Resilience forum discusses risks

GNS principal social scientist Dr Nick Cradock-Henry is worried that farming households dealing...
GNS principal social scientist Dr Nick Cradock-Henry is worried that farming households dealing with complex challenges often have no clear horizon on when they might see a solution. PHOTO: TIM CRONSHAW
Rural leaders growing uneasy about farmer resilience in the face of growing challenges have yet to lose faith.

A forum on resilience attended by about 100 scientists, farmers and other industry people was hosted by the New Zealand Institute of Agricultural & Horticultural Science at Lincoln University.

Agribusiness Group managing director Jon Manhire said focusing on risk was a good way for agribusinesses to build more resilience.

"There are risks that promote opportunities; there are negative risks that create hazards and problems. What we’ve tried to do is look at it through a broader scope than just saying these are all problems. One definition that guides some of our work in the space is that resilience is the capacity to bear risk."

A business setting up in the agriculture, forestry or fishing sectors in 2023 had about 40% chance of survival.

Mr Manhire said risks had to be identified and managed for businesses to be around in the future.

Overseas research looking at failed businesses has found that economic and financial risks are often putting more pressure on cashflows than natural disasters.

Leading failure reasons were economic factors at 47%, financial troubles 38%, inexperience 7%, owner neglect 4% and others such as disaster and fraud 3%.

Mr Manhire said risk management was not a new concept for farmers.

"But farmers are balancing a lot of balls in the air when they’re starting to make decisions. They are conditioned by their own knowledge base. They have got differences in their own farm and the fiscal properties of a farm and their operating environment, their mitigations and their irrigation, their technology, environmental pressures, economic factors and also the whole norms of peer group pressures about what is good farming. Out of that they have to make decisions on the production options in farming systems."

Farmers had different risk appetites, some following the path of their forebears and others preferring risk. For some of them their financial situation meant they were unable to afford more risk or it might drive them to take more risk than they should.

"So the ideal is identify risks and make some strategic choices and there is a number of ways you can manage risk — you can avoid them, reduce them, transfer them or retain some risks if they are of low impact and you can manage them."

Years ago Agribusiness Group analysed risk factors such as international competition from lower-cost producers, biosecurity and wildcards, including synthetic milk and meat and the loss of hill country farms from carbon farming.

Milk and meat scandals, increased welfare standards, insect pests and even the "delusional idea" of a global virus epidemic were raised.

Many of them have come true, including the emergence of AI.

Mr Manhire said many overseas companies had chief risk officers who had taken the science of risk management to a new level and there was a gap for this in New Zealand.

AgResearch senior scientist Dr Robyn Dynes said it was important pastoral farming remained resilient as it accounted for more than seven million hectares of 13.6m productive hectares.

She said the sector was strong, but a future vision and leadership were needed as land managers were dealing with "more of the same, plus some".

Pastoral farming had gone through state-led expansion from 1960 to 1984 to rapid change almost overnight to a free economy, followed by high interest rates.

"So that tested the resilience of our rural communities like we have not seen before. The change has been substantial — it’s been our productivity phase — and we have seen remarkable increase in productivity, so how can we not have faith in the future when we know what we were challenged there and we have got the wisdom and the knowledge to be forewarned and forearmed?"

She said landowners were experiencing changes to environmental limits and challenges to the social licence to farm, animal welfare and international pledges signed by New Zealand.

Dr Dynes said the disruption to farm systems needed to be widely understood.

About 40% of dairy farmers would have to make substantial changes to reduce nitrate leaching and meet coming Freshwater Farm Plans.

"Do we ... genuinely understand what that means [for the economy]? ... Because that’s what we need to talk about."

Changes in the policy landscape for reducing emissions, forestry, biodiversity,freshwater and climate regulations were the source of the greatest anxiety about limiting progress.

Each of them could impact the pastoral sector’s competitiveness. Within them, however, were opportunities, but resilience and weathering these challenges required a profitable business and access to capital, she said.

GNS principal social scientist Dr Nick Cradock-Henry said the rural community was dealing with economic shocks, water quality, fire, extreme weather events, climate change and floods and the risks were compounding.

"Rural New Zealand faces significant challenges and it’s not simply low frequency, high magnitude events like Cyclone Gabrielle. Rural communities were constantly facing structural and demographic change, a changing policy in a legislative context, changing consumer demands and social licence."


Southern Field Days 2024 - Featured Businesses