3. Promoting Industry & Rural Community Performance

3.1 ICP 510

Programme Title: The implications of E-Commerce for agriculture and forestry
Programme Leader: Alastair Aitken
Institution: Martech Consulting

Summary

E-commerce provides the potential for New Zealand to achieve very significant benefits. Studies prepared in the UK and the USA suggest that across the whole economy:

  • e-commerce could result in cost reductions equivalent to between 2 percent and 3 percent of GDP in those countries;
  • there will also be a freeing up of working capital equivalent to about 25 percent of current inventory levels;
  • there will be substantial changes to current business models as inefficiencies and discontinuities are removed from sector value chains, intermediaries change their roles, and current market channels and relationships change;
  • there is a significant opportunity for the primary sector to differentiate its produce and achieve price premiums, but also a real risk of downwards price pressure if market power moves to buyers because the sector is unable to make the transition effectively;
  • the rate of change in the economy will continue to increase.

There will be considerable impact on the rural community:

  • input prices (supply) and transaction costs will reduce, as will the need for working capital by service providers;
  • the sector will benefit through better access to markets and better marketing information. Farmers and growers will find that they have more choice in how they interact with their markets and service providers;
  • e-commerce introduces a risk of downward pressure on prices as market power moves to buyers, but also provides an opportunity to achieve price premiums through product differentiation, provided that producers are willing and able to take up the opportunity;
  • new services will be needed, ranging from online market exchanges to organisations able to certify product for sale;
  • there may be a negative impact on small rural businesses that are unable to participate in online portals, and there is likely to be increasing difficulty with rural distribution arrangements.

Participation by the rural community in e-commerce requires that access issues be resolved, and that the various forms of resistance to change (regulation, industry structure, skills, motivation, entrenched interests) be overcome. These and other factors enable a subjective assessment to be made of the ability of the various industries to take advantage of e-commerce. This analysis suggests that the meat industries may be most at risk, and that the overall risk (and opportunity) from e-commerce is relatively similar among the others, despite considerable variation in individual factors.

Most of the development in e-commerce will occur independently of government. There are, however, a number of policy areas where government could provide leadership and facilitate co-ordinated efforts to overcome resistance, motivate the sector, reduce duplication of effort, and increase the likelihood of a smooth transition. Current initiatives in relation to e-government are a start, but these must be integrated with the other community needs that can be served online.

Background

The goal is to provide MAF with information relevant to the development of an e-commerce strategy supported by Government. MAF's need is to understand the risks and opportunities that e-commerce holds for the rural sector and for primary industries.

Approach & Outcomes

The research objectives were to assist MAF in its understanding of:

  • the implications and risks associated with e-commerce;
  • any impediments to the adoption and use of e-commerce in the primary sector;
  • the role that should be played by Government in addressing these impediments.

The program for this study involved:

  • a series of interviews with key players in the sectors of interest;
  • an extensive review of current e-commerce-related literature;
  • critical analysis and discussion to identify the key factors and their implications.

It is important to note that while the knowledge-based economy is commonly thought of as an information technology economy, with an emphasis on software and hardware, information technology is primarily an enabler, not an end in its own right (other than for data-based products such as information, software or music).

3.2 ICP 511

Programme Title: Mäori development of indigenous forests
Programme Leader: Don Hammond
Institution: Hammond Consulting

Summary

The overall outcome from this study shows that a significant indigenous forest estate exists on Mäori land and that if fully developed this resource offers considerable timber production (and subsequent employment and economic) opportunity. The development of Sustainable Forest Management Plans for these forests would also provide substantial ecological benefits to the forest in the form of pest control. The development of these forests for sustainable management requires overcoming some information gaps for the owners, and development of a level of control and trust that the owners are comfortable with.

Background

The programme is designed to explore the potential of Mäori owned indigenous forests to produce sustainably managed indigenous timber and to identify options for economic development to the benefit of the owners, and to generate regional development.

This project was developed in recognition that while a significant indigenous forest estate existed on Mäori land, that estate contributed little if anything to the regional economy in which it exists, nor to the benefit of the owners. There was recognition that Mäori may be missing out on an opportunity to develop sustainable businesses and to provide income to enhance their own well-being and to enhance and protect the forest ecosystem. The project aimed to assess the size, location and quality of the estate, and to determine what if any potential for sustainable forest management exists within these forests. From here a determination of impediments to such development can be completed as well as considering what if any action is appropriate to overcome these impediments.

