Whangawehi Catchment Management Group 22 th May 2014 Mike & Sharon Barton

Outline The context in which I farm A brief look at the current NZ farming business model and the interface with emissions capping My science needs and some thoughts on Agricultural Opportunities

The history of the N cap: a farmer’s perspective The history of the N cap: a farmer’s perspective We became aware of the issue in 2000 Incorporated Society formed Taupo Lake Care (TLC) to represent farmer interests in negotiations with Environment Waikato Negotiated to balance Lake protection with economic viability Advocate for and participate in research Represented the majority of catchment farmers and Maori incorporations farms

Nitrogen Leached Tussock, Native Forest - 3kgs/ha Plantation Forest 3kgs/ha Sheep Beef and Deer Farms17kgs/ha Dairy Farms45kgs+/ha Farming emits 93% of the manageable Nitrogen entering the Lake 4 Dairy farms -101 extensive sheep, beef and deer farms

A Nitrogen Cap – The realities Is a cap on stock urine Essentially a cap on stocking rate/production A production cap is an income cap under existing commodity regimes To remove 20% of manageable N we have covenanted 35,000ha for 999 years

Consented farmers Consented farmers Applying for a consent that limits our production in perpetuity-significant implications for farming business models and property values Six farms modeled for Environment Court – insolvent in 5-9 years Length of consent about the length of an average mortgage or less than one rotation of trees, but at least we know what we can do for 25 years

Our Farm – The implications Capped at 2004 production –costs increased by 48% Discontinued with breeding cows based on gross margin per kg of N leached Need to grow young animals as rapidly as possible –no 2 nd wintering If it is not in OVERSEER it doesn’t exist for me Top B+L quintile for beef production – I can’t produce any more

Declining returns for past 25+ years B+LNZ Class 4: Taranaki/Manawatu B+LNZ Economic Service

Productivity Comparison e Lambing Percentage (ewe)100.4% 123.3% +23 lambs Hogget lambs as % all lambs-5.4% Average Lamb Wt (kg) % Lamb sold (kg/ewe) % Wool Prodn (kg/head greasy) % Average Steer Wt (kg) % Milksolids per cow (kg) %

Do consumers pay a premium for beef produced under a catchment management plan that protects Lake Taupo?

Taupo Beef Certification

TAUPO BEEF – The Results Consumers have paid a significant premium Outstanding feedback from chefs and diners Demand exceeds our ability to supply Need to build a business model that returns a premium to farmers

Farming under an emissions cap: The farmer’s challenge We can farm under emissions caps Will livestock numbers and classes need to be capped to do so? Do we accept a consequent cap on income or are we willing to invest to redefine the NZ Agricultural Business model?

Food and water quality: The consumer’s challenge Do you actively seek out food that is produced in a manner that protects water quality? Do you know where to source such food? What premium are you prepared to pay for that food? Is this the real test of how much you value water quality? Eating is the final agricultural act!

Thoughts… As a Nation we cannot continue to have conversations about protecting water quality without having a parallel set of conversations that redefine the NZ Farming Business Model – How do we facilitate relevant conversations within Agriculture?

Thoughts… We cannot continue to occupy the commodity agricultural market place and mandate catchment nutrient caps and biodiversity protection How do we establish brand values that facilitate and fund the achievement of these environmental goals and farm profitability?

Immediate science needs All science outputs described as $ profit per kg N leached All science outputs embedded in OVERSEER ® Selection and breeding of more efficient converters of grass to protein Cropping and pasture establishment systems that leach much less

Using Science to Profile our Food Profile our agricultural produce from a water quality perspective? Verifiable brand standards that resonate globally? Establish premiums that fund new opportunities? Sell our food at it’s real/true price which includes emissions and biodiversity values? What is WCMG’s position in this space?

QUESTIONS FOR THE WCMG Can you build significant brand advantage on your own? Your target market is concerned about water quality anywhere in the world –can you reach them and how? Should you work in conjunction with your Regional Authority? Verifiable/robust Water Quality Mark –is this possible here? Can you turn this into a brand value that allows you to grow income under constrained production

Questions?