Agricultural Economics and Food Policy in New Zealand: An Uneasy but Successful Collaboration Between Government and Farmers (Palgrave Studies in Agricultural Economics and Food Policy) [1st ed. 2021] 3030862992, 9783030862992

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PALGRAVE STUDIES IN AGRICULTURAL ECONOMICS AND FOOD POLICY

Agricultural Economics and Food Policy in New Zealand An Uneasy but Successful Collaboration Between Government and Farmers

David Hall

Palgrave Studies in Agricultural Economics and Food Policy

Series Editor Christopher Barrett, Cornell University, Ithaca, NY, USA

Agricultural and food policy lies at the heart of many pressing societal issues today and economic analysis occupies a privileged place in contemporary policy debates. The global food price crises of 2008 and 2010 underscored the mounting challenge of meeting rapidly increasing food demand in the face of increasingly scarce land and water resources. The twin scourges of poverty and hunger quickly resurfaced as highlevel policy concerns, partly because of food price riots and mounting insurgencies fomented by contestation over rural resources. Meanwhile, agriculture’s heavy footprint on natural resources motivates heated environmental debates about climate change, water and land use, biodiversity conservation and chemical pollution. Agricultural technological change, especially associated with the introduction of genetically modified organisms, also introduces unprecedented questions surrounding intellectual property rights and consumer preferences regarding credence (i.e., unobservable by consumers) characteristics. Similar new agricultural commodity consumer behavior issues have emerged around issues such as local foods, organic agriculture and fair trade, even motivating broader social movements. Public health issues related to obesity, food safety, and zoonotic diseases such as avian or swine flu also have roots deep in agricultural and food policy. And agriculture has become inextricably linked to energy policy through biofuels production. Meanwhile, the agricultural and food economy is changing rapidly throughout the world, marked by continued consolidation at both farm production and retail distribution levels, elongating value chains, expanding international trade, and growing reliance on immigrant labor and information and communications technologies. In summary, a vast range of topics of widespread popular and scholarly interest revolve around agricultural and food policy and economics. The extensive list of prospective authors, titles and topics offers a partial, illustrative listing. Thus a series of topical volumes, featuring cutting-edge economic analysis by leading scholars has considerable prospect for both attracting attention and garnering sales. This series will feature leading global experts writing accessible summaries of the best current economics and related research on topics of widespread interest to both scholarly and lay audiences.

More information about this series at https://link.springer.com/bookseries/14651

David Hall

Agricultural Economics and Food Policy in New Zealand An Uneasy but Successful Collaboration Between Government and Farmers

David Hall Wellington, New Zealand

ISSN 2662-3889 ISSN 2662-3897 (electronic) Palgrave Studies in Agricultural Economics and Food Policy ISBN 978-3-030-86299-2 ISBN 978-3-030-86300-5 (eBook) https://doi.org/10.1007/978-3-030-86300-5 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover illustration: Landscape with snowy mountains and grazing cows, New Zealand This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Contents

1

Introduction

1

2

Coming Together to Work Collectively

9

3

Struggling Towards a Unified Organisation

25

4

Emerging from Wartime Conditions

39

5

Impact Nationally and Internationally

57

6

Farming Anxieties and a More Favourable Government

75

The Weakening Relationship with the UK and Market Diversification

89

7 8

Growing Farmer Influence on Government

109

9

Domestic Matters for Meat, Dairy and Agriculture in the 1950s and 1960s

125

10

Wool: Prosperity Then Reform

141

11

Impact of the European Economic Community (EEC)

157

12

Encouraging Government Support for Farming

169

13

Subsidisation Keeps Growing

187

14

Subsidies at Their Maximum and Their Death

201 v

vi

15

CONTENTS

A Comprehensive Strategy for Agricultural Economics and Food Policy

223

16

Enforced Change in Farming Practices

239

17

Reforming Their Own Organisation

255

18

Producer Boards’ Reform

275

19

Reform to Reduce Farming Costs

289

20

Environment

305

21

Water Quality: ‘Clean and Green’ Versus ‘Dirty Dairying’

323

Farming and M¯aori, New Zealand’s Indigenous People

339

23

Difficult Times in the New Millennium

355

24

Increasing Pressures on Farming from the Outside World

373

25

Trade Agreements

391

26

Future Agricultural Economics and Food Policy?

409

22

Index

415

Abbreviations

ACC ADC AGROW AJHR ANZ APMA CAP CEO CO2 DOC ECA EEC ERMA ETS EU FAO FCA FF FMG GATT GM GMO HSNO IBAC IFAP IWS

Accident Compensation Corporation Agricultural Development Conference Agricultural Growth Appendices to the Journal of the House of Representatives Archives New Zealand Apple and Pear Marketing Act [EEC] Common Agricultural Policy Chief Executive Officer Carbon Dioxide Department of Conservation Employment Contracts Act European Economic Community Environmental Risk Management Authority Emissions Trading Scheme European Union (UN) Food and Agriculture Organisation Fruit Control Act Federated Farmers Farmers’ Mutual Group General Agreement of Tariffs and Trade Genetic Modification Genetically Modified Organisms Hazardous Substances and New Organisms Independent Biotechnology Advisory Council International Federation of Agricultural Producers International Wool Secretariat vii

viii

ABBREVIATIONS

JO KHP MBMB MIC MMP MOU MP MPI MWBA NAWAC NES NFU NGO NIDA NIWA NPS-FM NZ NZFF NZPD NZSFF OECD OIC OSH PBEC PPMA R and D RMA SFMC SIDA SMP SNZ TPP UK USA WDA WDFF WFO WIA WIPA WT WTO

Joint Organisation Keith Holyoake Papers Meat Board Minute Book Ministry of Industries and Commerce Mixed Member Proportional Representation Memorandum of Understanding Member of Parliament Ministry of Primary Industries Meat and Wool Board Act National Animal Welfare Advisory Committee National Environment Standards [for Freshwater] National Farmers’ Union [UK] Non-Government Organisation North Island Dairy Association National Institute of Water and Atmospheric Research National Policy Statement for Freshwater Management New Zealand New Zealand Fruitgrowers’ Federation New Zealand Parliamentary Debates New Zealand Sheepowners’ and Farmers’ Federation Organisation for Economic Co-operation and Development Overseas Investment Commission Occupational Safety and Health Pacific Basin Economic Council Primary Products Marketing Act Research and Development Resource Management Act Southland Frozen Meat Company South Island Dairy Association Supplementary Minimum Prices Statistics New Zealand Trans-Pacific Partnership United Kingdom United States of America Wool Disposal Act Women’s Division Federated Farmers World Farmers’ Organisation Wool Industry Act Wool Industry Promotion Act Waitangi Tribunal World Trade Organisation

List of Figures

Fig. 1.1

Fig. 1.2 Fig. 1.3 Fig. 1.4 Fig. 3.1 Fig. 7.1

Fig. 7.2

Fig. 7.3

Fig. 10.1

New Zealand Geography and provinces (John Wilson, ‘Nation and government - Local government’, Te Ara the Encyclopedia of New Zealand, http://www.TeAra. govt.nz/en/map/2740/regional-council-boundaries (accessed 18 June 2021)) Destinations of New Zealand exports in 1947 Export commodities in 1949 demonstrating New Zealand’s high dependence on farming exports Destinations of New Zealand exports from 1950 to 2020 Original organisational structure of federated farmers of New Zealand Growing sales of beef, in tonnes (000), to the USA in the 1950s (Source of information—New Zealand Digital Yearbook—Statistics New Zealand) Growing sales of sheepmeat, in tonnes (000), to Japan in the 1950s and 1960s (Source of information—New Zealand Digital Yearbook—Statistics New Zealand) Growing sales of Milk Powder, in tonnes (000) to Asia in the 1950s and 1960s (Source of information—New Zealand Digital Yearbook—Statistics New Zealand) Price of New Zealand wool in £/lb in the late 1940s/early 1950s (Source of information—New Zealand Digital Yearbook—Statistics New Zealand)

2 4 4 5 30

97

99

102

142

ix

x

LIST OF FIGURES

Fig. 10.2

Fig. 14.1 Fig. 16.1 Fig. 23.1

Fig. 23.2 Fig. 25.1

Price of New Zealand wool in $/tonne in the late 1960s/early 1970s (1971 prices) (Source of information—New Zealand Digital Yearbook—Statistics New Zealand) Number of Farms in New Zealand (Source New Zealand Digital Yearbook [Statistics New Zealand]) Growth in forestry exports Growth of New Zealand export sectors in the twenty-first century (Source of information—New Zealand Digital Yearbook—Statistics New Zealand) Federated Farmers membership 1981–2018 (Source Federated Farmers) Main destinations for New Zealand exports—1989–2020 (Source of information—New Zealand Digital Yearbook—Statistics New Zealand)

147 219 249

356 357

392

List of Tables

Table 5.1 Table 5.2

Ownership of New Zealand freezing works at the start of 1940 Killing capacities and annual killings for Auckland, Hawke’s Bay and Southland in 1950

58 59

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CHAPTER 1

Introduction

New Zealand has small population in an extended land-mass whose temperate climate and rainfall makes it fertile. It has two major islands, the North and South Islands, accompanied by several smaller islands. M¯aori, originally from Polynesia, settled in the islands from the fourteenth century but, following European explorers encountering the islands in the eighteenth century, M¯aori were swamped in the nineteenth and twentieth centuries by European settlers, mainly from the United Kingdom (UK). There is considerably more fertile land than is necessary to meet domestic food needs and from the late nineteenth century, initially as a colony and, after 1907, as a Dominion of the British Commonwealth, food was grown predominantly for export to satisfy the needs of ‘Home’—the UK which became by far New Zealand’s prime market for agricultural produce despite the considerable distance separating the two countries.1 Exporting food and wool was the means by which New Zealand earned the overseas income to support its development and standard of living (Fig. 1.1). Because agricultural exports were important, together with, in the second half of the twentieth century, the need to diversify away from over-dependence on the UK market, combating market distortions, such as import restrictions and exports’ dumping, has been a major concern for New Zealand in global dialogues which is why the Uruguay GATT © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_1

1

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Fig. 1.1 New Zealand Geography and provinces (John Wilson, ‘Nation and government - Local government’, Te Ara - the Encyclopedia of New Zealand, http://www.TeAra.govt.nz/en/map/2740/regional-council-bou ndaries (accessed 18 June 2021))

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INTRODUCTION

3

Round saw New Zealand pressing strongly for agricultural trade liberalisation. The importance of New Zealand’s farming for its balance of payments gives agricultural economics and food policy a higher profile than in most other countries. It was common in the twentieth century to describe farming as New Zealand’s ‘backbone’ and agriculture has been key in New Zealand’s rise by the mid-twentieth century to a standard of living higher than most other countries. Wool, wheat and gold comprised the first exports from New Zealand following early European settlement in the mid-nineteenth century. When ship refrigeration started between New Zealand and the UK in 1882 meat and dairy produce could be maintained in prime condition during the long sea voyage and enabled significant exports of pastoral produce (Condliffe 1959).2 Strong familial and sentimental links encouraged further New Zealand’s strong trading relationship and dependence on selling farm produce to the UK (Belich 20013 ; Barnes 2012).4 The UK, exceptionally among the major developed nations in the nineteenth and early twentieth centuries, maintained free trade that gave its population cheap food even though it damaged its domestic agriculture. The UK, as the most diverse and successful nineteenth century industrial nation, provided the goods needed for New Zealand’s development (Thomson 1977a).5 When the 1930s Depression made international trading unreliable, the UK and the British Dominions, including New Zealand, mitigated the impact by agreeing trade arrangements based on ‘Imperial Preference’ (Singleton and Robertson 20026 ; Thomson 1977b7 ; Neill 2010).8 Through those arrangements the UK restricted imports from non-Empire countries but continued to accept imports duty-free from Empire countries in return for preferential treatment of British exports. When World War II threatened to disrupt the UK’s trading with others, the UK (Figs. 1.2 and 1.3): agreed to purchase all primary produce surplus to New Zealand’s domestic needs. That bulk purchase proved of inestimable value in giving security to New Zealand’s primary production and very profitable. (Hall 2017a)9

Bulk purchase tied New Zealand even more strongly to the UK market (Fig. 1.2). After the War, doubts grew whether the UK could absorb all New Zealand’s produce in the long term. The UK decided to rebuild its domestic agriculture and from the 1950s onwards New Zealand began to

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90

DesƟnaƟons of New Zealand exports in 1947

80

Percentage

70 60 50 40 30 20 10 0 United Kingdom

Others

Fig. 1.2 Destinations of New Zealand exports in 1947

New Zealand Exports by Commodity, 1949 40 35

Percentage

30 25 20 15 10 5 0 Meat

Dairy

Wool

Agiculture

Non-Primary

Fig. 1.3 Export commodities in 1949 demonstrating New Zealand’s high dependence on farming exports

diversify its export markets away from its ‘entrenched colonial’ relationship with the UK (Hall 2017b).10 That need for diversification prompted New Zealand to press wherever possible for liberalising agricultural trade by removing market distortions. By the second decade of the twenty-first

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INTRODUCTION

5

DesƟnaƟons of New Zealand Exports 1950 - 2020 70

Percentage

60 50 40 30 20 10 0

1950 1970 1990 2010 2020

Fig. 1.4 Destinations of New Zealand exports from 1950 to 2020

century New Zealand exports to Asian-American markets far exceeded those to the UK (Fig. 1.4). Kym Anderson demonstrates New Zealand’s strong farming comparative advantage, showing that, of the main 20 agriculture exporters, New Zealand has the second highest (after Brazil) net specialisation in agriculture exports when expressed as net exports over exports plus imports (Anderson 2016a).11 Also, despite its small size, it is in the top six exporters of ‘eight key traded farm products’, including being the top exporter of milk powder (Anderson 2016b).12 But despite that significant exporting it is second lowest in terms of Producer Support Estimate (just above Ukraine) (Anderson 2016c).13 Johan Swinnen reports New Zealand as a country in which there were ‘dramatic’ changes in agricultural policy (Swinnen 2018a)14 including radical liberalisation stimulated by major budgetary problems (Swinnen 2018b).15 It is also an example of a country for which, unusually for a ‘rich’ country, most subsidisation for agriculture was abolished (Swinnen 2018c).16 Development and implementation of New Zealand’s agricultural economics and food policy has been based on significant influence by farmers themselves. That influence has been through an organisation representing those within the farm gate—Federated Farmers. Since its incorporation in 1944, Federated Farmers has led New Zealand farmers’ relations with Government, those processing and marketing farm

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produce, the urban public, indigenous M¯aori and international farming organisations. This book traces how those relations have influenced New Zealand’s agricultural and food policy over the 75 years since that incorporation. The book examines how well, through periods of major changes in New Zealand society and in international trade and relationships, Federated Farmers has achieved it prime objectives of distilling the views of the many diverse strands of farming and the many diverse views of its individual members and representing that distillation to influence Government policy. The intention is to demonstrate how agricultural economics and food policy are dependent for their development and implementation on not only Government but also on farmers’ actions, markedly so in a country such as New Zealand. The book analyses, with emphasis on farmers as much as on Government, how policy in a country such as New Zealand depends on an effective collaboration between Government and farmers. After analysing the pressures through the first half of the twentieth century that eventually made farmers overcome their disinclination to act collectively, the collaborative development of New Zealand’s agricultural exports, from the mid-twentieth century until the second decade of the twenty-first, is analysed noting both those forces encouraging and those inhibiting increased production. Also, the many attempts to restrict costs imposed on farming and to press for reform of the processing, marketing and shipping industries in addition to reform of farming. The influence of farmers on not just Government agriculture and food policy but also on economic policy in general is noted together with the pressures that enabled farmers to persuade Government to increase subsidisation up to the 1980s. Also, the pressures that encouraged farmers in the 1980s to press Government to abandon the subsidisation that had become a considerable element in farmers’ incomes. The influence of the indigenous people, M¯aori, in agriculture is identified noting that Federated Farmers, which represented by far those of European ethnicity, eventually recognised the need for a specific policy accepting the disadvantages created for M¯aori by European settlement and how those disadvantages should be addressed. Towards the end of the twentieth century and into the twenty-first century global forces raised environmental concerns encouraging New Zealand farmers and Government to work closely together to make sure that New Zealand responded appropriately. New Zealand had built its

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INTRODUCTION

7

reputation for quality farm exports through its claims to be ‘clean and green’. Maintaining that reputation needed a collaborative response from farmers and Government.

Take Away Points New Zealand has considerably more fertile land than is necessary to meet domestic food and supported its development by exporting food. Combating market distortions has been a major concern. The importance of New Zealand’s farming produce for its balance of payments gives agricultural economics and food policy a high profile. New Zealand has the second highest net specialisation in agriculture exports and it is in the top six exporters of ‘eight key traded farm products’. Unusually for a ‘rich’ country, most subsidisation was abolished. Development and implementation of New Zealand’s agricultural economics and food policy has been based on significant influence by farmers themselves through Federated Farmers. The book’s intention is to demonstrate how agricultural economics and food policy are dependent not only Government but also on farmers’ actions.

Notes and References 1. The grouping of the self-governing Dominions of the British Empire were distinguished by being called members of the British Commonwealth and from the late 1940s with the increasing number of colonies achieving independence, the British ‘Commonwealth’ replaced the British ‘Empire’ entirely. 2. Condliffe, J.B. 1959. New Zealand in the Making: A Study of Economic and Social Development (London: George Allen and Unwin Ltd.): 152. 3. Belich, J. 2001. Paradise Reforged: A History of New Zealanders from the 1880s to the Year 2000 (Auckland: Penguin Books (NZ)): 29–30, 53. 4. Barnes, F. 2012. New Zealand’s London: A Colony and its Metropolis (Auckland: Auckland University Press): 124.

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5. Thomson, D. 1977a. The Pelican History of England: England in the Nineteenth Century (Harmondsworth: Penguin Books Ltd.): 195. 6. Singleton, J. and Robertson, P. 2002. Economic Relations between and Australasia 1945–1970 (Basingstoke: Palgrave): 7. 7. Thomson, D. 1977b. The Pelican History of England: England in the Nineteenth Century (Harmondsworth: Penguin Books Ltd.): 199. 8. Neill. C. 2010. Trading Our Way: Developments in New Zealand’s Trade Policy 1930s to 1980s, Palmerston North, Doctoral Thesis, Massey University: 44/5. 9. Hall, D. 2017a. Emerging from an Entrenched Colonial Economy: New Zealand, Britain and the EEC, 1945–1975 (Cham: Palgrave Macmillan): 23. 10. Hall, D. 2017b. Emerging from an Entrenched Colonial Economy: New Zealand, Britain and the EEC, 1945–1975 (Cham: Palgrave Macmillan): 6/7. 11. Andersen, K. 2016a. Agricultural Trade, Policy Reforms, and Global Food Security (New York, Palgrave Macmillan): 63. 12. Andersen, K. 2016b. Agricultural Trade, Policy Reforms, and Global Food Security (New York, Palgrave Macmillan): 75. 13. Andersen, K. 2016c. Agricultural Trade, Policy Reforms, and Global Food Security (New York, Palgrave Macmillan): 108. 14. Swinnen, K. 2018a. The Political Economy of Agricultural and Food Policies (New York, Palgrave Macmillan): 109. 15. Swinnen, K. 2018b. The Political Economy of Agricultural and Food Policies (New York, Palgrave Macmillan): 54. 16. Swinnen, K. 2018c. The Political Economy of Agricultural and Food Policies (New York, Palgrave Macmillan): 102.

CHAPTER 2

Coming Together to Work Collectively

Introduction Farming’s many diverse aspects, together with farmers’ individualism and the diversity of regional viewpoints, make collective action by farmers difficult and in its early days of European settlement in New Zealand that difficulty was reinforced by the relative isolation of farms caused by transport difficulties. This chapter investigates Federated Farmers’ gestation by looking back to the start of the twentieth century and analysing more deeply the pressures that eventually made the main farming organisations combine. The origins are illustrated by considering how three organisations, the Farmers’ Union, the Sheepowners’ Federation and the Fruitgrowers’ Federation, found their common interests leading them to work more closely together. The breadth of concerns of those three organisations illustrates the diversity of topics covered by Federated Farmers, a diversity that meant Federated Farmers has always had to cope over a broad front with an extensive range of activities.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_2

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The Farmers’ Union At a meeting in December 1899 Mr. Vesey-Stewart told ‘his brother settlers’ of the need for collective action while recognising the difficulties among farmers that restricted collective action: a Union of the farming interest was indispensable to combat the tyranny of the various Trades Unions, through whom we have of late years been governed, or rather misgoverned; these Trade Unions, composed of men residing in our large Centres and Cities, formed a compact body, and thus are enabled to give solid votes for the so-named Liberal Government, while farmers, isolated and scattered, without the time or the opportunities of reading the current newspapers, are divided and left to the mercy of billetseekers and persons having but little stake in the Colony, to work out their own personal interests. (Bay of Plenty Times 1900)1

Vesey-Stewart was welcoming Arthur Glass who was touring New Zealand’s North Island to build interest in forming a Farmers’ Union. At that time farmers were represented by small, local, organisations that remained small and local partly because transport over long distances was difficult. Glass was successful, and by the end of 1900, many branches of the New Zealand Farmers’ Union had been formed, most in the North Island but by mid-1901 farmers were ‘stirred at last’ in the South Island: to be keenly interested in the movement, initiated in the North Island, but apparently spreading to the South, to concentrate energies for the protection of their mutual interests into a body known as the New Zealand Farmers’ Union. Although but little has been heard of this matter here in the South, it has been taken up enthusiastically in the North Island, where already several thousand members have been secured, while new branches of the Union are being formed week by week. Properly and wisely administered, the New Zealand Farmers’ Union should become the greatest industrial combination in the colony. (Mataura Ensign 1901)2

By mid-1901 the Union’s potential influence was demonstrated by the attention it was being given by the Prime Minister, ‘Dick’ Seddon. The Evening Post reported: The rapidity with which the Farmers’ Union is ’catching on’ in the North Island, and the evident intention of its promoters that it shall not be converted into a political machine with the Premier or any other politician

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at the handlebar, has evidently arrested the attention of the Government, and as a consequence an attempt is to be made [by the Prime Minister] to capture or discredit it. (Evening Post 1901)3

Specific issues that had prompted Glass and his colleagues to form a Farmers’ Union included that (i) settlers should be allowed free occupation of bush land while improvements were made; (ii) indigenous M¯aori should be allowed to manage their own lands without restrictions but should pay rates on all lands not leased or sold; (iii) payment for freights should be reduced; (iv) the country’s economy should be altered to make farmers’ incomes equivalent to those of ‘industrial classes’; (v) farmers with good security should be able obtain temporary loans at low rates of interest and at short notice, (vi) training farms be established where farmers’ sons could obtain instruction, at a low rate, in the agriculture’s principles and practice. Others wanted farmers to fix a minimum price for their product because ‘other classes of the community by combination’ had raised their labour prices while the farmer took no steps for his own protection (Auckland Star 1899).4

The Sheepowners’ Federation Formation of the Farmers’ Union did not replace rural organisations that had a more restricted range of objectives, most notably, the Canterbury Sheepowners’ Industrial Union of Employers in the South Island which was the largest union of employers in New Zealand. Major sheepowners, for instance, the Aclands who controlled one of the largest sheep stations, Mt Peel in Canterbury, saw themselves as distinct and looked to their own organisations for their specific needs. One specific recurring need at the start of the twentieth century was control of payment for sheep-shearing. Shearers had organised into a Union and succeeded during 1909 in securing increases in their fees in the North Island. The Canterbury Union resisted those increases and long-running negotiations followed. During those negotiations, the need for more national representation of sheepowners became recognised, and in March 1910, a meeting of local organisations was arranged to form a Dominion-wide Sheepowners’ Federation (Dominion 1910).5 From mid-1910 shearing negotiations were led by the Sheepowners’ Federation and that organisation became well established to run in parallel with the Farmers’ Union.

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Fruitgrowers’ Federation At the twentieth century’s start, fruit growers were represented by a series of local associations separate from the Farmers’ Union and in 1912 set up the Fruitgrowers’ Federation. At first that organisation’s role was simply to bring together local associations to meet once a year at an annual conference to discuss common interests. In 1916 the Federation was strengthened by becoming The New Zealand Fruitgrowers’ Federation Ltd. and was helped by Government which passed legislation ruling that all orchard owners should pay a levy to the Federation. The new Federation saw its role as ‘promoting, fostering and protecting’ the fruit industry throughout the Dominion and encouraging unity among all those engaged producing fruit. The Federation also intended to obtain from ‘anywhere in the world’ spraying material, fertilisers, implements’ machinery, books and any article that might be required by growers (NZFF 2015).6 By the mid-1930s there was sufficient concern over how the horticultural industries were operating that the Government commissioned a report into the industries. The Committee after its initial investigations concluded that. the horticultural industries, as a whole, are in a chaotic state, and that, although, in the main, good to high quality material is produced, material that is essential to the health of the community, producers generally by reason of the disorganised condition of affairs are finding it increasingly difficult to carry on in consequence of the low net returns ruling.’ (MIC 1937a)7

The Committee recommended: The formal assumption of control of the marketing of all our horticultural commodities by the [Government] Primary Products Marketing Department … The appointment by the Primary Products Marketing Department of an officer to be designated the “Director of Fruit Marketing”.

It recommended also setting up a consultative committee representing the Fruitgrowers’ Federation, the Fruit Export Control Board, the Fruit and Produce Brokers’ Federation and the Wellington Fruit and Vegetable Retailers’ Association (MIC 1937b).8 That meant a strong Government

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involvement in horticultural organisation and eventually the industry needed the Farmers’ Union support in mitigating Government control.

1930s Concerns In the 1930s, the Sheepowners Federation’s major concerns were export earnings, overseas control of meat processing and research overseas into ‘vegetable substitutes for wool’. The first was driven by concerns over the global economic situation following the Depression that had been a feature of the early 1930s. The second by the perception that major overseas organisations were seeking control of New Zealand’s primary production and that that would be a disaster for farmers. Research into substitutes for wool were in their early days but the president warned it would unwise to treat the ‘this matter … too lightly’ (NZSFF 1935).9 In 1936 the Federation’s President, Henry Acland, identified ‘the outstanding happening’ that would ‘create drastic changes in industry generally within New Zealand and more particularly with our primary producing export industries’. The outstanding happening was the election of New Zealand’s first Labour Government. Acland expected that Labour’s policies would mean, ‘if production for export is to be successfully continued … a substantial measure of subsidisation’ would probably be needed to meet the ‘additional production costs within the Dominion caused by recent legislation’ while still leaving farmers with ‘sufficient balance in hand on which to live’ and an inducement to further increase production for export. Acland was concerned about the Sheepowners’ Federation’s relations with Government and wanted to keep the Federation free to ‘helpfully criticise legislation affecting our industry … quite irrespective of any [political] party issue’. He said legislation by the Labour Government was ‘experimental’ and ‘fraught with the gravest possibilities’, but the Federation should ‘remain in a position to assure the Government of our desire to accept in the best spirit the legislation already passed, and to endeavour to make it workable, if possible’ (NZSFF 1936a).10 One piece of ‘experimental’ legislation that Acland criticised was the Labour Government’s intention to raise standards of living by ‘shortening working hours’ and ‘raising money wages’. He said that would increase production costs and though consumers would have a ‘greater sum in money wages’ the purchasing power would be lowered because of increases in production costs (NZSFF 1936b).11

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Acland was concerned also that the Labour Government, in trying to raise living standards ‘by collective action’, would need to impose restrictions and inhibitions on trade and industry sufficient to ‘seriously affect the liberties of the individual citizen’. The Federation would ‘carefully’ guard against that to ensure New Zealand retained the individual freedom that was the ‘inalienable heritage of free and independent British countries’ (NZSFF 1936c).12 By the 1930’s end, the dairy industry had accepted a degree of Government control that set it apart from the meat and wool industries. The first Labour Government in 1936 had introduced payment to dairyfarmers at each season’s start of a ‘Guaranteed Price’. The Government sought to ‘ensure for Producers an Adequate Remuneration for the Services rendered by them to the Community’ and to protect them from ‘the effect of fluctuations in the market prices’ (PPMA 1936a)13 Guaranteed prices took into account ‘The general standard of living of persons engaged in the dairy industry in comparison with the general standard of living throughout New Zealand’ (PPMA 1936b).14 But soon dairyfarmers became dissatisfied that the Government was overriding the agreed mechanisms for fixing the guaranteed price and prices did not adequately keep dairyfarmers’ standard of living on par with other (urban) sectors of the community. That became one of the major issues in the Farmers’ Union relations with Government at the 1930’s end. The Government wanted to introduce a similar scheme for meat and wool but that was strongly resisted by the Farmers’ Union learning from the dairyfarmers’ experience (Sievers 1939).15 Occasionally, matters of significant interest to the Farmers’ Union, Sheepowners Federation and the Fruitgrowers’ Federation led to cooperative action. One such issue was pay rates for farm workers. In 1936 the Government announced its intention to fix standard rates of pay and conditions for farm workers. The three organisations met to consider the Government’s proposals and appointed a delegation to meet the Minister and officials of the Labour Department. The delegation persuaded the Minister that fixing rates of pay should be only for one year and only for the dairy industry (NZSFF 1936d).16 Their joint concerns led the Farmers’ Union and Sheepowners’ Federation to set up a joint committee to review ‘The Farm Position and Prospects’. The committee reported in April 1939. The prime conclusion was that:

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The present position and prospects of farming are worse than for many years past. Production is already declining and is tending to decline further. Unless the position is improved, production will fall further and the effects on the Dominion may be disastrous. (NZSFF 1939)17

The ‘chief difficulties’ were that costs had risen ‘out of all proportion’ compared with changes in export prices. Export prices were determined by international market conditions and within New Zealand the prime option to overcome the difficulties was to reduce costs significantly but that was seen as impractical. Direct subsidies to farmers were also seen as impractical: ‘money would be hard to get, control schemes might be imposed, and the higher costs of those control schemes would largely be passed on to farmers’. The committee argued that the Nation’s dependence on farming meant the Dominion’s prosperity depended on prosperity ‘being restored’ to farmers. The Committee thought the answer was to stop ‘arbitrarily’ pegging the exchange rate and let the New Zealand pound change to the level most appropriate for the international market’s conditions.18 It was anticipated that that would mean a rise in the currency’s value and higher earnings for farmers’ exports. The need for strong representation because the Labour Government was perceived to be biased against farmers was strengthened following Government attacks on the Farmers’ Union President, Walter Mulholland, attacks that were perceived as attempts to break up the Farmers’ Union (Point Blank 1939a).19 Mulholland had led protests to Government on several issues—the Government’s operation of the Guaranteed Price scheme for dairying was considered to be flawed because the Government did not follow the agreed procedures for fixing prices; the underlying concern that the Labour Government intended to take over control of farming; Government was misusing broadcasting by broadcasting only Government views and not opposing views; and the long-running concern that costs had increased significantly while farming incomes had, at the best, remained unchanged. The Labour Government in return was concerned that the Farmers’ Union was considering setting up a Rural Party to contest future elections though that was quickly ruled out by the Farmers’ Union (Point Blank 1939b).20

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During World War II World War II’s onset at first changed the Farmers’ Union’s relations with Government. Mulholland immediately offered to place the Farmers’ Union’s facilities at the Government’s disposal. The offer was made ‘in the belief that the organisation could be of assistance in the emergency situation brought on by the declaration of war’. The Government willingly accepted the offer especially because farm production needed to increase ‘under the stress of wartime conditions’ (Point Blank 1939c).21 Dairy leaders agreed to ‘scrap for the time being the whole of the dairy industry’s arguments on the guaranteed price issue’ (Point Blank 1939d).22 A Primary Production Council was set up with Mulholland as a member and the Council worked with local farmers’ committees to plan how production could be increased. But Mulholland soon had to report to the Government ‘grave fears as to the possibility of maintaining production at even its present level let alone increasing it’. Those grave fears included that the war was being used as an excuse for introducing permanent State control of farming, the continuing concerns that guaranteed prices for dairy produce were inadequate, and that it was impossible to find suitable farm labour (Ferris, 1939).23 Throughout 1940’s early years, there were many specific perceptions shared by all farmers whatever type of farming they were engaged in. Perceptions that encouraged the coming together included those on land legislation, taxation, costs, import control and economic policy. In 1944 those all acquired increasing importance as farmers and Government anticipated peace. By 1944’s autumn, the war’s successful progress gave an added incentive for farmers to make a strong input into planning for post-war agricultural economics and food policy. Farmers’ discontent with Land Legislation was that their suggestions for the Servicemen’s Settlement and Land Sales Act of 1943 were ignored. A Land Court was set up by the Act comprising two lay members and a judge. Farmers wanted the lay members to be able to overrule the judge but parliament insisted that for any majority decision the judge had to be part of the majority. Lay members were appointed by the Government but farmers insisted that at least one should be appointed by private landowners because often the Government was a party in disputes. Disputes were heard first by Land Committees with the Land Court hearing appeals against Committee decisions. Farmers objected

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that Committee members held office at the Government’s pleasure and could be dismissed without warning. The Farmers’ Union called that a ‘travesty of justice’ and discouraged members from accepting appointment. The Prime Minister publicly criticised Mulholland for discouraging members but the ‘farmers of the country’ endorsed Mulholland’s actions. Straight Furrow said that Mulholland and the Union should be ‘commended’. The Union had ‘ably performed its duty as watchdog of the rural community’ (Straight Furrow 1943a).24 Farmers considered the rules for controlling land sales ‘clumsy’, giving Government ‘unlimited’ and ‘undefined’ control of land that was the subject of financial transactions (Mulholland 1943).25 The North Canterbury district feared that ‘State ownership of all land’ was the Government’s eventual objective (Straight Furrow 1943b).26 That fear was encouraged when the Minister for Rehabilitation declared that the Land Sales Bill gave the Labour Government ‘blanket authority of all land’, giving the Government control over production (Straight Furrow 1943c).27 Farmers’ fears were strengthened with the planning for rehabilitating returning servicemen. Farmers became concerned that the Government intended to purchase land compulsorily prioritising servicemens’ interests rather than those of the farmers whose land was purchased (Straight Furrow 1943d).28 The Farmers’ Union’s King Country branch urged the Dominion Executive29 to set up a rural housing committee to influence the Government’s post-war housing scheme (Straight Furrow 1943e).30 There were many taxation facets that farmers challenged. Farmers’ spending to reclaim land damaged by extreme weather conditions was taxed as though the expenditure was the first improvements needed to bring land under production (Straight Furrow 1944a).31 Farmers regarded paying local Government rates as unfair because it was a tax on their land, which was the equivalent of the ‘tools of the tradesman’. The 1944 Dominion Conference passed a remit demanding ‘that a campaign for the complete de-rating of farmlands be instituted throughout the Dominion’ (Straight Furrow 1944b).32 The Government had introduced a Price Tribunal to stabilise prices during wartime but costs for farmers still rose, for instance, tractors and farm implements, because they had to be imported (Straight Furrow 1943f).33 Farmers did not receive the full prices paid by the UK for their exports, increases above a 1942 baseline were withheld by Government to avoid inflationary pressures. Farmers accepted that policy as necessary

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during wartime but still saw those withheld funds as theirs and, justifiably, were concerned over how those withheld funds would be treated after the war (Straight Furrow 1944c).34 Farming’s essential role in exporting meant there was continual pressure from Government for farmers to increase production but that was at a time when the Labour Government was easing working conditions for industrial and retail employees by introducing a five-day, 40-hour, working week and paid holidays. Farmers saw this as a direct contradiction of Government pleas for increased production by farmers many of whom had working weeks far in excess of 40 hours. International conferences on post-war monetary policy were held in 1944 and the Farmers’ Union warned that those meetings were of ‘close and personal concern’ for farmers because a major issue would be providing food to countries devastated by war and unable to pay for the food. That would threaten a major impact on farmers’ incomes if countries such as New Zealand were expected to make supplies available at no cost (Mulholland 1944).35 Farmers resented the protection given to urban people by Government imposing customs duty or import embargos to protect manufacturing industries from competition from imports. The Government justified those measures because they created employment for the urban population but the impact on farmers was increased costs by having to pay for goods which otherwise could be obtained from overseas sources at ‘onefifth’ of the cost. Farmers saw that as making employment for the urban population while making unemployment for farmers ‘on the margin of economic cultivation’. The Farmers’ Union claimed that rates charged by local Government benefitted urban areas far more than rural by providing ‘parks, libraries, streets, baths, paths and much else’ and could be paid more easily by the urban ‘workers’ who were compensated through higher wages. To farmers the ‘ever-increasing cost of the cities’ was a ‘great burden’ for farmers who could not pass on extra charges because prices for their produce was determined by overseas markets (Straight Furrow 1943g).36 Farmers sought to ensure that the Labour Government did not, after the war, return to its pre-war practice of ‘living well beyond our income’, funded by running down the overseas reserves earned by farming exports. Also, funding domestic spending by printing new money thereby depreciating the New Zealand currency and increasing the export prices, acting as a tax on farmers (Straight Furrow 1943h).37 There was also concern,

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since the war’s start, that wartime measures introduced by the Government to increase control over farming would not be repealed when the war ended.

The Farmers’ Federation A significant step to a farmers’ unified organisation was taken in 1941 by forming the ‘Farmers’ Federation’. This was a loose federation in which the leaders of the main organisations met regularly to discuss common interests with an independent president holding the organisation together. Formation of the Farmers’ Federation was encouraged by seeing the Federation of Labour, an urban trade unions’ federation, successfully winning preferment for its policies from Government. The Farmers’ Federation started in May 1941 with farmers’ leaders meeting at the Farmers’ Union offices. The conference affirmed ‘the necessity of the several sections of primary producers’ organisations cooperating closely for the purpose of promoting the best interests of all producers’. The conference was: convinced that the future welfare of the primary industries of New Zealand is dependent on the better and closer organisation of farmers and farmers’ organisations, and strongly urged that every primary producers’ annual conference and annual meeting agree to the early establishment of a farmers’ federation.

A ‘tentative’ constitution for such a federation was that the executive should consist of eleven members, distributed among organisations as follows—Meat Board and its Electoral College (2 members); Dairy Board and Dairy Council (2); Sheepowners’ Federation (1); Poultry Board (1); Fruit Board (1); Pig Council (1); bobby calf pools (1); New Zealand Farmers’ Union (1); honey, tobacco, small fruits (1) (Evening Post 1941).38 The concept was supported at the Farmers’ Union annual conference later in 1941. The President of the Farmers’ Union looked forward to an eventual even stronger federation and said ‘The objective of complete unity should not be lost sight of (Manuwatu Standard 1941)’.39 G. Brown told a meeting of the Farmers’ Union and the Sheepowners’ Federation that ‘undoubtedly, if the farmers were properly organised and could speak with one voice, they would go further than at present’. Mr.

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Williams told the meeting that if they could start again the ideal would be one big union, with a separate committee for each industry rather than the more loosely organised Farmers’ Federation. J. E. Brosnahan referred to a public meeting 18 months earlier, which was almost unanimous that the Farmers’ Union and the Sheepowners’ Federation should amalgamate. S. D. Reeves said that the absorption of various organisations into one union was found impracticable, and if the federation idea was not the ideal, at least it was a step in right direction. Mr. Benson feared that the Farmers’ Federation would be ‘a washout’, and would only keep the two bigger organisations, the Farmers’ Union and the Sheepowners’ Federation, apart (Gisborne Herald 1941).40 The new federation operated through regular meetings of the executive committee, with Mulholland as the first president, but does not seem to have evolved more formal procedures for consulting with farm-gate producers except through personal contact with executive committee members and through each organisation’s annual conference. No formal constitution evolved. The presidency passed from organisation to organisation, the president of the Sheepowners’ Federation followed Mulholland and then the chairman of market gardeners. Two major issues on which the Federation took significant steps to represent farmers views to Government were the wartime stabilisation policy (Press 1943)41 and the Land Sales Act (Otago Daily Times 1943a).42 There were also several minor issues that farmers expected the Federation to act as the link relaying concerns to Government, for instance, vegetable growers were upset when the Price Tribunal, without consulting growers, imposed a maximum price but not a minimum (Evening Post 1943).43 The Government recognised the Federation’s strength and agreed that before decisions were made on agricultural policy, detailed discussions should take place with the Farmers’ Federation (Evening Star 1943).44 The National Dairy Conference expected the Farmers’ Federation to take, at the first favourable opportunity, the necessary steps to obtain amendments to the existing industrial legislation that affected primary industries (Evening Post 1941).45 By 1943 relations between farmers and the Labour Government had deteriorated sufficiently that farmers’ leaders discussed whether to affiliate with the opposition party, National. Mulholland told the Farmers’ Union’s Southland provincial conference that the Government had dealt ‘unsympathetically’ with farmers’ problems. He criticised the Minister of

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Agriculture in particular, who Mulholland said had trumpeted, wrongly, that the woolgrowers were receiving 62% above the pre-war prices. Mulholland was concerned that that was preparation for reducing the future wool price. The Sheepowners’ Federation leader, James Begg, said the Government had ‘misappropriated’ woolgrowers’ income by withholding some of the increase paid by the UK for New Zealand wool. The Prime Minister’s pitiful excuse, ‘that all the money paid by the British Government goes to the woolgrower’ was so fallacious that it would not deceive a schoolboy’. Mulholland said the farmers’ leaders had no confidence that the Government offered any hope of an economic future for the farming community. The leaders set up a committee to prepare a policy acceptable to the farming community and to approach the political parties, and particularly the National Party, to support that policy. Several meetings with the National Party had been held, and that party’s agricultural policy approached very closely to that of the Farmers’ Union (Auckland Star 1943).46 The Otago Provincial Council of the New Zealand Farmers’ Union expressed extreme dissatisfaction with the woolgrowers’ unjust and unconstitutional treatment by the New Zealand Government. Mulholland said this matter should be made a political issue and that all sheep farmers should take it up personally with Members of Parliament. Mass meetings throughout the country districts were called for action. The Farmers’ Union and the Sheepowners’ Federation had done all in their power, and it was now a case for individual action on a concerted plan (Otago Daily Times 1943b).47 Take Away Points The chapter investigates Federated Farmers’ gestation noting that farming’s many diverse aspects, together with farmers’ individualism and the diversity of regional viewpoints, make collective action by farmers difficult. By the end of 1900 a New Zealand Farmers’ Union had been formed. In March 1910 a Dominion-wide Sheepowners’ Federation (PP 1910b) was formed. In 1916 The New Zealand Fruitgrowers’ Federation Ltd was formed. Matters of significant interest to the three organisations led to cooperative action in the 1930s. The need for strong representation was

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strengthened with the election of a Labour Government perceived to be biased against farmers. Farmers shared many specific perceptions and in 1941 a loose federation was formed with the leaders of the main organisations meeting regularly. That formation was encouraged by seeing an urban trade unions’ federation, successfully winning preferment for its policies from Government.

Notes and References 1. Bay of Plenty Times, 1900. ‘N.Z. Farmers’ Union’, 03/01/1900: 2. 2. Mataura Ensign, 1901. ‘A Hugh Combine’, 11/06/1901: 2. 3. Evening Post, 1901. ‘Editorial’, 12/07/1901: 4. 4. Auckland Star, 1899. ‘Auckland Farmers’ Agricultural Association Conference’, 21/11/1899: 3. 5. Dominion, 1910. ‘Unions and Membership’, 26/07/1910: 6. 6. NZFF 1915. (N.Z. Fruitgrowers’ Federation), ‘An Important Meeting’, 12/05/1915: 4. 7. MIC 1937a. (Ministry of Industries and Commerce), Fruit Marketing Committee Report, Wellington, 23/01/1937: 8. 8. MIC 1937b. (Ministry of Industries and Commerce), Fruit Marketing Committee Report, Wellington, 23/01/1937: 198. 9. NZSFF 1935. (New Zealand Sheepowners’ and Farmers’ Federation), Annual Report for the Year ending 31/03/1935, Christchurch: 3. 10. NZSFF 1936a. (New Zealand Sheepowners’ and Farmers’ Federation), Annual Report for the Year ending 31/03/1936, Christchurch: 3. 11. NZSFF 1936b. (New Zealand Sheepowners’ and Farmers’ Federation), Annual Report for the Year ending 31/03/1936, Christchurch: 4. 12. NZSFF 1936c. (New Zealand Sheepowners’ and Farmers’ Federation), Annual Report for the Year ending 31/03/1936, Christchurch: 5. 13. PPMA 1936a. (Primary Products Marketing Act), 1936: 60. 14. PPMA 1936b. (Primary Products Marketing Act), 1936: 68. 15. Sievers, R. 1939. ‘Farmers and the National Economy’, Point Blank, 15/06/1939: 8.