Approach & Outcomes

The project consisted of two major parts. The first was a determination of the location, extent and quality of the forests in Mäori ownership, while the second was to examine the potential for those forests to produce a sustainable harvest of timber and the issues that either enhance or impede that potential.

The determination of location and extent of the forests was completed using the MAF Land Cover Data Base (LCDB). Interrogation of this database allowed a number of parameters to be considered including distance from roads, size of individual landholdings, and regional locations. The accuracy of the LCDB and the relatively recent data incorporated in this provides a high level of confidence in the final outcomes as to the size and location of the forests. The determination of forest quality is more subjective, and thus more prone to interpretation.

The second part of the project was completed using a number of processes including ground truthing of the LCDB outputs, discussions with people who have an intimate knowledge of the forests and with others to determine their views on what impediments may exist and what potentially may be done to remove those impediments.

The study showed that, with the exception of the SILNA land, there is almost no Mäori land in the South Island that supports indigenous forest. Thus the outcomes from the study are restricted to the North Island.

The area of indigenous forest on Mäori land is approximately 614,000 hectares. Of this, approximately 209,000 hectares supports scrub and regenerating indigenous forest, which while important in an ecological sense, has no near term potential to support a sustained harvest of indigenous timber. A further 200,000 hectares is considered to have little or no potential in the near term due to constraints such as being too far from any roading infrastructure, being in land titles too small to support a Sustainable Forest Management Plan in terms of the requirements of Section III of the Forests Act, being reserved through Nga Whenua Rahui type covenants, or being "unavailable" for other reasons.

The net result is a forest estate of around 205,000 hectares that has some potential to be managed under a Sustainable Forest Management Plan to produce a sustained harvest of indigenous timber. The Bay of Plenty Region has the largest resource with Northland and the Waikato also being significant. Using relatively conservative growth increment estimates, this estate could produce an annual harvest of 71,000 cubic meters per year. Even at very nominal stumpages, this has the potential to be a very significant income. There is also considerable potential to increase this sustainable harvest through improved data on specific forests, and through sound forest management.

The key impediments that were noted in the study to the development of this resource are a lack of appropriate information about the potential opportunity that these forests present the owners, and a level of distrust of a range of people and organisations as a result of past experiences in relation to the forests. While these issues have been identified, they are not seen as insurmountable, but they must be worked through if there is to be any sustainable development of these forests.

On the positive side, the study indicates that if the ecological values of the forest are to be protected, interventionist management is required, especially to control plant and animal pests that currently threaten the integrity of the forest. If the forest continues to be simply an item owned by Mäori but with little or no economic return there is little incentive to carry our this control work. If however the forest becomes a significant economic asset, there is considerable incentive to ensure it is protected from a wide range of threats, and delivering a wide range of benefits in the process.

3.3 ICP 512

Programme Title: Consultancy services to Mäori farmers: A survey of farm consultants in New Zealand
Programme Leader: Tanira Kingi
Institution: Massey University

Summary

Many consultants found that the restriction of the land tenure system associated with multiple ownership and the "committee system" necessary under the trust and incorporation structures was a major impediment to the performance of the farm businesses. This constraint was ameliorated through developing systems where the decision-making was improved (e.g. fewer numbers of key decision-makers on the committees and enhanced expertise of board members on their governance roles). The capability and expertise of the governing boards was the most significant factor impeding the performance of multiple-owned Mäori farm businesses.

The information sought by Mäori clients was essentially no different to other clients. For Mäori Trusts and Incorporations however, the majority of consultants stated that information delivery needed to be appropriate for a committee where the skills of individual members could vary considerably among members. The provision of independent advice to the boards of Mäori Trusts and Incorporations and the landowners as to how well management was performing was a key role of the farm management consultant. Consultants that had a large proportion of Mäori Authorities in their client base developed expertise in improving capabilities of their client committees to carry out their governance responsibilities. An important role of the farm management consultant therefore was that of the educator and mentor of the board.

The majority of consultants stated that the factors necessary for a successful consultant-client relationship with Mäori clients were generic, including having the appropriate mix of personal as well as professional attributes, rapport building skills, the ability to communicate and technical competence. In addition, some factors were unique to Mäori clients including an understanding of the cultural protocols, tribal dynamics and Mäori values in relation to farming and the environment.

Background

This research aimed to identify the number and location of farm consultants that consult to Mäori and their level of interaction with their Mäori clients. Mäori farmers were defined as either an organisation that owned and controlled Mäori land, or individuals that farmed Mäori or General land.

