards

Collaboration faces challenges; mainstream discussion reduces complex issues to "dirty dairying" or "un-swimmable rivers" reinforcing existing perceptions in a world where the majority of people lack the time to seek and understand facts. The wealth the sector contributes to New Zealand's economy is not well understood and, as a consequence, the dividend delivered to society from utilising our environment, water and oceans to grow food, fibre and timber are not connected to environmental impacts.  Degradation has also become an "us and them" issue creating a chasm between producers and the remainder of the community that will take time to bridge.

While industry leaders recognised that there is much work to be done they were confident progress could be made as substantial common ground exists.  The aspirational goal of protecting the unique characteristics and productive capacity of our natural assets for generations to come is as appealing to producers as it is to any other New Zealander.  The challenges Auckland faced last summer with beaches being closed due to pollution highlighted that all New Zealanders have a role to play in addressing environment and water quality issues.

The industry’s first step must be to build a deeper understanding of the real expectations of the wider community than is currently held.  These are not the views of the vocal minority on Facebook or Twitter that have the ear of the media and whose views become the proxy of all New Zealanders. Developing a deep understanding requires the industry (producers, their staff, service providers and leaders - not market researchers) to get out of their comfort zone and head into homes, schools, shopping malls, offices and factories in large and small communities across the country and listen carefully. Continual engagement will in time reveal the true expectations of the community on a wide variety of issues if the right questions are asked and the answers are listened to.

While I would not like to pre-empt what the industry would learn from this, it is my expectation that mainstream aspirations for the country are unlikely to be too different from those held across the primary sector.  These points of similarity provide opportunities to build connections that create platforms that enable collaborative responses to the biggest issues facing the country. Connections can be built by investing in projects that inspire people across the whole community and deliver outcomes that benefit all, a good example being the Predator Free 2050 initiative.  Enabling events that connect communities can make a significant contribution; for instance, enabling the urban population to attend A&P, holding 'Farming in the City' events, New Zealand food celebrations and promotions or a national year of food producer, as Australia did when it celebrated the Year of the Farmer.

Too often in the past the industry has failed to deliver on commitments that have been made to the community.  On occasions, it has ignored (and in some cases condoned) behaviours that fall significantly below the standards a reasonable person would consider acceptable.  It is not surprising that this has damaged trust. Commitments made by the industry must be honoured and there needs to be significant consequences for those that choose not to adhere to standards that the industry agrees to.  Rebuilding confidence in the industry is critical to ensuring relationships are strong enough to handle both the successes and challenges that are ahead. Over the years, producers have been expected to do the right things by their land, water, animals, people and community.  The challenge for many has been working out what the right thing to do has been. In recent years as expectations have lifted and regulations tightened the right thing has become a moving target that can shift depending on who you talk to. Expectations on producers must be clearly defined and they need to be supported in understanding and meeting these expectations.  This could mean the development of structured continuing education programmes which address rule changes and advancements in farming practice.  It could entail processors increasing investment in extension services to support their suppliers. Reassessing the industry good model used across the primary sector is also necessary to ensure the right levy funded support is available to producers when they need it.

While building stronger links to the wider community requires open and transparent acknowledgment of both strengthens and weaknesses this does not mean the industry needs to accept every perspective expressed on its operations as being valid or correct.  It has an obligation to defend its right to operate and should be proactive in shaping the conversation around how the boundaries to its license to operate are set.  Rather than being reactive to mainstream or social media stories, organisations should take a lead in sharing stories about the positive contribution they make to the community, the science that underlies operating practices and improvements being made in relation to the natural environment.   The industry should not be afraid of standing up for itself when it is confident it is making a positive contribution that benefits all New Zealanders.

Kickstart Breakfast awards