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16. NZSFF 1936d. (New Zealand Sheepowners’ and Farmers’ Federation), Annual Report for the Year ending 31/03/1936, Christchurch: 13. 17. NZSFF 1939. (New Zealand Sheepowners’ and Farmers’ Federation), Report of the Sub-Committee of the Sheepowners Federation and Farmers’ Union, ‘The Farm Position and Prospects’, 14/04/1939: 8. 18. New Zealand used the pound as its currency until 1967 when it changed to decimal currency based on a New Zealand dollar. 19. Point Blank, 1939a. ‘Attacks on the President’, 15/08/1939: 1. 20. Point Blank, 1939b. ‘Suggested Rural Party causes flutter in political dovecots’, 15/08/1939: 10/11. 21. Point Blank, 1939c.‘Dominion President’s Offer to Government’, 15/09/1939: 29. 22. Point Blank, 1939d. ‘Guaranteed Price Question’, 15/10/1939: 8. 23. Ferris R.L. 1939. ‘Lack of Sympathy; Ministers and Producers’, Point Blank, 15/11/1939: 8. 24. Straight Furrow, 1943a. ‘The Election’, 15/10/1943: 3. 25. Mulholland, W., 1943. ‘That Land Act!’, Straight Furrow, 15/10/1943: 4. 26. Straight Furrow, 1943b. ‘Confidence Expressed in President’, 15/11/1943: 11. 27. Straight Furrow, 1943c. ‘Minister States Real Objective; Land Sales Act’, 15/11/1943: 10. 28. Straight Furrow, 1943d. ‘The Government versus the Farmer’, 15/12/1943: 28. 29. The Federation preferred to label its leading bodies ‘Dominion’ rather than ‘National’ because one of the two major political parties was called ‘National’ and the Federation wanted to avoid confusion. 30. Straight Furrow, 1943e. ‘Housing Shortage; Need in Rural Areas’, 15/10/1943: 28. 31. Straight Furrow, 1944a. ‘Taxing Out Production’, 15/05/1944: 12. 32. Straight Furrow, 1944b. ‘Rating Problems: Farmers’ Union Movement’, 15/06/1944: 41. 33. Straight Furrow, 1943f. ‘Tractors and Farm Implement Prices’, 15/12/1943: 7.

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34. Straight Furrow, 1944c. ‘The London Agreement and Stabilisation’, 15/08/1944: 4. 35. Mulholland, W. 1944. ‘International Exchange’, Straight Furrow, 15/07/1944: 4. 36. Straight Furrow, 1943g. ‘You Can Only Lift Yourself By Very Good Bootstraps’, 15/10/1943: 27. 37. Straight Furrow, 1943h. ‘Financial Policy: Plain Speaking’, 15/11/1943: 3. 38. Evening Post, 1941. ‘Producers Meet, 20/05/1941: 11. 39. Manuwatu Standard, 1941. ‘Farmers’ Federation’, 17/07/1941: 7. 40. Gisborne Herald, 1941. ‘Union of Unions’, 18/10/1941: 10. 41. Press, 1943. ‘Remarks by Minister’, 14/01/1943: 2. 42. Otago Daily Times, 1943a. ‘Farmers’ Resentment’, 10/06/1943: 4. 43. Evening Post, 1943. ‘Farmers Protest’, 18/06/1943: 3. 44. Evening Star, 1943. ‘Premier Reviews Situation’, 15/01/1943: 2. 45. Evening Post, 1941. ‘Producers Meet, 20/05/1941: 11. 46. Auckland Star, 1943. ‘Minister Blamed’, 5/06/1943: 6. 47. Otago Daily Times, 1943b. ‘Land Sales Bill’, 09/08/1943: 2.

CHAPTER 3

Struggling Towards a Unified Organisation

Introduction Rather than driving farmers’ leaders to associate with a political party, their joint concerns encouraged farmers, sheepowners and horticulturalists to move towards replacing the Farmers’ Federation with complete unity. The Government had set up statutory Producer Boards, described later in this chapter, to organise exports better. Those marketed farmers’ produce but did not view themselves as representing farmers politically. The industrial trade unions’ success in winning concessions from the Government encouraged farmers to ask whether they could achieve more by unifying still further. A farmer, writing for the Farmers’ Union magazine Straight Furrow, claimed that ‘watersiders and miners … through direct and drastic action on the part of their Union’ were able to get ‘more pay for less work’. They had ‘flouted the law, treated with contempt the pleadings … of Cabinet Ministers’. Farmers should be able to achieve the same. That would be most effectively achieved by welding together all farmers into one big union that would be a ‘force to be reckoned with’ (Straight Furrow 1944a).1 Many farmers were pressing for ‘direct action’ (Straight Furrow 1944b).2 However, striking or ‘going slow’ was ruled out because farming was a ‘continuous business’. Also, farmers were too loyal to limit their food production ‘fully realising the dire straits of the

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_3

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UK and Europe’. Refusal to pay taxes was suggested as direct action that farmers might successfully take (Yeoman 1944).3

One Big Union In January 1944, Straight Furrow reported the Farmers’ Union continuing to work towards its objective of one big Union of all farmers in the Dominion. Although matters were proceeding slowly, definite progress had been made, and it was hoped that before long the Union would be close to completely reorganising representation of farming interests in the Dominion. The Union indicated that it was prepared to go to any reasonable length to achieve this end (Straight Furrow 1944c).4 In April 1944, farmers were told that ‘negotiations are taking place for the joining up of the major bodies and further linking of other bodies representing the different sections of farming industries’ (Straight Furrow 1944d).5 One month later more details were made public. The main negotiations were between the Farmers’ Union and the Sheepowners’ Federation and were started by exchanging resolutions ‘enthusiastically adopted’ at the conferences of the two bodies in July 1943. Representatives met in October 1943. ‘A number of difficulties were discovered’ but it was agreed those were surmountable. Another meeting took place in December 1943 to deal further with ‘practical matters’ but the Sheepowners’ representative said another sheepowners’ general meeting was needed to achieve progress. The Farmers’ Union was upset with the sheepowners prevaricating and pointed out the ‘intense restiveness among farmers throughout the Dominion at the delays’. The Farmers’ Union pressed for a meeting early in June 1944 so that reports could be given to the Dominion conferences due to be held in July (Straight Furrow 1944e).6 But it was not until September 1944 that the Farmers’ Union and the Sheepowners’ Federation were in a ‘position to make arrangements for rapidly pushing ahead’ the new organisation’s formation (Straight Furrow 1944f).7 The ‘Federated Farmers of New Zealand’ was incorporated in December 1944 but there was a final delay in its full operation because of doubts held by the Auckland Farmers’ Union section (Herman 1974a).8

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Affiliated Organisations The fruit industry was facing crises in the mid-1940 over Government’s ‘bureaucratic’ control of production. The Fruitgrowers’ Federation was seen as important in giving strength to fruitgrowers and that was used to illustrate the ‘necessity of having a strong federation of all farming interests wherein all the farmers will be able to fully support each other in obtaining their full and just rights as producers’ (Straight Furrow 1944g).9 But, when it came to a final decision on whether the fruitgrowers should become a formal part of Federated Farmers, the Fruitgrowers Federation ‘definitely wanted to see’ Federated Farmers operating but the Federation felt it had to continue as a separate organisation because of its business activities and distinctive mechanism of funding through a levy. The ‘spirit’ of the Fruitgrowers’ Federation was ‘to back up this new movement and push it along to success’. The Fruitgrowers became an ‘affiliated’ organisation rather than an integral part of Federated Farmers (Straight Furrow 1945a).10 Affiliation later became a suitable mechanism for accommodating new farming groups when New Zealand farming became more diversified in the 1950s and 1960s. It allowed small groups to avoid losing their identity but allowed them to take part by attending Federated Farmers’ Dominion Council Meetings and Dominion Conferences. Affiliation enabled communication with organisations such as the Women’s Division Federated Farmers (WDFF). Despite its name, WDFF was an independent organisation that was proud it operated independently from Federated Farmers. Leaders of WDFF frequently expressed frustration that the organisation was perceived to be an integral part of Federated Farmers because of its name. Calls to change the name were often made, to emphasise that the WDFF was not a womens’ club of Federated Farmers, but instead a very separate organisation. But even into the 1990s those calls were unsuccessful until 1999 when the organisation became Rural Women New Zealand. In the mid-1990s when a woman provincial president of Federated Farmers proposed a merger of Federated Farmers and WDFF the idea was ‘soundly slapped back’ by the WDFF President. She said the two organisations had separate roles that were better handled under existing arrangements and ruled out any immediate plans for amalgamation. Any expectation of amalgamation was finally abandoned when the organisation changed to Rural Women New Zealand (Molloy 1995).11

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Troubles with Auckland The Auckland Section had always sought special recognition within the Farmers’ Union and monthly had its own separate report in Straight Furrow. In later years, problems, reported below, with Southland and Northland, the most southerly and northerly districts, demonstrated that an ‘us’ and ‘them’ separation between the Federation’s Head Office seemed to become more marked with distance from its base in Wellington in the centre of New Zealand. The Auckland branch was called the New Zealand Farmers’ Union (Auckland Province) Incorporated. When it became clear that the amalgamated organisation of all farmers intended to be called the United Farmers’ Federation of New Zealand Incorporated, the president of the Auckland Section, Mr. Rushworth, on his own initiative, registered a new organisation as the United Farmers’ Federation of New Zealand (Auckland Province) claiming this to be the same arrangement as was in place for the Farmers’ Union. He also claimed that it was a holding operation until a Auckland section conference had approved the proposed rules of the amalgamated farmers’ organisation and agreed to join the organisation. But the Public Registrar would not allow the amalgamated organisation to use the same name as the new Auckland organisation. The Auckland provincial concerns ran deeper than Rushworth’s first public claims. The draft rules made Auckland suspicious because no provisions were made for trading and were claimed to be an obvious attempt to ’break up’ the Auckland province. Auckland would not hand over its assets to the new National Federation, insisting they should be transferred to a similar provincial organisation in the new Federation as in the Farmers’ Union. Finally, the Auckland province felt it had been given insufficient time to assess the rules (Straight Furrow 1945b).12 It was 18 months before the issues with Auckland were resolved and Straight Furrow could announce: that the difficulties have been resolved between the N.Z. Farmers’ Union (Auckland Province) Inc. and Federated Farmers of N.Z. (Inc.), by an agreement reached during the Auckland annual conference. Federated Farmers (Auckland Province) Inc. is to be formed under the Incorporated Societies Act, 1908. The rules of this and the Dominion body are to be coordinated pending a fresh consideration of all the rules at the forthcoming Dominion conference of the parent body. Further points in the agreement are that Auckland province is to continue to collect the subscriptions due

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from its own members, and that any outstanding matters in dispute are to be submitted to arbitration. Widespread satisfaction has been expressed throughout New Zealand that a wholly unified farming organisation is now in sight as a result of this agreement. (Straight Furrow 1946a)13

Organisational Structure Federated Farmers’ leaders produced an organisational diagram (Fig. 3.1) to demonstrate how the organisation made provision for the autonomy of branches and produce sections, within a unified organisation (Straight Furrow 1945c) (Fig. 3.1).14 The organisation was built on local branches and allowed complete autonomy for the various produce or commodity groups but they were interlocked with the general interests of all primary producers of the Dominion. Branches (circles in Fig. 3.1) operated through their provincial produce section executives (triangles) and thence to the Dominion produce section councils (squares) which were interlocked with the interests of all farmers by provincial general executives (central diamond), composed of branch representatives (dotted line) and the chairman and another member of each provincial section executive. The provincial general executives (central diamond) had direct communication with the various Dominion produce section councils (squares) and with the central Dominion council (at top of drawing), through which body it eventually dealt with the elected Dominion executive. At its head office, in Wellington, close to Parliament, there was a Dominion council comprising members from each Dominion produce section council together with elected representatives of the various provinces, according to numerical strength. The council elected the Dominion executive. The advantage of the organisation was that it matched the need to represent all farmers with the need to allow local and sectional autonomy. The disadvantage was that the organisation would always have to deal with an extremely broad range of issues as each branch and section had their own local priorities. Typically, issues covered in an early Dominion Council meeting were international trade, Government control of marketing, international famine emergency, footwear in NZ, broadcasting uses, income tax, farm maintenance, sales tax, oil prices, rebate for petrol usage, death duties, fertiliser subsidy, edible fats, back country roads, rehabilitation of returned servicemen, stock returns and rural education. Prioritisation while avoiding perceptions of bias would

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Fig. 3.1 Original organisational structure of federated farmers of New Zealand

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be a major issue that always had to be kept in mind (Straight Furrow 1946b).15 As discussed in later chapters, the arrangements agreed in the mid1940s lasted until the 1980s when a more centralised structure was introduced. But from the 1980s declining membership was a continuing pressure for more change and maintaining the Federation’s status became difficult in the twenty-first century.

Producer Boards The coming together to form Federated Farmers demonstrated that farmers were not satisfied that their interests were fully covered by the Producer Boards, labelled as ‘statutory bodies’ in Fig. 3.1. Because of ‘legal difficulties’ they could not be incorporated into the federated organisation. The boards were concerned mainly with processing and marketing farmers’ produce. Their work was primarily with issues outside rather than inside the farm-gate. The incentive that encouraged Government to set up producer organisations was, at first, the economic uncertainties in the 1920s for New Zealand’s dominant exports of agricultural and pastoral products. The objective was to organise better exports for the benefit of the whole of New Zealand and to provide better income security for the primary producers themselves. Meat, Dairy and Fruit Boards were set up in the 1920s, a Wool Committee added in the 1930s. The Wool Committee became the Wool Board in 1944 and in 1948 an Apple and Pear Board took the place of the Fruit Board which had ceased operation at the outbreak of World War II. Meat Board From the start the Meat Board considered that its prime objective should be to control the whole of the New Zealand’s exported meat so that it yielded the highest net return to the producer (Hayward 1972a).16 In striving for the highest net return, the Board interpreted that it should be active also in reducing costs both within and external to New Zealand, for instance, transport costs including shipping. The Board and its administrative costs were met from a levy charged on all exported meat.

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One formal function of the Board was to control meat export by issuing export licences; export without the Board’s approval was prohibited. Also, the Board controlled meat shipment by acting as an agent for the marketing companies thereby providing a single, strong, body for negotiating shipping rates and the Board was successful in achieving significant reductions (Hayward 1972b).17 The Board played an important role in ensuring export meat’s quality by controlling arrangements for grading, handling, pooling, and storage of meat and, also, through inspection and hygiene control at places such as Freezing Works. The Board could be involved directly in meat marketing for export but did not exercise that power until after World War II. At first, primarily, the Board dealt with sheep meat but its coverage was expanded gradually to include beef, canned and processed meat, game meat and fish. The first Board comprised five meat producer representatives, two Government representatives and a representative chosen by Stock and Station Agents. A Dairy Board member was added in 1942 because of the strong common interests. Producer representatives were elected to the Board by an electoral college of, at first, six members and, later, twenty-five members, the college members being elected on a district-bydistrict basis by producers. The districts were set to give rough equality in sheep numbers (MBMB 1955).18 Bartley reports that the first Chairman of the Board claimed that the electoral-college system meant that Board members were chosen by those taking the national interest into account rather than regional issues (Bartley 1987a).19 Bartley also suggests that because the Board would have to make decisions compromising producer interests to favour processing and marketing sectors, a degree of isolation from direct control by all producers was thought necessary (Bartley 1987b).20 Dairy Board The Dairy Board was established in 1923. Evans suggests that the essential difference that distinguished the Dairy Board from the Meat Board was that: the Meat Board was established to act as agent of the [farm-gate] producers ... whereas the Dairy-Produce Control Board was established to control the industry [including dairy companies] and marketing of all New Zealand dairy produce. (Evans 1969a)21

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Problems for New Zealand’s dairying in the 1930s were low prices and restrictive quotas in the British market. The serious concerns in New Zealand led to a Dairy Industry Commission to review the industry’s state and to recommend changes (Ward 1975).22 Following the Commission’s report, the Board was reconstituted in 1936 having five industry representatives and only one Government representative. The Board’s electoral arrangements were changed in 1937 to members’ election not by producers but by Dairy Company directors and in proportion to their output. The first Labour Government took over marketing through the Primary Products Marketing Act of 1936 and soon introduced the Guaranteed Price scheme discussed above (Sinclair 1976a).23 The Primary Products Marketing Act dealt only with the Dairy Industry because it was thought not to be ‘feasible to put into operation forthwith any plan or plans to deal effectively with all classes of primary products’ (PPMA 1936).24 Sinclair says that it was easy to introduce the strong state control of the Dairy Industry because it was already well centralised in its administration, unlike the meat and wool industries that sold to private companies or by auction (Sinclair 1976b).25 Wool Board By the 1870s there was a ‘ready overseas market’ for wool and ‘prices were high’ (Evans 1969b).26 Marketing by annual auctions attended by international buyers was well established for Australian wool early in the nineteenth century and New Zealand joined in those well-established marketing procedures as its industry grew in the second half of that century. The problem for the wool industry was mainly the uncertainty in world prices; there could be considerable fluctuations including occasional, unexpected, sharp dips in prices. But Government intervention in New Zealand seems not to have been strong until the first Labour Government set up in 1936 a Wool Committee to promote the New Zealand wool sales in collaboration with similar groups in Australia and South Africa; the three countries formed the International Wool Secretariat (IWS) to manage their collaboration. The main incentive for the collaboration was the growing threat from synthetic fibres and the IWS activities included promoting improvements in wool’s quality through science research and promoting improved production (WIPA 1936).27 The New Zealand Committee comprised one Government representative and four producer representatives, elected by an electoral college similar

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to that of the Meat Board. In addition, the Director General of Agriculture and the Secretary of the Department of Scientific and Industrial Research were associate members. From 1944 the Committee was turned into the Wool Board with the additional activities being the handling, pooling, appraising, storage, distribution, marketing and disposal of wool (WIA 1944).28 Apple and Pear Board A New Zealand Fruit Export Control Board was set up in 1924 to sell fruit in export markets on producers’ behalf (FCA 1924).29 It comprised four grower representatives, elected directly by all fruit producers, and two Government representatives. Its activities were taken over by the Internal Marketing Department of the Department of Agriculture at World War II’s start. Following the war, an Apple and Pear Marketing Board was set up in 1948 to acquire and market apples and pears grown in, or imported into New Zealand, including determining the prices, and the Board had a formal advisory role to Government (APMA 1948).30 This Board was different to the Fruit Export Control Board and the other Producer Boards in that a prime responsibility was selling fruit domestically rather than for export. The Board had two producer representatives, selected by the Minister from a list submitted by the Fruitgrowers’ Federation, and two Government representatives appointed with the Fruitgrowers’ Federation’s agreement. Fruit was acquired by the Board using a guaranteed price scheme similar to the Dairy Industry. Provision was made also for a small level of ‘farm gate’ sales through which farmers sold directly to New Zealand customers. Accountability The Meat and Wool Boards’ members were elected by an Electoral College which itself was elected by producers. But the arrangement made Board members one step away from direct representation. Herman describes how the Electoral College arrangement led to ‘accountability … far removed from … those whose interests that system had been designed to serve’ (Herman 1974b).31 The Dairy Board was elected by Dairy Company directors, many of those were farmers but that election method made Dairy Board members one step from representing all dairyfarmers. Federated Farmers’ strength was that it could claim to represent by far

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a large farmers’ majority. The Boards did not have the branch, district, provincial, national equivalents, equivalents that gave all farmers access to raising their problems and seeking information. While the Boards main engagement was with those processing and marketing farmers’ produce, Federated Farmers represented the farmers themselves. Take Away Points Their joint concerns encouraged farmers, sheepowners and horticulturalists to move towards complete unity and ‘Federated Farmers of New Zealand’ was incorporated in December 1944. The organisation made provision for the autonomy of branches and produce sections, within a unified organisation. The coming together to form Federated Farmers demonstrated that farmers were not satisfied that their interests were fully covered by New Zealand’s Producer Boards. The boards were concerned mainly with processing and marketing farmers’ produce. Their work was primarily with issues outside rather than inside the farm-gate. The objective was to organise better exports for the benefit of the whole of New Zealand. Meat, Dairy and Fruit Boards were set up in the 1920s, and a Wool Board in 1944. The Boards’ electoral arrangements led to insufficient accountability. While the Boards main engagement was with those processing and marketing farmers’ produce, Federated Farmers represented the farmers themselves.

Notes and References 1. Straight Furrow, 1944a. ‘One Big Union’, 15/06/1944: 5. 2. Straight Furrow, 1944b. ‘Reorganisation Scheme; Objectives of the Union Outlined’, 15/06/1944: 35/36. 3. Yeoman, 1944. ‘The Case for Direct Action’, Straight Furrow, 15/07/1944: 35. 4. Straight Furrow, 1944c. ‘The Union’s Year: Federation of Bodies’, 15/01/1944: 6. 5. Straight Furrow, 1944d. ‘No Time for Dissension’, 15/04/1944: 21.

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6. Straight Furrow, 1944e. ‘Amalgamation of Sheepowners’ Federation and Farmers’ Union: Review of the Proceedings’, 15/05/1944: 11/12. 7. Straight Furrow, 1944f. ‘The United Farmers’ Federation’, 15/09/1944: 3. 8. Herman, P.G., 1974a. A History of Federated Farmers, Master’s Thesis in Political Science, Victoria University of Wellington: 14– 28. 9. Straight Furrow, 1944g. ‘Increasing Our Membership’: 15/01/1944: 8. 10. Straight Furrow, 1945a. ‘Building the New Federation’, 15/03/1945: 10. 11. Molloy, A. 1995. ‘Marriage not on for rural lobbyists’, Straight Furrow, 20/11/1995: 4. 12. Straight Furrow, 1945b. ‘Auckland’s Reply to Straight Furrow, ‘Criticism’, 15/03/1945: 11. 13. Straight Furrow, 1946a. ‘Agreement Reached In Auckland’, 15/06/1946: 15. 14. Straight Furrow, 1945c. ‘Picturing the New Federation’, 16/10/1945: 5/6. 15. Straight Furrow, 1946b. ‘Dominion Council Quarterly Meeting’, 15/11/1946: 3. 16. Hayward, D., 1972a. Golden Jubilee; First Fifty Years New Zealand Meat Board 1922–1972, Universal Printers, Wellington: 190. 17. Hayward, 1972b. Golden Jubilee; First Fifty Years New Zealand Meat Board 1922–1972, Universal Printers, Wellington: 47. 18. MBMB 1955. (Meat Board Minute Book), 31/03/1955: Appendix. 19. Bartley, C. F., 1987a. The Accountability of the New Zealand Meat Producers Board to Farmers from 1922–1985, Masters Thesis, University of Canterbury, 1987: 94. 20. Bartley, 1987b. The Accountability of the New Zealand Meat Producers Board to Farmers from 1922–1985, Masters Thesis, University of Canterbury, 1987: 95. 21. Evans, B.L., 1969a, A History of Agricultural Production and Marketing in New Zealand, Keeling Mundy Ltd Palmerston North: 15. 22. Ward, A., 1975. A Command of Cooperatives: The development of leadership, marketing and price control in the co-operative dairy

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industry of New Zealand (New Zealand Dairy Board, Wellington): 84. 23. Sinclair, K., 1976a. Walter Nash, Auckland University Press, Auckland: 129. 24. PPMA 1936. (Primary Products Marketing Act). 25. Sinclair, 1976b. Walter Nash, Auckland University Press, Auckland: 127. 26. Evans, 1969b. A History of Agricultural Production and Marketing in New Zealand, Keeling Mundy Ltd Palmerston North: 4. 27. WIPA 1936. (Wool Industry Promotion Act). 28. WIA 1944. (Wool Industry Act). 29. FCA 1924. (Fruit Control Act). 30. APMA 1948. (Apple and Pear Marketing Act). 31. Herman, 1974b. The Electoral Committee of the New Zealand Meat and Wool Boards, Political Science, June 1974, 26, 1: 56.

CHAPTER 4

Emerging from Wartime Conditions

Introduction The economic background in years immediately following World War II was that New Zealand’s economy was still largely determined by wartime conditions. There were ample markets for produce, full employment and national income greater than the available supplies of goods and services, all giving excessive pressure on domestic prices. New Zealand was prosperous because it could sell a large proportion of its agricultural production at profitable prices. The seller in overseas markets had been in a superior position. The ample markets were mainly that since the start of World War II the UK had contracted to buy from New Zealand all of its exportable surplus in meat, wool and dairy products, and in 1944, new four-year contracts were agreed at ‘substantially increased prices’. In 1949, the Minister of Finance, Walter Nash, reviewed New Zealand’s economy. He was ‘talking up’ the economy just before a General Election, but many claims were justified. In general, he thought the economy was buoyant and successful. Economic activity was at a higher level than ever before. There was full employment, a record level of total production which was steadily increasing, high levels of wages and national income, and capital development proceeding at a rate commensurate with other fields of economic progress. There was no poverty or want. New Zealand had been among the fortunate minority of nations © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_4

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whose production facilities and property were not seriously damaged by the war’s direct effects. But the war’s adverse effects had not been entirely overcome. Interest payments on public debt incurred during the war had to continue. Shortages, especially of capital goods, still affected progress. Production wastage in war had engendered inflationary pressures but in New Zealand, through its policy of stabilisation of costs and by price and other essential controls, economic equilibrium had been achieved (AJHR 1949).1

Platform Planks The first annual Dominion Conference of Federated Farmers was held in October 1946 and that specified the key issues (‘planks’) that formed the ‘platform’ of the new organisation (Straight Furrow 1946a).2 The platform started by firmly ruling out connection with a political party: Federated Farmers of New Zealand places principles before party and supports no political organisation but reserves the right to criticise the legislation of any political party.

The platform planks represented the issues that had brought unity to farmers. The Federation insisted the ‘gap’ between farmers’ costs and prices had to be closed either by reducing costs or by increasing prices. The closure had to be sufficient to give farmers an income commensurate with the service they provided and in line with income obtained by others in the community who provided equivalent service. That income had to be sufficient (i) to pay competitive wages for farm hands; (ii) to meet increased costs imposed by Government legislation, for instance, tariffs and import control; (iii) to preserve the capital invested in the land and stimulate full exploitation of that land. The Federation preferred direct taxation to indirect taxation with direct taxation levied on personal income only and graduated so that the burden fell most heavily on those best able to bear it. Imports’ taxation should be for revenue purposes only and be confined mainly to luxuries. The Federation was totally opposed to land tax; it was ‘wrong in principle’ and ‘unjust in its incidence’. The land-holder should be allowed to obtain the freehold from the State under fair and reasonable conditions with the Government helping ‘suitable settlers’ with small amounts of capital and

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removing obstacles. The Federation supported national control of credit and currency by a national authority free from political control. The Federation found some, but not all social security provisions acceptable. It supported a national health insurance scheme financed by compulsory direct contributions levied on wages, salaries or personal income. Hospital finance should be a charge on that fund. The Federation also supported a universal national provident fund similarly financed to provide for all pensions and allowances for public services. The Federation insisted on equal opportunity for education for town and country children, including consolidating country schools where desirable. The Federation strongly supported the principle of cooperation with producer control where it enabled farmers more economically to produce and market their produce. It strongly supported the cooperative provision of farm finance. Farmers recognised the need for state involvement in farming, for instance, as represented by the Producer Boards, but did not want to be seen to be supporting ‘socialism’. ‘Cooperation’ was the word chosen to represent farmers’ views. It was presented as a middle way between heartless, devil-take-the-hindmost, capitalism and full state control. Federated Farmers supported cooperation with producer control in processing produce, for marketing products and for the provision of supplies and services. It considered the State had no right to take the control from farmers even if the Government made cooperation compulsory to make the marketing fully effective in meeting the organised competition of other countries. The Federation was ‘definitely opposed’ to State ownership of the means of production, distribution and exchange, but accepted that State monopoly control was ‘desirable’ for railways, telegraphs and electricity. The confidence that cooperation was the most effective means of ensuring producer control was strongest in the dairy industry. From the end of the nineteenth century, the dairy industry had been built on farmers’ cooperative organisations. Arthur Ward in his history of the New Zealand dairy industry called his book Command of Cooperatives and explained why the industry preferred producer cooperatives: During the earliest periods of dairy farming in New Zealand a basic pattern emerged from the farm manufacture of milk surplus to household requirements into butter and cheese for sale to neighbours or to the local store. The second phase was the establishment of a cooperatively owned manufacturing dairy between neighbouring farmers to deal with this surplus milk

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or of a factory erected by the storekeeper, with or without outside interests, and sometimes by outside interests alone. The former factories were cooperative in nature and origin while the latter were owned by proprietary interests and were so called. Up to the later 1800s there was little if any conflict between the two groups and a great deal of mutual assistance in evidence. But as the growth of dairying expanded and export trade became a reality, a pattern of conflict between cooperative and proprietary interests emerged … the proprietary factories were separate units and lacked coordination. Cooperative units on the other hand had their roots established solidly in the farms and milking sheds and in their ownership of the manufacturing dairies. The directors of the cooperatives were elected by the suppliers and could be controlled by them. They had learned to survive by harsh experience, often having to function in areas where no proprietary interests were prepared to invest. They were suspicious of outside interests, and when it came to joint or district association they naturally preferred to associate with other cooperatives … The struggles and the sacrifices were inevitably considerable and it was from these conditions that the fabric of cooperative leadership and the qualities of self-reliance emerged. The drive was from within, and the hardship and privations, in which wives and children frequently participated, strengthened the cooperatives in their determination to succeed, and to secure as large a share as possible of the market results of their labours … The two types of manufacturing dairy which had emerged, cooperative and proprietary, competed for the growing volume of milk supply. Gradually the cooperatives overhauled the proprietaries in number and by greater cohesive ability in district organisation led the way to national leadership. (Ward 1975)3

By the end of its the first year, Federated Farmers’ produce sections had been constituted—dairy, meat and wool, and agriculture. The Dairy Section had dealt with prices, and bovine tuberculosis testing and compensation; the Meat and Wool Section had an active part in the negotiations for the setting up a Royal Commission on the sheep farming industry, the question of pelt price pay-outs and stabilisation, and the question of meat prices generally; the Agriculture Section with the standard size of produce sacks, wheat prices and small seed matters (Straight Furrow 1947a).4 On nomenclature, ‘Agriculture’ was used as the label for non-pastoral farming by Federated Farmers, but the word was also used more generally for all farming, for example, with the relevant Government Department of farming being called the Ministry of Agriculture.

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Day-To-Day Business At the end of 1946, the Federation could devote itself to its day-to-day business unhampered by dealing with all the teething troubles in establishing a new organisation. During 1946, that day-to-day business for the Dominion Executive included hospital rating, sales tax, scarcity of supplies particularly of wire, petrol selling hours, fertilisers and their distribution, import control, food production, sharemilking, direct importation of livestock from the UK, noxious weeds, organisation of linen flax growers, various committees of the Standards Institute and the Bureau of Industry, population, price stabilisation, charges for electric power, rural education, taxation, rehabilitation of returned servicemen, rural mail deliveries and restrictions on opossum destruction (Straight Furrow 1947b).5 Those many items demonstrated that the essence of Federated Farmers was coping on a broad front with the diverse range of issues that impact on implementation of agricultural economics and food policy. Decisions from the Dominion Conference at end of 1947 included that: Federated Farmers is opposed to the promotion or maintenance of industries in New Zealand which produce, on an international exchange basis, a smaller proportion of exchangeable wealth than can be gained by the use of the same capital and labour for other available purposes. That the financial policy of New Zealand be so adjusted that exchange and import control can be abolished. Until such abolition is possible there should be no complete exclusion of goods manufactured in the country, but at least 20 per cent in volume of total consumption of any article manufactured in New Zealand should be allowed to be imported from overseas to serve as a check on the efficiency of our industry in New Zealand. (Straight Furrow 1947c)6

Avoiding Inflation Through a Stabilisation Policy Costs and prices were always a major concern for Federated Farmers and those were, in the Federation’s early years, determined by wartime agreements. During World War II, farmers had acted responsibly and agreed with the Government’s ‘stabilisation’ policy which sought to restrict potential causes of inflation at a time when the war effort restricted production of domestic goods and services. To avoid increases in income unmatched by increases in goods and services, farmers agreed

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that increases in price for produce sent to the UK would be retained in ‘stabilisation’ accounts until after the war. John Baker describes, in the official history of New Zealand’s economy during World War II, how the policy affected farmers. He said the policy was based on ‘understanding between various groups, who were prepared to make sacrifices to ensure the war economy ran smoothly, provided the burden was shared by all’. Baker noted farmers’ special place in the New Zealand economy: Their production was the predominant earner of overseas exchange out of which imports and overseas debt servicing could be financed. Exports of farm produce earned annually a sum averaging about a quarter of the national income. Net incomes of farmers made up on average about 14 per cent of national income. The relative importance of farm incomes made changes in export prices a major cause of instability in the internal economy of New Zealand … The comprehensive stabilisation scheme introduced in December 1942 provided for stabilisation of the payments to farmers per unit of their produce and for holding farm costs. (Baker 1965a)7

The Government negotiated an agreement with the Farmers’ Federation covering farm produce which provided for: The establishment of stabilisation accounts for each product or group of products after consultation with the industry concerned The payment into stabilisation accounts of any increases in price received from sales of the product overseas above the level ruling at 15 December 1942 The payment from the accounts of subsidies required to keep the costs of production down to the level ruling at 15 December 1942

The agreement provided that credit balances at the stabilisation scheme’s termination would be used for the benefit of the industry concerned, while debit balances would be met by the Government. Federated Farmers was always suspicious that the Government would use the stabilisation accounts, sometimes called ‘reserve’ or ‘pool accounts’, for purposes other than ‘for the benefit of the industry concerned’. Farmers’ concerns were intensified when in 1944 the UK, to encourage New Zealand to continue sending its exportable surpluses to the UK after the war, in addition to agreeing substantially increased prices for meat and dairy produce, agreed to pay a lump sum of £12 million ‘as compensation to meet the abnormal increase in prices of New Zealand

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imports from the United Kingdom from 1939 to the present’. Also, to pay lump sum of £4 million sterling per annum for four years ‘towards the cost of economic stabilisation in New Zealand, and in recognition of the fact that benefit accrued to United Kingdom through New Zealand’s economic stabilisation policy’. Farmers were suspicious that the lump sums were being paid directly to the NZ Government to circumvent even higher prices being paid to New Zealand farmers. ‘Whose money is it?’ asked Straight Furrow (Straight Furrow 1945a).8 The Prime Minister claimed the UK had agreed that New Zealand should be compensated for ‘her increases in costs, whether these were borne by the farmer, by the State through subsidies and cost allowances, by the whole community through the higher price paid for articles outside the stabilisation scheme’s range or deferred and still to be met’. The payments were recognition by the UK that British costs had increased by far more than New Zealand and that meant increased costs for New Zealand imports from the UK. The Dominion Executive of the Farmers’ Union passed a resolution ‘strongly objecting’ to the ‘attempt to deceive the public as to the real prices being obtained for New Zealand produce by dividing payment into two parts—one part paid as a lump sum, and the other at per unit of each commodity’ (Straight Furrow 1945b).9 ‘We insist that the full export prices received for our primary produce be paid to the producers’. The Executive had been prompted by two remits at its annual conference: It must be recognised by the Government … that the farmer is the owner of his produce, and that the proceeds from the sale of it belong entirely to him, and to no one else. This Executive strongly supports the Dominion Executive in demanding that the lump sum paid to New Zealand by the United Kingdom Government for primary produce be paid in its entirety to the primary producers. (Straight Furrow 1945c)10

But a Joint Committee of the Meat and Dairy Boards agreed, after being given full access to all documentation relating to the agreement, that the lump sum payments were not made by the UK in respect to products sold (Straight Furrow 1945d).11 Federated Farmers’ leadership accepted that position but the phrase ‘lump sum’ from then onwards to many farmers

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never lost its connotations of something underhand passing between the two Governments. Another prime activity for Federated Farmers during the years of stabilisation was to remain alert to wage increases outside farming that meant the ‘burden’ of keeping a stable economy was not ‘shared by all’. Baker reports that a stabilisation policy’s major concern: was to keep an acceptable relationship between wages and farm incomes. The basis of the stabilisation understanding was that farmers and workers alike agreed not to take advantage of a sellers’ market for their produce and labour. (Baker 1965b)12

But towards the war’s end wages ‘broke away’ from the stabilisation policy and that was partly ‘as a result of the adoption of militant tactics’. Militancy included the waterside and freezing works’ workers whose actions directly affected primary produce export costs. Federated Farmers’ Dominion Conference ‘viewed with alarm the departure from stabilisation as instanced by wage increases without any corresponding (and immediate) increase in the monetary return to primary producers’. It urged that steps be taken forthwith to increase meat and other produce prices to counteract those increased costs (Straight Furrow 1945e).13

Contributions of the Sections Coping on a broad front over a range of diverse topics was possible because, while the Dominion Executive and Council dealt with matters of general interest to farmers, the produce Sections dealt with the more immediate problems associated with their particular produce. Problems identified by Sections were referred to Dominion level if stronger political clout was needed or if the problems threatened conflict between Sections. The Dairy Section The Dairy Section first had to establish its role among the existing bodies of New Zealand’s dairy industry. Milk taken by farmers from their cattle was processed into the various products by local dairy factories that, as described by Hayward, were often local cooperatives with shares owned by each farmer according to their factory throughput. The New Zealand Dairy Control Board, with its mixture of Government and Dairy

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Company representatives, established mainly to control exports in 1923 and also controlled collection, processing and quality of dairy produce. The payment of the ‘guaranteed price’ became seen by producers as the Government guaranteeing that producers would be paid sufficient to maintain a reasonable standard of living whatever prices were being realised for their export produce. The original guaranteed price legislation included that the guaranteed price would be based also on compensation for all costs including reasonable wages for farmhands and interest on capital. In 1939, the dairy industry itself had seen the need for greater coordination and a Dairy Industry Council was introduced to provide a common forum for the Dairy organisations that had developed separately; the North Island Dairy Association (NIDA), the South Island Dairy Association (SIDA) and the Dairy Board. In January 1947, Federated Farmers sought to have three representatives on the Dairy Industry Council recommending that the Council be comprised of all Dairy Board members, two North Island Dairy Association representatives, one South Island Dairy Association and three Federated Farmers’ representatives. The Federated Farmers’ Dairy Section Chairman justified appointing Federated Farmers’ representatives because most present Council members represented dairy factory directorates while Federated Farmers represented the individual dairyfarmer. In some districts, up to 100 per cent of dairymen belonged to the Federation. Federated Farmers claimed to be in constant touch with the ‘man on the milking stool’ more so than any of the other organisations. The Dairy Board, recognising the Federation’s growing membership and influence, supported the Federation’s request for Dairy Council membership. The Dairy Section chairman could report in July 1947 ‘We have had the greatest cooperation from the Dairy Board and the Dairy Industry Council. Dairy Section representatives had been appointed also to their various subcommittees, so that throughout the year the Dairy Section was directly represented in any negotiations vitally concerning the industry’ (Straight Furrow 1947d).14 The Section continued to press for payment to the dairy farmer in line with the increases granted to other sectors of the community. Dairyfarmers felt that Government manipulation meant that the guaranteed price was inadequate to maintain the standard of living commensurate with others. In 1946, the Dairy Board complained on producers’ behalf that the payment received by farmers from the prices paid by the UK

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was insufficient to ‘attract and hold farm labour and to bring dairy farms into full-scale production’ (Straight Furrow 1946b).15 The guaranteed price each season was discussed by a Dairy Costs Adjustment Committee that comprised representatives of the dairy industry and Government, but in 1946 the Committee could not agree on an appropriate price and the decision was left to the Minister (Straight Furrow 1946c).16 But when the Minister had reached his decision the Dairy Board through its Chairman said that the Government was arbitrarily handling the costs adjustment and that was contrary to the Government’s ‘expressed desire to work in harmony with the industry’ (Straight Furrow 1946d).17 After the war’s end, the Government agreed that marketing should be transferred from Government to a semi-independent body, the New Zealand Dairy Products Marketing Commission, which had three Government and three industry representatives under an independent chairman appointed by the Government. The Commission was to purchase all butter and cheese for export, including determining the guaranteed price to be paid to farmers subject to the proviso that the ‘general economic stability in New Zealand’ needed to be considered. The Commission also needed to comply with the ‘general trade policy of the Government and with any general or special directions issued by the Minister’ (Straight Furrow 1947e).18 The Commission was to be responsible for handling, pooling, advertising and transport including shipment and storage. The overall objective was to export dairy produce ‘to the best advantage’. In determining the guaranteed price, emphasis was placed on what the produce would realise in export markets. It was accepted that the UK’s financial difficulties stopped the Commission from asking the UK to pay higher prices, but it was expected that New Zealand would ask for more if costs continued to increase (Straight Furrow 1947f).19 Federated Farmers welcomed a Marketing Commission that would remove dairy industry administration from political control but was concerned that the Commission would have insufficient control over the farmers’ ‘real’ income. That would depend also on the Government’s monetary policy and on wage awards for workers in general. Federated Farmers wanted there to be ‘general acceptance … that the farming industry is the basic industry of New Zealand, the rewards in other industries must be based on rewards in the farming industry’. The proposed Commission needed to be part of an ‘integrated mechanism

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for preserving balance between the different sections of the community’. All other bodies setting national prices and wages needed to take into account prices received for farming produce sold overseas (Straight Furrow 1947g).20 The Dairy section also extended the Federated Farmers’ coverage by forming a sharemilkers’ sub-section. Sharemilkers were common in New Zealand’s dairy industry; they owned their own cows but grazed them and milked them under contract to a farm owner. Sharemilking enabled young people to start a herd without buying a farm, though that was usually their long-term goal. The Dairy Section also endeavoured to form closer links with the Town Milk Producers Association that represented milk producers for domestic supplies within New Zealand (Straight Furrow 1947h).21 Bovine tuberculosis herd testing had been a key issue for the Dairy Section Council for a considerable time and it continued to press for adequate compensation for all stock destroyed on account of tuberculosis. It asked that compensation should be at least 90 per cent of the full market value, and also asked that the Government convene a conference on tuberculosis control. The Council had supported that where complete herds were voluntarily tested for tuberculosis they should be placed on the same basis as those herds that were tested compulsorily (Straight Furrow 1947i).22 Meat and Wool Section The Meat and Wool Section was primarily centred on sheep farming. Soon after Federated Farmers’ formation, the Meat and Wool Section set up an inquiry into questions affecting the meat producer. The Section met also with master butchers’ representatives to discuss local meat marketing. The Section urged that all possible steps should be taken to preserve the identity of New Zealand meat going to the UK and other markets. The Section paid particular attention to prices and pressed for the fixing of prices in line with increases granted to other community sectors, in addition to proven increased costs (Straight Furrow 1947j).23 Key steps in meat processing were the abattoirs and freezing works that processed meat for export. Those had very militant workers and Federated Farmers found freezing works issues a long-term problem that increased costs for farmers.