Approach & Outcomes

A mail survey was posted to 461 primary industry consultants in New Zealand in December 2000. This information was collated against the six districts of the Mäori Land Court. Ten consultants with significant involvement with Mäori clients participated in face-to-face, in-depth interviews to explore issues raised in the survey. In particular, these consultants were asked their opinions on the constraints facing Mäori farmers, information sought by their Mäori clients and critical factors that contribute to an effective relationship with their Mäori clients.

In all 216 consultants responded to the survey (51 percent response rate). The Te Waipounamu Mäori Land Court district which covers the entire South Island had the largest number (68 or 32 percent) of all respondents. While the lowest number of consultants were located in the Tairawhiti (9 respondents: 50 percent response rate) and Tai Tokerau (22 respondents: 65 percent response rate) districts, the consultants in these districts had the highest number of Mäori clients. Mäori trusts and incorporations, in aggregate, were the most common ownership structure (54 percent) with the owner-operator the next largest group (28 percent). Approximately half of the Mäori clients were dairy and the majority of these used consultants based in the Waikato-Maniapoto and Waiariki MLC districts. Tairawhiti had the largest number of sheep and beef consultants (31 percent of all sheep and beef clients) and consultants based in Waiariki had 43 percent of all Mäori forestry clients.

3.4 ICP 513

Programme Title: The impact of Producer Board deregulation in other countries
Programme Leader: Frank Scrimegeour
Institution: Waikato University

Summary

This research analysed the evolution of producer board reform in other countries during the last five years. The research was part of ongoing analysis about how to enhance the performance of international marketing arrangements in agriculture and horticulture. The research involved case analysis in Ireland, South Africa, Australia and Canada. The approaches and outcomes vary between countries but all four countries are wrestling with a common set of issues and how best to adapt to global challenges in the age of information.

Background

The goal of the research was to document and analyse the impact of producer board deregulation in Ireland, South Africa and other countries and to provide objective information and analysis on overseas experience.

There has been robust debate about the role and performance of producer boards during the last decade. The issues that have dominated the debate have included: Do they have market power? Are there problems of weak selling in agricultural markets? Do boards usefully provide public goods such as information and extension? Are boards appropriate institutions to handle quotas? Are boards needed at all? If boards provide benefits, could these benefits be provided in other ways? In recent years arguments have moved on to discuss alternative ways to do business. These discussions have tended to focus more on optimal ways to deal with any problems of market failure, achieving critical mass in the market, how to avoid being production driven, how to co-operate and how to compete. The future of international agribusiness involves adaptation and change. This paper documents changes that have been occurring during the last five years.

Approach & Outcomes

The research was based on case analysis built on a literature research and visits to two countries. A library search, net search, and an email search of known contacts and experts was the basis for understanding new literature and establishing contact with Researchers/Industry in Ireland and South Africa. The research identified legislative and political changes and the response of farmers, producer boards and companies to the changing environment. The research also gathered and analysed economic data showing changes in prices, production, farm incomes and other variables. The combination of qualitative and quantitative data provides a basis for interpreting the changes in these four countries.

The research reveals different trajectories of change in the four countries studied.

Irish reform of the dairy sector was driven by the requirements to access the EU. Ireland now has considerable experience with more commercialised activity though, it still focuses on Europe because of EU policies. Irish dairy farming is thriving, independent of substantive government or board assistance, and helped by the prices received in Europe.

In South Africa a government committed to substantial deregulation of the sector has driven reforms. South Africa is experiencing substantial entrepreneurial activity. Not all of the new ventures will succeed because of problems of experience, expertise and size. South African agriculture, although thriving, faces challenges relating to the provision of public goods.

Australia's national competition policy and the Australian Productivity Commission have driven Australian reforms slowly and steadily. The Australian agricultural sector is finding new ways to achieve outcomes that historically have been achieved by boards. Despite the progress of reforms the Australian agricultural sector is still constrained by institutions and regulations that cause inefficiencies.

Canada has had little reform with no government commitment to reform. The Canadian Wheat Board is changing its form but most other boards in Canada are subject to substantial government guidance. The Canadian agricultural sector functions in a closeted environment. The country is yet to find a way to reform that does not cause chaos in the sector.

Publications

Scrimgeour, Frank and Oswin Maurer, (2001): The Impact of Producer Board Deregulation in Ireland, the Republic of South Africa, and selected other Countries. A report prepared for MAF Policy, Wellington.

Previous PageTable Of ContentsNext Page

Contact for Enquiries

Farm Monitoring Programme Manager
Monitoring and Evaluation
MAF Policy
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0623
Fax: +64 4 894 0741
Contact this person

 
Print this page Print this page




WebSite survey