Building Resilience In The Food And Fibre Sector
The report recommends farmers increasingly adopt smart digital technologies and processes that provide greater visibility along the value chain and deliver on-farm efficiency improvements.
Proofing against shocks
While developments in US tariff policy have sowed concern among NZ exporters, a new report from Westpac NZ and MyFarm Investments suggests there's opportunity for the country's food and fibre sector to proof against this shock.
The report – Proofing against shocks – increasing the resilience of the food and fibre sector – says diversification and cost efficiencies will be key for the sector in offsetting the threats posed by higher US tariffs. The report's co-author, Westpac Industry Economist Paul Clark, says while there is a risk that higher US tariffs could dampen export prices for several of New Zealand's key agricultural products, a proactive approach by farmers will go a long way to mitigating the impact.
'Businesses involved in export markets should be looking to diversify into markets that deliver consistency of demand,' Mr Clark says. 'While these may not deliver a higher price immediately, looking to the medium term we think they should provide superior returns.'
'Cost is something else the sector should be looking at. Again, rather than taking a short-term view, farmers should be looking at how they can minimise production costs over the long-term and improve their resilience. All the better if that can be accompanied by a drop in emissions per unit of production.'
The report recommends farmers increasingly adopt smart digital technologies and processes that provide greater visibility along the value chain and deliver on-farm efficiency improvements.
Mr Clark says: 'We believe the future of farming in New Zealand will see greater uptake of sensors, drones and robots, along with greater use of artificial intelligence, data analytics and the Internet of Things.'
However, Mr Clark points out that the level of investment required for large-scale technology uptake could prove prohibitive, especially for the many small farmers that operate within the sector.
'In the future, it's likely that this investment requirement will mean that food and fibre sector production is dominated by bigger enterprises with the necessary scale and strong balance sheets.'
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