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Shearing matters were important for the Meat and Wool Section and the Section participated in a conference on shearers’ training. Provinces were asked to cooperate with all other interested parties to see what could be done to attract more shearers to the industry. Financial and environmental anxieties had been sufficient to encourage the Government to set up a Commission of Inquiry into the sheep industry in 1939. That Commission had barely commenced its work when World War II started, and it was decided that ‘it was inadvisable to continue the work of the Commission as originally planned’ (AJHR 1940a).24 The Commission did produce limited recommendations that included: Problems were most obvious in the high-country lands of the South Island and the hill-country lands of the North Island. Inefficiencies in sheep farming were the result of (i) inadequate labour, (ii) farms being either too large or too small, or, (iii) the inadequacies of farmers; Sheep farming suffered from an inadequate labour supply because the reward of labour for sheep farming compared unfavourably with that in other industries – provision of housing for farmworkers using Government resources was needed; The deterioration of the land including soil erosion was serious and called for immediate evaluation of remedial action. (AJHR 1940b)25

Within Federated Farmers, committees were formed representing High Country and Hill Country lands, the former mainly lands in the South Island, the latter in the North. In 1947, the committees were considered sufficiently important that from 1947 representation from those committees was added to the Meat and Wool Section Council. The Section persuaded the Government to resume the Commission of Inquiry into the Sheep Industry and it was resumed but this time as a Royal Commission. Wool bulk purchase by the UK during wartime had been at prices higher than pre-war and stimulated increased production with the annual clip at the war’s end 30% higher than the average for 1934–38 (Economist 1946).26 But marketing could not return to the pre-1939 arrangements immediately in 1945 because considerable stocks purchased by the UK

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during the war remained unused. Wool, unlike meat and dairy produce, did not perish and that made stockpiling an option rather than selling at low prices. Production during the war years exceeded requirements and wool stockpiled to an ‘embarrassing’ extent (Baker 1965c).27 There were fears that releasing those stocks onto the market would plunge prices for the new, post-war, clips. The precursors to Federated Farmers, the Farmers’ Union and Farmers’ Federation, advocated that there should be an international organisation to handle disposal of surpluses. Two members of the Farmers’ Federation Dominion Executive were in the New Zealand delegation for a Wool Conference, held in London during April and May 1945 with representatives from New Zealand, the UK, Australia and South Africa, to discuss how best to deal with the stockpiles. Edward Greensmith, a key figure in New Zealand’s wool bureaucracy for three decades and in the New Zealand delegation, reports how the stockpiles were ‘a serious burden’ and ‘a cloud hanging over the market’ (Greensmith 1946a).28 The Conference’s opening report warned that ‘on reasonably optimistic assumptions the complete disposal of the stock, and of current clips in conjunction, may be expected to take 12 or 13 years’ (Greensmith 1946b).29 The Conference agreed to form a private company, UK-Dominions Wool Disposals Ltd., with the four Governments nominating shareholders; that company became known as the Joint Organisation (JO). From June 1945, the JO replaced the wartime bulk purchase arrangements and attempted to prevent price collapse by an orderly disposal of stockpiles avoiding over-supply. The JO also protected woolgrowers from low prices by setting, at each season’s start, a reserve price below which the Organisation itself would purchase wool and hold it until prices rose (Evans 1969a).30 Governments in each country needed to approve the reserve price but individual farmers, if they wished, could set their own reserve price above the JO’s and withhold wool not sold at their own reserve. The JO’s main activities occurred in London, and subsidiary bodies within the Dominions regulated selling their own surplus stocks and current clips. In New Zealand, a Wool Disposal Account, set up at the Reserve Bank, received income from wool sales and funded the JO’s activities—this fund became known as the Wool Industry Reserve Account (WDA 1945).31 For the Dominions’ woolgrowers, the JO ensured an orderly disposal of annual and stockpiled wool and avoided marked price fluctuations. According to Evans:

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By controlling the sale of such large quantities of wool, the JO had the effect of stabilizing the wool market during the crucial years of post−war reconstruction, and in so doing helped to prevent the economic chaos which the results of the war would undoubtedly have brought about. (Evans 1969b)32

After World War II, markets recovered from wartime disruption and created high demand for wool; the JO sold 40% of surplus stocks within its first year, refuting estimates that it would take 13 years to clear stocks (Straight Furrow 1946e).33 The Agriculture Section The Agriculture Section, unlike the Dairy and Meat and Wool Sections, was primarily concerned with production for domestic needs rather than for export. Growers of wheat, linen, flax, hops and vegetables together with seed suppliers were represented. The Section’s concerns during its first year included ensuring a broad representation of producers on the Department of Agriculture advisory committee on seed certification and testing. Also, the Section wanted the Department to send a representative to survey the possibilities for exporting seeds to others including Australia and the UK. The Section pressed the Government to agree higher prices for sale of peas and wheat. For peas, the Section was determined to publicise the position and provide supporting information for the press (Straight Furrow 1947k).34 The Section argued that for wheat, the only way to overcome domestic shortages was to increase the acreage used for wheatgrowing and that could be achieved only by payment of an incentive that ‘would give the necessary encouragement’. Steps to guard against the spread of pests such as nassella tussock grass were proposed, including that the Department of Agriculture should ensure that the Noxious’ Weeds Act included that all seeds sold should be analysed and, if found to contain dangerous noxious weeds, destroyed. The Section requested that the Department of Scientific and Industrial Research conduct experiments in honeybees’ training in fertilisation of seed crops. An officer of the Department of Agriculture was in England and the Section encouraged the Department to support his work in collecting and despatching suitable bees to New Zealand to overcome a bees’ shortage (Straight Furrow 1947l).35

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Relations with Government Federated Farmers’ influence on Government policy was demonstrated in 1947; Federated Farmers’ first full calendar year, Straight Furrow reported the outcome of the Federation’s specific approaches to Government. Of those, 43% were received positively with Government reporting that it was already taking action or would take action as proposed by Federated Farmers. 20% were given ‘holding’ replies—‘your proposals will be given due consideration’. For 37%, the Government disagreed with the Federation’s proposals and refused further action. In addition to those specific requests, the Federation influenced Government through representation on Government advisory bodies. The requests to Government demonstrate the diversity of issues influencing agricultural economics and food policy: Trade with France Sales Tax on farm machinery Fertiliser availability Transport Shortages of various items of farm equipment Need for increased immigration Broadcasting Boarding Allowance for rural schoolchildren Land Sales Saturday mail deliveries Producer representation on the UN Food and Agriculture Organisation Droughts Telephone services Various pests such as rabbits and opossums Prevention of weeds spreading Advertising hoardings in rural areas Country roads Various taxation issues including death duties Lump sums paid by the UK Marketing of farming produce both domestically and overseas Animal health issues Implications of the 40-hour working week for farmers and their families Means of increasing production Prices and costs for farm produce Fires in rural areas Rehabilitation of returned servicemen Relations with the UK Secondary Industry Reticulation (continued)

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(continued) Stock thefts Rural Housing Import control Opening additional ports for export of primary produce Wire fences Social Security for farmers Research Funding School buses

Take Away Points In Federated Farmers’ first years, there were ample markets for produce and full employment; New Zealand was prosperous because the UK had contracted to buy from New Zealand all of its exportable surplus farm produce and new contracts were agreed at ‘substantially increased prices’. When its first year ended, Federated Farmers’ produce sections had been constituted—dairy, meat and wool, and agriculture. The essence of Federated Farmers was coping with a diverse range of issues that impacted on agricultural economics and food policy. That was possible because the produce Sections dealt with the more immediate problems associated with their particular produce. Federated Farmers’ influence on Government policy was demonstrated in 1947 by the diversity of issues influencing agricultural economics and food policy.

Notes and References 1. AJHR 1949. (Appendices to the Journal of the House of Representatives), B Series, Economic Surveys, 1949 Vol. B6: 1. 2. Straight Furrow, 1946a. ‘A Platform for Federated Farmers’, 15/10/1946: 2. 3. Ward A.H. 1975. A Command of Cooperatives, The New Zealand Dairy Board, Preface. 4. Straight Furrow, 1947a. ‘The Year’s Work’, 15/01/1947: 1/2. 5. Straight Furrow, 1947b. ‘The Year’s Work’, 15/01/1947: 1/2. 6. Straight Furrow, 1947c. ‘Decisions of Annual Conference’, 15/09/1947: 41.

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7. Baker J. 1965a. The New Zealand People at War: The War Economy (Wellington: Historical Publications Branch): 325. 8. Straight Furrow, 1945a. ‘Whose Money Is It?’, 15/04/1945: 36. 9. Straight Furrow, 1945b. ‘Payment of Full Export Price to Producers’, 16/10/1945: 56. 10. Straight Furrow, 1945c. ‘Who Gets the Lump Sum Payments?’, 15/11/1945: 5. 11. Straight Furrow, 1945d. ‘Lump Sum Payments Again’, 15/08/1945: 11. 12. Baker, 1965b. The New Zealand People at War: The War Economy (Wellington: Historical Publications Branch): 325. 13. Straight Furrow, 1945e. ‘Increased Produce Prices Wanted’, 15/08/1945: 51. 14. Straight Furrow, 1947d. ‘Dairy Industry Council’, 15/02/1947: 27. 15. Straight Furrow, 1946b. ‘Mr. Hale Expresses Disappointment At Increase Granted’, 15/10/1946: 19. 16. Straight Furrow, 1946c. ‘Dairy Farm Cost Allowance Increased’, 15/10/1946: 19. 17. Straight Furrow, 1946d. ‘Objection To Dairy Cost Allowance’, 15/11/1946: 9. 18. Straight Furrow, 1947e. ‘Commission Control Of The N.Z. Dairy Industry’, 15/05/1947: 6. 19. Straight Furrow, 1947f. ‘The Dairy Products Marketing Commission’, 15/08/1947: 2. 20. Straight Furrow, 1947g. ‘The Proposed Dairy Commission’, 15/05/1947: 1. 21. Straight Furrow, 1947h. ‘Mr. Blyde Reviews Work of Dairy Section’, 15/07/1947: 19. 22. Straight Furrow, 1947i. ‘Mr. Blyde Reviews Work of Dairy Section’, 15/07/1947: 20. 23. Straight Furrow, 1947j. ‘Report of Chairman to Annual Conference’, 15/07/1947: 21. 24. AJHR 1940a. (Appendices to the Journal of the House of Representatives), Commission Report, H29A: 2. 25. AJHR 1940b. (Appendices to the Journal of the House of Representatives), Commission Report, H29A: 1–12. 26. Economist, 1946. ‘The World’s Wool’, 09/11/1946: 758.

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27. Baker, 1965c. The New Zealand People at War: The War Economy (Wellington: Historical Publications Branch): 198. 28. Greensmith, E., 1996a. The New Zealand Wool Commission (Wellington: New Zealand Wool Marketing Corporation): 12. 29. Greensmith, 1996b. The New Zealand Wool Commission (Wellington: New Zealand Wool Marketing Corporation): 12. 30. Evans, B.L. 1969a. A History of Agricultural Production and Marketing in New Zealand (Palmerston North: Keeling and Munday): 94. 31. WDA 1945. (Wool Disposal Act). 32. Evans, 1969b. A History of Agricultural Production and Marketing in New Zealand (Palmerston North: Keeling and Munday): 96. 33. Straight Furrow, 1946e. ‘Contributory Charge on NZ Wool’, 15/11/1946: 11. 34. Straight Furrow, 1947k. ‘Meeting of Council of Agriculture Section’, 15/06/1947: 19/20. 35. Straight Furrow, 1947l. ‘Meeting of Council of Agriculture Section’, 15/04/1947: 42.

CHAPTER 5

Impact Nationally and Internationally

Introduction There were always strong reservations about ‘overseas’ control of primary production in New Zealand. The question of overseas control of meat freezing works in Southland through the 1940s and 1950s demonstrates attempts to resist overseas control and the distinctive roles of the national Federation, local provinces, Government and the Meat Board (Hall 2017).1 That demonstrated the Federation balancing national interests against local. In its early years Federated Farmers realised it needed to represent farmers not just in national matters but also internationally. The success in bringing together primary producer organisations in New Zealand gave considerable authority for farmers’ leaders participating in world farming politics. At the start of 1950 Federated Farmers published a list showing the problems it claimed had been successfully handled, demonstrating that at the 1940’s end the organisation was well established and recognised as a body that Government should always approach on farming policy even though there was no statutory obligation.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_5

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Producer Control of Meat Processing Table 5.1 shows that at the start of 1940 about one quarter of freezing factories were farmers’ cooperatives, half were proprietary companies with shares held by farmers, and one quarter were owned by overseas companies. But many New Zealand-owned companies had contractual arrangements with specific overseas companies as buyers giving the overseas companies strong influence. Bruce Curtis concludes that the Meat Board’s policy of resisting overseas control of freezing companies made New Zealand-owned companies sub-contractors to the overseas companies (Curtis 1996a).2 Through those arrangements the overseas companies controlled, at the end of World War II, 80% of meat exports from the North Island and about half the exports from the South Island (Curtis 1996b).3 The Board and Federated Farmers tried to stop that overseas ownership growing, justifying that approach through the mantra of ‘producer control’. According to Dai Hayward, that policy on formation of the Board in the 1920s was: Table 5.1 Ownership of New Zealand freezing works at the start of 1940 Overseas-owned Waitara, Waingawa, Fielding, Canterbury, Ngahauranga, Ocean Beach, Westfield, Tomoana, Kaiti (1 /2 share) Owned by proprietary companies with New Zealand majority shareholders Belfast, Fairton, Pareora, Petone, Shortland, Eltham, Longburn. Nelson, Castlecliff, Imlay, Picton, Islington, Smithfield, Burnside Owned by proprietary companies with New Zealand majority shareholders but with contractual arrangements to sell to specific overseas companies Mataura, Finegand, Morewa, Southdown, Horoliu, Tokumaru, Kaiti (1 /2 share), Whakatu Owned by farmer cooperatives Wairoa Owned by farmer cooperatives with contractual arrangements to sell to specific overseas companies Kaiapoi, Patea, Pukeuri Source Curtis, B. 1996. “Producers, Processors and Markets: A Study of the Export Meat Industry in New Zealand” (Ph.D. Thesis, University of Canterbury): Appendix 1

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Overseas meat interests have, rightly or wrongly, been regarded as the bogey-men of the export meat industry. It was always accepted that competition was necessary and that to a degree, this was supplied by overseas companies. However, the Board feared, especially during its early days, that an increase of overseas control would lead to a monopoly and the essential competition would thus disappear . . . In January 1923 it passed this rather dramatic resolution: “That this Board will look with an unfriendly eye upon: (a) the purchase by overseas interests of any Freezing Works in New Zealand, (b) the acquiring of any interest in New Zealand Freezing Works by overseas interests, and (c) the erection of new Freezing Works in New Zealand by overseas interests.” (Hayward 1972)4

As described by Clive Lind, in Southland there had been long-term dissatisfaction with meat processing facilities (Lind 1981a).5 In 1938, the provincial Farmers’ Union conference expressed ‘dissatisfaction with the freezing industry in Southland’. Federated Farmers in reviewing the history in 1950 said that from 1938 to 1946, ‘the congestion and lack of facilities’ were ‘extremely difficult and chaotic’ (Lind 1981b).6 Facilities in Southland compared unfavourably with those in other parts of New Zealand (Table 5.2), the ratio of need for annual killings to daily capacity being double that of Auckland and 50% more than that in Hawke’s Bay. Also, in Southland, the killings were compressed into a shorter killing season. The processing and marketing was carried out by two companies, the Southland Frozen Meat Company (SFMC) at Mataura and the Ocean Beach Freezing Company, the former being by far the most influential. As shown in Table 5.1, the companies were proprietary companies rather than cooperatives; Ocean Beach was overseas-owned. Table 5.2 Killing capacities and annual killings for Auckland, Hawke’s Bay and Southland in 1950

District Auckland Hawke’s Bay Southland

Daily capacity for killings

Annual killings

47,000 26,000 25,000

2,322,994 1,715,598 2,309,601

Source Curtis, B. 1996. “Producers, Processors and Markets: A Study of the Export Meat Industry in New Zealand” (Ph.D. Thesis, University of Canterbury): Appendix 1

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Meanwhile, Southland Federated Farmers had taken the initiative and wrote to the Meat Board that the local Federation had approved a proprietary company being selected to apply for a new freezing works licence in Southland (MBMB 1946a).7 In November 1946, Southland Federated Farmers asked whether the Meat Board would recommend granting a new licence. The Board’s response was that it would not ‘give a decision until complete information regarding ownership was available’ (MBMB 1946b).8 A Southland Sheep-Farmers Company was formed by Southland Federated Farmers to set up a new freezing works (Lind 1981c).9 But instead of restricting the proposed company to local farmers, the farmers formed a 50-50 arrangement with the overseas-owned W. and R. Fletcher Ltd to share financial risk with an organisation that had experience in the freezing industry (Lind 1981d).10 Fletchers were a subsidiary of the British Vestey organisation that operated globally in meat procurement. The President of Southland Federated Farmers justified the decision to join forces with Fletcher, farmers would have a: strong partner with a wide and lengthy experience in the erection and operation of freezing works, and processing and production standards of both the meat and the by-products which are the highest in the Dominion. Also with an unrivalled world-wide selling organisation. We also have a guaranteed throughput sufficient to assure the financial success of the company. (Straight Furrow 1952)11

In November 1947 the Meat Board was rather taken aback when it received a letter from the Minister noting that the Southland SheepFarmers Company was to join with the overseas-owned W. and R. Fletcher (N.Z.) Ltd to form the Alliance Freezing Company (Southland) Ltd with the intention to erect a new slaughterhouse in Southland (MBMB 1947).12 The Minister sought the Meat Board’s recommendation to approve a licence for the new works; the Board refused, telling the Minister that Fletchers already had ‘the largest share of New Zealand’s Meat Export Trade … It was not in Producers’ interest for this concern to obtain any greater hold’. The Board considered that the principle of producer control outweighed the local producers’ interests in solving their difficulties. In March 1948, the Board confirmed its policy that ‘there shall be no increase in overseas ownership or control of freezing works in New

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Zealand’ (MBMB 1948).13 Federated Farmers’ Meat and Wool Section was horrified that Southland farmers had entered into a partnership with an overseas-owned proprietary company. The Section resolved to urge the Federation, nationally, to continue to favour co-operative producer control of all new freezing works and those for sale in the future. N. J. B. Dougherty moved the resolution saying if farmers were not careful they would get only what was left after the proprietary company had its share. S. Sim said if Southland farmers attempted to share control with a proprietary business, they would find they have no control. Farmers, unfortunately, too frequently sold their shares in companies. J. R. Marren ‘deplored the lack of loyalty which is so frequently shown among members in regard to policy … Southland has gone behind our backs in this matter (Straight Furrow 1948)’.14 Discussions took place through 1948 and in October the Meat Board considered again a request from the Minister that the Board recommend granting a licence to Alliance—the Board again refused. Following pressure from Federated Farmers’ Head Office the Government agreed that the question of ownership of Freezing Works in Southland was of sufficient interest nationally that a Royal Commission was needed to look into and report on ‘the desirability of establishing an additional meat export slaughter-house in Southland’ (Lind 1981e).15 The Commission found the Southland farmers’ actions and persistence to be justified fully in pressing for a new company and new works. The farmers had believed ‘sincerely’ that good farming practices had suffered because of the way in which local freezing companies had operated. Evidence from farmers had not been rebutted by evidence from the Meat Board or the freezing companies (Straight Furrow 1951a).16 The Meat Board had always claimed that protection of producers had been its major objective; the Commission decided that Federated Farmers was the more effective and able to ‘afford strong protection against any scheme or policy which might prevent a farmer reaping the full reward of his labour’ (Straight Furrow 1951b).17 The Commission’s findings suggested that the Meat Board had become divorced from producers and at times may have acted against their interests. But Federated Farmers nationally also seemed divorced from Southland Federated Farmers. Southland Federated Farmers from the start recognised an essential need in Southland and the Royal Commission confirmed that need. Federated Farmers’ national reservations about overseas control inhibited it from pressing the Meat Board and the Government to force a solution.

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The issue remained very much alive through the 1950s. The Southland attitude was outlined, belligerently, in 1952 by the provincial president, A. V. Hartley, at a Meat and Wool Council meeting. Hartley’s remarks followed a Meat Board proposal to bypass Southland Federated Farmers by approaching a group of farmers outside Southland Federated Farmers to form a co-operative organisation comprised entirely of farmers. Hartley said: It is no use forcing the farmers to accept something that most of them do not want. Our executive will accept no responsibility if this is done … For years we have fought the South Island monopolies that are controlling 70 per cent. of the export meat. Now we want a licence for the company (Fletchers) that has been with us all through that fight. What the board must remember is that a licence is not merely an aid for the ownership of bricks and mortar, it is also goodwill between producers and operators. The Alliance company is a 50-50 company. The clause suggested by the Royal Commission, whereby any dispute be referred to arbitration on application of either shareholder, has been agreed to by Fletchers. No one could get any more co-operation than that.

He said it would be impossible to float a farmer-only co-operative works, the Meat Board proposal had been put behind Southland Federated Farmers’ backs to a very small minority. Southland Federated Farmers had not been approached. Hartley hoped the proposals would fail. He objected to the ‘whispering campaign’ that was being waged against the integrity of Fletcher—it was propaganda and a travesty of British justice. T. Double, also representing Southland, concurred with Hartley. He prophesied that the issue could split the Federation. “We will not be dictated to by a small minority of the wealthy element,” he said. “Our membership has been built up on this fight, and we will not have the Federation used as a springboard by our enemies” (Straight Furrow 1952).18 In 1954 the Meat Board was still refusing to grant a licence to the Alliance Freezing Company because of the involvement of an overseas company (MBMB 1954).19 Nationally, outside Southland, Federated Farmers still supported the Meat Board. The Dominion Council of Federated Farmers had been embarrassed in 1953 when the Minister of Agriculture sought the views of the Federation on the establishment of a meat export slaughterhouse in Southland, as recommended by the Royal Commission. Several members pointed

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out that the Federation had always regarded the establishment of the proposed works as a parochial matter and one that should be decided by the Southland Farmers, the New Zealand Meat Producers Board and the Government. The Minister’s reason for approaching the Federation was because he would “feel on much safer ground if I had the opinion of the Dominion Council of your Federation” when discussing the question with a caucus of Government members with the view to resolving the ‘long-standing’ problem. But the Council refused to give an opinion (Straight Furrow 1953).20 After ‘carefully considering the Minister’s letter’, the Council concluded it must adhere to its policy in such matters and directed the General Secretary to advise the Minister that, whilst Council appreciated being consulted, the Federation saw no reason to change its policy which was already well known to the Government. Southland farmers persisted and the Meat Board Chairman reported in mid-1955 that there had been numerous meetings between the Board and Southland farmers. It was agreed that the Alliance Freezing Company would become a public company with only bona fide farmers within Southland as shareholders, and with Articles of Association permitting it to grant rebates and limit dividends under co-operative principles. The Meat Board was now able to recommend to the Minister that directly the contract with W. and R. Fletcher (N.Z) Ltd. had been terminated and the share of W. and R. Fletcher (N.Z) Ltd. in the Alliance Company was acquired by Southland farmers, the Minister should agree to issue a licence (MBMB 1955).21 Eventually, Southland Federated Farmers and the Meat Board achieved a compromise acceptable to both. A. V. Hartley, president of Southland Federated Farmers, outlined the submissions made by the Southland farmers to the Meat Board. These submissions included: The sheepfarmers will find £500,000 capital for the Freezing, Company as needed. The Meat Board will lend the balance of the cost of the Works at 1% per annum for 40 years with right to repay £1000 or multiple at any time, interest ceasing on repayments. W. and R. Fletcher N.Z. Ltd. will establish and maintain a buying organisation in Southland and will undertake, if called upon to do so, to protect the Works’ volume by killing a minimum of 300,000 head during any season, for which the Freezing Company will give Fletchers first opportunity of

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marketing the resultant by-products subject to prices being satisfactory to the Directors. All shares in the Freezing Company to be owned by sheepfarmers, they to appoint the majority of directors. The Meat Board would be entitled to appoint directors approved by sheepfarmers. (Straight Furrow 1955b)22

Clearly, after much discussion a role had been found for Fletcher acceptable to both Fletcher and the Meat Board. In replying to the proposals the Board stated it would be prepared to recommend the granting of a licence on the general basis of the conditions outlined in the memorandum as qualified by subsequent discussion, on the understanding that the applicant Company and the holding Company reconstitute themselves to comply with the conditions specified by the Board. Federated Farmers nationally made no comment and gave little prominence to the agreement. The new works opened in March 1960 incorporating ‘the most modern techniques and developments in meat-killing and exporting’ and amply demonstrated that it met a need in Southland (Tait 1989).23

Impact Internationally Walter Mulholland had told farmers in 1944: It is important for the farmers of New Zealand to realise that the trend of events is forcing us more and more into the field of international co-operation. Isolation and a policy entirely dictated by ourselves is fast becoming impossible, if indeed it is not impossible today, and we must adjust our thinking and broaden our viewpoint to bring within their scope this larger aspect of affairs. (Straight Furrow 1945a)24

In January 1945 a delegation from the UK’s Farmers’ Union had visited New Zealand and the delegation’s leader, J. Turner, said that, following the setting up of the United Nations Food and Agriculture Organisation (FAO), it was ‘of paramount importance’ that farmers stake the claim of primary producers for representation. Turner said British farmers were not well acquainted with the problems for New Zealand farmers, nor New Zealand farmers acquainted with farmers’ problems in the UK. A regular exchange of views would be of inestimable mutual benefit. Both shared a common aim ‘to secure an equitable return to those who

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work on the land and to contribute our share to the common good’. He said that ‘nothing but good’ could come from constant collaboration between all countries, and especially those within the British Empire. He asked New Zealand farmers to consider promoting an International Federation of Agricultural Producers Organisations which should meet at least annually. He proposed that such a group should provide reliable information to members on food production, consumption, and distribution, on scientific advances in the industry, market intelligence, new market potentialities, and political information. The proposed group would co-ordinate primary producers’ views for representation at the FAO, either directly or through the respective delegates to the Commission. Turner thought post-war aerial transport would facilitate travel. Turner proposed that a conference of primary producers’ organisations be held in London and invited New Zealand farmers to attend. One objective would be to encourage Governments to include representatives of the primary producers’ organisations in delegations to the FAO. The conference would also set up the machinery for an International Federation of Agricultural Producers (IFAP) (Straight Furrow 1945b).25 The response from New Zealand farmers was positive. A motion proposed to the meeting by D.H. Cockburn (Otago) was carried unanimously; this fully representative conference of primary producers of New Zealand warmly welcomes the proposals of the United Kingdom farmers’ delegation, and strongly recommends that delegates be sent to a conference of primary producers’ organisations in London.

Cockburn said if New Zealand farmers were not prepared to participate in an international body, they would not be facing matters squarely. W. Malcolm seconded the motion, saying that New Zealand farmers in their organisation had not achieved anything like the unanimity of the British Farmers’ Union. The British farmer was thinking miles ahead of the New Zealander because in their organisation they were miles ahead (Straight Furrow 1945c).26 The meeting proposed by Turner eventually took place in May 1946 and the New Zealand delegation, led by Mulholland, played a strong role with the authority of being able to claim it was speaking on behalf of an organisation that represented virtually all farmers in New Zealand.

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At the meeting Mulholland said that, in the present proposals, the producers’ federation was too subordinate to the United Nations FAO. The New Zealand view was that the federation should be entirely an independent farmers’ organisation representing farmers’ viewpoints. Its relations with FAO. should be those of most national farmers’ relations with their Governments. They should be free to criticise, free to offer suggestions and free to co-operate—but ‘free to use the boot on the others’ trousers’. Unless farmers made their weight felt, the FAO. would become a periodical holiday resort for over-worked Government officials. Mulholland proposed we can all unite: To raise the social and economic standing of agriculture throughout the world; To obtain the fullest use of agriculture’s potential capacity; To accept common responsibility within the producers of each commodity for surpluses in that commodity; To encourage or criticise Governmental and inter-Governmental action, making full use of members for this purpose; To ’sell’ farmers to the people of the world.

Mulholland proposed that the original objectives of IFAP set out to the conference should be changed. He wanted a much stronger focus on support for producers and raising their status. He wanted to avoid the IFAP being a FAO subsidiary. He suggested the objectives should be: To co-ordinate action by national organisations and promote the wellbeing of all who obtain their livelihood from the land, and to assure to them an adequate and steady remuneration in order that they may supply the full sum of food and fibre needs; To raise the status of agriculture to the first place in human effort; To influence, advise on, and assist international action through member organisations and other agencies. (Straight Furrow 1946a)27

Mulholland’s proposals were influential, the objectives finally agreed were:

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To promote the well-being of those who gain a livelihood from the land and assure their adequate and safe remuneration. To exchange information and ideas for the purpose of co-ordination of action by world farmers. To confer with, advise or assist FAO. and other international organisations in matters affecting the welfare of agricultural primary producers. (Straight Furrow 1946b)28

Another New Zealand delegate who made a significant contribution to the conference was Keith Holyoake who during the next 30 years became New Zealand’s most influential politician when he progressed from Federated Farmers to Minister of Agriculture, Prime Minister and Governor-General. Holyoake’s basic training in politics was through his engagement in farmer politics. At various times he had grown hops, tobacco, and fruit and had been an MP in the 1930s. By 1943, Holyoake had been President of the Nelson Province of the Farmers’ Union since 1935 and was the Union’s South Island Vice-President. In his biography of Holyoake, Barry Gustafson says that: as a fruit, hops, and tobacco farmer, Holyoake was seen as being committed to neither the sheep farmers nor the dairyfarmers. He was thus able to play a constructive role in helping to bring the various farming factions together. (Gustafson 2007a)30

Holyoake’s skill in bringing ‘factions together’ possibly accounts for his long-term success as a politician, he listened to others more than having dogmatic principles that he tried to persuade others to accept. But that did mean that once in power he would not put farming interests above all others. In 1941 he became one of six members of the provisional executive of Farmers’ Federation and was one of seventeen signatures on the applications to incorporate Federated Farmers in December 1944 and served as its Vice-President from 1944 until 1950. In all, he was a Dominion Council member of the Farmers’ Union and Federated Farmers from 1932 to 50. Gustafson says: Holyoake believed that his activity in the Farmers’ Union and later Federated Farmers meant that he knew nearly all the leaders of the farming

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industry in New Zealand, was on a first-name basis with them all, and a personal friend of many.’ (Gustafson 2007b)31

Holyoake supported Mulholland’s amendment at the IFAP meeting saying that the original motion gave the federation’s purpose as advising on and assisting inter-Governmental action through the FAO. and other international bodies: To freedom-loving farmers that seemed to go too far. The amendment, on the other hand, stressed the right of the farmer, through his own national democratic organisations, to have the maximum possible amount of control.

Holyoake said the New Zealand delegation insisted that farmers should have the maximum possible say in influencing Governments and in handling their own affairs: Our national farmers’ organisation … will not accept an organisation which has for its primary objective an object which is worded in such a way that it can be interpreted that all the international organisation would do would be to advise and assist inter-Governmental action. (Straight Furrow 1946c)32

Achievements in the 1940s Achievements claimed by Federated Farmers since its formation listed at the start of 1950 included: opposed the introduction of a wholesale price order for meat consumed on the local market, and succeeded in keeping the months of September, October and November free from the order; was successful in combating Price Control Division interference in livestock sales; persuaded the Meat Board to investigate deductions made by freezing companies for shorn lambs. A schedule was then prescribed which was agreed to as being reasonable; successfully resisted an attack on stock and station co-operatives;

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submitted extensive evidence to the Sheep Industry Commission from all parts of New Zealand; pressed for, and successfully opposed attempts to prevent, the passing of the Stock Remedies’ Act that provided valuable protection against quack stock remedies and faulty sheep dips; made effective representations to expedite the importation of wire; pressed for the manufacture of adequate supplies of penicillin for veterinary requirements; was successful in having the lime transport subsidy backdated to when free cartage was cancelled; has been foremost in advocating and promoting the development of aerial topdressing; arranged for the distribution each season of the particulars of germination of Government-approved turnip and swede seeds; was successful in having a Federation member appointed to the Transport Charges Committee; employed a special officer to attend to transport and industrial matters. Several attempts to have charges increased were successfully withstood; assisted the Bobby Calf Pools to secure an additional 71d. a lb. allowance for the cost of production of bobby calf skins; at a time when dollar spending was heavily restricted, secured the release of 61 million dollars for the importation of necessary farm machinery and parts front North America. This was additional to importations from the UK. In 1949 the Federation secured the release of 31 million dollars for a six months’ period with a further release assured for the later six months; put its full weight behind the Aid for Britain movement making possible the export of more food to the UK;

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assisted the commercial gardeners to break the boycott imposed by retailers concerning container charges; ensured adequate supplies of superphosphate at the lowest possible price; negotiated wage agreements as applying to dairy-farm and other farm and station employees; secured relief in income tax so that income from the sale of trees planted on farming land could be spread over several years. secured provision for adjustments of assessments in cases where, by reason of having adopted an unduly low standard value, the apparent profit on the sale of livestock is not real profit; strengthened the right to freehold; obtained an arrangement whereby farmers and others who were unable to use their allowance of petrol for holidays at Christmas, to obtain a licence making the petrol available in a later months. (Straight Furrow 1950)33

The list of ‘successes’ for Federated Farmers suggest that the organisation was operating well in the immediate years after its foundation with autonomous Sections and Provinces allowing the Federation to cope with an extremely diverse range of topics, topics flowing up through the organisation from individual farmers. The Federation benefitted from the close links with Government formed during wartime, especially by leaders such as Mulholland who served on Government committees set up to ensure national cooperation. The future test for the Federation was how well it could maintain its national influence as the strong need for national wartime cooperation dissipated. Take Away Points There were always strong reservations about ‘overseas’ control of primary production in New Zealand, The distinctive roles of the Federation, regional sensitivities, Government and the Meat Board were demonstrated by debate over producer control of meat processing facilities in Southland. The Southland farmers had formed a 50-50 arrangement

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with the overseas-owned W. and R. Fletcher Ltd. The Meat Board and Federated Farmers’ Head Office opposed overseas ownership. A Royal Commission found the Southland farmers’ actions to be justified fully and Federated Farmers’ nationally seemed divorced from Southland. Federated Farmers realised it needed to represent farmers not just in national matters but also internationally. In 1945 a UK’s Farmers’ Union delegation visited New Zealand and asked farmers to consider promoting an International Federation of Primary Producers Organisations. New Zealand responded positively and played a strong role in the new organisation’s first meeting in 1946. The Federation benefitted from the close links with Government formed during wartime to ensure national cooperation.

Notes and References 1. Hall, D. 2017. ‘Producer Control in the New Zealand Meat Industry in the 1940s/1950s’, Journal of New Zealand Studies NS25 2017: 72–87. 2. Curtis, B.M. 1996a. ‘Producers, Processors and Markets: A Study of the Export Meat Industry in New Zealand’ (PhD Thesis, University of Canterbury), 99. 3. Curtis 1996b. ‘Producers, Processors and Markets: A Study of the Export Meat Industry in New Zealand’ (PhD Thesis, University of Canterbury): 76. 4. Hayward, D. 1972. Golden Jubilee: The story of the First Fifty Years of the New Zealand Meat Producers Board 1922–1972 (Wellington: Universal Printers): 162. 5. Lind, C. A. 1981a. The Keys to Prosperity: The Centennial History of Southland Frozen Meat Ltd. (Southland Frozen Meat Ltd., Invercargill): 212. Lind gives the Company’s point of view on the question of the need for additional freezing works in his book written for the Company’s centennial and published by the Company. 6. Lind, 1981b. The Keys to Prosperity: The Centennial History of Southland Frozen Meat Ltd. (Southland Frozen Meat Ltd., Invercargill): 237. 7. MBMB 1946a. (Meat Board Minute Book) 8, 28/08/1946: 411. 8. MBMB 1946b. (Meat Board Minute Book) 8, 01/11/1946: 428.

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9. Lind, 1981c. The Keys to Prosperity: The Centennial History of Southland Frozen Meat Ltd. (Southland Frozen Meat Ltd., Invercargill): 226. 10. Lind, 1981d. The Keys to Prosperity: The Centennial History of Southland Frozen Meat Ltd. (Southland Frozen Meat Ltd., Invercargill): 226. 11. Straight Furrow 1952a. ‘Issue Not Yet Decided: Deep Flaws In All-Farmer Scheme’, 15/01/1952: 6. 12. MBMB 1947. (Meat Board Minute Book) 9, 6/11/1947: 494. 13. MBMB 1948. (Meat Board Minute Book) 9, 5/03/1948: 517. 14. Straight Furrow 1948. ‘Producer-Control of Freezing Works’, 15/04/1948: 37. 15. Lind, 1981e. The Keys to Prosperity: The Centennial History of Southland Frozen Meat Ltd. (Southland Frozen Meat Ltd., Invercargill): 235/236. 16. Straight Furrow 1951a. ‘Killings in Southland: Figures Show Terrific Pressure Exerted’, 15/10/1951: 40. 17. Straight Furrow 1951b. ‘Commission Says New Freezing Works For Southland Is A Necessity’ 15/10/1951: 3. 18. Straight Furrow 1952b. ‘Southland President’s Anti-Trust Fight’, 15/01/1952: 7. 19. MBMB 1954. Meat Board Minute Book 11, 05/08/1954: 1062/3. 20. Straight Furrow 1953. ‘Establishment of Meat-Export Slaughterhouse Discussed: Southland Freezing Works’, 01/03/1953: 11. 21. MBMB 1955. Meat Board Minute Book 11, 04/08/1955: 1169– 1170. 22. Straight Furrow 1955. Farmer-Owned Freezing Works for Southland’, 1/07/1955: 11. 23. Tait, P. 1989. In the Chair: the Public Life of Sir John Ormond, (CHB Print, Waipukurau): 164. 24. Straight Furrow 1945a. ‘United Kingdom Farmers’ Delegation’, 15/01/1945: 3. 25. Straight Furrow 1945b. ‘International Collaboration: Meeting in London’, 15/01/1945: 10. 26. Straight Furrow, 1945c. ‘Resolution Carried—London Conference To Be Held’, 15/01/1945: 24.

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27. Straight Furrow, 1946a. ‘Opening of London Conference: Mulholland States New Zealand’s Case’, 15/06/1946: 4. 28. Straight Furrow, 1946b. ‘Final Decisions Made In London: Provisional Federation Now Formed’, 15/06/1946: 9. 29. New Zealand is a monarchy with the British monarch as the head of state. The monarch’s representative in New Zealand is the Governor-General. 30. Gustafson, B. 2007a. Kiwi Keith: A Biography of Keith Holyoake, (Auckland University Press, Auckland): 37. 31. Gustafson 2007b. Kiwi Keith: A Biography of Keith Holyoake, (Auckland University Press, Auckland): 37. 32. Straight Furrow, 1946c. ‘Freedom Claimed For World’s Farmers: Holyoake’s Address At London Conference’, 15/06/1946: 5. 33. Straight Furrow 1950. ‘Federated Farmers Does Pay Dividends’, 16/01/1950: 40/1.

CHAPTER 6

Farming Anxieties and a More Favourable Government

Introduction Farming anxieties were demonstrated by a Royal Commission on the sheep farming industry in the late 1940s. That gave a thorough insight into the state of New Zealand’s main foreign exchange earner at the end of the 1940s—its meat and wool farming. Also, a change thought to be favourable for farming was that for the first time since before World War II a National Government was elected with a former Federated Farmer as the Minister of Agriculture. One key interaction with Government at the 1950s’ start that was to be repeated in the next two decades was Federated Farmers seeking support for its central operations through a compulsory levy on farming produce.

Anxieties at the Start of the 1950s The farming anxieties influencing agricultural economics and food policy in New Zealand were identified by a Royal Commission on the sheep farming industry in the late 1940s. Economic anxieties were that the Government was anxious that its leading foreign exchange earner, the sheep farming industry, faced decreasing productivity while farmers were anxious that costs were increasing with no accompanying increase in their income and were finding it difficult to maintain, let alone improve, © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_6

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productivity. Rural society in general was anxious that the Government’s interventionist policies favoured urban communities leaving the rural community as ‘political outcasts’. Sheep-farmers’ wives were anxious that they were being left behind in adopting modern labour-saving devices and in social life more generally including their children’s education and medical support. Both Government and sheep farmers were anxious that rural labour was ‘drifting’ to the towns and sought to reverse that. Government environmental scientists were anxious that global concerns over soil erosion and the potential loss of food-producing capacity were also serious threats in New Zealand and steps had to be taken to prevent erosion; farmers were anxious that their income would suffer from those steps to cure what they saw as threats that were exaggerated (AJHR 1949a).1 The lands under discussion were mainly marginal lands that were taken up when sheep farming was expanding, but the remoteness, the terrain, the isolation and the additional transport costs made farming exceptionally difficult. The difficulties had been there from the start, but by the 1950s, with urban activities offering increasing opportunities, the rural community’s perception grew that Government intervention was helping the urban community more than the rural. Anxieties were not about an absolute decline in wealth or status but a relative decline; perhaps best summarised by Mrs Wilson noting the farmers’ perception that they were no longer seen as ‘the backbone’ of New Zealand but were becoming the ‘funny bone’ (AJHR 1949b).2 Though the farmers’ political representatives in the early twentieth century were opposed to ‘socialism’ and the Government intervention that implied, Government subsidisation in rural areas was increasingly sought. In the 1940s, maintaining the ‘environment’ meant maintaining the land’s productive capacity rather than the maintaining the indigenous environment. However, evidence to the Royal Commission and the Commission’s reaction demonstrate how striking an appropriate balance between individuals’ environmental awareness, financial issues, national prosperity and Government regulations was difficult. All agreed something must be done, but no one wanted to pay or see their way of life changed. Also, extremist views tended to receive most publicity and that created a polarised climate masking views that might otherwise be close to consensus. The Royal Commission passed on the anxieties without scrutinising their relative importance and the anxieties’ reality. It simply suggested that

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something must be done about all anxieties and that Government should increase rural expenditure to meet the farmers’ needs. That ‘something must be done’ included rearranging Government bodies and adding new Boards, for instance, a Sheep Board and a Marginal Lands Board. Rather than finding solutions, the Commission simply suggested new bodies for discussing the problems further. The Commission’s make-up, with high and hill country farmers dominant, appears in hindsight to have been simply a body representing farmers rather than an independent body able to take a dispassionate view. The diversity of problems reported to the Royal Commission demonstrates that the task facing Federated Farmers at the 1950’s start was, as in the 1940s, not coping just with a few, major, problems but advancing on a broad front trying to cope simultaneously with several. To obtain widespread opinion on the Royal Commission’s report, Federated Farmers asked its North Island Hill Country Committee, South Island High Country Committee and all districts to send to head office their opinions on the Commission’s recommendations. Those opinions were consolidated and finally considered by the Meat and Wool Section Council. The Meat and Wool Section’s conclusions were then circulated to Dominion Council members and approved unanimously before being submitted to the Government. The Federation claimed that the Government should be well satisfied that the conclusions expressed the whole farming community’s opinion. That demonstrated the main argument for Federated Farmers’ importance as an advisor to Government relative to the statutory Boards—its claim to represent directly farmers, whereas the statutory Boards were a step away from direct representation. Federated Farmers agreed most Sheep Commission’s recommendations and made several additional comments (Straight Furrow 1950a).3 The Commission recommended that a Marginal Lands Board be set up and that there should be a subsidy paid for fertiliser for marginal lands administered by a separate Marginal Lands’ Committee. Federated Farmers approved the Commission’s recommendations but wanted increased farmer representation on the Board and Committee, with farmer members recommended by the Federation. The Commission recommended that uneconomic farm units should be regrouped into large units with regrouping compulsory and agreed by a Sheep Industry Board. Federated Farmers wanted regrouping to be

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decided by local committees appointed after consultation with Federated Farmers. Federated Farmers approved all the recommendations made by the Commission on income tax except that concerning livestock treatment, wanting farmers to be choose between treating their livestock for tax purposes as either capital stock or, as was the position in the UK, trading stock. Federated Farmers supported the Commission’s recommendations on death duties but considered that they did not go far enough. The Federation thought the death duties in many cases imposed a crippling burden on the land, and that death duty rates should be reduced substantially to prevent the land being impoverished. High death duty rates tended to cause farmers to over-farm or under-maintain their land in their later years to provide for estate and succession duties payable on their deaths. Federated Farmers approved recommendations on rural housing but considered that farmers should be able to obtain finance under the Rural Housing Act at interest rates similar to those allowed by the State Housing Department of State rental houses in urban areas.

A More Favourable Government? At 1950s start, farmers felt they could go ahead and increase production without the insecurity and frustration which had burdened them for so long. It was anticipated that the ‘sense of insecurity and frustration’ would disappear because the 1949 General Election brought into power the party thought more sympathetic to rural society, the National Party. The change in Government was expected to lessen the many rural anxieties about Government favouring urban communities. National had opposed too much Government intervention and spending, winning the election through much emphasis on the Labour Government’s ‘wasteful’ spending. Keith Holyoake, standing for election as a National MP, had said during the election campaign: ‘primary production is the basis of the standard of living of every person in New Zealand … the best way to increase our standard of living would be to increase our primary production’ (Gustafson 2007).4 Holyoake was careful to state that he was expressing his own opinion rather than his party’s; he implied that there would be increased spending in rural areas even though the National Party was calling for reductions in Government spending. In doing this, he displayed the political awareness that

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made him successful as a politicians in longevity terms in power and influence. Holyoake, who had been a Federated Farmers’ Vice-President and involved in events leading to the Federation’s formation, became the Minister of Agriculture and Marketing. Holyoake soon after taking office met with the Federated Farmers’ Dominion Council and spoke positively about his future relationship with farmers: ‘This is a homecoming for me. Around this table with many of you here, and, with other old stalwarts no longer with us, I learned my politics’. Holyoake said he approached his task ‘very humbly’ and continued: I think I may say that I have a pretty general knowledge of farmers’ problems but no man may say that he knows all about farming problems. I have no doubt that, in certain matters any one of you here knows far more than I will ever know but I will do my best to learn everything that I can about those problems. I have learned along with you fellows and have at least a smattering of knowledge … Increased production from the farmlands of New Zealand means an increased standard of living for everyone in the Dominion. Now that the Government had changed there was a receptiveness in the minds of all farmers to pleas for more production and that could be achieved through teamwork.

