The need to make NZ farming cleaner and greener

It means a farm environmental plan will be as important as a Land Information Memorandum report when buying or selling a property, adding to the environmental compliance requirements for farm buyers and lenders. 

"Achieving compliance carries a considerable investment in time, resourcing and ongoing cost.”

In this market farms which haven’t completed a substantial amount of work around future water allocations, nutrient discharge allowances and how they will impact on land-use intensity can expect to not realise their full value.

Achieving compliance carries a considerable investment in time, resourcing and ongoing cost.

Some farmers are more advanced than others but if the people I’ve spoken to in the Waikato are anything to go by it is accepted new rules are coming. They will be a permanent part of farming - and they are essential to the long-term viability of the sector.

For those with the right mindset the new rules will be an opportunity to create the sort of farming businesses increasingly attractive to producers facing heightened customer expectations over quality, purity and traceability.

They will also be creating the sort of businesses New Zealand agriculture should aspire to lead the world in – efficient, sustainable and high tech.

Transition

As a financier ANZ is paying a lot of attention to compliance and how the requirement for an environmental plan will become part of the lending process. From now on the environment has to sit at the front of a business model - it can’t be growth first, environment second. 

ANZ has been doing a lot of work around understanding the farming sector's transition to more sustainable farming practices.

While some farms have been slower to act than others, a recent farmer-customer survey by ANZ showed strong awareness of the need to invest in environmental compliance.

More than 90 per cent of respondents were very aware and were doing something about it - but they were looking for help with the 'how?' 

There was uncertainty around what technological or precision-farming investments they should make to not only make them compliant but help them make better decisions with the environment at the heart of their farming model.

Respondents also understood there is a cost to this transition. Over the past five years the average-spend on environmental enhancements was $NZ16,000 (possibly higher in parts of the South Island). 

Around 70 per cent had invested in fencing waterways, 52 per cent in riparian planting, 52 per cent on changes to fertiliser management, 38 per cent into irrigation practices and 35 per cent in changes to water use.

Almost 60 per cent said they would absorb the cost into total farm expenditure; 45 per cent said costs would reduce overall farm productivity; 23 per cent would reduce spending in other areas and 15 per cent said they would require extra borrowing to cover the cost.

While respondents estimated costs would be $NZ10,000 - $NZ20,000 a year, I personally think it will be more than that. When fencing and planting is done they have to think about more investment in technology.

There are plenty of examples of customers using technology to record data on the farm which is helping manage their environmental footprint. 

Water sensors tell farmers exactly how much water is being used, and where, via an app on their phone; individual online stock profiles give farmers access to animal health and productivity records on the spot and nutrient budgets use software to track all the nutrients going onto a farm and where they are going.

Farmers of all types and all generations are getting on board with environmental compliance as it becomes a fundamental part of the business.

All farmers I know consider themselves custodians of the land and want to leave their farms in a better state for the following farming generations. ANZ is supporting customers through specific environmental loans to aid with technology advances and farm systems.

The requirement now is for farmers to exercise their environmental creativity and formalise their environmental impact. That's got to be good in terms of meeting consumer expectations and improving waterways.

When it comes to selling their business, the more they have done to meet signalled or implemented rules, the better off they - and future generations - will be.

Mark Hiddleston is Managing Director Commercial & Agri NZ at ANZ