Holyoake concluded that he was convinced that Federated Farmers would cooperate to the best of its ability and he knew that there was now a more responsive attitude. He told the Dominion President, W.N. Perry: ‘At all times my door is open to you and your organisation’. Perry replied: your appointment puts agriculture where it should properly stand in the relationships of State departments—next in importance to finance … We farmers now have totally different feelings about our work and our future … We will feel that we can now go ahead and increase production without that sense of insecurity and frustration which has burdened us for so long … We seek no special treatment from you; all we require is fair chance to do our work. If we get that chance I can assure you that the farmers will respond most heartily. (Straight Furrow 1950b)5

A similar analysis to that reported in Chapter 2 shows that for specific requests made in 1950 to the National Government 42% received a positive response, that same percentage as in 1947, 44% received holding

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responses, double the number in 1947, and 14% were refused, less than half those in 1947. This simple analysis suggests that the National Government was far more inclined to look into matters rather than giving an immediate negative response to farmers. Perhaps, that demonstrates that National had more sympathy (or was more cautious because it was new to governing) and was prepared to listen more to farmers, but there was no guarantee that Federated Farmers’ proposals would be accepted. Rural representation was still outnumbered by urban representation in Parliament. Early in his time as Minister of Agriculture, Holyoake re-introduced a subsidy on fertilisers and made provision for house-building in rural areas (NZPD 1950a).6 He also set up a Primary Production Advisory Committee to advise him on how to increase production in all primary production sectors (NZPD 1950b)7 (FF 1950)8 and included Federated Farmers’ representation in the Committee. But optimism was quickly damped. The new Prime Minister, Sidney Holland, announced: The previous Government has committed New Zealand to spend very much more than it is raising from the people of New Zealand by taxation and borrowing combined. New Zealand is spending overseas much more than she is earning overseas. Inflation is in top gear … causing serious difficulties in the country’s overseas balance of payments. It will not be possible to correct all the distortions of years of inflation overnight or in a day or even a year. New Zealand is living both externally and internally far beyond its income and is meeting the internal deficiency by the disastrous methods of creating Reserve Bank credit without a corresponding production of goods or services. (Straight Furrow 1950c)9

Straight Furrow warned farmers: By now it will have become apparent to the Government that there will be grave difficulty in carrying out all the promises made by the National Party in the election campaign. To those who have studied the financial situation in New Zealand it is apparent that unless the printing press is resorted to, there will be a shortage of funds to meet the huge Government expenditure built up by the Labour Party … It is fairly clear that some of the financial promises which the National Party made to the electors will have to stand over. (Straight Furrow 1950d)10

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A Levy to Support Federated Farmers? From its formation, Federated Farmers’ operations had been funded from members’ subscriptions, but there was always an ambition that extra funds could be gained by a produce levy following, for instance, the orchard levy that had supported the Fruitgrowers’ Federation for many decades. Possibly sensing a favourable opportunity with the National Government’s election, with a former Federated Farmer as the Minister of Agriculture, and with Federated Farmers being invited to serve on the Primary Producers Advisory Committee, resolutions on the issue were agreed at the annual Dominion Conference and the General Secretary wrote to Holyoake: At the recent Annual Conference of the Federation the following resolutions were carried, and I was directed to forward them on to you for your information: “That the time is now opportune to urge the implementation of a levy on produce to finance Federated Farmers, and that this matter be given urgency.” “That this Conference recommends to the Dominion Council that in the interests of assisting production by making it possible for more people to be employed on the land, that representations be made to the Government for the previous resolution asking for the financing of Federated Farmers by way of a levy on produce to be implemented. This would ensure that in a time of recession there would be money available to ensure the guarantee of rent for State houses. If this policy is adopted, Federated Farmers will take full responsibility for the guarantee of rent which the Minister of Housing has asked for.” (ANZ 1950a)11

There was no supporting information but, perhaps, it was expected that Holyoake was sufficiently aware from his involvement in the Federation. The approach demonstrated some naivety because Holyoake, even if he, himself, strongly supported the concept, would have to persuade the Cabinet which would want to know the implications and background. Holyoake demonstrated that he would not simply be a conduit for carrying Federated Farmers’s wishes into Government unmodified— he would not be Federated Farmers’ representative within the Cabinet. Trying to avoid being seen as such a representative may well have made

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him, within Cabinet, less sympathetic to issues raised by the Federation than the Federation had initially anticipated. Holyoake agreed to present the proposal to Cabinet but insisted that, if Government agreed that there should be a levy, a majority of Federation members should consent and an acceptable basis for the levy proposed (ANZ 1950b).12 Holyoake was probably aware that some farmers were strongly against the levy. The Helensville branch had ‘lodged an emphatic protest’ against such a levy and asked the Auckland Provincial Council to ‘do all in its power to prevent any such imposition’ (Straight Furrow 1950e).13 Unsurprisingly, ‘on the information before them, Cabinet was not disposed to view the project favourably, they considered that the matter should, in the meantime, be deferred’ (ANZ 1950c).14 Holyoake discussed the issues with the Federated Farmers’ President and General Secretary, both ‘appreciated the anomalies’ which might be created if their Annual Conference recommendations were approved. Holyoake proposed support for Federated Farmers from the meat, dairy and wool reserve accounts and the Federated Farmers’ President agreed to discuss this possibility with the Producer Boards’ chairmen. In the meantime, Holyoake, following advice from his Director General of Agriculture, decided ‘there is nothing fresh which might be placed before Cabinet’ (ANZ 1951a).15 Agreement was reached that the three Boards would make annual payments, but that put a brake on how far the Federation could go in criticising the Boards’ activities (ANZ 1951b).16 Federated Farmers decided that the Government might be persuaded if a farmers’ referendum strongly supported the levy and the Federation asked Holyoake whether the Government would be prepared to assist (pay for?) a referendum (ANZ 1952a).17 Holyoake met with the Federated Farmers’ President and Research Officer and the meeting demonstrated clearly the barriers to be overcome before even Holyoake would give his full support. Federated Farmers described specifically what they were proposing—a 1% levy on gross values for products under the jurisdictions of the Dairy Board, Meat Board, Wool Board, Potato Board, Wheat Committee and Town Milk Council. It would mean a dairyfarmers’, meat farmers’, wool farmers’, potato farmers’, wheat farmers’ and town milk suppliers’ referendum and would have to be done through the Government Electoral Officer. Holyoake ‘thought it would be a pretty big job’. He said Federated Farmers was now proposing compulsory membership for their organisation. He had always been against such a proposal

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but would not fight strongly against it or recommend against it if a referendum showed a majority in favour. His attitude was that an industrial organisation’s compulsory membership was very different from a political organisation’s. He said that if the farmers’ majority wanted the scheme, then the Government was there to serve the majority’s will, but he would never be happy in recommending it. He said there was nothing whatever to stop Federated Farmers carrying out such a referendum, but if they were asking the Government to do it that was another matter. The President asked that if Federated Farmers conducted a referendum and the majority were in favour would they still have to get approval from the Government? Holyoake said he could take it up with Government, but, ‘being completely honest’, he was not happy about it himself. The President asked whether the Government would either carry out the referendum or provide assistance. Holyoake said he had doubts partly because the Dominion Conference was not unanimous that there should be a referendum. Despite his apparent sympathy for farmers, Holyoake was realistic enough to know that he alone could not make decisions, he would have to persuade Cabinet (ANZ 1952b).18 Federated Farmers sent to Holyoake the exact text to be placed before farmers and the basis on which the roll of voters was to be prepared (ANZ 1953a).19 Holyoake replied: that the Government had given these proposals very careful thought. Because the remit by which your Annual Conference initiated the proposals was in broad terms and voting on the remit was by no means unanimous, the Government wanted a clearer indication of the feeling of your organization’s members generally before deciding if Government should assist in conducting the referendum. I suggest, therefore, that you again place the matter before an Annual Conference for re-affirmation in terms of the specific proposals now put forward for establishing the roll of voters and for setting out the form of ballot paper to be used. (ANZ 1953b)20

Holyoake was influenced by the Department of Agriculture’s Director General. The Director General saw difficulties. He was not satisfied that a satisfactory roll could be produced based on Federated Farmers’ membership coupled with non-members’ rights to be enrolled by declaring qualification for enrolment.

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The Director General concluded that a referendum on the basis suggested by Federated Farmers would, whatever the result, not be satisfactory for ascertaining the producers’ attitude to the proposed levy. A possible solution would be to make legislation authorising the levy subject to a leviable producers’ majority, in a Government-conducted referendum. The Director General recommended that the proposal be referred to Cabinet for consideration and direction (ANZ 1953c).21 The Cabinet considered Federated Farmers’ proposal and the following points were made in the Cabinet discussion: There was no objection to a levy to finance the operation of Boards such as the Honey and Potato Marketing Boards which were concerned exclusively with the marketing of the products of specialized groups of producers and with the economic affairs of the industries to which those producers belonged. Federated Farmers was a much wider organization which was not primarily concerned with the marketing of particular products. If legislation were enacted as proposed by Federated Farmers, it would be difficult if not impossible, to refuse requests for a similar legislative provision on behalf of manufacturers and importers. Though there was no objection to Federated Farmers taking a referendum at their own expense, this could not be authorized from Government funds. Moreover, as some producers were not members of Federated Farmers, it would be difficult to settle the basis of the referendum and how any scheme of compulsory levy could operate equitably.

Cabinet decided that it could not approve expending Government funds on a referendum and that no commitment could be made should Federated Farmers decide to conduct a poll at their own expense (ANZ 1953d).22 Holyoake informed Federated Farmers, thereby bringing the issue to an end for a decade (ANZ 1953e).23 Federated Farmers had to fall back onto annual grants made by the Meat, Dairy and Wool Boards. Take Away Points Anxieties influencing agricultural economics and food policy in New Zealand were found by a Royal Commission on the sheep farming industry to be economic, societal and environmental.

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The 1949 General Election brought into power the party thought more sympathetic to rural society, the National Party with Keith Holyoake a former Federated Farmers’ Vice-President as the Minister of Agriculture and Marketing. One key interaction with Government at the 1950s start was whether Federated Farmers’ central operations should be funded by a levy on farming produce. Cabinet decided that no commitment could be made. The Federation had to fall back onto annual grants made by the Meat, Dairy and Wool Boards.

Notes 1. AJHR 1949a. (Appendices to the Journal of the House of Representatives), Report of the Royal Commission to Inquire into and Report Upon the Sheep-Farming Industry in New Zealand, H46A. Evidence is recorded in 19 Volumes of typed manuscript held at Archives New Zealand. 2. AJHR 1949b. (Appendices to the Journal of the House of Representatives), Report of the Royal Commission to Inquire into and Report Upon the Sheep-Farming Industry in New Zealand, H46A; Evidence, Vol. 18, p23Q9–23Q12. 3. Straight Furrow, 1950a. ‘The Sheep Commission Report: Federation in General Agreement But ….’, 15/04/1950: 7–9. 4. Gustafson, B. 2007. Kiwi Keith, a Biography of Keith Holyoake (Auckland University Press, Auckland): 52. 5. Straight Furrow, 1950b. ‘A Farmer Among Farmers: Holyoake Addresses Dominion Council’, 16/01/1950: 2. 6. NZPD 1950a. (New Zealand Parliamentary Debates), 1950, Vol. 291: 1838–1843. 7. NZPD 1950b. (New Zealand Parliamentary Debates), Right Hon. Holyoake, 1950, Vol. 291: 2376. 8. FF 1950. (Federated Farmers), Dominion Agriculture Produce Section, Circular 122, Federated Farmers 90–343 MSY–2691, 1950: 3/5. 9. Straight Furrow, 1950c. ‘Mr. Perry and Mr. Holland’, 15/02/1950: 2. 10. Straight Furrow, 1950d. ‘The Road Ahead’, 15/02/1950: 1. 11. ANZ 1950a. (Archives New Zealand), General Secretary, Federated Farmers to Minister of Agriculture, 01/08/1950, AAFZ

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W1710 7174 Box 70, Rec No 2589, Produce Levy to Finance Federated Farmers of New Zealand. 12. ANZ 1950b. (Archives New Zealand), Keith Holyoake to Cabinet, 25/08/1950, AAFZ W1710 7174 Box 70, Rec No 2589, Produce Levy to Finance Federated Farmers of New Zealand. 13. Straight Furrow, 1950e. ‘Auckland Notes: Subscription Levy on Farm Produce’, 15/11/1950: 19, 23. 14. ANZ 1950c. (Archives New Zealand), Secretary of Cabinet to Minister of Agriculture, 05/09/1950, AAFD W2347 811 Box 46 CAB 123/9/1, Primary Industries Federated Farmers of New Zealand. 15. ANZ 1951a. (Archives New Zealand), Memorandum for Minister of Agriculture—Produce Levy to Fund Federated Farmers of New Zealand, 06/02/1951, AAFZ W1710 7174 Box 70 Rec No 2589, Produce Levy to Finance Federated Farmers of New Zealand. 16. ANZ 1951b. (Archives New Zealand), Secretary New Zealand Wool Board to Minister of Agriculture, 15/06/1951, AAFZ W1710 7174 Box 70 Rec No 2589, Produce Levy to Finance Federated Farmers of New Zealand. 17. ANZ 1952a. (Archives New Zealand), General Secretary, Federated Farmers to Minister of Agriculture, 02/10/1952, AAFZ W1710 7174 Box 70 Rec No 2589 Produce Levy to Finance Federated Farmers of New Zealand. 18. ANZ 1952b. (Archives New Zealand), Notes of Deputation, Minister of Agriculture with representatives of Federated Farmers, 16/10/1952, AAFZ W1710 7174 Box 70 Rec No 2589 Produce Levy to Finance Federated Farmers of New Zealand: 1–3. 19. ANZ 1953a. (Archives New Zealand), General Secretary, Federated Farmers to Minister of Agriculture, 13/02/1953, AAFZ W1710 7174 Box 70 Rec No 2589 Produce Levy to Finance Federated Farmers of New Zealand. 20. ANZ 1953b. (Archives New Zealand), Minister of Agriculture to General Secretary Federated Farmers, 13/03/1953, AAFZ W1710 7174 Box 70 Rec No 2589 Produce Levy to Finance Federated Farmers of New Zealand. 21. ANZ 1953c. (Archives New Zealand), Director-General Ministry of Agriculture to Minister, 02/09/1953, AAFZ W1710 7174 Box 70 Rec No 2589 Produce Levy to Finance Federated Farmers of New Zealand: 1/2.

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22. ANZ 1953d. (Archives New Zealand), Memorandum Secretary of the Cabinet to Minister of Agriculture, 22/09/1953, AAFZ W1710 7174 Box 70 Rec No 2589 Produce Levy to Finance Federated Farmers of New Zealand. 23. ANZ 1953e. (Archives New Zealand), Minister of Agriculture to General Secretary Federated Farmers of New Zealand, 30/09/1953, AAFZ W1710 7174 Box 70 Rec No 2589 Produce Levy to Finance Federated Farmers of New Zealand.

CHAPTER 7

The Weakening Relationship with the UK and Market Diversification

Introduction Through the 1950s, realisation grew within New Zealand that its entrenched trade relationship with the UK would be insufficient to provide the overseas income necessary to fuel the expected population growth from increased immigration. The UK was no longer the globallydominant financial power that it had been pre-World War II and the financial strain that brought an early end to its attempt to retake the Suez Canal in 1956 at last began to make many (but not all) Britons realise the UK’s status was declining. Also, the anxieties from the threat of wartime blockade had made the UK realise it needed to rebuild its domestic agriculture and make itself less dependent on food imports. For the New Zealand Government, the need to free itself from the UK’s economic ‘apron strings’ became obvious. But it also became clear to New Zealand that diversifying to new markets, for instance, the USA, was hindered considerably by market distortions that were especially strong in inhibiting agricultural imports, and with subsidies causing excesses that countries sought to ‘dump’ at low prices. Jim McAloon describes New Zealand’s position as: Not only was there now disenchantment with the British economic relationship at the highest levels of the New Zealand Government, but New

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Zealand was in a weak bargaining position. It was easy enough to talk of finding new markets but developing them would take time and effort. For all that, the debate indicated a growing awareness of the urgent need to diversify our trade and, as the Minister of Industries and Commerce put it, that our manufacturers must begin to think in terms of exporting. (McAloon 2013a)1 Once again, the old settler economy was fracturing. (McAloon 2013b)2

Bulk Purchase by the UK---Good or Bad? The Federated Farmers’ Dairy Section reviewed the state of dairying in New Zealand at its annual meeting in June 1950. The Section Chairman (A. G. Alexander) said a satisfactory market for dairy produce was assured because New Zealand had agreed continuing the UK’s bulk purchase of New Zealand’s exportable surpluses of primary produce that had started at the beginning of World War II. But Alexander warned that but for that contract New Zealand dairymen would have an uneasy future. The industry was entering a new phase with the era of the sellers’ market rapidly passing. The industry now had to examine closely future new markets (Straight Furrow 1950a).3 Federated Farmers could not make up its mind on bulk purchase agreements with the UK. Bulk contracts were discussed at the Dominion Conference in 1952. The uncertainty was noted by the President who told the conference: ‘We have lost on the ups and if we throw over bulk purchasing we might easily lose on the downs’. He said opinion was divided and it was difficult to decide which was the best course to pursue in producers’ interests. ‘We are at the crossroads and it is my personal view that the situation is serious’. He said it might be dangerous to make snap decisions. A remit recommending that the Conference favour continuing bulk purchase was replaced by a resolution recommending bulk purchase’s future be not decided at the Conference as insufficient information was known by the farming community. Full details of the merits and demerits should be investigated and disseminated among branches before seeking a decision (Straight Furrow 1952a).4 The Federated Farmers’ Research Officer, D. L. M. Martin, visited provinces explaining the pros and cons. But reflecting that the Federation had not reached an agreed policy, Martin explained the ideas were his and not necessarily the Federation’s. He said the British Government

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had announced that its guiding principle was to buy the best food at the lowest price. One reason why the UK Government purchased butter and meat in bulk from New Zealand during the previous 13 years was that prices were lower than those expected from a free market (FF 1952a).5 An advantage for the New Zealand Government was that bulk purchase meant that the Government controlled export and that enabled it to withhold from producers some portion of the prices paid by the UK. That allowed the Government to control local market prices. Control enabled the Government to retain ownership of the huge funds accumulated in Reserve Accounts. In short, said Martin, Government to Government trading enabled both the New Zealand and British Governments to exercise control over prices mainly at the New Zealand producers’ expense. Demonstrating how effective the UK Government’s policy had been in depressing prices for New Zealand butter exports, Martin said that prewar New Zealand butter was sold wholesale in the UK at prices similar to those in other important dairy exporting countries. In 1938, before bulk purchase had started, New Zealand was receiving prices higher than those of France, the USA and Canada but lower than those for Belgium and Germany. But in 1952 price for New Zealand butter was lower than all countries by more than 25%. Federated Farmers’ General Secretary, Alec O’Shea, reported Martin’s findings to the February 1953 Dominion Council. In addition, he reported that one of the greatest disadvantages of the system was the political repercussions. Bulk purchase negotiations had led to bad feeling between the UK and New Zealand because the UK paid higher prices to other exporting countries (Straight Furrow 1953a).6 O’Shea also thought a further bad feature of Government-toGovernment purchase was slackness of handling and preparation in New Zealand products. Under private trading, slackness would have been corrected. Another real disadvantage was the inflexibility of marketing arrangements, New Zealand’s development of other markets needed British permission. The 1951 Federated Farmers’ Meat and Wool Conference called for an end to bulk purchase because it prevented New Zealand investigating more comprehensively other markets which seemed more profitable than selling to the UK (FF 1951a).7 O’Shea concluded that, ultimately, New Zealand would sell to the UK just as much produce as the people of the UK required. The price would be exactly what the people of the UK were able and willing to pay and

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no arrangement, Government or otherwise, would be able to alter that. O’Shea did not make a recommendation on the continuance or otherwise of bulk purchase. Wairarapa proposed at the 1953 Dominion Conference that bulk purchase contracts should be continued, but the remit remained ‘received’ and not endorsed (FF 1953a).8 The Auckland Province President was asked by the Auckland Provincial Conference to review bulk purchase. He reported that bulk purchase was hotly disputed, but many a sound economic argument had been lost in the obscurities of political harangue. The UK argued that offering a large and assured market over a lengthy tenure ensured a measure of security to New Zealand producers. He pointed out that the present contracts expired in 1955 and farmers in New Zealand needed to start considering now what sort of export marketing arrangements they wanted when the present bulk purchase contracts expired. He emphasised that the UK was still New Zealand’s greatest and most dependable market, and if the UK wanted to carry on buying in bulk, New Zealand could not object, but, in that case, the machinery of negotiation within New Zealand should be overhauled. The Auckland President said it was difficult to say just how much produce New Zealand would sell at a higher price outside the UK. Because of trade barriers and other factors, the future may not be rosy. The Department of External Affairs had reported: Efforts to establish dollar markets for meat and dairy produce during the year met with some success, but the prospects for 1952 - 53 are uncertain. Canada has placed butter under import control and has requested New Zealand to refrain from sending cheese. Imports of butter into the United States have not recently been promoted, and comparatively small quantities of cheese have been allowed.

The President concluded that bulk purchase should be abandoned with caution, because of the implications—firstly, the farmers’ pocket and secondly, the overall economy of the nation. The problem could be posed very simply: if we desire ourselves to abandon bulk purchase, and the UK is agreeable, then do we wish the restoration of free unbridled private enterprise, with its accompanying atmosphere of suspected monopolistic cartel, or do we wish for producer control, with its accompanying problems of marketing and administration by the producers themselves (KHP 1953a)?9

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The Federated Farmers’ President warned also that New Zealand did not permit the free import of the UK goods into New Zealand. In addition to custom duties to protect local industries, there were import embargoes and licensing and also price control on many important goods. It was difficult to see how New Zealand could expect free trade for its export produce when free trade was not allowed in New Zealand for the exporters of other countries (FF 1953b).10 The case for ending the meat bulk purchase contract was stronger than for ending the dairy contract. Since the 1940s, the UK had wanted New Zealand to increase meat supplies, but production was held back because producers wanted an assurance that markets would be guaranteed for the additional meat tonnages after bulk purchase ended (KHP 1950a).11 Holyoake recognised that farmers wanted ‘to secure the longest term possible of markets that would take New Zealand produce’ and undertook to ‘work along those lines’ in Government-to-Government negotiations with the UK (KHP 1950b).12 In 1950, the Primary Production Advisory Committee producers began to realise that bulk purchase might not be to their advantage (KHP 1950c).13 Martin summarised the arguments for price increases and argued that the UK exploited New Zealand’s ‘loyalty and goodwill’ (Martin 1950).14 He pointed out that prices for British imports into New Zealand had risen considerably so that lamb exported to the UK in 1950 bought 31% less imports from the UK than in 1939 (FF 1950).15 The Federated Farmers’ Meat and Wool Chairman said New Zealand farmers would be ‘staggered’ by how much more the UK paid Argentina for meat (FF 1951b)16 (Straight Furrow 1953b).17 Anticipating annual negotiations in 1953, the Federated Farmers’ President said business rather than sentiment should now rule New Zealand’s dealings with the UK on meat prices (Straight Furrow 1953c).18 During the 1951/2 meat negotiations, New Zealand secured a 12.5% increase (Straight Furrow 1952b).19 The UK agreed, also, that there would be unrestricted and duty-free access for New Zealand meat for 15 years up to 1967 because it would ‘greatly encourage’ the increases in meat exports to the UK ‘if there were an assurance of a market for all meat produced in future years’ (KHP 1952).20 The British Food Ministry proposed that the bulk purchase agreement should be terminated as planned in 1955, but the Meat Board recommended that the contract be terminated on 30 September 1954. Federated Farmers and the Minister agreed because the strong global

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demand for meat opened opportunities in markets other than the UK (MBMB 1954).21 Following the end of bulk purchase, New Zealand could, if it wished, still send its exportable meat surplus to the UK, but the UK would no longer pay guaranteed prices. The Dairy Board and Commission also considered in mid-1954 it to be ‘in the best interests of producers’ to terminate the dairy bulk purchase agreement early (AJHR 1954).22 The frequent complaints that the UK paid unfair prices led dairy bodies to decide it would earn more on a free market than the best prices that might be negotiated with the British Ministry of Food; in 1954, the UK had been proposing reduced prices. The Board and Commission were ‘unanimously of the opinion … that the contract should be cancelled this year’ (KHP 1954a).23 They recognised that the change would need to be made at some time and ‘the sooner the change was made the better’ (KHP 1954b).24 But doubts remained within Federated Farmers, a remit from the Auckland province was endorsed by the Dairy Section conference asking the Dairy Commission what planning was taking place for the changed conditions after bulk purchase. That with the prospect of the termination of the Dairy Products Bulk Selling Agreement, this Conference asks the Dairy Products Marketing Commission … what research is being made into, marketing conditions, having regard to the availability, demand, and packaging requirements of dairy produce for different parts of the world. (FF 1954)25

The South Taranaki Federated Farmers’ Provincial President suggested that bulk purchase had made producers ‘lose touch with the modern market and its requirements’ (Straight Furrow 1955a, 1955b).26

Accepting the Need to Diversify Trade Federated Farmers had discussed the need for new markets as early as 1945,27 and at the start of the 1950s, the Meat and Wool Section recognised the need for diversification and pressed that, in any new contract arrangement with the UK, New Zealand be allowed increased sales to markets outside the UK (FF 1951c).28 During bulk purchase, producers knew there was a market for as much as they could produce and operated under a cost-plus system in which payment more that met costs despite the impressions that the UK treated

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New Zealand unfairly. But after bulk purchase ended the dairy industry seemed out of line with world conditions, and, for the first time, selling exports at prices sufficient to cover costs became difficult. In mid-1956, prices slumped on the British market warning that over-supply in dairy produce had become established and the problem could not be ignored. Dairy prices in the British market slumped partly because countries with surplus dairy produce were dumping their surpluses at prices less than the cost of production. The New Zealand Dairy Board and Commission were unprepared for a change from a protected market. The British Delegation at trade talks with New Zealand in 1957 considered that Danish butter commanded a premium over New Zealand’s partly as ‘the result of sustained salesmanship over many years’, implying that New Zealand lacked that sustained salesmanship (ANZ 1957).29 David Randall in an article in Straight Furrow argued that ‘there is immense scope for improvement in the presentation of our products to the world’s consumers – we must have a thoroughly experienced salesman who knows what the public – not only in the UK but in the 50-odd other countries to whom we sell dairy produce – want most’ (Randall 1955).30 By 1957, Federated Farmers was sufficiently influential that the President of Federated Farmers was invited to join the New Zealand Government delegation visiting the UK to discuss future access to the British market. The President reported back to New Zealand farmers that it remained clear that the UK for the foreseeable future would be the main customer for New Zealand dairy produce. But the UK would not limit imports from foreign sources to accommodate New Zealand’s expanding exports (FF 1957a).31 The position had become clear; New Zealand could not rely on the UK to absorb its expanded production. The New Zealand economy now had to accept that increased production would mean that extra New Zealand produce needed to be sold outside the UK (FF 1957b).32 The Dairy Board shared the view with Federated Farmers that ‘it had to be accepted that the UK could not absorb all New Zealand’s butter’ (ANZ 1956).33 In October 1957, butter and cheese prices again fell on the UK market; for butter, caused by imports from Ireland, Argentina, the Netherlands, Finland, Sweden and South Africa; for cheese by increased production in the UK (Straight Furrow 1957).34 That additional major price fall emphasised the growing difficulties for New Zealand in the free market.

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Breaking into the USA Market Federated Farmers made significant contributions to breaking into the American lamb market (Straight Furrow 1950b).35 The Federation recognised early the need to establish relations with the powerful farming organisations that strongly influenced the US Congress (Straight Furrow 1950c).36 Producers should not try to sell to the USA without first ensuring support from American producers, for instance, by proposing to phase sales to avoid interference with peak selling seasons (Straight Furrow 1950d).37 The Federated Farmers’ General Secretary, Alec O’Shea, advocated working jointly with American suppliers. He said it would be important to have a real understanding with the American farmers because, traditionally, they opposed primary produce imports; nothing could be done unless the American farmers approved (Straight Furrow 1951).38 O’Shea advocated strongly that New Zealand should look towards developing the American market by selling lamb surplus to the UK’s needs. He thought increases in the American market seemed far more likely in comparison with other markets; the US population would increase and the USA might face domestic shortfalls. Also, rarely for a country in the early 1950s, the USA could afford food imports. Finally, developing a market in the USA would be important because New Zealand, inevitably, would become tied in the Pacific politically with North America. When early shipments of meat to the USA were refused because they did not meet US regulations, the Federated Farmers’ Meat and Wool Council expressed its deep concern over shipments to the USA being ‘below the standard expected’, asking that the Meat Board should take immediate action to ensure that the standard and reputation which New Zealand meat had earned in the past should be maintained in the future (FF 1953).39 When concerns continued, the Federated Farmers’ Dominion President called a meeting of all who handled New Zealand meat to discuss how to make sure that proper processing and handling took place now that opportunities had opened up in the American market (Straight Furrow 1958a).40 Early in 1958, O’Shea, still Federated Farmers’ General Secretary, repeated his 1951 plea for New Zealand to establish good relations with the American farm organisations (Straight Furrow 1958b).41 O’Shea claimed that the lamb market could be developed by helping to arrest

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90 80

Tonnes (000)

70 60 50 40 30 20 10 0 1955

1956

1957

1958

Fig. 7.1 Growing sales of beef, in tonnes (000), to the USA in the 1950s (Source of information—New Zealand Digital Yearbook—Statistics New Zealand)

the decline in the sheep-breeding industry in the USA and thereby improve the supply continuity for the American housewife (Straight Furrow 1958c).42 Federated Farmers invited the main American farming organisation leaders to a goodwill visit to New Zealand early in 1959 (Straight Furrow 1958d).43 The visit established valuable links between producers in both countries, and the American National Farmers Union President gave encouragement for New Zealand to increase exports to the USA (Straight Furrow 1959).44 But rather than lamb, New Zealand beef proved suitable for meat processing in the USA and that proved the most successful of exports to the USA (Fig. 7.1).

Breaking into Asian Markets Hall describes how attitudes towards Asia needed to change before New Zealand could diversify into Asian markets (Hall 2017).45 In the 1940s, New Zealanders called Asia ‘the East’ or ‘Far East’ rather than the ‘North’ or ‘Near North’, reflecting how New Zealand saw itself as the UK’s distinct hinterland rather than an independent island group in the South Pacific. In 1947, a remit to the Federated Farmers’ Dominion Council proposed that the Council should investigate additional trade

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with ‘the East’ (FF 1947).46 In 1951, Holyoake, as Minister of Agriculture, described the ‘Far East’ as a ‘giant awakening hungry for food’ (Straight Furrow 1951b).47 New Zealand had exported wool to Japan and China before World War II and wool trading with Japan began again in 1947. US diplomacy encouraged links between New Zealand, Australia and Japan to cement Japan’s relations with the non-communist world (Singleton and Robertson 2002a).48 But when, in 1957, the Dairy Commission wanted to send its General Manager, Stan Murphy, to Communist China to discuss potential trade, New Zealand’s Department of External Affairs worried about the impact on relations with the USA: any advantages which the development of trade ... with Communist China may present should be weighed carefully against the consequent harm which could be done to New Zealand’s relations with the United States. (KHP 1957a)49

The economist, Bryan Philpott, pointed out the complementarity between New Zealand and Japan now that, while Japan wanted cheap food and a market for its manufactures, New Zealand wanted cheap manufactures and a market for its food (Philpott 1961).50 Private exporters started the sheep meat sales to Japan (Calder and Tyson 1999a)51 and were prime catalysts that enabled New Zealand to diversify into the American beef and the Japanese mutton markets, the main markets that expanded through the 1950s and 1960s. In 1968, Borthwick’s General Manager summarised the role of independent exporters in the diversification into Asian markets (Straight Furrow 1968).52 He said that independent exporters such as Borthwick’s: appoint agents overseas, make frequent visits to their markets, encourage buyers to come to New Zealand and at all times accept that full blast of competition from domestic suppliers in overseas markets and from imported meat from other supplying nations.

Former Meat Board employees Calder and Tyson agree: independent exporters ... led the way in almost all of the newer markets for New Zealand meat ... they boldly went where few had been before ... and usually went alone ... they were supreme risk takers. (Calder and Tyson 1999b)53

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The New Zealand and Japanese Governments began discussing a trade agreement as early as 1953, but Japan would not relax its agricultural protectionism, thereby inhibiting New Zealand’s main interest in increasing primary produce exports (Singleton and Roberston 2002b).54 In parallel, New Zealand’s refused to relax its industrial protectionism preventing increased trade in manufactures. Late in 1957, when the Japanese Prime Minister visited New Zealand to encourage imports of Japanese goods, Holyoake, who had just become New Zealand’s Prime Minister, avoided encouraging expansion of Japanese exports to New Zealand. He told the Japanese Prime Minister that while he understood that Japan ‘wanted to rebuild her trade … New Zealand is obliged to give protection to our own manufacturers’ (KHP 1957).55 It was not until September 1958 that New Zealand and Japan signed an agreement that specifically included expanding New Zealand’s meat exports (Singleton and Robertson 2002c).56 In 1960, a market survey confirmed the fortunate coincidence for New Zealand that the Japanese preferred ewe mutton, a product with no great demand in the UK (Fig. 7.2). In 1962, the investment in meat advertising in Japan became second only to that in the UK and the Meat Board could 100 90 80 Tonnes (000)

70 60 50 40 30 20 10 0

Fig. 7.2 Growing sales of sheepmeat, in tonnes (000), to Japan in the 1950s and 1960s (Source of information—New Zealand Digital Yearbook—Statistics New Zealand)

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claim justifiably that New Zealand had become Japan’s principal overseas meat supplier, supplying 90% (MBMB 1962).57 Wool sales to China recommenced in 1954, but opposition within New Zealand to building links with China hindered other trade. New Zealand’s growing dependence on the USA for security caused difficulties for dairy diversification. When the UK recognised Communist China in 1950, New Zealand did not; in 1951, New Zealand ‘inclined in its Far Eastern [Asian] policy much more closely to the American than British point of view’ (The Observer 1951).58 Through the 1960s, meat matters were firmly under the Meat Board’s control, led by its chairman, John Ormond. The main topic that Ormond sought to resolve was future markets for New Zealand meat. Ormond was slow to realise that the UK could no longer go on taking unrestricted meat exports from New Zealand. Federated Farmers tried to influence Ormond and the Board but with little success until towards the 1960s end when reality finally dawned on Ormond. In 1961, Ormond rebutted the ‘new found experts’ who had been saying that consumption limits for New Zealand meat in the UK had been reached (FF 1961a).59 He claimed that ‘this is the sort of thing we have heard throughout the history of our trade’ (FF 1961b).60 Tonnage for lamb markets outside the UK measured in ten-thousands and not the hundred-thousands exported to the UK (Straight Furrow 1963a).61 Lamb could not be sold easily outside the UK because, in most other countries, domestic production satisfied lamb consumption; only 4% of New Zealand’s lamb exports shipped to countries other than the UK in 1963. Meat Board members other than Ormond stated vociferously the need for change. One member, John Andrew, told Federated Farmers’ Southland Provincial Executive that the British Government had asked the Meat Board to develop new markets because the British market could not accept increased sales from New Zealand (Straight Furrow 1963b).62 Ormond’s views seemed to be out of step with those of other Meat Board members. By mid-1964, the Federated Farmers’ Vice-President, P. S. Plummer, took a more realistic line than Ormond and told a provincial annual conference that, inevitably, at some future time the British would impose a quota on New Zealand meat. Plummer noted the marked trend towards managed markets because countries such as the UK pursued policies designed to boost their own agriculture (Straight Furrow 1964).63 He

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warned New Zealand meat producers to note the changing trade patterns (Straight Furrow 1965a).64 The Federated Farmers’ Meat and Wool Chairman warned New Zealand meat producers that their British equivalents ‘make no secret of their wish to see quota limitations placed on imported meat’ (FF 1968).65 In addition, the Federated Farmers’ General Secretary warned that New Zealand could no longer take for granted assumptions regarding duty-free and quota-free access (Straight Furrow 1969).66 By February 1970, the British Labour Government moved towards introducing levies on lamb imports, and Edward Heath, the British Conservative Party leader, made it clear during a visit to New Zealand that, if his party won the forthcoming General Election, it would introduce levies (FF 1969); (Straight Furrow 1970).67 , 68 In June 1970, the Conservative Party won the election and introduced a levy on imported foodstuffs. The Dairy Commission again in the mid-1960s wanted to investigate trade with China. The General Manager, Stan Murphy, said China’s purchasing power was considerable and the Chinese were short of food (Straight Furrow 1965b).69 He thought it now reasonable to start trading, but significant New Zealand dairy trade with China did not start until the 1970s, following the USA finally breaking the diplomatic ice with President Nixon’s visit to China in 1972. When Labour won the 1972 election, New Zealand finally agreed to recognise China (Freer 2004).70 Diplomatic relations were established at the end of 1972 followed by a New Zealand–China Trade Agreement. In 1975, Charles Patrick of the Dairy Board, following a trade mission to China, reported growing prospects that import of milk solids would be needed (Straight Furrow 1973).71 That proved to be correct, and New Zealand had at last overcome its inhibitions and found the country that eventually would overtake the UK as New Zealand’s main trading partner in agricultural produce in the twenty-first century (Straight Furrow 1975).72 Up to the 1960s, Britain remained the prime customer for milk powder buying more than the combined total sold to others. But milk powder earnings from Britain declined from the mid-1960s because sales to Asia/Pacific customers increased significantly (Fig. 7.3) (Bewley 1970).73 The New Zealand dairy industry achieved the necessary change despite American restrictions on dairy imports and sales of domestic surpluses in competition with New Zealand, especially in Asia.

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140 120

Tonnes (000)

100 80 60 40 20 0

Fig. 7.3 Growing sales of Milk Powder, in tonnes (000) to Asia in the 1950s and 1960s (Source of information—New Zealand Digital Yearbook—Statistics New Zealand)

Take Away Points New Zealand realised its entrenched relationship with Britain would no longer provide the overseas income necessary for its growth. But market diversification was hindered by market distortions. The era of dealers’ market was rapidly passing. New Zealand realised that new opportunities were open up for agricultural produce exports to Asia. The Federated Farmers’ President warned that New Zealand did not permit the free trade for goods imported into New Zealand making it difficult for New Zealand to expect free trade for its exports. The bulk purchase agreements with the UK ended in 1954, but bulk purchase had made producers lose touch with modern market requirements. Federated Farmers recognised early that relations had to be established with the powerful US farming organisations. New Zealand’s dependence on the USA for security discouraged links with China. But, eventually, a New Zealand trade mission to China identified that import of milk solids would be needed. China would eventually replace the UK as New Zealand’s main agricultural trading partner.

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Notes and References 1. McAloon, J. 2013. Judgements of All Kinds: Economic PolicyMaking in New Zealand 1945–1984 (Victoria University Press, Wellington): 144. 2. McAloon, J. 2013. Judgements of All Kinds: Economic PolicyMaking in New Zealand 1945–1984 (Victoria University Press, Wellington): 151. 3. Straight Furrow, 1950a. ‘The Future of the Dairy Industry’, 15/07/1950: 6/7. 4. Straight Furrow, 1952a. ‘Summary of Conference Minutes: Meat Bulk Purchase’, 01/09/1952: 14. 5. FF 1952a. (Federated Farmers), 90–343, MSY2733 113/1952, Nature of Bulk Purchase Agreements: 1–10. 6. Straight Furrow, 1953a. ‘Bulk Purchase Agreements Not Contracts: O’Shea Examines Trading Arrangements for N.Z. produce’, 01/03/1953: 9. 7. FF 1951a. (Federated Farmers), 90–343 MSY–2732, MandW39/151, Chairman’s Address to the Meat and Wool Section Conference, 27/06/1951. 8. FF 1953a. (Federated Farmers), 90–343 MSY2708 D117/1953, Minutes of Council, 04/02/1953: 3. 9. KHP 1953a. (Keith Holyoake Papers), 1814 series, 32.1 Dairy, ‘Tabled to [Auckland] Provincial Executive Meeting’, 18/02/1953: 1–5. 10. FF 1953b. (Federated Farmers), 90–343 MSY–2732, MandW Circular 193/1953, Chairman, Meat and Wool Section, Address to Dominion Conference, 25/06/1953: 4. 11. KHP 1950b. (Keith Holyoake Papers), MS–1814—11/1, Minutes of Meeting of Minister with Producer Representatives: Increased Production, 04/05/1950: 5. 12. KHP 1950b. (Keith Holyoake Papers), MS–1814—11/1, Minutes of Meeting of Minister with Producer Representatives: Increased Production, 04/05/1950: 5. 13. KHP 1950c. (Keith Holyoake Papers), MS–1814—11/1, Working Paper 50/13: Work of the Primary Production Advisory Committee, 08/06/1950: 2.

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14. Martin, D.L. 1950. ‘The Export—Import Relationship: Are We Getting A Fair Deal From the UK?’, Straight Furrow, 15/12/1950: 7. 15. FF 1950. (Federated Farmers) 90–343 MSY–2730 MandW 152/1950, Chairman’s Address to the Meat and Wool Conference, 27/06/1950: 5/6. 16. FF 1951b. (Federated Farmers) 90–343 MSY–2732 MandW28/1951, Minutes of the Meat and Wool Section Council, 09/05/1951: 2. The disparity was in the sale of beef, Argentina received 40% more than New Zealand; for lamb the prices were the same. 17. Straight Furrow, 1953b. ‘Price Discrimination by the UK for Meat’, 01/02/1953: 15. 18. Straight Furrow, 1953c. ‘Taranaki: Federation’s Value’, 01/06/1953: 19. 19. Straight Furrow, 1952b. ‘Meat Price Increase’, 15/02/1952: 3. 20. KHP 1952. (Keith Holyoake Papers), MS–1814—68/6 Meat, Joint Declaration by the UK and New Zealand Governments, 14/02/1952. 21. MBMB 1954. (Meat Board Minute Book), 11, 06/05/1954: 1022/1023. 22. AJHR 1954. (Appendices to the Journal of the House of Representatives), ‘Economic Survey’, Vol. I, B–5, 1954: 24. 23. KHP 1954a. (Keith Holyoake Papers), MS–1814—40/1 Dairy Produce, Memorandum for the Rt.Hon. Minister of Agriculture, 03/06/1954: 1. 24. KHP 1954b. (Keith Holyoake Papers), Memorandum for the Rt.Hon. Minister of Agriculture, 03/06/1954, MS–1814—40/1 Dairy Produce: 1. 25. KHP 1954b. (Keith Holyoake Papers), Memorandum for the Rt.Hon. Minister of Agriculture, 03/06/1954, MS–1814—40/1 Dairy Produce: 1. 26. Straight Furrow, 1955a. ‘Provincial President Sounds Note of Warning’, 01/07/1955: 22; Straight Furrow, 1955b. ‘Our Economy Is Getting Out of Line with World Conditions’, 01/07/1955: 23. 27. On average through 1945 and 1946, there were two articles each month in Straight Furrow mentioning the need for new markets.

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28. FF 1951c. Chairman’s Address to the Meat and Wool Conference, 27/06/1951, Federated Farmers 90–343 MSY—2732, MandW 37/1951. 29. ANZ 1957. Meeting of Milk Products Group, 17/04/1957, LONB, 37/1/1E Part 1. 30. Randall, D. 1955. ‘Some Blunt Truths About Marketing of N.Z. Butter, Cheese’, Straight Furrow, 01/04/1955: 3. 31. FF 1957a. (Federated Farmers), Re: The Trade Mission, 90–343 MSY–2713, D74/1957, 17/06/1957: 1/2. 32. FF 1957b. (Federated Farmers), Re: The Trade Mission, 90–343 MSY–2713, D74/1957, 17/06/1957: 3. 33. ANZ 1956. Working Party on Economic Policy, meeting with representatives of the Dairy Industry, 12/12/1956, T/1/61/3/21 Pt II. 34. Straight Furrow, 1957. ‘Dairy Commission’s Review: London Market Report’, 15/10/1957: 5. 35. Straight Furrow, 1950b. ‘N.Z. Mutton Would Sell In America’, 15/03/1950: 6. 36. Straight Furrow, 1950c. ‘Meat And Wool Section’, 15/07/1950: 15. 37. Straight Furrow, 1950d. ‘Trade with the United States Must Be Handled Carefully’, 15/11/1950: 3. 38. Straight Furrow, 1951a. ‘America Must Be Our New Market’, 15/11/1951: 5. 39. FF 1953c. (Federated Farmers), Minutes of the Meat and Wool Section Council, 04/02/1953, 90–343 MSY–2732, MandW168/1953: 3. 40. Straight Furrow, 1958a. ‘Meat Handling Conference Proposed’, 16/04/1958: 20. 41. Straight Furrow, 1958a. ‘Meat Handling Conference Proposed’, 16/04/1958: 20. 42. Straight Furrow, 1958c. ‘Potential of USA. Market For Lamb’, 06/08/1958: 34. 43. Straight Furrow, 1958d. ‘Invitation to U.S. Farm Leaders’, 07/05/1958: 4. 44. Straight Furrow, 1959. ‘Meat and Wool Chairman’s Annual Address’, 01/07/1959: 8.

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45. Hall 2017. Emerging from an Entrenched Colonial Economy: New Zealand, Britain and the EEC, 1945–1975 (Cham, Palgrave Macmillan): 21–126; 207–211. 46. FF 1947. Federated Farmers MSY2730, M&WM30/1947, Minutes of the Meat and Wool Council, 16/09/1947: 5. 47. Straight Furrow, 1951b. ‘An Awakening Giant—The Far East’, 15/08/1951: 17. 48. Singleton, J. and Robertson, P. 2002a. Economic Relations Between Britain and Australasia 1945–1970 (Basingstoke, Palgrave): 124. 49. KHP 1957a. Keith Holyoake papers, MS–1814—56/2 Dairy Produce, Secretary for External Affairs to Acting Minister of External Affairs, 28/06/1957: 1/2. 50. Philpott, B. 1961. Straight Furrow, ‘New Markets: An Age Old Problem’, 01/11/1961: 14. 51. Calder, M. and Tyson, J. 1999a. Meat Acts: The New Zealand Meat Industry 1972–1977 (Wellington, Meat New Zealand): 128. 52. Straight Furrow, 1968. ‘Marketing New Zealand Meat’, 16/10/1968: 22. 53. Calder and Tyson, 1999b. Meat Acts: The New Zealand meat industry 1972–1977 (Wellington, Meat New Zealand): 125. 54. Singleton and Robertson, 2002b. Economic Relations Between Britain and Australasia 1945–1970 (Basingstoke: Palgrave): 130– 135. 55. KHP 1957b. Keith Holyoake Papers MS–1814—071/4, Visit of the Japanese Prime Minister, State Luncheon in Honour of the Japanese Prime Minister, 02/12/1957: 1–5. 56. Singleton and Robertson, 2002c. Economic Relations Between Britain and Australasia 1945–1970 (Basingstoke: Palgrave): 134. 57. MBMB 1962. (Meat Board Minute Book), 06/06/1962: 1870. 58. The Observer 1951. ‘New Zealand’s Choice’, 10/06/1951, Clipping in Keith Holyoake papers, MS–1814—16/6. 59. FF 1961a. (Federated Farmers) 90–343 MSY–2738 MandW40/1961, Meat Board Chairman’s Address to the Electoral Committee, 22/08/1961: 4. 60. FF 1961b. (Federated Farmers) 90–343 MSY–2738 MandW40/1961, Meat Board Chairman’s Address to the Electoral Committee, 22/08/1961: 3. 61. Straight Furrow, 1963a. ‘Report on Farming’, 17/04/1963: 1. 62. Straight Furrow, 1963b. ‘U.K. Can’t Take All’, 03/04/1963: 7.

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63. Straight Furrow, 1964, ‘Co-operation to Avoid Controls?’, 03/06/1964: 7. 64. Straight Furrow, 1965a, ‘Visit of T. F. Peart’, 15/09/1965: 7. 65. FF 1968. (Federated Farmers) 90–343 MSY2746 MandW36/1968, Chairman’s Address to the Meat and Wool Council, 19/06/1968: 3. 66. Straight Furrow, 1969. ‘UK Market Access Must Not Be Presumed’, 02/04/1969: 3. 67. FF 1969. Federated Farmers 90–343 MSY2745, MandW31/1969, Chairman’s Address to the Meat and Wool Section Council, 18/06/1969: 5. 68. Straight Furrow, 1970. ‘Proposed UK Levy on Beef Imports Has Very Serious Implications’, 04/02/1970: 16. 69. Straight Furrow, 1965b. ‘Trade with Communist China?’, 20/10/1965: 31. 70. Freer, W. 2004. A Life in Politics: The Memoirs of Warren Freer (Wellington: Victoria University Press): 158. 71. Straight Furrow, 1973. ‘Chinese Milk Imports Possible’, 12/12/1973: 16. 72. Straight Furrow, 1975. ‘China: A Trade Burst After a Shut-Off Era’, 17/09/1975: 3. 73. Bewley, J. 1970. ‘A Survey of Changes in Production, Manufacturing and Marketing in the New Zealand Dairy Industry, 1947–48 to 1967–68’, New Zealand Geographer, 26, 1, 1970: 47.

CHAPTER 8

Growing Farmer Influence on Government

Introduction Labour had returned to power for a short period at the end of the 1950s and the Labour Minister of Finance, Arnold Nordmeyer, in his 1960 Economic Survey said ‘every effort must be made to enlarge and diversify markets for our export products and to persuade other countries to moderate their policies of agricultural protectionism’. McAloon comments that ‘any finance or trade minister in the next 50 years’ might have used those words (McAloon 2013a).1 The comments demonstrated that Government accepted its economic stability depended on successfully diversifying farming exports to new markets. That increased farmers’ influence on Government policy. Federated Farmers’ insistence that support was needed to achieve increased production encouraged the Government to arrange an Agricultural Development Conference in 1963/4 specifically to review impediments to increased production and how those could be removed. Federated Farmers made thorough proposals for changes to New Zealand’s economic policies more generally than simply agriculture and food policy, demonstrating the Federation had sufficient knowledge and contacts to make significant contributions at national level. In 1961, the actual day-by-day grind through which Federated Farmers achieved such objectives was described by J. G. Pryde, the Federation’s Research Officer. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_8

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The Federation once again considered the time opportune to request Government agree a compulsory levy to support its activities. Once again the Government declined.

Influence on the National Economy After the General Election at the end of 1960, the governing party was once again National led by the former Federated Farmer, Keith Holyoake. Holyoake remained in power for the next twelve years. McAloon describes how: Holyoake’s general approach to economic management emphasized private enterprise and competition, farming as the main export industry, restraint in public spending, gradual rather than radical change, and balancing competing sector group interests through informal negotiation. He intended to diversify trade and the structure of the economy, and to manage crises while avoiding shocks. He was an instinctive centrist and earned high praise for his grasp of economic management.

The other significant contributor to New Zealand’s Government for the next thirteen years, taking over the premiership from Holyoake in 1972, was Jack Marshall who, in addition in 1960 to being Deputy Prime Minister, took over the major economic portfolio, Industries and Commerce, together with an enlarged portfolio of Overseas Trade. McAloon says Marshall: travelled the world tirelessly, arguing New Zealand’s case for special consideration with current and prospective members of the [European] Common Market and developing new markets for New Zealand exports. Few ministers in the second half of the century had such a profound and beneficial impact on the New Zealand economy. (McAloon 2013b)2

Federated Farmers was active in making submissions to the Government on a diverse range of topics including—death duties, taxation of development expenditure, employment contracts, grain conditioning and bulk handling, agricultural chemicals, cost of woolpacks and eradication of bovine tuberculosis (Straight Furrow 1962a).3 In addition, in 1961, the Federation was sufficiently confident of its influence with the new Government and its own command of economics to propose a comprehensive economic policy not only for farming but for the New Zealand

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economy more broadly. The February 1961 Dominion Council meeting set up a committee to present to Government the Federation’s views on the farming and the national economies. The remit which sparked the discussion came from the Dairy Section and called for the Dominion Council to exploit Federated Farmers’ strength in representing all farming areas to formulate a unified policy replacing the past piecemeal dealing with situations (Straight Furrow 1961a).4 Proposals for what should be included in the Committee’s deliberations demonstrated farmers’ concerns at the 1960s start. The Committee was instructed to study the effect of the basic price for dairy products on the labour supply and in causing the economic extermination of small units. Also, to ensure that the Government, in commandeering all overseas funds derived from exported dairy produce, should accept responsibility to pay the dairyfarmers sufficient to encourage production. Other suggestions referred to the committee were: That the National Party in its election manifesto had given an undertaking to correct taxation anomalies, farmers wanted Dominion Headquarters to raise the question of livestock taxation pressing for the implementation of the principle of optional capital livestock values as recommended by the Royal Commission on the Sheep Farming Industry in 1949, and the Special Taxation Committee in 1951. That the possibility be investigated of farmers being allowed to accumulate, tax free, over a period of five years. a sum equal to one year’s income such funds to be deposited in a national savings account and be available for exigencies on the application of farmer’s own accountant.

Others wanted a more workable farming taxation system; an averaging of incomes over five years for taxation purposes and that incomes be averaged on Australian lines; and action on wage disputes. One other issue that raised considerable emotion was that there should be relaxation of ‘death duties’—tax that had to be paid by the inheritors of a farmer’s estate when he died. Attitudes on this were demonstrated at a Dominion Executive meeting first by D. D. Alderton who said it was important for the national economy that farmers should increase the value of their property, but they felt they were wasting their time in putting money into their property, only to lose it in death duties. The Dominion Council was asked to arrange for a deputation to the Minister

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of Finance or the Prime Minister. Waikato wanted to go further than just a deputation to Government, claiming further representations to the Prime Minister and the Minister of Finance would be absolutely futile. Waikato called on the Federation to arrange and organise throughout New Zealand concerted action to fight with every mean in its power ‘the vicious and crippling incidence of the present death duty taxation’ (Straight Furrow 1959).5 In April 1961, a Federated Farmers’ Deputation led by the President met the Ministers of Labour and Agriculture and, also, the UnderSecretary to the Ministry of Finance to present the Federation’s proposed economic policy to the Government. The Federation demonstrated the farmers’ unsatisfactory position by showing that between 1950 and 1960 prices of imported articles had increased by one-third, locally produced articles had increased by over 50%, nominal wage rates had gone up by nearly two-thirds, but export prices were on the same level as in 1950. It was claimed that unsatisfactory position had been largely brought about by Governmental high expenditure and deficit financing, and the drive for excessive industrialisation. Total Government spending had increased between 1952 and 1960 by more than two and a half times the increase in the value of exports. The deputation urged a change in national policies, and in particular: Inflationary forces be curbed by lower Government balancing of the budget and a progressive reduction in protection to secondary industries. The Arbitration Court be required to have more regard to export prices and to their future prospects in fixing wages.6 Rates of taxation be reduced. Steps be taken to increase the volume of goods and services introducing staggered hours and shift work.

The deputation suggested several ways in which Government expenditure could be reduced and offered Federated Farmers cooperation to achieve the reductions: Capital expenditure on buildings, particularly on housing could be pruned.

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The tempo of construction of Government works could be slowed up where speed of completion is not of vital importance. State money borrowed from the public and lent for purposes such as housing, should be lent at not less than the commercial rate of interest. Restrictive practices which are responsible for reduced production or increased costs, should be stopped.

The deputation reported how death duties affected farming, pointing out their detrimental effect on all national production. Finally, Federated Farmers submitted to the Government the need for production incentives such as more liberal taxation allowances for development expenditure (Straight Furrow 1961b).7 The Deputy Prime Minister undertook to have the proposals fully considered by the Cabinet. The deputation was successful in that in the 1961 Budget death duties were reduced. Also, production incentives were introduced in the form of more liberal taxation allowances for development expenditure (Straight Furrow 1962b).8

Agriculture Development Conference Federated Farmers’ review in 1961 was a forerunner of the Agricultural Development Conference arranged by the Government for 1964 and the Federation was well prepared to contribute to the Conference. The Agricultural Development Conference’s objective was to investigate all aspects of farming in New Zealand and to identify the main needs to ensure increased production. Before the first meeting, the Minister of Agriculture set up a ‘Targets’ Committee to (i) coordinate Producer Board studies of how much could be sold abroad, the products to be concentrated on and the effects on earnings of product diversification; (ii) the Department of Agriculture was to survey likely trends in livestock production over the next two, five and ten years under existing policies; and (iii) the Treasury, in consultation with others both inside and outside Government, was to estimate future overall export needs. The tentative targets were to be derived from reconciling the three approaches. The main findings reached by the Committee were that (i) export earnings during the 10 years to 1972–1973, on expected trends in farm

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livestock, would fall significantly short of what would be needed to maintain reasonable economic growth; and (ii) export prospects warranted investment in farming sufficient to raise pastoral exports to the level which would support a compound growth rate of gross national product of 4% per annum. Federated Farmers raised long-term concerns over factors inhibiting more productive farming. The Federation submitted that a fundamental cause of high costs was the escalator effect of general wage orders by the Arbitration Court. The Federation advocated abolishing the Court’s power to make general wage orders suggesting instead that Government should share prosperity by adjusting taxes and family allowances. The Conference recommended examining economic effects of the general wage order system and whether it should be replaced by some other method for periodically reviewing minimum wage rates (ADC 1964a).9 Other long-term Federated Farmers’ concerns were discussed by the Conference and increased support was agreed. There was increased financial support for schooling of farmers’ children; increased availability of, and of loans for, farm workers’ accommodation; increased financial support for development, refinancing and purchase of land too small to be economic; the Inland Revenue Department would now pay fees when valuation was carried out for assessing tax due; the State Advances Corporation would increase emphasis on loans for development, and increased financial support would be available for farmers on marginal lands; exemptions from death duties would be further increased; land tax was reduced by 50%; a farm income equalisation scheme was introduced though which farmers could deposit up to 25% of income during the year with a consequent reduction in tax, the deposit to be withdrawn within five years and added to the taxable income for that year; farmers on retirement could spread taxable income from sale of livestock over the following three years; a depreciation allowance to cover all farm buildings but homesteads was introduced; all farm development activities were made tax deductible and items that counted as development were increased; and a subsidy for fertiliser transport would be introduced (ADC 1964b).10 Other submissions by Federated Farmers were less successful. The Federation questioned the quality of items made locally where imported goods were excluded to protect New Zealand industry. For example, it was claimed that baling twine and barbed wire made locally compared unfavourably with imported products. But the representative of the Manufacturers’ Federation gave evidence on the corrosion resistant and

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the breaking strain properties of New Zealand-made barbed wire. Tests made at Canterbury University had demonstrated that the New Zealand product was fully up to accepted standards in comparable overseas countries. The Conference had no recommendation to make on this topic. The Federation raised also its concerns that farming cost increases were caused by import protection (e.g. on tyres, pistons and bulldozer blades). But evidence again by the Manufacturers’ Federation showed that New Zealand tyres and pistons were fully competitive compared with prices in similar countries. The Conference made no recommendation on this topic. The Conference considered further proposals by Federated Farmers that there should be: (a) a uniform price for motor spirits throughout the country and (b) liberalisation of the Motor Spirits Prices Regulation to enable on-the-farm deliveries by oil company tankers to be charged at wholesale rates. The first proposal had implications affecting the whole community, and prices and trading practices were already the subject of Government regulations which provided for wholesale qualifications. The Conference did not feel itself competent to deal with the proposals and had made no recommendations, much to Federated Farmers’ disappointment. Federated Farmers also made representations on the high prices of hormone weed killing and scrub killing preparations and restrictions on distribution. The Trade Practices and Prices Commission had inquired into this matter and Federated Farmers had made submissions. The Conference considered it was inappropriate to study the problem and had no recommendation to make (ADC 1964c).11 These experiences suggest that prejudices, for instance, on the poor quality of New Zealand wire, had been formed in Federated Farmers’ early days and had become folk lore within Federated Farmers and the farming community. The Conference provided an opportunity for those topics to be reviewed with other farming organisations and Government, a valuable stepping back for Federated Farmers to reconsider whether some of their long-term assumptions might be wrong. One topic taken up by the Conference that Federated Farmers had frequently raised with Government was the importance of controlling inflationary pressures and facilitating the movement of capital, labour and other resources into farming. It was proposed that Government should: (a) adopt firmer monetary and fiscal policies; (b) review policies which

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tended to attract too great a proportion of the country’s capital resources into social investment; (c) encourage investment in export industries and other industries which by reason of their competitive strength made the greatest contribution to the economy; and (d) continue arrangements which allowed farmers to even out their expenditure and taxation, thus helping to smooth the effects of fluctuating export prices (ADC 1964d).12 In 1964, the Prime Minister announced important policy measures in line with the Federated Farmers’ proposals to reduce inflation. These included slowing down the Government’s capital expenditure programme, especially postponing new projects, holding down firmly current expenditure and future commitments by Government Departments, and encouraging local authorities and the National Roads Board to defer expenditure (AJHR 1964).13 One specific task identified by the Conference for Federated Farmers was the need for a simple standardised form of farm budget to enable proper budgeting and control. Farmers tended to run into difficulties associated with over-expenditure because of lack of information on their financial position and lack of a planned expenditure programme. A standard budget linked to the farm accounts and understood by the farmer was expected to provide considerable assistance. Federated Farmers was urged to emphasise the need for proper accounting services (ADC 1964e).14 An offer by Federated Farmers to operate a national farm cadet training scheme was accepted by the Government, which agreed to help pay costs of the scheme. The intention was to provide on-farm training for selected boys on selected farms. The Federated Farmers’ proposals were based largely on schemes already being operated by some provincial districts under which selected farmers took on selected boys for training for three to five years. Practical farm work was supplemented by correspondence courses and attendance at short courses and discussion groups. The Conference recognised the importance of Government Industry consultations to supervise the implementation of Conference decisions and to keep under periodical review progress made towards attainment of targets. It was recognised that the type of machinery where the leaders of Federated Farmers and the Producer Boards meet in committee with top officials of the relevant Government Departments was an effective means of consultation among those responsible for advice or decisions on agricultural production and marketing and economic policy. To fulfil

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the supervisory and review functions, the Conference recommended the establishment of an Agricultural Production Council with Federated Farmers as a member alongside the statutory Boards, the Department of Agriculture and the Treasury. Undoubtedly, by the mid-1960s, Federated Farmers had established itself as of equal status with the Boards as a Government adviser (ADC 1964f).15

DAY-to-DAY Federated Farmers’ deputation to Government on economics matters demonstrated the percolation of ideas from districts through to the Dominion Council. The Federation’s Research Officer, John Pryde, explained to a meeting of the Bay of Plenty Provincial Executive how the Federation operated (Straight Furrow 1961c).16 First, Pryde reminded the Executive of the advantages of Federated Farmers for the farming community. It meant that Governments when they sought farming opinion could consult one organisation instead of several. It provided a forum for various farming sub-groups to thrash out problems and come to a common viewpoint. It consolidated resources into a strong single organisation. The objectives ranged from the very general: ‘To protect, to foster, and to advance the interests of all farmers and of farming generally’, to very specific matters such as obtaining reasonable freights on all produce, by road, rail, sea or air, and promoting harmony between farmers and their employees. Other tasks included collecting and publishing statistics or economic information of interest to the farming community and assisting in placing on a satisfactory basis the sales of produce and charges for materials required by farmers. Finally, Federated Farmers promoted the study of economic and social questions of interest to the rural community more widely. In 1961, the Federation was divided into 24 provincial districts, with a total of more than 600 branches and that ensured that all farmers, wherever farming in New Zealand, had a local branch through which to make representations on any matter. The organisation remained divided into three main commodity sections—meat and wool, dairy and agriculture. These commodity sections had complete autonomy except where a matter also affected other groups. In that case, it was referred to the general executive or Dominion Council of the Federation. The

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commodity sections kept close contact with the statutory boards whose representatives attended the sections’ quarterly meetings. The main policy-making organ of the Federation remained the annual Dominion Conference. In July each year, delegates from all Provincial Districts met in Wellington to take part in the three-day Conference known as the ‘Farmers’ Parliament’. The Dominion Council dealt with matters not the exclusive concern of one of the commodity sections. The Dominion Council conducted the business of the Federation between the Annual Dominion Conferences. The Council had power to appoint sub-committees, for instance, Finance, Lands, Fertiliser and Transport. The Provincial Secretaries undertook the varied clerical and administrative work involved in the Federation’s business. Many of their activities were local matters with the Federation throughout the country. Those matters could be the making of arrangements for a shearing school, formulating farmer opinion in local body matters, convening a farm school or promoting a golf tournament or shooting competition. These were but a few of the activities carried on in the provinces. At Dominion level, Head Office in Wellington carried out the work connected with the Annual Dominion Conference, the quarterly meetings of the Dominion Council and the produce sections, the various Dominion Council committees, correspondence from provinces and a multitude of minor day-to-day affairs. From Head Office, many deputations went to Cabinet Ministers during the year on national matters raised at Dominion Conference, Section Councils or Committee meetings. Before a Deputation made a submission to Government, considerable research and preparation were needed to prepare an effective case. This meant that Head Office staff had to gather necessary information and statistics and prepare a submission. It was also necessary to keep close personal contact with officials of Government departments, many sectional organisations, statutory organisations and such business enterprises as stock and station companies and shipping companies. These personal contacts enabled transaction of many matters in an expeditious way. To keep abreast of what was happening within the country and abroad, it was necessary to have access to the latest and reliable information sources. Each day journals and periodicals, pamphlets, news digests, etc., arrived in the office to be scanned and important matters noted to ensure that Head Office was well informed. During Parliamentary sessions,

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legislation had to be reviewed to note any matters having a bearing on farming. When legislation was referred to a House of Representatives Committee, the Federation made submissions following extensive research and preparation to ensure a convincing case would be made (Straight Furrow 1961d).17

Levy In mid-1964, Federated Farmers decided it was again appropriate to raise the issue that a levy on produce should be imposed to fund Federated Farmer activities. There was immediate opposition from the Whangarei Cooperative Dairy Company even before the proposal had been raised with the Minister. At its annual assembly, ‘several speakers expressed fears’ that there was a move afoot for Organisations to be given the right to strike levies on the producers’ incomes, without the sanctions of the Statutory Produce Boards. The company told the Minister of Agriculture it had no direct knowledge but ‘it would be a sad state of affairs if Organisations were given the Legal right to impose levies on Dairyfarmers’ incomes without their consent … we cannot see that it would be wise or proper to allow other Organisations to impose levies unless the producers themselves authorised such levies’ (ANZ 1964a).18 The Minister truthfully answered that ‘no representations or requests have been made’ (ANZ 1964b).19 But soon Federated Farmers made a formal approach. The approach was far more thorough than the approach on the same topic a decade earlier demonstrating that Federated Farmers had learnt the importance of providing Government with considerable, well-researched, background material and preparing the ground for a submission to Cabinet. The Federation now recognised that its submissions should be seen as material to persuade Cabinet and not just the Minister of Agriculture. In less than a month, the Director General of Agriculture had produced a draft cabinet paper recommending the introduction of legislation to provide for the imposition of a levy on main farm produce to be applied towards financing the Federation’s activities in representing and negotiating on behalf of all New Zealand farmers. The Federation, aware that one of the main objections to the proposal in the 1950s was that a levy on produce implied a levy on non-members as well as members, now emphasised that much of the work done by the

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Federation benefitted all farmers; irrespective of their financial membership, the cost of these services should be borne by both members and non-members. Federated Farmers had discussed the proposal unofficially with the Chairmen of the Producer Boards. They would have no objection to the levy, but they did not want the produce handled by the Boards to be loaded with an extra charge unless it was recorded separately so that the farmer knew why the levy was being made and how much it was costing him. The Federation justified the levy by proposing to extend its activities, particularly in providing to farmers economic information and legal advice on taxation. It suggested that the additional finance would recoup an existing deficit and provide for the increased services. It argued that the Federation officially represented New Zealand farmers irrespective of their financial membership and was being required to play an increasing part in negotiations and conferences of interest to farmers. These activities benefitted the whole farming community. Federated Farmers pointed out the levy would replace the contributions at present being made by the boards while farmer members’ subscriptions would continue unchanged. At times, the Federation felt restrained from criticising the Boards because they were the Federation’s paymasters. The Federation argued that to be completely effective, it must be independent of outside interests and not dependent on other organisations for its funding (ANZ 1964c).20 The Minister of Agriculture recommended that Cabinet approve the levy on farm produce for financing the Federation’s activities in representing and negotiating on behalf of all New Zealand farmers. But the Cabinet referred the Minister’s recommendations to Government’s political party caucus, which disapproved. The Prime Minister, Holyoake, noted that ‘this matter may now be dropped’ because the Meat and Dairy Boards agreed to a five-year arrangement for further financing (ANZ 1964d).21 Towards the end of the ‘five-year arrangement’, Federated Farmers met with Holyoake again and he advised them to discuss a levy with the Producer Boards in an endeavour to reach agreement with them without recourse to legislation. A couple of months later, Holyoake told Cabinet he would arrange to talk to the Producer Board Chairmen to persuade them to provide the additional finance sought by the Federation. He said he and his colleagues felt that the organisation should continue to secure

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its basic finance from the Producer Boards and suggested that Federated Farmers arranges to meet with Holyoake and the Chairmen of the Boards to ‘continue discussions in the light of the views held by all parties’ (ANZ 1969).22 The Federation waited two years before raising the issue of levies again. Take Away Points The Minister of Finance said ‘every effort must be made to diversify markets and persuade others to moderate their policies of agricultural protectionism’. Federated Farmers was sufficiently confident to propose a comprehensive economic policy for the New Zealand national economy. The Federation urged inflationary forces be curbed partly by a progressive reduction in protection to secondary industries. The Government arranged an Agricultural Development Conference to identify the main needs to ensure increased production. The Prime Minister announced important policy measures in line with the Federated Farmers’ proposals to reduce inflation. In mid-1964, Federated Farmers decided it was again appropriate to raise the issue that a levy on produce should be imposed to fund Federated Farmer’ activities. The Cabinet referred the Minister’s positive recommendation to Government’s political party caucus which disagreed with the recommendation.

Notes and References 1. McAloon, J. 2013a. Judgements of All Kinds: Economic PolicyMaking in New Zealand 1945–1984 (Victoria University Press, Wellington): 180. 2. McAloon, J. 2013b. Judgements of All Kinds: Economic PolicyMaking in New Zealand 1945–1984 (Victoria University Press, Wellington): 167. 3. Straight Furrow, 1962a. ‘The Federation’s Year’, 10/1/62: 3. 4. Straight Furrow, 1961a. ‘Special Committee to Frame Economic Policy’, 01/02/1961: 1. 5. Straight Furrow, 1959. ‘Death Duties Encourage Laziness’, 21/01/59: 13; Straight Furrow, ‘Call for Action on Death

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Duties’, 21/01/1959: 17; Straight Furrow, ‘Taxes Are Not Paid by the Dead: Must Be Met by the Living’, 18/02/1959: 1. 6. Since 1894 New Zealand had a specialist court, the Court of Arbitration, for arbitrating industrial disputes and setting minimum standards of employment including wage levels. 7. Straight Furrow, 1961b. ‘Our Economic Policy Goes to Cabinet’, 05/04/1961: 4. 8. Straight Furrow, 1962b. ‘The Federation’s Year’, 10/01/1962: 3. 9. ADC 1964a. Report of the Agricultural Development Conference 1964, Farm Costs Working Party: 154. 10. ADC 1964b. Report of the Agricultural Development Conference 1964, Recommendations and Progress: 316–323. 11. ADC 1964c. Report of the Agricultural Development Conference, 1964, Farm Costs Working Party: 159. 12. ADC 1964d. Report of the Agricultural Development Conference, 1964, Farm Costs Working Party: 168–169. 13. AJHR 1964. (Appendices to the Journal of the House of Representatives), B Series—Economic Surveys, Vol. I, B5: 6–7. 14. ADC 1964e. Report of the Agricultural Development Conference, 1964, Finance Working Party: 52. 15. ADC 1964f. Report of the Agricultural Development Conference, 1964, Production Committee: 295. 16. Straight Furrow, 1961c. ‘As We See Ourselves’, 18/10/1961: 19– 20. 17. Straight Furrow, 1961d. Article on Federated Farmers Meetings, 01/02/1961: 32. 18. ANZ 1964a. Whangarei Co-Operative Dairy Company Ltd. to Minister of Agriculture, 03/08/1964, AAFZ W1710 7174 Box 70, Producer Levy to Fund Federated Farmers 1950–1972. 19. ANZ 1964b. Minister of Agriculture to Whangarei Co-Operative Dairy Company Ltd., 11/081964, AAFZ W1710 7174 Box 70, Producer Levy to Fund Federated Farmers 1950–1972. 20. ANZ 1964c. Proposal to Cabinet For Levy To Support Federated Farmers of New Zealand (Inc.), 17/09/1964, AAFD W4198 811 Box 59 CAB 123/9/5 [Industry and Commerce]—Primary Industries—Federated Farmers of NZ—General: 2–3. 21. ANZ 1964d. Minister of Agriculture Note to Cabinet, 17/09/1964, AAFD W4198 811 Box 59 CAB 123/9/5 [Industry and Commerce]—Primary Industries—Federated

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Farmers of NZ—General; Secretary of Cabinet to Minister of Agriculture, 21/09/1964, AAFD W4198 811 Box 59 CAB 123/9/5 [Industry and Commerce]—Primary Industries—Federated Farmers of NZ—General, A handwritten note by Holyoake reports that ‘the matter may now be dropped’. 22. ANZ 1969. Secretary of the Cabinet to General Secretary Federated Farmers, 31/07/1969, AAFD W4198 811 Box 59 CAB 123/9/1 [Industry and Commerce]—Primary Industries—Federated Farmers of NZ—General. The letter is signed by Holyoake rather than the Cabinet Secretary. ANZ 1969, ANZ 1969 Secretary of the Cabinet to Prime Minister, 31/07/1969, AAFD W4198 811 Box 59 CAB 123/9/1 [Industry and Commerce]— Primary Industries—Federated Farmers of NZ—General.

CHAPTER 9

Domestic Matters for Meat, Dairy and Agriculture in the 1950s and 1960s

Introduction Through the 1950s and 1960s, the roles of the various organisations involved in farming became well established in their roles and contentious issues were usually settled satisfactorily. A contentious issue for the meat industry was Government expenditure of the reserve funds accumulated through the wartime stabilisation scheme. Federated Farmers was disappointed when the Government reported it was not obliged to consult the Federation on the expenditure, but the Federation’s relationship with the Meat Board allowed an acceptable solution. For Dairy, the main ongoing issue was whether the ‘guaranteed price’ was sufficient to maintain dairyfarmers standard of living. After much debate, the limitations of the scheme were accepted with reluctance.

Meat Matters Usually, Federated Farmers and the Meat Board collaborated well. Federated Farmers had closer ties with the Meat Board because those processing meat, the freezing companies, had no say in electing Board members and freezing companies were a common enemy for both the Meat Board and farmers.

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Federated Farmers saw one role was to bring farmers’ concerns to the Meat Board’s notice, expecting the Board to respond. An example was that the President of Otago Federated Farmers complained that the Meat Board had let farmers down in organising stock processing and shipping it overseas. Farmers, by using land and pasture improvement through the widespread use of fertilisers and trace elements, had increased the Otago sheep population by more than 30% over five years during the 1950s ‘answering the call for more production’. But killing and freezing space at meat processing works was too limited, and it was often difficult to get stock processed when most required. There were also bottlenecks in shipping. Those hold-ups meant farmers had to hold on to stock ready for processing using pastures that were intended for winter feeding (Straight Furrow 1959a).1 The Meat Board was frequently criticised for not keeping farmers fully informed about market prospects and prices. In 1955, the Meat and Wool Section criticised the Board for not publishing prices earlier in the season. The Section secretary sought an explanation from the general manager of the board. Eventually, the Board changed its policy and agreed to weekly publication of prices. If conflicting reports about meat market prospects appeared in the media, Federated Farmers encouraged the Meat Board to ‘come out and given its view on the real position’. When there were considerable fluctuations in beef prices, Federated Farmers expected ‘The board should tell farmers what is going on’. The Board agreed to make as much information as possible available to farmers but warned there were risks of misleading farmers; sometimes the Board received three conflicting reports on market conditions in the UK (Straight Furrow 1955a).2 One question that remained uncertain at the start of the 1950s was whether the consent of the Meat Board or Federated Farmers or both was needed for spending funds built up during wartime as a result of New Zealand’s stabilisation policy. In March 1951, the Government merged the Meat ‘Pool Account’ and the ‘Industry Stabilisation Account’ into a new account known as the Meat Industry Reserve Account (Straight Furrow 1951a).3 The Meat Pool Account resulted from an agreement made in 1941 between the Government and the New Zealand Meat Producers’ Board while the Meat industry Stabilisation Account came from the 1943 agreement between the Government and the Farmers’ Federation, the forerunner of Federated Farmers, the actual signatory

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being Walter Mulholland, President of the Farmers’ Federation and, later, of Federated Farmers. There was often confusion among farmers over the origins of the accounts and their potential uses. Four years after the merging of accounts into the Reserve Account, Federated Farmers tried to bring clarity, pointing out the wartime agreement between the farmers and the Government in which it was agreed that the funds would be used for the benefit of the industry, in particular to cushion falls in overseas prices. The amount owing to meat farmers by the Government was £42,000,000. The Prime Minister and the Leader of the Opposition had made public statements supporting the Federated Farmers’ interpretation of the Account’s objectives. The Prime Minister had said ‘the general understanding … that the funds will be available to cushion any sudden falls in price or to spread any long-term downward trends in world prices’. The Leader of the Opposition had said: ‘It was made clear time after time during the Labour Government’s term of office that the balances finally remaining in the Meat Pool Account and the Meat Industry Stabilisation Account belonged to and would be held for the benefit of the meat industry’ (Street 1955).4 Unsurprisingly, Federated Farmers was shocked in 1951 when the Minister told the Federation that the Government did not need its consent to use the funds in the Meat Reserve Account. The Minister was replying to a resolution passed by Federated Farmers’ Meat and Wool Council asking the Government to affirm that, as prescribed in the 1943 Stabilisation Agreement, the Government would not make any payment out of the Meat Pool and Stabilisation Accounts without first obtaining the consent of Federated Farmers. The actual wording in the Stabilisation Agreement was that payment would not be made ‘except with the consent of the producers’ organisation dealing with any products concerned’. The Minister interpreted that wording to refer to statutory farm industry bodies such as the Meat Board, the Wool Board and the Dairy Board. The Federation told the Minister that meat producers would be alarmed to hear that the Government considered it did not need the Federation’s consent. Federated Farmers’ Meat and Wool Section challenged the Ministers’ interpretation because, earlier, the Prime Minister had consulted Federated Farmers on use of the funds when introducing a freeze on wool prices and when the Government had decided to subsidise

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hides’ and pelts’ prices. The Meat and Wool Section wanted the Federation to obtain a legal opinion on the disputed clause (Straight Furrow 1951b).5 By 1951, Mulholland was a member of the Meat Board after leaving his role as President of Federated Farmers. Mulholland reinterpreted history and squashed any challenge to the Minister’s interpretation by saying the general agreement was made between the Farmers’ Federation and the Government, but the specific details were reserved for the Boards. Mulholland claimed also that the document was never a ‘legal’ document and there could be no legal challenge to the interpretation (Straight Furrow 1951c).6 Federated Farmers discussed the matter with the Meat Board and the Board agreed that before decisions on major questions of policy for use of the Meat Industry Reserve Account were decided the Meat Board would consult the Federated Farmers’ Meat and Wool Section but on the understanding that the Board alone should decide on matters arising from its statutory obligations. One such ‘statutory’ obligation was to agree subsidies (Straight Furrow 1956).7 A need for subsidy in the form of ‘support prices’ was agreed for pelts and hides in 1951 following a rapid fall in prices. Federated Farmers were fully engaged in discussions of changes for the meat industry. The Government consulted both Federated Farmers and the Meat Board and agreed to pay support prices to producers from the Meat Pool. Through the first half of the 1950s, consideration was given to a more permanent scheme for paying support prices (Straight Furrow 1952a).8 A committee comprising the Government, Meat Board and Federated Farmers considered the options, and in 1955, the Government agreed to introduce a Bill providing support for all classes of meat for export. The scheme provided for the announcement, before the season began, of a floor price for each class of export meat. These prices would remain unaltered for the duration of the season. A deficiency payment would be announced when the price for any class of meat was lower than the floor price. Meat exporters would add the deficiency to prices paid to producers and be reimbursed from the meat industry reserve funds. While the general administration of the scheme was the responsibility of the Meat Board, the levels of both floor prices and deficiency payments would be determined by a committee comprised of two representatives from the industry, two from the Government and a chairman appointed by the

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Government in agreement with the Meat Board and Federated Farmers (Straight Furrow 1955b).9 Control and use of the Meat Industry Reserve Account Funds continued to be discussed at the Dominion Council and Dominion Conference. Concern at Government’s attitude on using the funds was shown in a resolution passed at the annual Section conference. The resolution strongly reaffirmed that Government should place the control of the Meat Industry Reserve Account in the Meat Board’s hands. Speakers were concerned that Government was attempting to restrict using the funds to support farming.

Dairy Matters In the 1950s, with the Dairy Board and Dairy Commission well established in their roles, Federated Farmers found its role in dairying rather limited. Where it could best use its influence was in the issue that most directly affected the ‘man on the milking stool’—the guaranteed price including industry costs. Announcement of the guaranteed price was a major point each year, and producers were well satisfied that the scheme gave them stability, but often felt the price insufficient. One of Federated Farmers’ main tasks was to review continually the elements that contributed to the guaranteed price and press for the full dairy farming costs to be recognised. Typically, the Federated Farmers’ Dairy Section Chairman complained in 1951 that dairyfarmers had yet to receive from the Dairy Products Marketing Commission an increase to compensate for rises in farm maintenance and increased factory costs (Straight Furrow 1951d).10 Also, it was Federated Farmers’ task to determine the appropriate allowance for farm labour costs by agreeing wages with the New Zealand Workers’ Union. In December 1953, when announcing an increase in the guaranteed price of 2.15d. per pound of butterfat, the Chairman of the Commission said that price anticipated an increase in farm labour wages of an additional £1 per week for each adult male. But in 1954, when the Chairman of the Commission announced reduced prices, he made no reference to dairy farm workers’ wages (Straight Furrow 1954).11 Federated Farmers complained to Government that the Guaranteed Price Act specifically mentioned that farm wages should be taken into account and eventually a conference was arranged attended by the Ministers of Agriculture and Labour and representatives of Federated Farmers,

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the Dairy Commission and the Dairy Board. No agreement was reached, but immediately afterwards the Government announced that dairy farm wages would be increased and the Dairy Commission followed with an announcement that the Guaranteed Price would be increased proportionate to the increase in wages. But that episode was a clear warning that the Commission wanted to decouple farm wages from the guaranteed price. The Federated Farmers’ General Secretary discussed the question with the Dairy Section Council saying that farm wages had followed prices since the guaranteed price agreement with the Labour Government in 1936. This had worked when prices were going up, but obviously did not work when prices were going down. The fundamental idea behind the scheme was fixing a price ‘sufficient to meet costs’. But by 1955 a general reluctance to set a price that met costs was becoming evident (Straight Furrow 1955c).12 It was now apparent that both the Dairy Commission and the Government did not want to continue linking movements in the guaranteed price with farm wages. It was claimed by the Government in meetings with Federated Farmers that it would be unrealistic to reduce dairy farm wages in a period of over-full employment when wage rates in other sections of industry were moving upwards. This was undoubtedly a valid point, when some dairyfarmers were paying actual wage rates above the minima prescribed in the Arbitration Court wage order. Federated Farmers argued that if the linkage between the guaranteed price and dairy farm wages was not going to be implemented, then it should be eliminated by an amendment to the Agricultural Workers’ Act (Randall 1955).13 The Guaranteed Price, according to legislation, was also intended to assure dairyfarmers of ‘a reasonable standard of comfort’ relative to others in the community. Federated Farmers in the 1950s tried to ensure that the interpretation of ‘a reasonable standard of comfort’ matched what dairyfarmers saw as the appropriate standard and expected increased wages and conditions for ‘others in the community’ to be matched by increases in dairyfarmers’ net income. But Federated Farmers recognised that the payout to farmers could not exceed the income earned from exports. A Dairy Industry Account had built up during the period of bulk purchase and increasingly that was being called upon to protect farmers from the falling prices (Straight Furrow 1952b).14 The Chairman of the Dairy Products Marketing Commission defended a further reduction in prices for the 1955/56 season. He quoted the

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Government Statistician who reported the average dairyfarmers’ income, compiled from a survey for the year ending March 1954 of 1500 representative dairyfarmers, as £1266 and the average for all other individuals in New Zealand as £835. Marshall claimed there could be no question about the reasonable standard of comfort enjoyed by dairyfarmers (Straight Furrow 1955d).15 He agreed the reduction was not matched by reductions in income borne by other sections of the community as expected by the legislation, but he predicted future falls of income for those other sections (Straight Furrow 1955e).16 The Federation argued that the dairy farmer’s cost of production was determined by forces outside his own control; urban wage and salary earners were guaranteed a minimum return by the Arbitration Court, and secondary industries were protected in their market to a great degree by Government import licensing and tariffs. Furthermore, a substantial degree of farming’s high costs was the result of high Government expenditure. The Federation insisted the dairy farmer should be assured of a price which would cover his production costs and assure him of a standard of living and a personal return equal to other sections of the community (Straight Furrow 1955f).17 Eventually, the Minister of Agriculture, the Hon. C. Skinner, who had replaced Holyoake following Labour’s victory at the 1957 General Election, gave Federated Farmers a written assurance that he would consult with the Federation before any revision of the guaranteed price scheme was implemented (Straight Furrow 1958).18 But by 1959 the Provincial Dairy Section Chairman, W. Petersen, spelt out the reality at the annual conference of the Section. It had at last been brought home to dairyfarmers that the actual price they would receive would be decided largely by the overseas realisations of their produce, independently of guaranteed price legislation and the many ‘airy promises’ of politicians in the past to maintain the dairy farmer’s standard of living. The year had been an anxious one for dairy industry bodies because of the very low price for produce on the London market. Peterson said also that the new Government lacked sympathy for the dairy industry (Straight Furrow 1959b).19 Walter Nash, the architect of the Guaranteed Price system in the 1930s, was now Prime Minister after Labour won the General Election in 1957 and he pointed out the dilemma for the dairy industry. If the low export prices were subsidised with a guaranteed price higher than overseas prices realised, New Zealand, which had fought hard against dumping distorting the British market, would itself be classed as a dumper and treated with less favour by the UK. Nash claimed

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‘the present pay-out does cover the full production costs of the “average dairy farmer”’ (FF 1959).20 The change back to a Labour Government negated any progress that had been made by Federated Farmers on dairy matters in the 1950s. Federated Farmers played an important role in keeping animal diseases under control. The Dairy Section was active in its campaign to achieve a workable and effective scheme to eradicate bovine tuberculosis from the Dominion’s dairy herds. The chairman and deputy chairman discussed with the Dairy Board a plan to be submitted to Government. The Government agreed to adopt the plan the administration of which was to be controlled completely by the Department of Agriculture. It was hoped that eventually New Zealand would have completely tuberculosis-free dairy herds. Another important health matter was new regulations for the compulsory vaccination of all calves against brucellosis. The Dairy Council had been pressing for such a scheme for a long period and it was a cause for satisfaction that regulations were implemented. The Federation’s Animal Health Committee scrutinised the draft regulations and were successful in having alterations made before they became effective at the start of December 1966. Also, the Council obtained clarification from the Minister of Agriculture that no compulsory scheme of testing and slaughter was envisaged and would not be adopted without prior consultation. The voluntary scheme progressed satisfactorily and relatively few aspects required attention by the Dairy Council. Leptospirosis became a topic of considerable importance in Council discussions. The Department of Health was questioned closely on the work being undertaken to isolate the various strains and to evolve a vaccine to effectively immunise humans against the disease. In response, the Departments of Health and Agriculture gave the problem considerable priority with an inter-departmental committee giving special and urgent study to the problem (Straight Furrow 1967a).21 The 1960s were marked for the dairy industry by many attempts by Federated Farmers to bring to the attention of Government the relatively low incomes of dairyfarmers and to seek relief. The Dairy Section Annual Conference in 1961 set up a special committee to study the economic problems affecting the industry. The committee’s report spotlighted the meagre net income of dairymen in Northland and suggested that urgency be given to surveys by the Agriculture Department, in Waikato and Taranaki also (Straight Furrow 1963a).22 The special committee

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concluded that the Government should set up a special farming commission to deal with dairy farms in serious financial difficulties. It should consist of one representative from the Department of Agriculture, one from a financial institution and one from Federated Farmers. To assist the commission, local committees should be formed to act in an advisory capacity, and instances of problem farms should be brought to the commission’s notice only after the local committee was satisfied that a prima facie case existed for an investigation. The report also contended that the industry should take up immediately with the Government the need for an urgent settlement of the long-outstanding issue of the ‘inadequate’ price being paid for butter sold for domestic consumption. Other conclusions and recommendations reached in the report were: There had been substantial increases in dairy farming costs during the last decade. The increases were all the more serious in view of the fact that the index of dairy export prices had fallen below the 1951 level. Though average dairy farming incomes over the decade 1950 – 1960 rose in money terms, if these were corrected for the decline in purchasing power of the New Zealand pound they recorded only a slight increase. Also, to help secure this small rise dairyfarmers had had to milk more cows and spend more capital. The estimated labour reward to dairyfarmers in relation to the hours and nature of the work involved was very modest. If the long hours involved were charged at ruling rates for skilled work, with penalty payments added for the conditions of work and irregular hours, the committee suggested that the rewards would be far in excess of the estimates shown.

The return on capital invested in the dairying units surveyed by the Department of Agriculture was, in the committee’s opinion, low and substantially below the return guaranteed, for example, to the overseas capital owners who had recently established a telephone cable factory in New Zealand. The farm investment percentages averaged 5.4 for the Rodney area, 4.6 for the Whangarei district and 5.6 for Rongotea. The returns were achieved on what were regarded as ‘above-average’ farms (Straight Furrow 1962a).23

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Federated Farmers sought a Government subsidy to increase the domestic price paid for butter, but the Treasury opposed the subsidy mainly on the grounds, again, that New Zealand, internationally, was fighting against the ‘dumping’ of surplus dairy produce onto the British market by several countries at prices lower than their domestic prices. That caused low prices in New Zealand’s main export market and, mainly at New Zealand’s instigation, the UK had introduced measures to limit imports from dumping countries. The Treasury argued that if butter was subsidised within New Zealand that would bring New Zealand into the UK’s definition of dumping because domestic prices paid to farmers would be more than export prices. In addition, the Treasury would not be able to resist similar requests for subsidy from others such as producers of milk for domestic consumption (Straight Furrow 1963b).24 The increase was also opposed by the Federation of Labour who told a commission of inquiry into the butter price that ‘the workers of New Zealand were not in a position to finance a handout to dairyfarmers’ (Straight Furrow 1963c).25 Federated Farmers argued that because a farmer’s capital was tied up in land he could not earn interest from that capital and that loss of interest should be counted as a cost when calculating a farmer’s income. But the commission of inquiry refused to accept that argument. The Government helped the dairy industry by negotiating with the UK the removal of a 15/- per cwt tariff on butter entering the UK market. The Dairy Board Chairman told the Dominion dairy conference in Wellington: The agreement now reached was a good one … Under the new arrangements, the dairy industry had a degree of protection … It had been agreed also that New Zealand’s share of the United Kingdom butter market would not be reduced and that its present actual quantity would continue to apply. The assurance had also been given that the United Kingdom Government would not expand the production of milk in the UK for manufacturing purposes. (Straight Furrow 1963d)26

The Government also proposed a loan guarantee scheme in the 1968 budget through which a farmer could obtain a loan guaranteed by the State Advances Corporation. The Corporation would pay the creditor and the farmer would pay the State Advances Corporation over a longer period. The Federated Farmers’ Dairy Section reluctantly accepted the scheme as a ‘stop-gap’ until the whole dairy situation was reviewed. In

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the 1969 budget, the Government announced a proposal to diversify the dairy industry by offering a payment of $10 a head for raising dairy calves for sale as beef cattle replacing dairy cattle thereby ‘diverting grass from milk to beef production’ (Straight Furrow 1969).27 The most important development in the Sharemilker Employers’ Subsection during 1967 was adopting a constitution for the subsection. This constitution had been approved by the Dairy Section Council and forwarded to the Section’s 1968 annual conference for ratification. The main industrial matter discussed between the Employers’ Subsection and the Sharemilkers’ Association in 1967 was the percentage which should be allowed for hiring tractors and plant. The Sharemilkers’ Subsection was disappointed that the Federation’s Dominion Council decided not to support a farm lay-by scheme. However, the Council discussed with insurance companies alternative endowment insurance schemes to bring them more into line with the sharemilkers’ needs. Representations made by the Sharemilkers’ Subsection concerning State Advances Corporation policy on applications for finance for dairy farm purchase and date of settlement were successful. The Corporation modified its policy from 1 December 1967, to accept applications for finance to purchase dairy farms where settlement would be no later than the end of the current dairy season. This decision was welcomed by the subsection (Straight Furrow 1968a).28 The Dairy Section Council discussed with representatives of the Dairy Board the need for much greater economic data relating to dairyfarming operations. The Section advocated an independent economic service. The Section Council determined that if the industry’s case was to be argued in future, it should be better equipped with economic data on dairy farming operations. The Section believed that the issues at stake were so important that the industry would be failing its members if it did not gather immediately a great deal more economic and financial data. A request by Federated Farmers for increased representation on the Dairy Industry Council was acceded to by the Board, and Federated Farmers’ representation was increased to five delegates (Straight Furrow 1966).29 At the annual conference, delegates expressed strong views in favour of maintaining the basic price for butterfat for the 1966–1967 season at the same level as the previous season. Delegates were particularly conscious of the need to maintain the price in view of the added financial commitments undertaken by many farmers in their attempts to increase production.

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Consequently, it was a matter of satisfaction to dairyfarmers that the Dairy Products Prices Authority decided to maintain the price. Indications were that the dairy industry’s reserve account would be considerably in debt when the time arrived for the review of the next season’s payout price, and at that stage, the Council once more had to press vigorously for the dairyfarmers’ interests (Straight Furrow 1967b).30 The Federation gave its complete support to the Dairy Board’s representations that the local market retail price for butter should not be reduced consequent upon the reduction in the basic butter fat price. The section council continued to support the Board’s efforts to resist a reduction in the price. The Federation was extremely concerned to learn during the year that Government had refused to extend additional Reserve Bank Credit and was to exercise tight control over trading bank lending for the capital development of dairy factories. Council stressed the need for dairy companies to obtain satisfactory finance to develop sufficient manufacturing capacity to cope with the vastly increased farm production. When it became obvious that Reserve Bank and trading bank finance would not be available to the industry and a decision had been made to float a bond issue to obtain the urgently required finance, the Federation requested from Government a written assurance that the industry would be permitted to return to its traditional sources of finance at the earliest possible time. However, Government’s reply did not contain such assurance, but merely undertook ‘to review the present arrangements should this prove necessary’ (Straight Furrow 1968b).31

Agriculture Matters The Agriculture Section’s problems were those associated with grains and seeds along with agricultural machinery. Wheat bulk handling and storage and receipt of the grain at the mills were causing new problems. Following discussion with mill owners, at the instigation of the Section, an officer of the Department of Agriculture was sent overseas to study developments in grain conditioning and bulk handling. Means of identification of sacks was advocated so that sacks’ manufacturers could be traced and faults ‘sheeted home’. Improved markings on fertiliser bags identifying the contents had also been introduced. A surplus of used grain sacks had caused a good deal of concern, and the section finally agreed to arrangements and prices so that good once-used sacks

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would be used by wheat growers as well as new sacks. Negotiations were being conducted regarding a proposal to change the standard size of grain sacks with the Section opposing any change (Straight Furrow 1962b).32 A further increase in wheat acreage had made necessary investigations into the problems of transport, storage and distribution of the expected crop. A Government-appointed Committee of Inquiry into the wheat, milling and baking industries had been taking evidence from the Agriculture Section. In the meantime, the Section negotiated with the Government terms for storage increments to enable growers to provide sufficient storage facilities. Successes for the Section were that customs duty on cultivator points, then 20%, and on ammonium phosphate, then 12%, were eliminated through the Section’s efforts. Also, after many ‘long, drawn out representations’, the Government was persuaded to establish an agricultural machinery testing and research institute (Straight Furrow 1964).33 Take Away Points Federated Farmers was shocked in 1951 when the Minister told the Federation that the Government did not need its consent to use the surpluses in the Meat Reserve Account. The Meat Board agreed to consult Federated Farmers on using the Account. The Government agreed to introduce a Bill providing support for all classes of meat for export. A deficiency payment was paid if the price for any class of meat was lower than an agreed floor price. Federated Farmers’ main tasks included pressing for the full dairy farming costs to be recognised. It was now apparent that the Government did not want to continue linking movements in the guaranteed price with farm wages. It had at last been brought home to dairyfarmers that the actual price they would receive would be decided largely by the overseas realisations of their produce. Federated Farmers encouraged schemes to eradicate bovine tuberculosis, brucellosis and leptospirosis. The 1960s were marked for the dairy industry by many attempts by Federated Farmers to bring to the attention of Government the relatively low incomes of dairyfarmers and to seek relief.

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Notes and References 1. Straight Furrow, 1959a. ‘Otago President’s Annual Address’, 03/06/1959: 20. 2. Straight Furrow, 1955a. ‘Farmers Want More Information on Prices and Markets: Meat Board Criticised’, 01/03/1955: 1. 3. Straight Furrow, 1951a. ‘Meat Pool and Stabilisation Accounts Merged’, 15/03/1951: 6. 4. Street, B. 1955. ‘Many Short Memories Over Farmers’ Pool Funds: Historical Facts Reviewed’, Straight Furrow 1955, 01/02/1955: 1. 5. Straight Furrow, 1951b. ‘Funds Can Be Used Without Consent of Federation, Says Minister’, 15/05/1951: 10/11; Straight Furrow, ‘Special Report: The Future Use of the Meat Reserve Funds’, 15/06/1951: 4. 6. Straight Furrow, 1951c. ‘Proposals for Meat Support Prices: A Matter of “Enormous Moment”: Discussion of Ownership of Meat Funds’, 15/06/1951: 2. 7. Straight Furrow, 1956. ‘Use of Meat Industry’s Reserve Funds’, 01/10/1956: 3. 8. Straight Furrow, 1952a. ‘Proposal for Meat Support Prices: A Matter of Enormous Importance: Discussion of Ownership of Meat Funds’, 15/06/1952: 2. 9. Straight Furrow, 1955b. ‘Agreement Reached on Meat Floor Price Scheme’, 01/07/1955: 9. 10. Straight Furrow, 1951d. ‘Dairy Section: Increased Pay-Outs’, 15/06/1951: 52. 11. Straight Furrow, 1954. ‘Guaranteed Price Reduction’, 01/11/1954: 36. 12. Straight Furrow, 1955c. ‘The Guaranteed Price Scheme’, 01/06/1955: 3. 13. Randall, D. 1955. ‘Will the Industry Seek Revision of Guaranteed Price Scheme?’ Straight Furrow, 01/03/1955: 5. 14. Straight Furrow, 1952b. ‘Awakening Interest in Guaranteed Price Implications’, 01/07/1952: 21. 15. Straight Furrow, 1955d. ‘Guaranteed Price Reductions’, 01/09/1955: 11. 16. Straight Furrow, 1955e. ‘Mr Marshall Defends Commission’s Actions in Guaranteed Price Reduction’, 01/10/1955: 5.

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17. Straight Furrow, 1955f. ‘Federation’s Submissions to Committee of Enquiry into the Dairy Industry’, 01/12/1955: 11. 18. Straight Furrow, 1958. ‘Section’s Chairman’s Fighting Address’, 18/06/1958: 7. 19. Straight Furrow, 1959b. ‘Dairy Chairman’s Annual Review’, 01/07/1959: 29. 20. FF 1959. (Federated Farmers), 90–343, MSY 2715 D8/159, Prime Minister to Pryde, Federated Farmers, 21/01/1959. 21. Straight Furrow, 1967a. ‘Dairy Section’s Year’, 05/01/1967: 7. 22. Straight Furrow, 1963a. ‘The Federation’s Year’, 09/01/1963: 3. 23. Straight Furrow, 1962a. ‘Commission Sought on Dairy Produce’, 04/07/1962: 17. 24. Straight Furrow, 1963b. ‘Three Witnesses Heard in Local Butter Hearing’, 05/06/1963: 5. 25. Straight Furrow, 1963c. ‘Butterfat Inquiry Evidence’, 07/08/1963: 12. 26. Straight Furrow, 1963d. ‘Credit for Butter Agreement’, 07/08/1963: 39. 27. Straight Furrow, 1969, ‘Will This Scheme Help You’, 23/07/1969: 11. 28. Straight Furrow, 1968a. ‘Dairy Section’s Year’, 10/01/1968: 10. 29. Straight Furrow, 1966. ‘Dairy Section’s Year’, 05/01/1966: 5. 30. Straight Furrow, 1967b. ‘Increasing Concern with Marketing’, 05/01/1967: 5. 31. Straight Furrow, 1968b. ‘New Issues Emerge from 1967’, 10/01/1968: 7. 32. Straight Furrow, 1962b. ‘The Federation’s Year’, 10/01/1962: 3. 33. Straight Furrow, 1964. ‘The Federation’s Year’, 08/01/1964: 3.

CHAPTER 10

Wool: Prosperity Then Reform

Introduction Wool farmers found unexpected prosperity at the 1950s start because of the demand from the USA in support of its Korean War activities. But, after that highpoint, competition from synthetic fibres started to become significant, and from the 1960s, the need for reform of the industry procedures established in the nineteenth century was clear. But it took several years before reform acceptable to a significant majority of woolgrowers was implemented.

Prosperity Partial relief from farming anxieties came quickly for sheep farmers in the early 1950s. Following World War II, wool growing declined sharply in the USA (Straight Furrow 1950a)1 because wool prices had dropped and skilled labour for handling sheep had become scarce and highly priced (Straight Furrow 1951a).2 In 1950, home grown wool usage in the USA dropped to less than 40% (Straight Furrow 1950b).3 That became important for New Zealand when in 1950 the USA secured United Nations support to repel the North Korean invasion of South Korea. The USA needed wool for military purposes and New Zealand benefitted because prices surged, stimulated by the USA’s need to purchase © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_10

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foreign wool. The tonnage purchased from New Zealand increased fivefold. Wool prices tripled during 1950/1 and, at Parliament’s opening in 1951, the Governor-General announced that ‘great prosperity had come to New Zealand, mainly because of the prices received for our exports of primary produce, especially wool’ (Straight Furrow 1951b).4 But that was a brief interlude, and by the 1960s, a need for reform of the wool industry became obvious (Fig. 10.1). The USA sought international control over wool; Federated Farmers quickly pointed out that any such control would be ‘strongly opposed’ (Straight Furrow 1951c).5 Federated Farmers became concerned that discussions were taking place at Government level without involving farmers. The Government was urged in 1951 to give all the information that it could—‘Farmers generally are men of sound judgment who can be relied upon to look at the facts and come to a decision with both feet on the ground’ (Straight Furrow 1951d).6 The Federated Farmers’ Meat and Wool Section’s Chairman wanted to see ‘reciprocity and equal sacrifice’ if wool was to be ‘commandeered’. By that, he meant that farmers would expect the UK to compensate New Zealand for any financial loss for New Zealand. For the USA, he expected the US Government to ‘freely admit 0.45 0.40 0.35 Price £/lb

0.30 0.25 0.20 0.15 0.10 0.05 0.00 1946

1947

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Fig. 10.1 Price of New Zealand wool in £/lb in the late 1940s/early 1950s (Source of information—New Zealand Digital Yearbook—Statistics New Zealand)

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into the United States of America supplies of New Zealand butter, cheese and meat’. Federated Farmers had to defend the implication that farmers were ‘profiteering’ from the high prices. Farmers saw the increased income redressing the balance from past rainy days rather than as an investment for future ones. A Leader in Straight Furrow argued that: ‘the woolgrower … is only now beginning to … make amends for a long period of struggle’ (Straight Furrow 1950c).7 Federated Farmers was influential and acted with ‘common prudence and in the national interest’ when the Government raised concerns that the huge money influx into New Zealand unaccompanied by goods’ and services’ expansion would be inflationary. Agreement was reached between Government and woolgrowers, represented by Federated Farmers’ Meat and Wool Section, its High and Hill Country Committees and Dairy and Agriculture Sections, that one-third of farmers’ income be held back and paid into farmers’ accounts at the Reserve Bank. Federated Farmers welcomed that its advice had been sought before any legislative action. The Federated Farmers’ Dominion President called the meeting ‘democracy at its best’ (Straight Furrow 1950d).8

Controlling Prices and Costs The Joint Organisation (JO) set up in the 1940s to handle the wool surpluses built up during wartime finished its activities in the early 1950s. The Wool Board proposed a national scheme to replace it. Federated Farmers welcomed the scheme and ‘congratulated’ the Wool Board ‘for giving a lead in this matter’. The Wool Board proposed a grower-controlled Commission that would purchase wool if it were not sold above a reserve price that would be set by the Commission at the wool selling season’s start. The Commission would sell the wool later when prices had risen (Straight Furrow 1951e).9 The objective was to offer ‘greater resistance to any downward trend’ when prices were low. Federated Farmers undertook to discuss the plan with provincial representatives. In due course, all but one of the 22 Federated Farmers’ provinces supported the scheme (Greensmith 1996a).10 Federated Farmers’ influence was clear when the Government made the scheme permanent following Federated Farmers demonstrating farmers’ support. One other possibility was that the Commission would acquire all wool and be the marketing body. The advantages were claimed to be that,

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having acquired the wool, sale could spread in the most satisfactory way. Also, growers would be paid on delivery to the Brokers’ store rather than waiting until Brokers sold the wool. But it was recognised that acquisition by an Authority cut right across a fundamental principle, namely the right of each grower to market his own clip, how, when and where he liked. It was concluded that the great majority of growers wanted the sale of their individual clips in their own hands and would not favour an acquisition scheme (FF 1960).11 Proposals for an acquisition scheme resurfaced in the 1960s and 1970s debates on wool marketing reform and remained controversial. A threat for wool marketing that had first become obvious in the 1930s was synthetic fibres that began to compete with wool sales. New Zealand, Australia and South Africa formed in the 1930s an International Wool Secretariat (IWS) to promote wool sales internationally. But at the 1950s start the wool market’s strength eased concerns about competition from synthetics. Federated Farmers’ main roles through the 1950s on synthetics were to keep woolgrowers fully informed on developments and to fight against synthetics replacing wool in the New Zealand domestic market. Federated Farmers’ Meat and Wool Section’s Chairman warned in 1953 that ‘woolgrowers cannot be complacent’. Though certain man-made fibres had not measured up to expectations the ‘amount of misleading information … concerning … the newer synthetic fibres was appalling … it is significant that makers … are anxious to identify their products with wool and make use of the word wool in the fibres’. He said that ‘our own advertising mediums … must take all possible steps to combat the extravagant claims’ of synthetic producers. He said Federated Farmers should ‘immediately ask the Government to pass an act which requires all textiles sold in New Zealand to be labelled with an accurate description of the names and percentages of the constituent fibres’ (FF 1953).12 Wool Marketing and export were controlled by the Wool Board and the Wool Commission with the International Wool Secretariat promoting wool sale overseas. That left Federated Farmers with no executive role in the wool industry, and in the 1960s, wool matters demonstrated Federated Farmers in its watchdog role, protecting wool farmers interests on costs, prices, farming practices, marketing and Government actions. The Federation opposed unnecessary cost increases but also made farmers aware of why costs increased. One such occasion was when woolbrokers announced increased charges for handling wool in brokers’ stores.

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A Federated Farmers’ Meat and Wool Council deputation met woolbrokers’ representatives pointing out ‘strongly’ that woolgrowers were being ‘severely squeezed’ between falling returns and rising costs and the proposed increases would tend to divert sales from auction sales to private ‘shed’ sales and have a bad psychological effect. The woolbrokers were advised to absorb their increased costs as the farmers had to. The deputation took a moderate rather than a militant approach by accepting brokers had to keep up their earnings to permit the expansion necessary to handle the rising wool production but maintained that the sheep farmers’ difficulties were worse. If the sheep farmer lost his battle then brokers would no longer be needed. Woolbrokers agreed they would consult with Federated Farmers before introducing increases. The Meat and Wool Section deputation agreed to explain to members the reasons for the cost increases, which were increases in wage rates, while not accepting the increases (Straight Furrow 1963).13 The Meat and Wool Section Chairman demanded that woolgrowers play a ‘dominant’ role in negotiating freight rates when increases were announced. He said that woolbuyers who shipped the wool were not ‘vitally concerned’ with increases because they simply passed on increases.

The Need for Reform Federated Farmers became more involved in wool matters in the 1960s when debate about wool marketing reform began. The debate demonstrates the difficulties in modernising agricultural economies to meet the needs of globalised agricultural marketing. The decade started with the Wool Board Chairman criticising woolgrowers. After reviewing how uses of wool had changed and that wool was faced with competition from synthetics, he believed too many growers preferred to live ‘complacently in the past’. They dwelt in the same manner as ‘thirty years ago’ failing to realise the importance of trying to supply wool to the trade ‘tailor-made just as synthetics do’ (FF 1960).14 The Wool Board and Commission led the reform, but the controversies made Federated Farmers heavily involved in representing woolgrowers’ responses to the proposals. The Federation found itself torn between its own perception that significant change was needed, but change was resisted by a vocal minority that made consensus within the Federation impossible until the minority left the Federation. The root of the difficulties was the phrase ‘compulsory acquisition’. In the debate about wool reform, the Federation found itself

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dealing with a situation in which it was unable to represent the views of all of its own members because the spectrum of opinion was extreme. The Federation was faced with a choice of supporting reform that most of its leaders had seen as necessary for several years or attempting to compromise to satisfy extreme views. Towards the end of the 1950s, remits were put forward at the Federated Farmers’ Meat and Wool Section conference in 1959 that marketing of wool was ‘disorderly’ and that put wool at a distinct disadvantage with synthetics’ marketing. The Southland district called for a marketing method ‘more in line with the requirements of the trade’ (1959a).15 Nelson district wanted Federated Farmers to request the Wool Board to investigate if the auction system was the best means of selling wool (FF 1959b).16 The remits were not supported, but, eventually, starting in the 1960s, wool marketing reform became an important issue that Federated Farmers sought to influence. Major price fluctuations in the mid-1960s encouraged the Wool Board to set up the Wool Marketing Study Group to study causes (Straight Furrow 1965a) (Straight Furrow 1965).17,18 Federated Farmers, through its Provinces, led farmers reactions to the various proposals for change and was a major influence through what turned out to be a decade of debate over wool marketing reform (Fig. 10.2). Federated Farmers’ Provinces blamed auctions for causing significant wool price fluctuations and suggested that an appraisal system should be used with the wool price fixed by appraisers before sale (Straight Furrow 1964).19 Mr. Colquhoun told a Federated Farmers’ meeting in 1965 that it should not be beyond the ingenuity of farmers ... to devise a more up−to date method of selling wool ... it was hard to imagine a situation in which makers of cars, tractors or any other manufactured goods would dispose of their produce in the rough and tumble of a monthly auction, or of their increasing or decreasing their prices except in relation to their costs of production. (Straight Furrow 1965b)20

The Chairman of the Federated Farmers’ Meat and Wool Section Council said that auctions prevented manufacturers from budgeting for the season ahead with any sure knowledge of the cost of raw material. Low prices forced the Wool Commission to make supplementary (deficiency) payments for the first time. That brought criticism that the Commission made farmers feel degraded at having to accept subsidies,

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Price in $/tonne (1971 prices)

1200 1100 1000 900 800 700 600 500 400

Fig. 10.2 Price of New Zealand wool in $/tonne in the late 1960s/early 1970s (1971 prices) (Source of information—New Zealand Digital Yearbook—Statistics New Zealand)

the lack of which the farming community in New Zealand always felt proudly distinguished their farming from agriculture elsewhere in the world. Greensmith understood the industry sufficiently well to say: ‘To many ruggedly individualistic growers anything savouring of a subsidy, even if from their own moneys, was obnoxious’ (Greensmith 1996b).21 The Wool Marketing Study Group finally reported at the depth of a price collapse between 1966 and 1968. But by the time specific proposals for reform were put forward in 1969 prices had recovered and the proposals were rejected. The Study Group concluded that cyclical changes in the economies of wool consuming countries caused fluctuations in raw wool consumption by woollen mills and those led to price fluctuations. Basically, economic changes outside New Zealand’s control and not auctions caused fluctuations; mitigating the impact of price fluctuations within New Zealand was necessary (FF 1967a).22 The Group recommended that the system in place for the dairy industry should be used for the wool industry, with a Wool Marketing Authority acquiring all wool grown in New Zealand at a price announced at the season’s start. The Authority would then sell the wool through the existing auction system

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with the Authority’s activities self-balancing over a period of years (FF 1967b).23

The Struggle to Implement Reform The Wool Board and the Wool Commission set up a high-level Marketing Committee to assess the recommendations and propose legislation. The Meat and Wool Section Chairman said that it was obvious that there was a ‘considerable amount of suspicion’ among growers. There was strong opposition against acquisition by a monopoly organisation: growers wanted to retain independence and to avoid Government control. Also, growers demanded a referendum before adopting any plan (FF 1968).24 The Government favoured establishing a marketing authority but left the decision to the wool industry. The Minister of Agriculture, Brian Talboys, said that the real problem for wool marketing was: our willingness or reluctance to accept change. ... The present system was established in another age when journeys which today takes hours were measured in months and in an age when the romance of wool still carried emotional appeal. ... The mystique of wool buying has been shattered by the cold−blooded logic that produces wool’s competitors. But the emotional appeal is still strong. (Straight Furrow 1968a)25

With hindsight, Talboys aptly summarised New Zealand’s wool marketing reform debate in the 1960s and 1970s. Federated Farmers, itself, got caught up in the ‘romance’ of wool and its ‘emotional appeal’. In November 1968, the wool textile industry emerged from the 1966– 68 price collapse and the sense of crisis stimulated by the collapse had passed. Wool prices advanced markedly at 1968/69 season’s start and the Wool Commission no longer needed to buy wool (Straight Furrow 1968b).26 The improvement coincided with the Marketing Committee giving its decision on the new marketing scheme—the scheme’s implementation was important; growers would benefit from consistent pricing, objective measurement and collective marketing. But ‘change would require strong support from a substantial majority of woolgrowers, and this is not apparent at present’ (SSF 1969a).27 The Committee showed their disappointment and included in their report that they considered that ‘many of the criticisms arise from sectional interests that had failed

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to take into account the overriding national interest’ (Straight Furrow 1969b).28 Spackman, as Meat and Wool Section Chairman, said that: Major change could not be made until there was a greater grower understanding of the need for participation in marketing ... growers should concern themselves with all aspects of wool marketing so that they can determine whether the present system is adequate for modern day business methods. (FF 1969)29

Depressed wool earnings in the early 1970s stimulated a new demand by growers for significant reform (Straight Furrow 1970a).30 The Federated Farmers’ Dominion Council pressed the Wool Board to propose a plan for wool marketing claiming that ‘nothing that the Board has implemented thus far has gone to the heart of the low-price problem’ (Straight Furrow 1970b).31 After further studies, the Wool Board Chairman, Jack Acland, said that the Board proposed establishing a New Zealand Wool Marketing Corporation to buy wool and market it internationally as a ‘commercial organisation on a profit-making basis’ (Straight Furrow 1971a).32 Despite initial doubts, in 1972, the Federated Farmers’ Meat and Wool Conference ‘overwhelmingly’ approved the Wool Board’s plan despite some members being ‘disturbed’ by the possibility of total and almost immediate acquisition (Straight Furrow 1972a).33 The Government announced plans for legislation including acquiring the whole wool clip (WCA 1972).34 A Select Committee reviewed the proposed legislation and the Federated Farmers’ Meat and Wool Section reported to the Select Committee that overwhelmingly the Conference accepted the need for the Corporation to operate in a commercial manner removed from direct grower influence (FF 1972a).35 Federated Farmers recognised ‘firmly’ that, to overcome ‘fragmentation’ and introduce ‘greater efficiencies’, the Corporation needed ‘the powers of acquisition over the total New Zealand wool clip’. The Southland delegate to the Meat and Wool Section, Aubrey Begg, was typical of the minority opposition; he was ‘implacably opposed’ to compulsory acquisition and demanded a ‘national referendum so that if our freedom to sell wool is to be taken from us … it can only be done by a two-thirds majority’ (Straight Furrow 1972b).36 He was supported

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by the Federated Farmers’ Dominion President Alec Begg (no relation), who resigned as President. Alec Begg said growers now had to organise outside the Federation (Straight Furrow 1972c).37 Those opposed to compulsory acquisition formed a country-wide Woolgrowers’ Action Committee, outside Federated Farmers, to press for approval by a growers’ referendum before introduction of acquisition. The Committee justified its approach by claiming that a majority of growers opposed acquisition and based its campaign on rousing growers’ fears of losing their freedom to sell as they wished (Straight Furrow 1972d).38 The Action Committee intended to make the Government ‘withhold action on the Wool Marketing Corporation … until acceptable evidence is produced that the majority of growers accept the scheme as at present proposed’ (ATL 1972a)39 (MC 1972)40 (ATL 1972b).41 The Committee claimed that those supporting the proposed legislation: to take away freedom from the woolgrowers ... are fearful of the results of their decision and are doing their best to suppress the free expression of woolgrower opinion. (ATL 1972c)42

It was the furore raised by the Action Committee that succeeded in persuading the Minister of Agriculture to advise the Wool Board that the Bill ‘did not have a sufficient majority of grower support’ (FF 1972).43 Federated Farmers expressed their disappointment that the original version of the Bill including acquisition might not be adopted but agreed to support the referendum and abide by the decision (Straight Furrow 1972a).44 Robert Muldoon, Minister of Finance, described the Corporation’s objective as breaking through the present fragmented and somewhat archaic structure of wool marketing to enable wool to compete on more equal terms with synthetic fibres. But the Government would set up the corporation only if this was the wool growing industry’s firm wish (NZPD 1972).45 Tom McNab, as Chairman of the Federated Farmers’ Meat and Wool Section, said ‘The Federation must, express its disappointment that the original Bill may not be adopted … the need for improvements in all stages of our wool marketing system was urgent …We also believe that if the proposed Corporation is to be fully effective in tackling all aspects of marketing reform, it must have the powers originally proposed for it’ (Straight Furrow 1972b).46

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In October 1972, the Government passed the legislation, including that the Corporation would have powers of compulsory acquisition only if supported by a referendum of growers. The Action Committee remained wary especially so when Labour replaced National in the General Election at the end of 1972. Labour had criticised National for its retreat from compulsory acquisition and the Action Committee wondered whether the new Government would be ‘bold enough … to deny growers the right to express their wishes’ (ATL 1972d).47 Aubrey Begg told the Government that if acquisition went ahead without an ‘overwhelming majority … Federated Farmers will be stripped of farmers’ trust’ (ATL 1972e).48 But the new Government boldly revoked the need for a referendum, with the new Minister, Colin Moyle, convinced that the Corporation needed power of acquisition to be effective (NZPD 1973).49 Through the 1972/73 season, wool prices rose, lessening the sense of urgency for change and strengthening support for the Action Committee (FF 1972c).50 The furore aroused by acquisition raised interest above the usual apathy in the Electoral Committee election of members of the Wool Board (Straight Furrow 1971b).51 Herman points out that usually less than 50% of growers voted, districts were rarely contested, and delegates rarely changed. But, in August 1973, 67.5% voted, all but one district was contested and 15 new delegates out of 25 were elected, giving the Committee an anti-acquisition majority (Herman 1974).52 The new Electoral Committee recommended that powers of the Corporation should not include acquisition (Straight Furrow 1973).53 McNab issued a press statement announcing that ‘debate on the introduction of acquisition … should no longer divide woolgrowers. … The results of the recent Electoral Committee elections confirmed the change in woolgrower opinion’ (FF 1973).54 The Wool Board Chairman announced that the total marketing operation which the Board proposed had now been laid aside (Straight Furrow 1974).55 But the Government remained convinced that a Corporation needed the power of acquisition to be effective (WCA 1974).56 The Government introduced an amendment to the Wool Corporation Act, taking away the provision for agreement by growers before the Corporation powers of acquisition could be used (FF 1974a; NZPD 1974a).57 The Prime Minister, Norman Kirk, told Parliament that he would ‘accept a referendum of all those responsible, financially or otherwise for the production of wool … It is not only the woolgrowers; it is the taxpayers of New

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Zealand’. He reported the financial assistance given by ‘New Zealand taxpayers … to subsidise sheep farmers’ (NZPD 1974b; FF 1974b).58,59 Take Away Points In 1951, the USA needed wool for military purposes. The tonnage purchased from New Zealand increased fivefold and prices tripled temporarily. The Joint Organisation (JO) set up in the 1940s to handle war surpluses finished its activities and a national scheme replaced it with the objective to offer ‘greater resistance to any downward trend’. Synthetic fibres began to compete strongly with wool sales. Wool reform was debated and demonstrated the difficulties in modernising agriculture. A Study Group found changes outside New Zealand’s control caused price fluctuations. Proposals for compulsory acquisition were rejected. Wool Electoral Committee elections confirmed that rejection, but the Government amended to the Wool Corporation Act, taking away the provision for agreement by growers before powers of acquisition could be used.

Notes and References 1. Straight Furrow, 1950a. ‘Wool: World Production Figures’, Straight Furrow, 15/02/1950: 39. 2. Straight Furrow, 1951a. ‘American Sheep Flocks Will Not Be Built Up Fully Until 1955’, 15/02/1951: 7. 3. Straight Furrow, 1950b. ‘Increasing Dependence by US on Foreign Wool’, 15/07/1950: 23. 4. Straight Furrow, 1951b. ‘Close-up on Parliament’, 15/11/1951: 34. 5. Straight Furrow, 1951c. ‘International Control of Raw Materials May Affect N.Z.’s Wool Economy’, 15/03/1951: 3. 6. Straight Furrow, 1951d. ‘Wool in Need of Greater Protection’, 15/06/1951: 1. 7. Straight Furrow, 1950c. ‘The Selling of Wool’, 15/11/1950: 4. 8. Straight Furrow 1950d. ‘Arrangement for Wool’, 15/12/1950: 1. 9. Straight Furrow, 1951e. ‘Post—JO Plan for Wool: Reserve Price Scheme Explained’, 15/08/1951: 22.

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10. Greensmith, E. 1996a. The New Zealand Wool Commission (Wellington: New Zealand Wool Marketing Corporation): 35. 11. FF 1960a. (Federated Farmers), MSY-2737, MandW81/1960, NZ Wool Commission: An Acquisition Scheme for Wool, 16/07/1960: 1/2. 12. FF 1953. (Federated Farmers), MSY-2733, MandW193/1953, Chairman’s Address, 25/06/1953: 6–8. 13. Straight Furrow, 1963. ‘Behind the Scenes in Woolbuying’, 09/01/1963: 3. 14. FF 1960b. (Federated Farmers) Circular MSY-2737 MandW96/1960 23/08/1960, Chairman’s Address: 10. 15. FF 1959a. (Federated Farmers), MSY-2736, MandW5/1959, Minutes, 04/02/1959: 3. 16. FF 1959b. (Federated Farmers), MSY-2736, MandW26/1959, Minutes, 24/06/1959: 4. 17. Straight Furrow, 1965a. ‘Wool Marketing Study Group’, 07/07/1965: 12. 18. Straight Furrow, 1966. ‘Wool Auction Study’, 02/03/1966: 10. 19. Straight Furrow, 1964. ‘Wool Auction Instability’, 16/09/1964: 38. 20. Straight Furrow, 1965b. ‘“Rough and Tumble” Wool Auctions’, 19/05/1965: 5. 21. Greensmith, E. 1996b. The New Zealand Wool Commission (Wellington: New Zealand Wool Marketing Corporation): 77. 22. FF 1967a. (Federated Farmers), 90–343 MSY2744, MandW85/1967 Wool Marketing Study Group: Final Report, 01/11/1967: 26. 23. FF 1967b. (Federated Farmers), 90–343 MSY2744, MandW85/1967Wool Marketing Study Group: Final Report, 01/11/1967: 70–82. 24. FF 1968. (Federated Farmers), 90–343 MSY2745, MandW8/1968, Summary of views expressed by Delegates on the Wool Marketing Study Group Report, 14/02/1968: 1–4. 25. Straight Furrow, 1968a. ‘The Real Problem of Wool Marketing’, 24/07/1968: 22. 26. Straight Furrow, 1968b. ‘Review of the Wool Sales’, 27/11/1968: 3. 27. Straight Furrow, 1969a. ‘Marketing Authority for Wool Desirable but Not Timely’, 08/01/1969: 1.

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28. Straight Furrow, 1969b. ‘One Wool Marketing Authority Plan Defended’, 08/01/1969: 3. 29. FF 1969. Federated Farmers, 90–343 MSY2745, MandW31/1969, Annual Address of the Chairman of the Meat and Wool Section, 18/06/1969: 1. 30. Straight Furrow, 1970a. ‘Growers Claim They Are Not Getting Fair Share of Wool’s Value’, 27/05/1970: 6. 31. Straight Furrow, 1970b. ‘Federation Asks Wool Board to Present A Plan for Marketing’, 30/07/1970: 4. 32. Straight Furrow, 1971a. ‘Broad Powers for New Corporation’, 25/08/1971: 3. 33. Straight Furrow, 1972a. ‘Wool at the Crossroads’, 07/06/1972: 1. 34. Wool Corporation Act, 1972. 35. FF 1972a. (Federated Farmers), 90–343 MSY90–343–05/4, Submissions to the Land and Agriculture Committee by Federated Farmers, 03/08/1972: 2. 36. Straight Furrow, 1972b. ‘Overwhelming Majority: Wool Corporation Given Clear Mandate’, 05/07/1972: 3. 37. Straight Furrow, 1972c. ‘Alec Begg’s Decision: Objected to Speed of Wool Legislation’, 27/07/1972: 3. 38. Straight Furrow, 1972d. ‘Tense Debate on Wool Marketing: Action Committee Soundly Defeated’: 10. 39. ATL 1972a. (Alexander Turnbull Library), Bulletin of the New Zealand Woolgrowers’ Action Committee, July 10, 1972: 1. 40. MC 1972. Letter to the Prime Minister, 29/09/1972, Sir John Marshall Collection, MS1403 479/05. 41. ATL 1972b. (Alexander Turnbull Library), Bulletin of the New Zealand Woolgrowers’ Action Committee, July 10, 1972: 2. 42. ATL 1972c. (Alexander Turnbull Library), Bulletin of the New Zealand Woolgrowers’ Action Committee, July 10, 1972: 2–3. 43. FF 1972b. (Federated Farmers), 90–343–05/4, MandW65/1972, Minutes of the Meat and Wool Council Meeting, 26/09/1972: 8. 44. Straight Furrow, 1972e. ‘Meat and Wool Section Reserved on Referendum’, 04/10/1972: 3. 45. NZPD 1972. Appropriation Bill—Financial Statement, 22/06/1972, New Zealand Parliamentary Debates: 397. 46. Straight Furrow, 1972f. ‘Meat and Wool Section Reserved on Referendum’, 04/10/1972: 3.

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47. ATL 1972d. (Alexander Turnbull Library), Bulletin of the New Zealand Woolgrowers’ Action Committee, 5 December 1972: 1. 48. ATL 1972e. (Alexander Turnbull Library), Bulletin of the New Zealand Woolgrowers’ Action Committee, 5 December 1972: 1. 49. NZPD 1973. Hon. C. J. Moyle, NZPD, 1973, 02/03/1973, Vol. 382: 453. 50. FF 1972c. Federated Farmers, 90–343–05/4, Submissions to the Land and Agriculture Committee, 03/08/1972: 12. 51. Straight Furrow, 1971b. ‘Electoral Committee Contest’, 07/07/1971: 7. 52. Herman, P. 1974. ‘The Electoral Committee of the New Zealand Meat and Wool Boards’, Political Science, June 1974, 26, 1: 61. 53. Straight Furrow, 1973. ‘Acquisition Not Needed’, 05/09/1973: 12. 54. FF 1973, Federated Farmers 90–343–04/3, MandW46/1973, Statement Re: Wool Marketing Corporation, 16/08/1973: 2. 55. Straight Furrow, 1974. ‘Sheep and Wool Production Falling Far Too Short’, 03/04/1974: 16. 56. WCA 1974. (Wool Corporation Act—Amendment), 21/10/1974. 57. FF 1974a. Federated Farmers, 90–343–04/4, MandW22/1974, Press Statement, 31/05/1974: 1; NZPD 1974a. Hon. D. J. Carter, NZPD, 1974, Vol. 390: 1514. 58. NZPD 1974b. Right Hon. N. E. Kirk, NZPD, 1974, Vol. 391: 2508. 59. FF 1974b. Federated Farmers, 90–343–04/4, MandW29/1974, Minutes of the Annual Conference of the Meat and Wool Section, 01/07/1974: 114.

CHAPTER 11

Impact of the European Economic Community (EEC)

Introduction One issue that became important for New Zealand at the start of the 1960s and cast uncertainty over the whole decade was the possibility of the UK joining the EEC, or Common Market as it was better known during the early 1960s. John Ormond, the Meat Board Chairman, was the most vociferous in New Zealand warning of the dangers and he was supported by the Meat and Wool Section of Federated Farmers. The Section Chairman said if the UK was persuaded to adopt the Common Agricultural Policy (CAP) proposed by the Common Market’s six countries, it would be nothing short of catastrophic for New Zealand (FF 1961a).1 The Section expressed concern at the impact on export markets from the moves made by the UK to join the European Common Market, and pointed out the grave danger to New Zealand’s economy should the UK Government join on the present terms of the EEC agricultural policy (FF 1961b).2 The uncertainties stimulated attempts to build markets with New Zealand’s near neighbours in Asia and the Pacific.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_11

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Reponses in New Zealand Rather than trying to stop the UK joining the EEC, the Federated Farmers’ approach was to recognise the pressures on the UK and to work to secure protection for New Zealand’s vital interests. Through the 1960s, the Federation kept farmers fully informed on developments and worked with the Government to achieve the best solution for New Zealand. It demonstrated its capability for taking a broad view of farming interests and through its close connections kept farmers fully informed. The President said in 1960 the difficulty that the UK had faced all along in joining the Common Market was the control of imports of farm produce. But 20% of the UK’s trade was with the Common Market countries, and it was vital that she come to an agreement with them. New Zealand should be prepared for some compromise on the UK’s part in regard to joining the Common Market (Straight Furrow 1960a).3 Rather than trying to stop the UK joining the EEC, the chairman of the Dominion Dairy Council thought constructively. He said Federated Farmers has been consulted on the European trade question and should give considerable thought to the subject as it was vital for the primary producer. He thought the Federation could play a valuable role in the future negotiation. ‘We can act as a co-ordinating link with the statutory boards concerned with their own specific products. We can also provide unison with other farm organisations of the British Commonwealth. As we shall all be affected if the UK decides to make a move it should be very much in the interests of the New Zealand producer to have a link with our sister organisations in the Commonwealth’ (Straight Furrow 1960b).4 The Chairman of the Waikato Dairy Section, Mr. Perry, warned the Section that because New Zealand placed import restrictions on certain British goods, people in some parts of the UK were prejudiced against New Zealand farm produce and refused to buy it. Perry reported to the Section that there was definitely a hardening attitude in the UK in regard to buying New Zealand goods. New Zealand did not want the UK to join the Common Market, but on the one hand she was seeking protection and on the other she herself was imposing restrictions on British goods. He had been told by a New Zealand manufacturer that his firm was securing complete protection for an article it was going to make. Perry said the equivalent British article was cheaper than the New Zealand-made article, but import into New Zealand would be stopped. This was typical of what was going on all the time (Straight Furrow 1961a).5

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The General Secretary, Alex O’Shea wrote constructively in 1960 for The Times in the UK on behalf of Federated Farmers’ Dominion Council. On the one hand, they were aware of the need for a prosperous UK as their market and that the UK could not divorce herself from Europe, politically or economically. New Zealand farmers … were aware that European countries were endeavouring to solve a social as well as an economic problem with their agricultural policies and recognised the complications this entailed. Because of these things, they viewed with sympathy efforts made to widen trade in Europe. They would like to see a way in which the UK could join the Common Market without destroying the trade that had always existed between New Zealand and the mother country. It was pointed out that the UK had always been and was likely to remain New Zealand’s only market (Straight Furrow 1960c).6 The Prime Minister, Keith Holyoake, when ‘coming home’ to the Dominion Conference in 1961, told farmers whether we like it or not we are caught up in the course of events. The tide cannot be turned and we must learn to swim with it. There is much that is still uncertain and obscure, and we cannot know what conditions might be required of the UK until negotiations are opened for the terms of her entry. Holyoake added that, first and foremost, we must constantly try to protect New Zealand’s vital interests. We must also be realistic and be prepared to examine other methods of securing comparable or better outlets for our exports. Holyoake said throughout history a close association with the UK had been maintained and it was known from experience that when there was an undertaking with the UK assurances given by the UK were honoured. We are guilty ourselves of refusing to face reality if we do not understand that the UK must face the realities of a changing world. The question of whether or not the UK should join the community was one which must finally be decided by the British Government alone (Straight Furrow 1961b).7

The Outcome for New Zealand In 1967, the Federated Farmers’ President had said some farmers may well ask why Federated Farmers was becoming directly involved [in the EEC discussions]. He believed the Federation had an important co-ordinating part to play. The Producer Boards were responsible for particular products—the Federation’s role was to protect the producer (Straight Furrow 1967).8

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The UK was finally accepted by the EEC and became a member on 1 January 1973. The approach led by Holyoake and his chief negotiator with the UK and the EEC, Jack Marshall, successfully protected New Zealand’s ‘vital interests’ (Hall 2017).9 In the 1960s, New Zealand had (initially reluctantly) accepted quotas for the British market in place of free and unrestricted access. That meant that the threat from the UK joining the EEC was no longer whether free and unrestricted access would be lost but the quota level that would be agreed (ANZ 1969).10 The Dominion President, Alec Begg, and the General Secretary, John Pryde, visited the UK and Europe in 1971 to reinforce New Zealand’s case from the farmers’ viewpoint in the final negotiations and Begg said: We believe our views will add strength to New Zealand’s position at a time when the pace of the EEC negotiations is quickening. Within the next few months the situation with regard to British entry into the EEC will undoubtedly come to a head. Every opportunity will be taken to place our position squarely before officials in the major EEC capitals. (Straight Furrow 1971a)11

Begg remained in London ‘watching over New Zealand’s chief negotiator, Jack Marshall’s shoulder’ until the crucial foreign ministers’ meeting in Luxembourg on 22 and 23 June 1971 (Straight Furrow 1971b).12 The 1971 Luxembourg Protocol defined the special arrangements for New Zealand on the UK being accepted as an EEC member. In New Zealand, the Luxembourg Protocol on dairy exports received favourable responses. Federated Farmers responded that the Agreement held out the prospects for developing an orderly international dairy market, something that only the most idealistic had hoped for (Straight Furrow 1971c).13 In the long term, the EEC may have crystallised advances that would otherwise have been impossible. The dairy industry could become an even stronger force contributing to New Zealand’s well-being. At Luxembourg, new doors to international dairying were unlatched. The Federated Farmers’ Dairy Section Chairman remained optimistic about the positive state of markets, and, in his address to the annual conference, his prime concern was the potential ‘shortage of dairy products with which to take advantage of market opportunities’ (FF 1972).14 New Zealand’s successful diversification of dairy sales to other

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markets meant that the EEC quotas were not taken up fully, embarrassing the Government and producers. New Zealand dairy production now struggled to keep pace with its growing markets. In the years following the Luxembourg Agreement, Federated Farmers’ leaders were often in London and other European capitals. The Federation’s presence smoothed the way to make sure the Luxembourg Agreement operated to New Zealand’s benefit. In 1972, the Dominion President and General Secretary visited the UK to make sure that New Zealand’s issues over the Protocol fine print were not forgotten. An EEC butter surplus was growing and how that was traded would test the ‘nonfrustration’ clause through which the EEC undertook not to inhibit New Zealand markets. The visit successfully solicited the response from the EEC’s Vice-President that the EEC would avoid the 1960s market distortion policies that led to it substantially upsetting world markets. Also, in integrating agriculture into the EEC, there would be room for food imports, and access for New Zealand would continue (Straight Furrow 1972a).15 Moves by the Commission to reduce surplus butter demonstrated that it honoured the non-frustration clause in the Luxembourg Protocol (Straight Furrow 1972b).16 The Dominion President and others from Federated Farmers again met EEC leaders at the end of 1972 ‘to remind these people that they are dealing with people and not statistics’ (Straight Furrow 1972b).17 The successful outcome was reported by the New Zealand Ambassador in Brussels. He wrote to Federated Farmers enclosing an article based on a Press briefing by an EEC Commission spokesman. The article read: On October 26 when he received representatives of the Federated Farmers of New Zealand, the vice-president of the European Commission, Mr Scarascia-Mugnozza, explicitly declared himself in favour of a prudent policy with regard to exports from the EEC. The Commission wanted to avoid the criticisms levelled at it in 1969 and 1970 when the Community substantially upset the world market for dairy products by means of excessively high subsidies. It is obvious that a Community policy of high subsidies aimed in particular at reducing the EEC butter mountain could seriously threaten New Zealand’s efforts to diversify its export markets and the Commission undertook to contribute to New Zealand’s diversification policy by following a prudent export policy.

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Federated Farmers’ President, Bruce Dryden, commenting on the report, said it was particularly gratifying that the EEC Commission’s VicePresident should publicly acknowledge sympathy for, and understanding of, Federated Farmers’ concerns. The EEC’s Vice-President specifically recognised the need for prudence on the Community’s part in disposing of surpluses. The Federation’s delegation had pressed Mr. ScarasciaMugnosza very closely on the Community’s future attitude towards trade with New Zealand and his forthright reassurance of the validity of the Federation’s submissions was encouraging for New Zealand’s hopes of a more outward looking Community (Straight Furrow 1972d).18 The Federated Farmers’ delegation pointed out to the UK and the EEC Commission that New Zealand viewed the price agreement in the Luxembourg Protocol as a minimum, and provision for inflation and other cost increases should be taken into account (Straight Furrow 1972e).19 The actual average price for butter in 1969–1972 exceeded the level quoted in Parliament by Marshall which farmers in 1970 would have ‘accepted with alacrity even if it did not start until 1973’ (ANZ 1971).20 But that price did not take into account inflation during 1972. Fortunately, for New Zealand, the EEC Monetary Compensatory Amounts deemed that the payment to New Zealand should be in real terms, taking into account sterling’s depreciation (ANZ 1973).21 The UK accepted those regulations with, according to Federated Farmers, little complaint and no real effort to contest the New Zealand case (Straight Furrow 1973a).22 The UK agreed to compensate New Zealand with a $20 million payment (Straight Furrow 1973b).23 Selling butter to the UK remained lucrative. Federated Farmers commented also that the Dairy Board and New Zealand had cause to be satisfied with the cooperation it had been receiving from the EEC more generally (Straight Furrow 1973c).24 After the UK became a EEC member on 1 January 1973, New Zealand could export 163,000 tons of butter to the UK, more than the previous year’s tonnage. An annual pricing review had been agreed and welcomed by the Dairy Board. The Federated Farmers’ Senior Vice-President, John Kneebone was in the UK in mid-1973 and said the UK would continue to be the most significant market for NZ produce for the foreseeable future (Straight Furrow 1973d; Singleton and Robertson 2002).25 In 1973, New Zealand was falling 30,000 tons (about 15%) short of filling the quota agreed by the EEC. The Cabinet Economic Committee recognised that judgement would have to be made on political grounds whether to ship to Europe up to the guaranteed quantities of milk fat or

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to divert a proportion to new markets (ANZ 1972).26 Federated Farmers saw three reasons why New Zealand had to increase its dairy production: to fill the EEC quota; to take advantage of improved prospects in South and Central America and Japan; and in response to the request by the American Administration that the Tariff Commission considers allowing skim-milk power sales to the USA. The USA agreed also that New Zealand could export 14,000 tons of butter to the USA in 1973 and the allowable quota of cheese imports would be increased (Straight Furrow 1973e).27 When, in November 1975, the EEC agreed that prices for New Zealand produce after 1975 should be increased by 18%, again the Federated Farmers’ President was, in London, helping with the negotiations. He said New Zealand farmers had reason to be grateful for the way the British Government guarded New Zealand’s interests in Europe. It showed the UK’s obvious loyalty to New Zealand. The Dairy Section Chairman also congratulated the British Government for arguing on New Zealand’s behalf (Straight Furrow 1975a).28 The Anglo-New Zealand nexus in dairy trading continued well beyond 1973. In 1976, Federated Farmers’ Dairy Section Chairman reported that the UK remained ‘a very important market for New Zealand dairy products’ and there had been a ‘further significant rise in returns from the United Kingdom market’ (FF 1976).29

Turning the Far East into the Near East In the late 1960s, the Dairy Section Chairman recognised the weakening trading relationship with the UK and the difficulties should the UK become a member of the EEC. He encouraged members to face up to change. He said New Zealand must play a leading role in trading partnerships in the Pacific and Asia and could not do this if it continued to pursue narrow, inward-looking, protectionist policies. He continued that the vitality and prosperity of any nation were dependant on the ability of that nation to trade to advantage in the world’s markets. New Zealand was no exception. It was in this field that New Zealand faced one of its greatest challenges and should question whether trade relations and policies should be reconsidered in the light of a changing world with changing conditions. The one secure safeguard for peace and prosperity among Asian neighbours was a thriving trade of mutual benefit. What

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is the Far East to Europe and the UK was very much the Near East to Australia and ourselves (FF 1967).30 During the 1950s and 1960s, negotiations with overseas customers were the province of the Producer Boards or the Government, mainly because those negotiations were dominated by the long-term traditional relationship with the British Government. In the 1970s, Federated Farmers was taking the initiative in discussion of agriculture with potential new partners at the Pacific Basin Economic Council (PBEC) meetings. The Federated Farmers’ President told the PBEC in 1972 that New Zealand needed to concentrate its efforts to achieve an expansion of access and trade with the developed countries of the Pacific Basin. Also, there was a need to reduce market distortions if PBEC members were to achieve trade expansion through mutual growth (Straight Furrow 1973f).31 Allen Wright, a Federated Farmers’ Vice-President, hoped PBEC members could agree guidelines which would ensure consistent and profitable production in agriculture. He told the 1974 PBEC meeting that agriculture had been the ‘Cinderella’ of international trade negotiations in the past, and the unfortunate result had been that most trade barriers had been against agricultural products. That was why agriculturally based economies had not developed as they should have, and why the gap between the developed and the developing nations had widened instead of closing. That was caused by the continuing restraints of high tariffs, quotas, unreasonable hygiene requirements, unreasonable health requirements and the general reluctance of business to become more involved in food processing or to increase international investment in storage and transport facilities (Straight Furrow 1975b).32

Take Away Points Possible UK EEC membership was a major uncertainty for New Zealand and seen as potentially catastrophic for New Zealand. But the Government recognised the pressures on the UK and worked to protect New Zealand’s vital interests. That approach was successful despite New Zealand’s import restrictions on British goods. Federated Farmers’ discussions with the EEC encouraged hopes of a more outward looking EEC. New Zealand fell 15% short of filling its EEC quota. Political judgement had to be made whether to ship produce to the EEC or new markets.

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The weakening trading relationship with the UK was recognised and New Zealand anticipated a leading role in building trade partnerships in the Pacific and Asia recognising it would have to give up narrow, inwardlooking, protectionist policies. The Federated Farmers’ President told the Pacific Basin Economic Council that market distortions needed to be reduced to achieve trade expansion.

Notes and References 1. FF 1961a. (Federated Farmers), MSY2738 20/1961, 21/06/1961, Chairman’s Address to Conference: 10. 2. FF 1961b. (Federated Farmers), MSY2738 20/1961, 03/05/1961, Minutes of Council Meeting: 3. 3. Straight Furrow, 1960a. ‘N.Z. Must Watch How The Wind Blows Overseas’, 20/07/1960: 5. 4. Straight Furrow, 1960b. ‘Watch Common Market’, 02/11//1960: 21. 5. Straight Furrow, 1961a. ‘“Prejudice” Against NZ Produce’, 18/01/1961: 1. 6. Straight Furrow, 1960c. ‘NZ Farmers and The Common Market’, 21/12/1960: 1. 7. Straight Furrow, 1961b. ‘Whole Economy Still Turns on Farming’, 08/09/1961: 7. 8. Straight Furrow, 1967. ‘If Necessary The Voice of The Farmer Will Be Heard Directly’, 31/05/1967: 5. 9. Hall, 2017. Emerging from an Entrenched Colonial Economy: New Zealand, Britain and the EEC, 1945–1975 (Cham: Palgrave Macmillan): 41–47. 10. ANZ 1969. Prospects for the Industry, 27/03/1969, Dairy Industry—Export of Dairy Products New Zealand Policy, AAQW /WS3379 Box 11 4/1/4: 5. The paper assumed that should the UK join the EEC the British quotas would continue at 1969 levels. 11. Straight Furrow, 1971a. ‘To Put NZ Farmers’ Case’, 07/04/1971: 3. 12. Straight Furrow, 1971b. ‘EEC Crunch: Begg Remains In London’, 09/06/1971: 1. 13. Straight Furrow, 1971c. ‘The End Is … Only The Beginning’, 07/07/1971: 3.

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14. FF 1972 (Federated Farmers) 90–343 03/5, Dairy Section Chairman’s Address to the Annual Conference, 20/06/1972: 1. 15. Straight Furrow, 1972a. ‘EEC Declares Prudent Policy on Restitution Prices’, 29/11/1972: 6. 16. Straight Furrow, 1972b. ‘EEC Protocol Being Honoured’, 13/12/1972: 17. 17. Straight Furrow, 1972c. ‘People Not Statistics’, 01/11/1972: 1. 18. Straight Furrow, 1972d. ‘Federated Farmers Success: EEC Declares Prudent Policy on Restitution Prices’, 29/11/1972: 6. 19. Straight Furrow, 1972e. ‘No One Owes Us a Living’, 15/11/1972: 1. 20. ANZ 1971. Rt. Hon. J.R. Marshall’s Opening The Debate in The House of Representatives On The Special Arrangements For New Zealand, 01/07/1971,EEC—The Agreement—Statements and papers, ABOT W2670 6787 Box 2: 11. 21. Evening Post, 1973. ‘$20 m Compensation For Butter, Cheese, Eases Strain with UK’, 18/07/1973, Clipping in New Zealand Trade—United Kingdom—Dairy Produce: Butter 1973–1988, ABHS W5503 7148 Box 42 LONB 37/1/2 Part 20. 22. Straight Furrow, 1973a. ‘Dairy Drive Needed’, 08/08/1973: 3. 23. Straight Furrow, 1973b. ‘A Just Reward’, 26/07/1973: 3. 24. Straight Furrow, 1973c. ‘Dairy Drive Needed’, 08/08/1973: 3. 25. Straight Furrow, 1973d. ‘Confident of NZ Place in UK Market’, 26/07/1973: 8; Singleton, J. and Robertson, P. 2002. Economic Relations Between and Australasia 1945–1970 (Basingstoke: Palgrave): 6. 26. ANZ 1972. Prospects for New Zealand Dairy Products in World Trade in the 1970s, 05/07/1972, Dairy Industry—Export of Dairy Products New Zealand Policy, AAQW WS3379 Box 11 4/1/4: 5. 27. Straight Furrow, 1973e. ‘Big Lift Likely in NZ Cheese to USA’, 12/12/1973: 16. 28. Straight Furrow, 1975a. ‘Politicians Praised on EEC Price’, 26/11/1975: 3. 29. FF 1976. (Federated Farmers), 90–343 03/6,Dairy Section Chairman’s Address to Conference, 08/06/1976: 4. 30. FF 1967. (Federated Farmers), MSY2720, D27/1967, 13/06/1967, Annual Address to Council: 5.

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31. Straight Furrow, 1973f. ‘Pressing Need for Freer Trade in Agricultural Products’, 20/06/1973: 6. 32. Straight Furrow, 1975b. ‘Production Guides Needed Urgently’, 21/05/1975: 5.

CHAPTER 12

Encouraging Government Support for Farming

Introduction By the 1970s, Federated Farmers was closely engaged fighting to protect farmers’ interests in all major debates with Government about changes in New Zealand farming. At the start of the 1970s, after Holyoake had been replaced by John Marshall as Prime Minister, the Federation at last secured funding from a levy on produce. That allowed it to play a stronger role in supporting farmers and the rural community by influencing Government policy. That influence encouraged Governments to increase financial support given to farming. In 1967, Robert Muldoon became Minister of Finance and was Chairman of the Cabinet Economic Committee that reviewed finance proposals before they went to Cabinet. He was out of office from 1972 before returning in 1975 for nearly a decade as Prime Minister. During his periods in power, financial subsidies for farming increased considerably.

Support for Farming Grows Muldoon announced support for farming in the 1970 budget, noting that the Government was seriously concerned about the declining economic strength of the pastoral farming industries. Market distortions by New Zealand’s overseas customers combined with the threat of synthetic wool © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_12

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had caused decline in dairy and wool prices. That had been accentuated by a disastrous drought in New Zealand. The Government had introduced special drought relief measures before the budget and in the budget introduced a uniform subsidy of $5 per ton on all fertilisers to reduce substantially the cost to farmers. Muldoon encouraged farmers to enlarge their farms to create more economic units. Authorisations by the State Advances Corporation and Marginal Lands Board for amalgamation and development had doubled in the previous 3 years. The Government increased by $5 million the sum made available to the Corporation and the Board for amalgamations, strengthening of existing units and resettlement to ensure that the ‘very desirable trend’ would continue. To assist farmers, sharemilkers and others engaged in agricultural and horticultural production who had encountered serious financial difficulties for reasons beyond their control, a Special Agricultural Assistance Fund of $10 million was set up. The State Advances Corporation and the Marginal Lands Board would use that to grant suspensory loans. The loans would be interest-free and the capital written off, provided the farmer did not sell the property for 10 years unless the sale was part of an amalgamation of properties to constitute a more viable unit (NZPD 1970).1

A Failed Proposal The following year, prompted by significant inflation in New Zealand, Federated Farmers took the initiative in proposing how farmers should be compensated for their increased costs. The Federation sought a cost structure which enabled farmers to maintain sufficient ‘plough back’ for their farms to continue as a viable business. It was claimed that farmers had for many months been smarting under the most unprecedented cost escalation in New Zealand’s history. The Federation stressed the importance of farming for New Zealand. It earned 86% of New Zealand’s foreign exchange, yet, unlike other sectors of the community, farmers had been unable to adjust their export investment costs by increasing prices. The industry consumed only 80 cents of imports for every $10 it exported. The manufacturing sector used $3 in overseas exchange for every dollar it exported. Almost two-thirds of the overwhelming import content which allowed New Zealand’s manufacturing industries to exist came from the foreign exchange earned by farmers.

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Federated Farmers argued that while the incomes and wages of the rest of New Zealand had been advancing, those of sheep and dairyfarmers, despite increased production, had generally lost ground. Apart from any social injustice, the deterioration in farmers’ profitability had serious implications for New Zealand. Its economy was firmly based on farming and the standard of living depended to a large extent on farming’s ability to maintain and improve its productivity and to compete successfully in the overseas market. If the trends continued, there would be less ‘plough back’ with deleterious results in future production and obvious effects on New Zealand’s balance of payments and ability to export. The farming industry was entitled to ask that it should share on equal terms with the rest of the community’s economic advance. Federated Farmers proposed specifically a ‘cost adjustment scheme’ as a short-term investment in New Zealand’s economic future by providing the incentive for farmers to expand production. This expansion was intended to be linked directly to the costs incurred in producing for export (Straight Furrow 1971a).2 The Cost Adjustment Scheme related the indices of prices received and farmers’ costs to farm income and expenditure in a base year before the ‘current inflationary spiral’ began. This calculation determined the amount of subsidy required to restore farming to its base period position assuming constant volumes of farm production and farm imports. This amount was a minimum and would act as a starting point for annual negotiations between the Federation and Government. The suggested base year was 1964–1965, a year of relatively stable export prices, confident farm borrowing and consequent development, yet one of below peak farm incomes. Other factors such as changes in the volume of farm production, changes in the relative income of nonfarming sectors and trends in the balance of payments could influence the final adjustment. Also taken into account would be overseas prices, the most efficient resource use and that the benefit must accrue to the farmer (Straight Furrow 1971b).3 At 1971’s start, outside Parliament, Muldoon gave his views on farming’s status. He saw no harm had been caused by a fall-off in farm investment. He pointed out that severe drought had caused harm, but in view of the National Development Council targets there was no shortterm effect of great concern. Muldoon’s comments were typical of his combative style, aimed at stimulating others to strengthen their arguments. When presenting his 1971 Budget, without mentioning Federated

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Farmers, he reported the many points that the Federation had been making about the need for improving farming’s position. Muldoon noted how continued and accelerating increases in internal costs had placed further pressures and severely affected the confidence of farmers. During the past year, the wage-price spiral and the position of the farming industry had again been the major domestic economic problems. But Muldoon was not convinced that the Cost Adjustment Scheme was the answer. He was asked if he regarded the scheme as an investment in farming to increase export earnings and therefore the well-being of all New Zealanders? He saw it rather differently. He saw it as a proposal to increase net farm incomes by subsidising costs, a proposal that had been formulated in isolation. Muldoon said when Federated Farmers brought this scheme to Government they stated, first, they had no suggestions as to the source of funds they were asking for; second, they had given no consideration to the economic effect on other community sectors who would provide this sum through increased taxation; and third, they had not analysed the effect of liberating $100 million a year in the hands of farmers. Muldoon said the scheme had to be considered in relation to those factors, and only then could increased farm investment be looked at. It would be difficult to spend an extra $100 million on farm investment this year. It would be spent on deferred maintenance and eradication of debt. Muldoon had spoken of the proposal as putting ‘free cash in the hand of farmers’ (Straight Furrow 1971c).4 Muldoon justified his remarks by pointing out that the Federation didn’t dispute that the scheme would ‘put $100 million into farmers hands’. The options for the farmer were reinvestment, buying a new car or any other action. There was no actual immediate return in expansion of exports. Unquestionably, there would be some extra return in future, but none had been shown to him (Straight Furrow 1971d).5 The Cabinet Economic Committee led by Muldoon found flaws in the Federated Farmers’ scheme. To Ministers, the scheme was not a formula for automatic adjustments to farmers’ incomes as it purported to be. Rather, it would lead to annual negotiations on the assistance to be provided for farmers in the Budget. The Government statistician identified statistical shortcomings in the Cost Adjustment Scheme. The statistics used and computations were not valid. In measuring farm incomes by saying that total farm expenditure was equal to gross farm income less net income, Federated Farmers had used incompatible data. A further problem arose from the weighting of

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indices. In effect, Federated Farmers had said that a pound of wool or a pound of butter was worth the same as a pound of meat. The statistical shortcomings would alter the total initial subsidy value downwards. It could not be said by how much, but it was fairly sure that the Federated Farmers’ estimate of $104 million would be reduced (ANZ 1971a).6 A further disadvantage identified was the scheme would provide assistance for the cost of killing stock, but the person who received that benefit would be the last person to handle the stock. For sheep raised on hill country farms, the benefit would be received normally not by the breeder but by the farmer who fattened the sheep for slaughter. It appeared that the person who would receive the least assistance from the scheme would probably be the hill country store stock farmer who at the time was in the greatest financial difficulty. Subsidies would be given to the sectors in proportion to their incomes and, therefore, the greatest amount to the sector receiving the highest income. Ministers commented that under the scheme, assistance would still be given to sectors which were no longer in difficulties. For example, dairyfarmers would receive considerable assistance despite the current upturn in dairy prices. The scheme purported to assist the whole farming range, but it was stated it really only assisted producers of dairy products, beef, wool and sheep meats. The assistance given to such sectors as grain and horticulture was very small and appeared to have been added as an afterthought (ANZ 1971b).7 The Cabinet Economic Committee reported to Cabinet the shortcomings of the Scheme and Cabinet simply ‘noted’ the submissions by Federated Farmers (ANZ 1971c).8 John Pryde had reported in his description of the Federated Farmers day-to-day operations at the start of the 1960s the need for ‘considerable research and preparation’ to make an effective case to Government. That had become even more important in the 1970s. In the final days of the long period of National Government, Federated Farmers submitted specific proposals that should be adopted in the 1972 budget. The Federation wanted: exemption of farm four-wheel drive utility vehicles from sales tax; reductions in the rates of estate duty and increases in the level of exemptions for widows and infant children;

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extension of export incentives to cover animal products and by-products; increases in the subsidy paid to Counties for roading purposes.

The Cabinet refused all but pointed out that a 16.5% increase in expenditure on agricultural research was provided for in 1972/1973 (ANZ 1972).9 Federated Farmers had not been successful in putting forward its own proposals at the 1970s start but had learnt what was needed to successfully persuade Muldoon and Government.

Levy Securing parliamentary support for a levy to support Federated Farmers was helped by the retirement of Keith Holyoake as Prime Minister at the start of 1972. Despite Holyoake’s strong past links with the Federation, he never demonstrated in his parliamentary activities any bias in favour of the Federation. He needed their support in efforts to increase exports but, according to his biographer, his relations with the urban, industrial, interests were the same. Towards the end of his Premiership, he was pushing for industrial expansion to replace the dependence on primary production exports (Gustafson 2007).10 The levy agreed in 1972 was on stock slaughtered at abattoirs and freezing works and was to be paid to assist Federated Farmers in ‘defraying expenses incurred or to be incurred by it in the carrying on by its head office of such activities as the Minister of Agriculture specifies’. The mechanism was that a proportion of the meat inspection fees, as the Minister from time to time approved, was to be paid out to Federated Farmers. The levy replaced the annual grants from the three Producer Boards (Straight Furrow 1972).11 Federated Farmers had persuaded Cabinet by successfully stressing the important role it played in the economy representing farming interests on a wide range of Boards and Committees, for instance, the Agricultural Production Council and the National Development Council. That meant representing all farmers not just Federated Farmers’ members. The longterm levy for orchardists was quoted as a precedent. The Federation’s Dominion Office’s costs had risen considerably through increased activities undertaken by the Federation. But the trend towards larger farms and amalgamation of holdings had caused a decline in the total subscriptions received. Rather than entirely new legislation, an amendment to the Meat

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Act was used. There was already a levy charged on slaughtered animals to pay for Government inspection fees. The amendment simply increased the amount and identified the recipient of the increase. The inspection fees were raised by about 3 cents that generated approximately $160,000 per annum but meant the levy was spread widely and the burden on individual farmers was ‘very small indeed’. But there were several objections to the change and it was the Minister who replied to the objections, demonstrating Government now fully committed to the change. Dear Mr Crookenden I refer to your telegram of November 3 in which you stated that your Y.F.C. branch is opposed to the levy on meat being introduced to provide financial support for Federated Farmers’ Head Office activities. Your members will be aware that for some years the three Producer Boards have made annual grants to Federated Farmers and these grants themselves have been derived from levies imposed on meat, dairy produce and wool. With the growing complexity of Federated Farmers’ work in Wellington and with the full agreement of the Producer Boards it has been decided that a small levy on all meat was the most equitable way of meeting Federated Farmers’ needs. The necessary amendment to the Meat Act was approved by Parliament a few weeks ago. A farmer must continue to make his own decision as to whether or not he joins the local branch of Federated Farmers but I am convinced that there exists generally a full appreciation amongst farmers of the value to the industry of the work being carried out by its Head Office staff. (ANZ 1972)12

Working with an ‘Unlucky Government’ In 1973, National were defeated by Labour which came: into office at the peak of an economic boom, and halfway through its term was confronted by global recession and a terms of trade crash that was as bad as the Great Depression. Robert Muldoon led the National Party back into office at the end of 1975, campaigning on implicit promises to rapidly restore economic prosperity. Muldoon applied policies of severe deflation in his first 22 months as prime minister, but from the end of 1977 he moderated these policies and his approach became increasingly inconsistent. (McAloon 2013)13

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In twenty-first-century New Zealand folklore, the ‘trade crash … as bad as the Great Depression’ for New Zealand in the 1970s was the result of the UK joining the EEC, but in the real world it was caused by a global recession brought on mainly by oil price crises that damaged the economies of all New Zealand’s major overseas customers. The Labour Government elected at the end of 1972 was described by Peter Franks and Jim McAloon as an ‘unlucky’ Government because of international developments that had major impacts on New Zealand’s economy. Also, it lost its leader, Norman Kirk, through an untimely death in 1974 and he was replaced by Bill Rowling who never expected to be Prime Minister (Franks and McAloon 2016).14 The former National Minister of Agriculture, Brian Talboys, claimed in Parliament that Labour was prejudiced against farmers and Labour had called them ‘fat, flabby and rich’. Federated Farmers had to work to rid the Government of that prejudice. Federated Farmers had to work with the new ‘unlucky’ Labour Government when controversy arose over meat prices in mid-1973. As Parliament convened in February 1973, instability in foreign exchange markets closed trading internationally for some days. The USA devalued by 10%, but the New Zealand Government hoped to reduce inflation by leaving the New Zealand dollar unchanged. But that reduced exporters’ incomes (NZPD 1973).15 In New Zealand’s main export market, the UK, lamb prices were ‘rocketing’ and the new Government were concerned that that additional income for New Zealand farmers would fuel New Zealand’s inflation. In March 1973, the new Minister of Agriculture (Colin Moyle) asked meat and wool farmers to voluntarily withdraw $85 million of their increased income from circulation through ‘an extended voluntary income equalisation scheme’ threatening that that would become compulsory if $85 million had not been committed by farmers by the end of April. A farmer would be able to deposit whatever he could from the year’s income. Refunds would become assessable for tax when they were claimed, but Government guaranteed that the tax payable would not be higher than it would have been in the 1972–1973 year. Deposits had to remain for 12 months, with provision for earlier withdrawal in emergencies. Moyle said local appeal committees would be set up to deal speedily with hardship cases. Farmers with genuine needs would be fully accommodated. Deposits under the scheme would be held in the individual

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farmer’s name and the money frozen with the Reserve Bank. ‘Government expects that farmers will recognise that it is in their own and in the national interest to make full use of the existing voluntary scheme and make any further measures unnecessary’ said Moyle (Straight Furrow 1973a).16 Sheep farmers resented being initially singled out for this restraint. The Federated Farmers’ Meat and Wool Section Chairman, Tom McNab, said they had suffered years of extremely depressed prices, particularly for wool, and it was only in the last 12 months that sheep farmers’ incomes had started to rise. Sheep farmers were only beginning to catch up with deferred development and maintenance work, and it was in the longterm national interest that nothing should hinder this essential work. He repeated the argument that Federated Farmers had been pressing for many years—all economy sectors have a part to play in any overall incomes and prices policy. The Government should give tangible form to its declared intention of imposing restraints throughout the whole economy to curb inflation and that included stringent control on its own spending. Federated Farmers encouraged all sheep farmers to take full advantage of the voluntary scheme to avoid compulsion and $82 million was voluntarily contributed (Straight Furrow 1973b).17 The Government decided it needed a Prices and Incomes policy and farm incomes needed to be a key element. Ironically, rather than the economic catastrophe that many had predicted for the period following the UK joining the EEC the high export earnings of farmers had become an embarrassment for a Government trying to restrain incomes and domestic prices for farm produce which were strongly influenced by export prices. Officials reported to Government when prompted to study possibilities for a Prices and Incomes policy that: Action to restrain excessive increases in farm incomes may be required for three reasons: (a) To reduce undesirable increases in demand arising directly from farm income increases; (b) To lessen the impact of high export prices on the domestic price of some farm products; (c) The need to apply equitable measures of restraint to every sector. (ANZ 1973a)18

At the same time, Federated Farmers found itself trying to protect meat farmers from bearing the brunt of Government cushioning the rise in domestic meat prices. There had been considerable speculation that the

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Government would introduce a scheme to stabilise food prices including the possibility of a levy on export meat to discourage exports. The Federated Farmers’ President, Bill Dunlop, told the Government that the Federation would be implacably opposed to any scheme for which the burden fell on the meat producer. He pointed out the contribution farmers were already making to stabilising the economy by withdrawing $85 million from circulation. In March 1973, Dunlop received an assurance that the Government’s scheme would not be at the meat producers’ expense (Straight Furrow 1973c).19

A Failed Government Proposal and Potential Farming Militancy The Government struggled with inflation and the value of the New Zealand dollar through the 1973 winter, and in September 1973, the Prime Minister announced the most important problem for Governments in all countries was how to control inflation. New Zealand was particularly vulnerable to inflation imported from other countries because the economy was so dependent on overseas trade. Higher prices for exports meant higher and rising prices in the domestic market for such basic commodities as meat, unless action to avoid this was taken. The Government decided to revalue the New Zealand dollar by 10% so that imports would cost less and the domestic price of exports, such as meat and wool, would be lower. In addition, the Government embargoed hogget and wether mutton exports to ensure all supplies were available for the local market. The Prime Minister continued that despite the currency revaluation there was still a risk that further increases in export prices might lead to higher domestic prices. In that case, the Government would introduce a system of reference prices for export meat that would mean that if overseas prices rose beyond a certain level then payments above this level would be diverted from farmers to a ‘stabilisation’ fund. The fund would be used later for the benefit of meat producers as a whole (ANZ 1973b).20 Farmers were furious, and Federated Farmers had not been consulted—‘MEAT PRICE MADNESS’ declared Straight Furrow (Straight Furrow 1973e).21 There were ‘stormy meetings throughout the country’. Federated Farmers’ Dominion President Bill Dunlop said he had been assured that the Government recognised the need for farmer confidence in meat industry operations if shortages on the local market

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were to be avoided. He estimated the loss to farmers from the currency revaluation would be nearly $200 million. The farmers’ contribution to stabilisation would be a great deal more than that made by any other community sector (Straight Furrow 1973f).22 Dunlop said Government’s proposal to introduce the reference price scheme had caused widespread alarm among farmers. Federated Farmers called a special meeting of provincial presidents to question the Minister of Agriculture on Government’s intentions. The meeting was also attended by the Dominion Meat and Wool and Dairy Section executives, plus the chairman and deputy chairman of the Meat and Wool Boards’ Electoral Committee. A Government record of the meeting reported that Federated Farmers was represented by all provincial presidents, who were unanimous in their ‘very strongly held’ views. The theme throughout was a real probability of direct action which they would be unable to prevent. As was the case for the wool industry an ‘action group’, the New Zealand Beef Cattleman’s Action Group, clearly following the success of the Wool Action Group, had been formed by those who felt Federated Farmers’ approach was too appeasing. Federated Farmers had been formed partly in response to the perceived success of industrial unions in achieving their objectives through militancy. Occasionally, Federated Farmers’ local provinces proposed that the Federation should engage in greater militancy. Proposals for farmer militancy were raised at district level but were usually softened when percolating up to national level. One such issue early in the Federation’s life was protecting farmers from paying an unfair share of local rates through hospital rates. Federated Farmers insisted hospital rates should not be, as was the case, a charge upon the land but should be charged on the whole community. The Report of the Committee on Local Government to the House of Representatives in 1945 encouraged Federated Farmers. The Committee reported that the burden of hospital rates on rural areas was considerably greater than on urban areas. Hospital levies were calculated on a capital-value basis. The average capital value in rural areas was considerably higher per ratepayer than in urban areas where population was more concentrated, and where the average homeowner’s property value was considerably less than that of the average farmer. The hospital rate per head of the rural population was considerably greater than the rate paid per head of the urban population. Hospital facilities, however, were a

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function of population, and not of capital value. The Committee recommended that the Government review replacing the present hospital rating system with state funding. The question was raised with the Prime Minister, but he ‘indicated bluntly that he was not in sympathy with the Committee’s recommendation’. When told that ratepayers in the counties were getting restive, he observed that we could not have ‘mob rule’. Straight Furrow pointed out that the Prime Minister should realise that ideas of ‘mob rule’ did not originate in the farming community. He should also be aware that for the militant trade unions ‘mob rule’ appeared to have been connived at by the Government and had been a very profitable business. It was hardly surprising that farmer ratepayers should get ideas of emulating those successful practices (Straight Furrow 1946). Federated Farmers continued to press Government on this topic, but it took another decade before payment for hospital through local rates on land was ended and replaced by national Government funding. There was the strongest possible opposition to the 1973 reference price scheme on the grounds that revaluation had already meant $140M reduction in net farm incomes—this was accepted as it did not disrupt the market mechanism, but it was considered that that was a sufficient share towards stabilisation, especially following the $85M income freeze. Federated Farmers recommended that the reference price scheme should not go ahead claiming that the reference price scheme was: Administratively fraught with so many likely angles for inequity and smart practices by meat companies that it would become a nightmare to police. Disruptive of the mechanism of the market place on which the farmer bases his decisions on buying, fattening, holding and selling. Likely to have worst effects on the hill country store stock breeder who fattens no stock. Likely to generate highly emotional and irrational action that could cause enormous disruption in the normal flow of production. Likely to create a lack of confidence and declining productivity. Almost certain to create a massive meat shortage next winter

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A direct threat to the co-operative movements which rely on end-of-season bonuses to justify their existence. Caused grave difficulties for the owners-account system which is the best check on proprietary meat companies. Gave penalties instead of incentives for seasonally adjusted production. Caused consternation as the proposed reference prices represented an average drop of $4,000 per farmer. Dairyfarmers whose incomes had not significantly risen but were hit by revaluation were very incensed because they sell no lambs or sheep meat nor any beef for the New Zealand Market.

The Federation claimed that if the scheme went ahead the Government would not merely lose farmer support but would also stimulate violent opposition not previously encountered. The Federation recommended that Government should announce the intention to agree with Federated Farmers and the Meat Board schemes that would ensure that droughts and other seasonal difficulties would not again create shortages. The meeting outcome demonstrated a Government realising that it should not make proposals without first consulting Federated Farmers (ANZ 1973c).23 Federated Farmers’ President, Bill Dunlop, pointed out in a letter to the Minister the ‘damaging effect’ of the proposed reference price scheme for meat on production patterns and confidence, claiming that the proposed scheme was aggravating the situation which Government had hoped it would correct—the meat shortage on the local market during the off-season. He then suggested ways in which confidence could be restored. Meat prices on the local market during the off-season depended on the supply of stock and that depended on farmer finance available for stock purchases and farmer confidence in the prices expected for out-of-season production. Farmers were now making their individual decisions on stock for 1974/1975. They needed complete confidence in their finances; otherwise, the collective effect of their individual decisions would be short supply for the local market. Government’s interference in the market

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through the export embargo and the threat of an export price reference scheme had seriously undermined this confidence (Straight Furrow 1973f).24 A month after the Prime Minister’s announcement, the price reference scheme had been abandoned. Officials noted that the Prime Minister’s stated objective of a 10% fall in domestic prices may well be met without a reference price scheme. The Agriculture Minister said he was concerned at the ‘heat generated in farming circles’ but pointed out that references to ‘direct action’ might ‘further prejudice public sympathy and support’ for the farming industry. It was now unlikely that a reference price scheme would be needed because revaluation and other factors were leading to a reduction in domestic meat prices. The scheme was simply contingency planning to be implemented only ‘absolutely necessary’. The Government would not take any action that would reduce export earnings. The Government decided to extend the voluntary scheme of a percentage of farmers’ incomes being lodged with the Inland Revenue. It issued a press announcement but only after Federated Farmers had reviewed it. The announcement reported that the proposals had been discussed ‘in broad outline’ with Federated Farmers and further discussions would be held on the details. The ‘stormy meetings’ coupled with the threat of direct action had turned the tide, and for the rest of the Government’s life, Federated Farmers was very influential. It was perhaps a lesson from the freezing workers who had told the Federation, ‘arbitration on its own never led to important gains’; occasional militancy was valuable (ANZ 1973d, e).25,26 That the Government was responding to the Federation’s promptings was demonstrated further when the Prime Minister, Norman Kirk, decided to address the annual Federation Conference in 1974. He told the Conference that Government was putting more than seven times the trade and industry budget into backing primary producers, proof that it was concerned about the farmer’s welfare. Government was making an across-the-board fertiliser subsidy which would cost about $31 million on top of the Ministry of Agriculture funding. To the average sheep farmer, the subsidy would represent $1200 a year and for the average dairyfarmer about $500 a year. Kirk said that in addition Government had agreed to maintain the subsidies on transport which were expected to cost $10.5 million. ‘We are giving you subsidies on fertiliser and lime totalling an expected $46 million this year’, he said. ‘As well as that, to help you and the rest of the country’s industries, we are holding rail freight costs and

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bulk electricity charges’. ‘Does all this sound like a vote of no confidence in your industry?’ he asked. ‘I suggest it is a vote of confidence in farming (Straight Furrow 1974)’.27

Take Away Points Federated Farmers proposed a cost adjustment scheme to compensate farmers for inflation’s impact but it was ill prepared. When New Zealand’s major customers suffered from the 1973 oil price crisis, the Federation secured major subsidisation from Governments protecting the country’s balance of payments. Parliamentary support for a levy to support Federated Farmers was secured. In New Zealand’s main export market, the UK, lamb prices were ‘rocketing’ and the Government asked meat and wool farmers to voluntarily withdraw $85 million of their increased income from circulation. The Government threatened to introduce a system of reference prices for export meat payments; income above the reference price would be diverted from farmers to a ‘stabilisation’ fund. There was the strongest possible opposition to the reference price scheme. The Government was told it would lose farmer support and violent opposition would result. The price reference scheme was abandoned.

Notes and References 1. NZPD 1970. (New Zealand Parliamentary Debates), Appropriation Bill—Financial Statement 25 June 1970: 1301–1302. 2. Straight Furrow, 1971a. ‘Give Us the Tools’, 17/02/1971: 3. 3. Straight Furrow 1971b. ‘Cost Adjustment Scheme: The Scheme’, 17/02/1971: 1. 4. Straight Furrow, 1971c. ‘Mr. Muldoon Talks About the Cost Adjustment Scheme’, 03/03/1971: 4. 5. Straight Furrow, 1971d. ‘Mr. Muldoon Talks About the Cost Adjustment Scheme’, 03/03/1971: 5. 6. ANZ 1971a. ‘Proposal By Federated Farmers for a Cost Adjustment Scheme’, Cabinet Economic Committee, E(71)5, 14/05/1971, p. 1. AAFD W4198 811 Box 59 CAB 123/9/5/1

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[Industry and Commerce]—Primary Industries—Federated Farmers of NZ (General). 7. ANZ 1971b. ‘Proposal By Federated Farmers for a Cost Adjustment Scheme’, Cabinet Economic Committee, E(71)5, 14/05/1971, p. 2. AAFD W4198 811 Box 59 CAB 123/9/5/1 [Industry and Commerce]—Primary Industries—Federated Farmers of NZ (General). 8. ANZ 1971c. ‘Proposal By Federated Farmers for a Cost Adjustment Scheme’, Cabinet Economic Committee, E(71)5, 14/05/1971, p. 4. AAFD W4198 811 Box 59 CAB 123/9/5/1 [Industry and Commerce]—Primary Industries—Federated Farmers of NZ (General). 9. ANZ 1972a. Secretary of the Cabinet to Minister of Finance, ‘Federated Farmers—Budget Proposals’, 12/06/1972, AAFD W4198 811 Box 59 CAB 123/9/5 126/21/1 [Industry and Commerce]—Primary Industries—Federated Farmers of NZ— General. 10. Gustafson, B. 2007. Kiwi Keith: A Biography of Keith Holyoake (Auckland: Auckland University Press): 333. 11. Straight Furrow, 1972. ‘All Farmers Benefit’, 01/11/1972: 3. 12. ANZ 1972b. Minister of Agriculture to Mr. R. Crookenden, AAFZ W1710 7174 Box 70 Rec No. 2589 Produce Levy to Finance Federated Farmers of New Zealand, 21/11/1972. 13. McAloon, 2013. Judgements of All Kinds: Economic Policy-Making in New Zealand 1945–1984 (Wellington: Victoria University Press): 244. 14. Franks, P. and McAloon, J. 2016. The New Zealand Labour Party: 1916–2016 (Wellington: Victoria University Press): 179. 15. NZPD 1973. Vol. 382 1973, 5, 354 (Rowling). 16. Straight Furrow, 1973a. ‘Meat and Wool Farmers to Have Income Frozen’, 07/03/1973: 3. 17. Straight Furrow, 1973b. ‘Federation Opposes Compulsory Aspect: All Sectors Should Face Economic Restraint’, 07/03/1973: 3. 18. ANZ 1973a. To Chairman of Cabinet Committee on Policies and Priorities, AALR W3158 873 Box 59 Rec No. T61/1/22 Part 9 New Zealand Incomes Policy 1973–1974: 13. 19. Straight Furrow, 1973c. ‘Meat Men Won’t Be Levied’, 21/03/1973: 1.

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20. ANZ 1973b. ‘Oral Statement By the Prime Minister’, 09/09/1973, AALR W3158 873 Box 59 Rec No. T61/1/22 Part 9 New Zealand Incomes Policy 1973–1974: 1–3. 21. Straight Furrow, 1973d. ‘Meat Price Madness’, 19/09/1973: 1. 22. Straight Furrow, 1973e. ‘Meat Price Pandemonium Settling Down’, 17/10/1973: 6. 23. ANZ 1973c. ‘Meeting with Federated Farmers’, 13/09/1973, AAFD W4198 811 Box 59 CAB 123/9/5 126/21/1 [Industry and Commerce]—Primary Industries—Federated Farmers of NZ—General: 1–2. 24. Straight Furrow, 1973f. ‘Confidence Tricked’, 03/10/1973: 1–3. 25. ANZ 1973d. Director General of Agriculture and Fisheries, Secretary to the Treasury to Ministers of Finance and Agriculture, Farm Income Stabilisation Scheme, 02/11/1973, AAFD W4198 811 Box 59 CAB 123/9/5 126/21/1 [Industry and Commerce]— Primary Industries—Federated Farmers of NZ—General: ½. 26. ANZ 1973e. From the Minister of Agriculture, Farm Income Scheme to Continue Next Year, 11/12/1973, AAFD W4198 811 Box 59 CAB 123/9/5 126/21/1 [Industry and Commerce]— Primary Industries—Federated Farmers of NZ—General: ½. 27. Straight Furrow, 1974. ‘Government’s Vote of Confidence in Farming’, 25/07/1974: 10.

CHAPTER 13

Subsidisation Keeps Growing

Introduction The 1970s were marked by global financial crises including the oil price crises that saw a surge in global energy costs. Those crises had major impact on New Zealand’s customers and made efforts to increase farming exports vitally important. They placed farmers in a strong position to obtain Government financial support, and by the end of the 1970s, New Zealand farming was highly subsidised.

Special Assistance The Prime Minister, Norman Kirk, died, unexpectedly, within two months of addressing the Federated Farmers’ conference in 1974 and was replaced by Bill Rowling. Rowling’s Government continued to invest in farming as did the Government led by Robert Muldoon which replaced Rowling’s Government later in the 1970s. In February 1975, special assistance was given to farming. The Government accepted that after 2 years of very high prices farmers suffered a severe reverse in 1974 as the world recession hit the export industries. Meat and wool prices fell. World inflation and the oil crisis increased farm costs and in the distribution chain from the farm gate to the final consumer. Sheep farmers’ incomes dropped steeply in 1974–1975, even © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_13

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though many farmers were able to draw on their income equalisation accounts. Further justification for the special assistance was fluctuating export returns, a major cause of instability in the New Zealand economy for most of its history. Booms in export receipts encouraged domestic spending which could not be sustained when prices turned down. The Government attached the highest priority to stabilisation schemes to reduce the effects on the domestic economy of rapid swings in export returns. After consultation with the Producer Boards, interim stabilisation schemes were introduced by the Government to supplement returns to farmers for wool, lamb and beef. The Government promised a grant of $50 million to establish stabilisation funds. The Government also undertook to advance further money to the funds if needed to ensure that farmers’ returns for meat and wool were maintained during the 1975–1976 season at no less than the 1974–1975 level. Those advances would be made from the Reserve Bank at 1% interest. In the meantime, the Producer Boards had discussed establishing permanent stabilisation schemes for all major pastoral exports. Stabilisation of export returns only partly solved the problem of maintaining adequate farm incomes. Steps had to be taken to hold farm costs. The Government had suspended meat inspection fees and held the fertiliser price to its June 1974 level. The fertiliser price subsidy alone was estimated to cost $43 million in the 1975–1976 financial year. The total assistance with farmers’ input costs would amount to an estimated $71 million. The Government reintroduced a subsidy for the chemical control of noxious weeds. The subsidy would cover one-half of the applied cost of weed control undertaken by farmer groups organised for this purpose. The emphasis would be on weeds not controlled as part of normal farm management. In addition, the tax incentive for development expenditure on agricultural land would be extended for another 12 months to 31 March 1977. As a consequence of the lower incomes for meat and wool production, agricultural servicing industries had experienced a sharp fall in demand. Fertiliser application had declined markedly. This had affected future productive capacity and had serious repercussions for the aerial topdressing industry. Lime and fertiliser application bounties were introduced in January to counteract this trend and special assistance had

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been made available to agricultural aviation contractors by the Development Finance Corporation. These special measures would be followed up by longer-term assistance where this was necessary. Other agricultural services were being assisted by the Finance Corporation. The Government extended the lime and fertiliser application bounties from the cut-off date of 30 June 1975 to 31 December 1975. The bounty rates for lime application would remain the same, but from 1 July the fertiliser bounty would be paid at the rate of 75% of the pre-determined cost of application. The bounty rates would be $4.50 a metric ton for fertiliser ground spread by a contractor; $7.50 a metric ton (the same as at present) for fertiliser air spread by a contractor; and $3.00 a metric ton for fertiliser spread by a farmer. As a further measure to aid the agricultural servicing sector, the Government extended tax advantages to cooperative dairy, milk marketing and pig marketing companies. These companies were not generally taxed on income retained for industry expansion. This benefit had made a significant contribution to the successful development of farmer-owned cooperatives. To promote the further development of the cooperative movement in the agricultural sector, similar tax advantages were extended to other farmer-owned cooperatives engaged in marketing and processing of farm produce. Certain other cooperatives providing specialist services to the farming community were also included. The exemptions from tax applied only to income derived from transactions with members which was retained for the development or expansion of the cooperative’s business. Profits from trading with non-members continued to be subject to tax. Since its establishment as a separate entity, the Rural Banking and Finance Corporation had greatly expanded its lending to the farming sector. In 1972–1973, loan authorisations totalled only $69 million. Total loan authorisations by the Corporation would be increased from $103 million in 1974–1975 to $139 million in 1975–1976. Lending over the 2 years included about $20 million special seasonal finance for sheep farmers. Those additional funds enabled the Corporation to expand all classes of lending. In particular, there would be a substantial increase in lending for development and refinance to enable an extensive programme of restructuring farm debt to be carried out. To reflect higher costs of farm purchase, the average loan for dairy farm purchase was to be increased to $50,000 and the average loan for a sheep farm to $70,000. These increased individual loans were intended to reduce the need for

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costly second mortgage finance. It had also been decided to provide additional aid to sharemilkers buying their first dairy farm through an interest-free suspensory loan to sharemilkers who otherwise would need to sell a substantial part of their sharemilking herd if they could afford only a farm with a smaller carrying capacity. The loan would be repayable if the farmer concerned ceased to farm within 10 years of borrowing the money. The Government’s policies were directed at maintaining farmer confidence and encouraging farmers to increase production and investment and be more able to capitalise on the upturn in demand expected to follow renewed growth in the world’s major economies (AJHR 1975).1

Responses to Special Assistance Responses to the Government’s support for farming demonstrate the range of views that Federated Farmers were trying to represent and, also, the perception of farming subsidies by others. Dominion President, John Kneebone, welcomed the show of Government confidence in farming. But he pointed out the distaste that farmers felt over the need for Government ‘handouts’ and hoped this would be the last occasion on which such relief was necessary. Meat Board Chairman, Charles Hilgendorf, thought the measures were only ad hoc measures that would not overcome the major problem of costs. Government had not answered the real problem of costs; Wool Board acting chairman, Tony Lawrence, welcomed the measures but pointed out that growers would receive $130 million less for their wool than the previous year and more than $150 million less than the year before. Because wool was sold on markets on the other side of the world, there were huge and growing costs involved in getting wool to the markets, and without real determination by Government to hold inflation and costs, the woolgrower would face ever greater difficulties. Dairy Board Chairman Laurie Friis said for nearly 40 years the dairy industry has managed its own affairs and had its own stabilisation scheme. It seems the meat and wool industries were being encouraged to apply a similar discipline, and he was not convinced they would accept the need for such a discipline. If they did not, the $50 million was just a handout—to no real purpose. Federated Farmers’ Dominion Meat and Wool Section Chairman, Tom McNab, said his Section had drawn the Government’s attention to the situation a year earlier and it is a pity that the situation

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was not acted upon then. Some would refer to this cash injection as a ‘gift’, but it had to be seen in relation to the contribution of the meat and wool industries to the national economy. Hawkes Bay Provincial President, John Wills, was very pessimistic. He doubted that the measures would be as effective as Government hoped, and money would go towards paying off farmers’ debts rather than increasing production. The next time farm profits fell no one would bother to help themselves or do their best because Government had shown clearly that it would only help those farmers who do not help themselves. In such a situation of ‘chuff-sitting’, the servicing industries would be run down even more quickly than they have been this time.2 Federated Farmers’ Dominion Junior Vice-President, John Andrew, pointed out that the Government’s $50 million grant was only a fifth of the money the producers had already put up from their own resources. Farmers were not perfect, but what about the other links in the export chain—transporters, processers, shippers, marketers? All links in the chain had to cooperate or the farmer would not be able to make ends meet. Waikato Provincial President, Dryden Spring, said the Government needed to do a great deal more about internal costs. The measures were useful and would help to reduce budget deficits, but he did not believe they would affect the present stagnation in agriculture. Wanganui Provincial President, Don MacNab, believed that trying to stabilise farmers’ incomes was impracticable and had never worked overseas. Wairarapa Provincial President, Harry Wilton, was upset that the Prime Minister had referred to 1972–1973 as ‘boom years’ for farmers—they were not boom years for farmers whatever they were for the rest of the economy. The higher prices of these years enabled farmers to pay off indebtedness from the previous bad years and to replace worn-out equipment—but that was all. Non-farmer spokesmen also commented on Government’s package. Federation of Labour President, Mr. T. E. Skinner, doubted whether this ‘hand-out’ was the answer to all the problems, as there were a lot of farmers who could do without the assistance. Stock and Station Agents’ Association Chairman, Mr. R. Trotter, thought measures would lead to greater confidence in the industry. The sums involved were not substantial, but he was pleased that a ‘bottom has been placed in the bucket’. The farmers would not get much extra cash in hand as a result. Meat Exporters’ Council past chairman, Mr. P. T. Norman, said:

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Unless the prices New Zealand gains overseas can escalate at a faster rate than the costs between here and overseas, then there is no way the meat exporters can pay farmers at a level at which they can make a profit.

Hatuma Lime Co. managing director, Mr. H. J. B. Topp, thought Government has wrongly excluded some of the most necessary materials to improve the soil from the new subsidy. This position was scandalous and had been so ever since subsidies were first put on super-phosphate and not equally on all the other necessary topdressing materials. Road Transport Association member, Mr. I. J. Johnson, said: My industry is probably in an even more serious situation than the farmers, and I anticipate a complete breakdown of the rural road carriers’ industry unless some of this money flows from the farmers into our pockets. Government has given my industry some help through the banks, but the greatest need is for work.

Employers’ Federation executive director, Mr. P. J. Luxford, said: These measures make it even more imperative that Government quickly decide its wages policy for this year, otherwise it is likely to lead to further wage escalation and if this happens any benefit farmers have gained will be taken away by the extra cost burden.

Manufacturers’ Association President, Mr. A. I. Laidlaw, said: Manufacturers want to see farm production maintained, and while the amount of assistance seems reasonable I feel that more may be needed to be effective. (Straight Furrow 1975)3

At the Peak of Its Influence with Government Federated Farmers seemed to have started, at last, to persuade Government to adopt policies that the Federation had been putting forward for more than a decade. Another opportunity came in May 1975 for farmers to make their long-standing concerns clear to the Rowling Government. The Federation had again prepared a proposal for Government to restore farming confidence. That included not only measures for farming but also the Government’s economic policy in general. The Federation’s growing status was recognised in that it was invited to a meeting of the Cabinet

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Economic Committee. The Chairman said it was unusual for outside groups to be invited to attend the Committee and that the present invitation showed the Government’s concern for farming. There was a need for Government and farmers to work closely together to solve both shortand long-term problems. He hoped this would not be the last time that Federated Farmers attended the Committee. The Federation had submitted a paper which said that the balance of payments situation was a major problem facing the economy. It would be at crisis proportions for at least the next three years. While it was difficult to forecast with optimism, the world economy (and in particular primary product prices) would, by 1978, be once more buoyant. If not, then a new situation would face the nation. The key to the balance of payments problem was exchange earnings and consequently pastoral production. No other products were capable of displacing agricultural exports as exchange earnings in the foreseeable future. Agricultural production has stagnated over the previous few years for a number of reasons including weather and lack of profitability. However, the potential for increase in production in technical terms was very great. Given the right economic climate, an annual increase of 3½%–4% was sustainable without resorting to bringing in new areas of land not already in production. The Federation summarised that the situation facing the country was acute and called for imaginative and special measures. With the right encouragement, farmers would respond to the call for production. However, to be fully effective, any measures had to be taken alongside policies which would prevent the industry falling into stagnation to the severe detriment of the whole economy. At the meeting, the Federated Farmers’ President, John Kneebone, first commented on farming’s immediate future. He expressed concern that it would not be sufficiently profitable to enable farmers to plough back income for growth. Growth was needed to improve the country’s balance of payments. A problem facing farmers was the decrease in their returns. Kneebone wanted a completely new approach to farming. There was an urgent need to formulate an incomes policy which would avoid a stop/go investment in farming and maintain confidence in the industry to encourage investment. He felt that such a policy should guarantee parity of income for farmers and an equitable share of national income. The Chairman of the Federated Farmers Dairy Section, Mr. Stephenson, spoke of the frustration among farmers caused by the low

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marginal returns on increased production. He proposed export incentives in the form of tax rebates should be introduced based on growth in production. That would only be short term, and the aim was simply to achieve an increase in production and export receipts. Kneebone wanted an income stabilisation mechanism in conjunction with an incentive scheme. He said that farmers would only accept a stabilisation scheme if it was on an across-the-board basis and on the condition that reserves built up at present were not frozen. Federated Farmers suggested that it would be desirable for Government to accept certain off-farm costs, but the Department of Agriculture and Fisheries representative felt that this would result in subsidising an efficient processing industry and might institutionalise any inefficiencies that were there. The Federation expected major restructuring of the meat processing industry costing approximately $250 million in the next few years. Major overseas companies were wishing to withdraw from the processing market to avoid these costs. This restructuring would provide an opportunity for reconstructing the whole industry. The long-term interests of the industry required an early decision. Kneebone felt that both farmers and the meat trade would accept some unconventional solutions to many of the processing industry’s problems. Once meat prices moved up from their present level, the opportunity for stabilising income and prices and gaining acceptance of some new processing situations might evaporate. The Minister of Agriculture stated that the lead in changes in the processing industry would need to come from Federated Farmers. The Trade and Industry Representative noted that any expenditure on restructuring would need to ensure that products could be sold at a price which were acceptable abroad and which gave a fair return (ANZ 1975).4 The Government was persuaded. Its Economic Survey, one month after the Cabinet Economic Committee had met Federated Farmers, repeated many points made by the Federation. But the Government was defeated in the General Election 6 months later, bringing into power a National Government with Robert Muldoon as Prime Minister.

Robert Muldoon’s Support for Farming In 1978, another drought threatened farmers’ finances. Federated Farmers submitted to Muldoon’s Government a request for special assistance. Federated Farmers proposed that the following pre-Budget

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measures should be introduced rather than relying on more general measures in the context of the Budget: a cash grant of 77 cents/stock unit; a subsidy on nitrogenous fertiliser; a suspensory loan scheme through farmers normal financial institutions on an individual merit basis.

There was little dispute as to the magnitude of the drop in farmers’ incomes and the need for action to redress this situation. Drought relief measures already were inadequate. Department of Agriculture officials reported to the Cabinet Economic Committee a great variation in the ability of individual farmers to cope with falling real incomes and drought. Those farmers recently established and those on hill country deriving a large share of their total revenue from cattle would be hard hit. In dairy areas, farmers had had to dry off stock and suffered a loss of income. Farmers’ cash resources would also have been stretched by tax payments due in March, by the need to buy in extra feed and by stock agents unable to meet their clients’ normal seasonal requirements. Federated Farmers warned that farmers were being forced to dispose of breeding stock to maintain their cash position and that could inhibit production increases. But officials argued that was supported neither by slaughtering statistics nor by responses to enquiries made to meat companies and stock agents. Sheep farmers’ capital stock was not being disposed of excessively. Officials told the Committee that farmers would be able to recover from liquidity problems without the necessity of resorting to the proposal of Federated Farmers for suspensory loans guaranteed by the Government. For many farmers, the special relief arrangements operated by the Rural Bank should have provided the most effective help. The Government had already announced measures to help stock agents meet their clients’ needs and to enable the Rural Bank to undertake more refinancing. In addition, wool retention monies were repaid and dairyfarmers were informed that a 7½% increase in the basic price would be paid. For the dairy industry as a whole, production was likely to be 7½% down for

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the year ended 31 May 1978, but net incomes would be maintained at the same cash level (as opposed to real) as in 1976/77. It was noted that the dairy farm income was required to meet drawings, taxation, capital repayments and purchasing new plant. The 1978 figure included 50% of the 1976/1977 year’s trading surplus distributed as an end of season payment. It was understood the end of season payment in June would not be distributed to farmers until August. Officials were currently looking into the possibility of speeding up this payment and the effects of raising the end of season payment above the normal level of 50%. The Dairy Board had informed officials that an early announcement of the payment would assist dairyfarmers. Immediate relief would be given when the 7½% payout by the Board to companies was distributed to farmers in April. New Zealand cooperative suppliers on average would receive $1000 in cash to ease any short-term liquidity problems. If further industry-wide support became desirable, a further retrospective increase in the basic price for 1977/1978 might be considered. Officials recommended that the Cabinet Economic Committee agree that the Minister of Agriculture informs Federated Farmers that their preBudget proposals were not supported; but that the Government would be considering further measures to assist farmers in the 1978 Budget. Also discussions would be held between officials and the Dairy Board on the possibility of speeding up the end of season payout and the effects of increasing the payment above the level of 50% of the 1977/1978 trading surplus (ANZ 1978a).5 The Minister of Agriculture advised the Cabinet Economic Committee of proposals from Federated Farmers. Farmers were presently in a difficult liquidity situation, and there seemed to be a deep resistance within the industry to increased borrowing to remedy this. He had suggested to Federated Farmers that it might be better to include any assistance to the industry in the Budget, but they were adamant that farmers needed an earlier injection of funds. But the Minister said that he supported the officials’ proposal. There was no doubt in his mind that some farmers were in a very grave financial situation, compounded by the effects of the drought, but he supported the view that assistance to the industry should only be provided through the Budget. In response to a reference to the question of an earlier payout by the Dairy Board, the Minister informed the Committee that he had already written to the Chairman of the Dairy Board on this matter.

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The Ministry of Agriculture said that not all farmers were desperate and noted that evidence did not indicate that farmers were slaughtering stock excessively. It was important that more fundamental action be taken to assist the farming industry and an injecting funds at this stage would merely be a ‘patch on the leaking ship’. The Associate Minister of Finance agreed with this view. In his opinion, the Government needed to develop a general agricultural strategy beyond the Budget. It could not afford to take such short-term measures as proposed by Federated Farmers (ANZ 1978b).6 The Budget, with Muldoon putting great emphasis on the need to increase exports and that meant farming exports in particular, gave farming the support that Federated Farmers had been pressing for, and farming became a highly-subsidised industry. Muldoon said if our overseas earnings were to increase at the rate required to provide a basis for sound economic growth, agricultural production must play a key role. Farming was, however, an uncertain business. The past year had been a difficult one, with widespread drought and flooding causing serious problems in many districts. Prices on overseas markets had been relatively static. The costs of processing and getting the produce to markets had increased rapidly, thereby reducing prices for farmers and their income. This had again caused many farmers to doubt the wisdom of increasing production. Farm investment recovered well in 1976 but had not continued to rise. To get the export growth needed, it was essential that farm investment be maintained. This could only happen if farmers had confidence that expenditure would be justified by future returns. Muldoon said the Budget dealt with both with the immediate situation and with the longer-term problem. For the short-term situation, the Government provided compensation for the loss of farming income and to encourage farmers to continue development programmes. Special cash payments would be made to farmers. The payments, estimated to cost up to $60 million, would be made immediately on all sheep, beef and dairy stock. Muldoon said a major factor inhibiting achieving the agricultural sector’s potential was a lack of confidence in its future. The Government believed the most appropriate remedy was to ensure an adequate return on the increased production that the sector was beginning to realise. The Government established and underwrote new minimum prices to supplement those set under the stabilisation schemes operated by the Producer Boards. These ‘Supplementary Minimum Prices’ (SMPs) were intended

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to provide for farmers’ reasonable requirements for living expenses, farm operating expenditure and new development more adequately than would the minimum prices likely to be set under the existing arrangements. Muldoon expected that would give farmers an assured and realistic base for forward planning. The arrangements represented a significant contribution towards assuring farmers of prices that would give them a more adequate return for their efforts. Muldoon announced other measures to help farming. A Dairy Beef guarantee scheme introduced in 1976 through which dairyfarmers turned to beef production had been reasonably successful. The Government would now increase the market guarantee level from $50 per head to $60 per head. Subsidies on the price, transport and spreading of fertiliser have been fixed at levels designed to ensure that fertiliser application was adequate for pasture maintenance and development needs. Federated Farmers had been successful in getting their message across to Government. Muldoon repeated many of the points the Federation had been making. Muldoon said a rapid escalation in the costs of processing, and marketing had been an important factor contributing to the decline in farm incomes. There were several reasons why these particular costs had increased more rapidly than costs generally. The imposition of exacting hygiene standards by our overseas customers was a major cause. The sharp increase in freight rates since the oil crisis in 1973 was a second cause. The Government recognised it would be unreasonable to expect farmers to bear the full costs of the wage settlement negotiated by the freezing industry unions. The Government agreed to meet part of the costs of that settlement. The Government introduced land development loans as an incentive to improving reverted or under-utilised land. The existing deduction for taxation purposes of farm development expenditure and the farming and agriculture investment allowance was extended for another 12 months. To increase the productivity of farms in the lower rainfall areas, the Government would meet one-half of the cost of approved on-farm irrigation work. Considerable scope existed for increasing production from small rural holdings. The Rural Bank would make more finance available for their development, with particular emphasis on horticultural production for export. In a further measure to aid land development, the Government increased the allocation to the Marginal Lands Board.

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The farming package was expected to be a powerful stimulus to farmers and to the farm-servicing sector, and also a significant increase in the liquidity of the economy as a whole. For this reason, no further ratio reductions in private savings banks’ holdings of Government stock would be made, but the Government would keep the farm finance situation constantly under review. The total additional cost of all the farming measures was estimated at $92 million in 1978–1979 and $109 million in a full year, exclusive of any payments under the SMP scheme (NZPD 1978).7 The Government met other long-term concerns of Federated Farmers, a new Arbitration Court came into being to give effect to the Government’s policy of co-ordinating better the many separate wage-fixing bodies. There was also a further reduction in Death Duties. The 1970s demonstrated very clearly that the most persuasive element that Federated Farmers could use to encourage Governments to increase support for farming was the farming exports’ essential role in maintaining the standard of living in New Zealand. Simply complaining that farming incomes were not keeping pace with incomes of others in the community risked the response that it was farmers whingeing as usual. But demonstrating how changes in farming incomes had a negative impact on exports was far more effective. The 1970s was a decade of increased support for farming from both Labour and National Governments because it was a decade of major crises in the economies of New Zealand’s major customers, partly exasperated by the oil price crises. Those major crises were a major threat for New Zealand and demanded both increased and diversified exports. Apart from diversifying farming export markets, New Zealand was also diversifying the nature of its exports, and by the end of the 1970s, the share of exports from traditional farming produce was beginning to reduce.

Take Away Points World recession hit the export industries. The Government granted $71 million to establish stabilisation funds for farming and to hold farm costs. Special measures were introduced for agricultural servicing industries. Tax advantages encouraged development of the cooperative movement in farming.

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Responses to the Government’s assistance demonstrate the range of views that Federated Farmers were trying to represent and, also, the perception of farming subsidies by others. The Federation proposed measures and also the Government’s economic policy in general. Unusually for outside groups, the Federation was invited to attend the Cabinet Economic Committee. The Government Economic Survey repeated many points made by the Federation. The Government was defeated in the General Election and the new Government, led by Robert Muldoon, emphasised the need to increase farming exports. ‘Supplementary Minimum Prices’ (SMPs) were introduced to meet farmers’ living expenses, operating expenditure and new development. Farming became a highly-subsidised industry.

Notes and References 1. AJHR 1975. (Appendices to the Journal of the House of Representatives), B series—Economic Surveys, Vol. 1 B6, 22/05/1975: 10–15. 2. ‘Chuff-sitting’ is an informal phrase for sitting on one’s backside doing nothing. 3. Straight Furrow, 1975. ‘Welcome, But Some Doubts’, 05/02/1975: 9–11. 4. ANZ 1975. Cabinet Economic Committee, 16/04/1975, Minutes, AAFD W4198 811 Box 59 123/9/5 E(75) M12 Part 1 [Industry and Commerce] Primary Industries Federated Farmers of NZ General: 1–8. 5. ANZ 1978a. Chairman Officials Economic Committee to Chairman Cabinet Economic Committee, Federated Farmers Proposals For Special Assistance to Farmers, 10/04/1978, AAFD W4198 811 Box 59 123/9/1 121/10/2 [Industry and Commerce] Primary Industries Federated Farmers of NZ General: 1–4. 6. ANZ 1978b. (Cabinet Economic Committee), 11/04/1978, Federated Farmers Proposals For Special Assistance to Farmers, AAFD W4198 811 Box 59 123/9/1 121/10/2 [Industry and Commerce] Primary Industries Federated Farmers of NZ General: 1–2. 7. NZPD 1978. (New Zealand Parliamentary Debates), Appropriation Bill—Financial Statement, 1 June 1978: 534–541.

CHAPTER 14

Subsidies at Their Maximum and Their Death

Introduction Although at the start of the 1980s farming production continued to grow, farmers’ returns remained ‘painfully thin’. Farmers soon grasped that the national economy was in need of drastic change, mainly to combat inflation. The change needed included removing farming subsidies. But the manner in which the subsidies were withdrawn caused a short-term catastrophe for the farming community.

Federated Farmers Influence on National Economic Policy The 1980s started with the Federation introducing the ‘AGROW’ programme targeted at increasing considerably exports from farming. That demonstrated the Federation’s confidence that it understood well the needs of the New Zealand national economy. Previously, the industry had waited and then responded to initiatives taken by the Government. But in the AGROW campaign farmers had taken the lead and identified growth prospects for agriculture. Allan Wright, the Federated Farmers’ President, described the intentions in October 1980. He said New Zealand had a desperate need to lift its export earnings to support industry and expand job opportunities. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_14

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Farming was prepared and able to make a large contribution, and the momentum was well under way. A favourable economic climate had put the agriculture sector in a good position to lift output and dramatically expand exports through the 1980s. Export income from agriculture was $3.6 billion per year, 71% of the New Zealand total. Wright claimed that, given a modest 2% per annum increase in production, that figure—in real terms—would be at least $5 billion and possibly $5.5 billion by 1990 (FF 1980).1 Muldoon assured the industry that it was well placed for investment funds, and that the Government was fully aware that lifting agricultural production by 2% a year would demand a $2 billion investment programme over the period 1981–1984. Some industry growth would need to be financed from the public sector—for roading, port facilities and the rural infrastructure generally. However, much reinvestment and expansion was intended to come from farmers themselves, from profit ploughed back. Wright warned the necessary investment would be possible only if Government adopted economic policies in which adequate resources were available to efficient export industries. A year later, Wright could tell his Dominion Conference that the farming industry had pushed its export sales through the $4 billion barrier supporting the claims made by the AGROW campaign. But during the last four-year period on-farm costs had increased by 90% because of costs generated by excessive wage demands, weak management, high Government expenditure and budget deficits, and inefficiencies in allocating national resources. While the country was earning 78% more from agricultural exports, the cash returns to the farmer were ‘painfully thin’ (FF 1981).2 One major change during Wright’s four years as President was the changed farming sector’s attitude towards subsidies. The Federation pointed out to Government that restructuring the economy was essential for the country to escape an even more serious inflationary spiral, and that the farming industry fully supported the necessary changes. The Federation made it clear that farming would accept reduced subsidies if a new economic direction for New Zealand would remove anomalies and distortions within the system. The introduction of Supplementary Minimum Prices (SMPs) had allowed the industry to budget with far greater confidence, but the fallacy among the public was that SMPs were an unnecessary Government hand-out to already affluent farmers. It was made clear that not all subsidies should be removed until farmers secured

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a greater return from the market. Wright pointed out also that there had to be a more rapid move away from protecting the secondary and transport industries which created higher export costs. Federated Farmers, to their credit, recognised Muldoon’s policies were a danger for the New Zealand economy, including those which had seen major increases in financial support for farming when the 1970s ended. The Federation decided to propose economic measures to stem on-farm cost increases (Straight Furrow 1981).3 Subsidies had a major impact on farm incomes. Despite a reduction in wool production, wool income per farm for the year 1981/2 was up 26% over 1980/81, 22% from SMPs. The remaining 4% increase reflected market improvement but also included support from the Wool Board’s grower-funded minimum price support scheme. Income from lamb and sheep sales was estimated to be up 13% with only 2% representing higher market returns. Beef incomes were estimated to have increased by 9% even though income from beef at market prices for 1981–1982 was estimated to have decreased by 6%, implying that total supplementary payments and producer funded supplements had lifted beef income by 15% (Straight Furrow 1982a).4 A Dominion Executive policy committee met ‘to come up with a philosophical approach’ not only towards Federated Farmers’ own submissions on agricultural needs but also towards the changes the Federation considered necessary in the overall New Zealand Economy. The policy committee decided to change the emphasis. Rather than going to the Government saying there had been a 20% increase in farm costs and an SMP increase was wanted to cover it, it was recognised there was a point where there would be no more to give. Farmers would get about $265 million in SMP payments in the next year and $12,000 of the projected $17,000 meat, and wool farmers’ net income would be provided by the Government. But the gap between the Organisation for Economic Cooperation and Development (OECD) and New Zealand inflation rates was widening, with the OECD’s rate predicted at 8% and New Zealand’s at 16%. The policy committee decided the Federation should not ask that farmers be compensated for their cost increases—the number one priority for the Government had to be to deal with inflation (Straight Furrow 1982b).5 After Muldoon’s re-election in the 1981, a deputation met him to propose financial reform that included farming giving up its subsidies if

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Muldoon would take steps to bring inflation under control. The subsidies’ value was being eroded by annual inflation which increased farming costs by more than the subsidies’ value. Federated Farmers advocated that removing farm subsidies should be accompanied by (i) abandoning the centralised wage-fixing system and returning to free wage bargaining, (ii) removing policies that protected secondary industry from competition, and (iii) reducing Government intervention in all economy sectors (Wallace 2014a).6 The Federation felt that if it did not keep the pressure on Government there was no one else in the community who would do so and the 8% divergence in the OECD and New Zealand inflation rates would increase. Rob Storey, who taken over the presidency from Allan Wright in 1981, said that in Federated Farmers Budget submissions Government was asked to make every effort to control inflation. Secondly, to reduce Government spending. Thirdly, to reduce taxation, which had increased by 26% in the previous year. Finally, for SMPs, the Federation did not ask that farmers be compensated for the cost increases. The main thrust of dealing with inflation had to be the number one priority. After considering all factors, Federated Farmers reaffirmed that the SMP Scheme had to be market related. The Federation would seek increases only if those were justified by market indicators. Outside the SMP scheme, the Federation sought other specific measures: A special development loan should be made available to any farmer who proved to the Rural Bank that an increase in production would result. The interest rate should be concessional but charged at market rates if the farm was sold within 10 years. Government should recognise the benefits to the nation of capital expenditure on irrigation programmes when deciding its budget for capital expenditure. The research institutions involved in agriculture had contributed much to the advancement of the industry particularly to on-farm production. It was important That the information flow between farmer and scientist be strengthened to achieve maximum potential from monies expended on research. The Federation strongly recommended that Government funds be directed toward agriculture research, to ensure that maximum benefits were achieved.

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Fertiliser was farm production’s major necessity but the rapid escalation in fertiliser application costs had restricted its application and current forecasts suggested that would continue. The Government assistance for fertiliser had to, at least, be maintained and the Federation saw this as an area where further Government assistance may be appropriate. (Straight Furrow 1982c)7

In 1987, the Federated Farmers economist, Neil MacIntyre, summarised succinctly that the Federation changed its economic direction in the early 1980s because it believed that the assistance programmes offered to farming and for those throughout the economy were creating extremely negative distortions. It also acknowledged that the assistance to farming was only there because successive Governments had ignored getting the fundamentals right. The Federation’s policy was a complete package aimed at removing the various forms of protection and replacing them with sounder economic policies which would attack the fundamental problems (Straight Furrow 1987).8 But offering to accept reduced SMPs was not welcome throughout the Federated Farmers provinces. The Tangowahine branch decided to withhold annual subscriptions until the Dominion Executive lobbied harder for grass-roots farmers to maintain farm gate prices in line with escalating costs. The Auckland provincial executive also favoured SMP increases in the 1982–1983 financial year and had told Storey ‘in no uncertain terms’. Storey justified the Federation’s approach when meeting 170 farmers at Whangarei. He explained ‘we have not said we would not ask for an increase, but we have said we will not ask for an increase … regardless of what the market says your product is worth’. Until farmers stopped kidding themselves that they could protect themselves and isolate themselves from the world marketplace, they were very unlikely to get much success in dealing with inflation. In arriving at its budget recommendations, the Federation looked at what was needed for the whole country and to take a leading position hoping to persuade a farming majority to follow. He agreed that on this issue the Federation had a majority, but not total consensus (Straight Furrow 1982d).9 Later, in 1982, the Government decided to review SMP’s future and asked Federated Farmers to survey farmer opinions. The Federation asked each branch to examine the issues and held meetings with Commodity Section Councils, the Producer Boards and the agricultural industry groups not represented through the main Producer Boards.

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The Federation reported ‘a strongly held view’ that the conditions under which the SMPs were made necessary were created largely by Government’s failure to control New Zealand’s inflation, particularly in relation to major trading partners. It was for the Government to determine whether increased SMPs were necessary to maintain New Zealand’s viability as a major exporter. For SMPs longer-term future, the Federation was ‘very willing’ to discuss with the Government changes to be made in conjunction with changes in export assistance to other sectors. It remained the Federation’s firm policy that the farming industry, as the major export earner, should not require Government price support in normal circumstances (Straight Furrow 1983a).10 Muldoon replied noting the emphasis the farming community placed on holding down New Zealand’s inflation. He said that was precisely why the Government has imposed a wage and price freeze and associated measures. The Government was committed to SMPs at least at the current season’s level. But the Government decided not to continue the scheme at the end of the 1983/4 season. The intention had been to announce that in the 1984 Budget, but Muldoon called a ‘snap’ Election before the Budget was due and SMPs’ end was announced immediately.

Removing Subsidies At the 1980s’ end, Brian Chamberlin, Federated Farmers’ President at that time, described the 1980s as a ‘turbulent decade’ and farming had been through a ‘battle for survival’ (Chamberlin, B. 1989).11 Neal Wallace describes how Robert Muldoon’s policy of stimulating agricultural production and export earnings with subsidies threatened the industry and country with disaster. Subsidies gave farmers’ incomes above earnings, the excess coming from overseas borrowing. Wallace claims that ‘short term thinking was encouraged while innovation was discouraged’ taking the country’s economy to the ‘cusp of collapse’ (Wallace 2014b).12 Malcolm McKinnon describes how the 1970’s major global financial crises encouraged Governments to move away from Keynesian policies to ‘neoliberalism’ free market capitalism, deregulation and reduction in Government spending. That had taken place when the 1980s started in the USA with Ronald Reagan’s election as President and in the UK with ‘Thatcherism’ introduced by the Government led by Margaret Thatcher. McKinnon points out that moves towards neoliberalism had begun even earlier in Canada and Australia. The New Zealand Treasury, by 1984,

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also supported neoliberalism and considered that monetary and fiscal reform, market liberalisation, deregulation and less Government intervention were all essential. A financial crisis in New Zealand in 1984 raised the importance within the Cabinet of Roger Douglas who had become Finance Minister following Labour’s victory in the ‘snap’ election called by Muldoon. Douglas’s policies became known as ‘Rogernomics’. The crisis also raised the importance of Treasury officials whose ideas matched Douglas’s (McKinnon 2003).13 Those ideas were in line with the policies that Federated Farmers had been advocating for several years. After Labour had won the snap election, Federated Farmers had an early opportunity to press its ideas on economic reform when the new Prime Minister, David Lange, convened an Economic Summit Conference. Peter Elworthy had replaced Rob Storey as Federated Farmers’ President and he presented the Federation’s ideas to the Summit Conference. Wallace called Elworthy ‘a key ally’ for the new Finance Minister, Roger Douglas (Wallace 2014c).14 Elworthy started by noting that New Zealand’s best agricultural days were when export industries—predominantly agriculture contributed largely unsubsidised and market-related exports to overseas earnings. He looked forward to that time again, now in partnership with manufactured exports, tourism and other emerging export earners. But it was recognised that change would mean difficulties for farmers. Farming had already changed through exposure to overseas competition and political barriers. Internal cost squeezes forced it to adapt or fail. Farmers had changed their traditional farming methods. Thousands had been forced to leave the industry, and those remaining had been required to produce more milk, meat, fibre or fruit just to stay in business. But the farming community was falling behind in earning capacity. In 1974, a farm tractor could be bought for 28 bales of wool; today, it costs 66 bales. In 1974, a farmer could buy the farm transport car for 570 lambs; today, it required 1200. But the average urban wage earner now worked 9 weeks less for the family car than he or she did in 1974 (ESC 1984a).15 That squeeze on farm incomes and investment made SMPs and other subsidies necessary primarily to compensate the agricultural industry for inefficiencies in the internal economy—not for marketing problems. The farming community, though desperately needing the money, never supported the policies from which SMPs were spawned. The compensation payments blunted market signals, resulted in wrong production decisions, increased the Government deficit and the taxpayer’s burden,

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and created difficulties in marketing. Federated Farmers hoped that New Zealand’s inflation would never again exceed trading partners’ and the need for SMPs would be dead. Federated Farmers saw the Government’s prime role was to create the right investment environment through consistent policies; industry assistance must be minimal, even-handed and visible, for either a stated period or subject to regular reviews. The Federation had proposed: moving away from import licensing to reasonably low and uniform tariffs; a lower Government deficit; a tight monetary policy; a wages policy based on the ability of the economy and the industry to pay; eliminating restrictive trade practices.

Devaluation, buttressed by those essential economic measures, provided the opportunity and the incentive for more resources to be invested in efficient export industries to have any lasting benefits for the community; to create more jobs; and to attain social objectives. Devaluation’s advantages had to be made to stick and be supported by floating the exchange rate (ESC 1984b).16 Between the Economic Summit and the Budget two months later, Elworthy remained confident that the Government would be ‘evenhanded’ towards all economy sectors. Just before the Budget announcement, he told the South Canterbury Province that ‘even-handedness’ was strongly woven into the plan for New Zealand’s economic recovery. Elworthy assumed the Government was ‘on track for achieving this attitude’. He thought benefits from the economic recovery would be good for farming after removing protectionism and subsidies. Farming would be able to ‘flex’ its ‘competitive edge’ on international markets. He told South Canterbury that ‘reaction would be strong and swift should there be anything less than an even-handed approach’. Elworthy said the Federated Farmers team was strong and skilful enough to maintain the Federation’s reputation for high-quality lobbying (FF 1984).17

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A Lack of Even-Handedness Perhaps, Elworthy had been misled over even-handedness by the Economic Summit Conference in which all Economy sectors had been equally represented and there appeared to be a consensus on treating all equally. But Finance Minister, Roger Douglas, did not take an evenhanded approach in the short term—he took the opportunity in his first Budget to remove most assistance given to farming in addition to confirming that SMPs would not continue. Douglas noted that SMPs had encouraged farmers to continue producing, or in some cases increase production of, commodities whose international prices were depressed, when they might otherwise have turned to more profitable activities. Prices were critical in signalling where the best opportunities were, and they had to be flexible to reflect underlying economic change. Douglas announced measures to enhance competition for domestic industries as Federated Farmers had been urging for several years. Import licensing would be liberalised with a gradual increase in imports. The assistance given to import substitution industries by tariffs would be broadly in line with the assistance applying elsewhere. Consistent with the move towards lower and more uniform assistance levels, and to reduce cost penalties on other industries and consumers, the Government was considering reducing high tariff levels. Decisions on industry assistance were intended to ensure that New Zealand’s resources were invested in activities with the highest national return. But those measures for domestic industries would take place over the Government’s lifetime rather than immediately as was the case for removing assistance to farmers. Support removed from agriculture included: The Productive Development Loan Scheme announced by the previous Government would not proceed; Interest rates on Government-funded rural lending would progressively increased and brought into line with market interest rates; All product inspection services provided by the Ministry of Agriculture and Fisheries would be put on a partial cost recovery basis; All fertiliser transport subsidies—the fertiliser, lime, and acid transport subsidies and the aerial spreading bounty—would be removed immediately;

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The fertiliser price subsidy would terminate on 31 March 1986; The Farming and Agricultural Investment Allowance would not be extended beyond the current expiry date of 31 March 1985; The rate of subsidy for headworks and off-farm works on community irrigation schemes would be reduced from 70 to 35% for new schemes; The grant rate for rural water supply schemes would be reduced from 50 to 35% for new schemes; New borrowing from the Loans Account by the Rural Bank, would be phased out so that by 1986/87 the Bank would be raising all its new loans on the market; The Farm Vendor Finance Scheme would be terminated immediately; The Noxious Plants Control Scheme would cease on 28 February 1985.

Douglas estimated fiscal saving from these measures would be approximately $233 million in 1985/1986 and $433 million in 1986/1987 (NZPD 1984).18 Elworthy’s reaction was swift but not strong. He thought the Government had misunderstood the short-term effect on farming. Federated Farmers had supported the Government’s overall economic policy because the Budget’s measures would be good in the medium and long term. But the Federation had thought Douglas and the Government would adopt an even-handed approach. The budget had taken steps towards a more market-orientated economy, and the Federation had no quarrel with that. He said the Minister of Finance had said during the Budget announcement that the Government wanted to change every sector equally but farming had been hit hard and out of kilter with other sectors. That was the Federation’s complaint, not the general direction (Christian, G. 1984).19 Colin Dick, the Meat and Wool Board Electoral Committee’s deputy chairman, was more forthright in his response, perhaps reflecting more closely ‘rank and file’ farmers’ reaction:

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Why were farmers more hard hit than others in the Budget? We asked for it. Much of what was implemented in the Budget was requested by the top level of the Federation. (Straight Furrow 1985a)20

Elworthy asked to be told if Federated Farmers’ members thought the Federation should have spent more time alleviating members’ specific economic, social, climatic and other problems, rather than trying to put the country’s economy to rights. He pointed out there could be no doubt over the Federation’s influence in the overall economic planning (FF 1984).21 But Elworthy’s long-term interests were more in ‘putting the country’s economy to rights’ rather than farming—he later moved on from Federated Farmers’ President to become Director of the Reserve Bank. The Federation sought to lessen the impact upon farmers from losing Government support. The first and most urgent need was reduced interest rates and increased money availability. The Agriculture Minister and Rural Bank General Manager agreed, unequivocally, that sufficient funds would be available to ensure flexibility to keep efficient farmers on their land while the community adapted to the farming’s changed financial arrangements. They advised many development loans at present on a term of ten or twelve years could be extended to 25 years. There was also flexibility to set aside, in suspension, capital amounts with no interest or capital repayments accruing. Regional seminars to explain the available flexibility to farmers were arranged by the Government and attended by the Rural Bank, Ministry officials and the Federation. The Federation warned that more widespread measures might be required. The numbers involved meant that, rather than individual evaluations by the Rural Bank, the Government might have to introduce a moratorium on increased interest rates for a transitional period (Straight Furrow 1984c).22

Rogernomics Impact on Farming Communities The farming community’s crisis was described, independently, by Neil Wallace 20 years later. Wallace demonstrated how removing farming subsidies in 1984 caused a short-term disaster for the rural community that was compounded by droughts ‘the likes of which were only seen every 50 years’. Wallace points out how subsidies could be removed quickly because legislation was not needed and their removal took place before Rogernomics’ reforms in other Economy sectors. The delay in

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implementing those other changes meant manufacturers and unions continued to enjoy protection making farm costs rise while farm income was suddenly slashed by 30%. Wallace illustrates Rogernomics’ impact on rural New Zealand using case studies to describe the impact on individual families from what he called the ‘short-term disaster from Rogernomics and drought’ (Wallace 2014d).23 The studies show how rural families attempted to cope. In the mid-1960s, the Wool Commission Chairman had described sheep farmers as ‘ruggedly individualistic’; Wallace’s studies demonstrate that that phrase was still appropriate two decades later. Farmers were individualistic not only within the community but also within the farm gate. Wallace reports the surprise for wives on finding out their farm’s finances true, dire, state (Wallace 2014e).24 Farmers found it difficult to admit their financial plight to anyone, even their wives, until pressure from banks and creditors forced decisions to be made. Wallace describes graphically the farmers’ pain at having to attend meetings with creditors at which their true financial state had to be revealed. Wallace calls those meetings ‘the most foreign of environments and the most intimidating of forums’.

Demand for Direct Action and the ‘Roar from the Hills’ Towards 1985’s end, demand for direct action was growing and farmers were turning against Federated Farmers leadership. In Mayfield, farmers drove old ewes through the streets and slaughtered them in protest at low prices. Brian Chamberlin, the Senior Vice-President who had led the committee that had first decided that farming should give up subsidies if Government would take steps to control inflation, was annoyed that ‘people were saying the problems were caused by the Federation supporting Government policy’. He claimed the farmers’ difficulties were because Government ‘took on board’ only a small part of the Federation’s proposals. He had had many ‘irate’ calls from city people angry about the farmers’ actions in slaughtering the ewes. The calls were 50 to 1 against, and farmers had to be careful not to provoke strong reaction in the towns and cities against them (Straight Furrow 1985b).25 Bryan Lawn, who had taken part in the slaughter of ewes, ‘felt let down badly by the Federation’ for ‘not coming out and supporting’ the farmers. He had the strong impression that Federated Farmers was ‘strongly against the slaughter’. The Federated Farmers’ President claimed the

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Federation through its Meat and Wool Council had ‘nationally recognised’ the slaughter as an outward and visible sign of extreme frustration of farmers. But the Federation’s leaders felt it necessary to communicate the urban reaction. Federation leaders had to take public opinion into account; that’s what Government listened to. The public had supported farmers in their climatic and economic difficulties, but the crescendo of adverse publicity was beginning to ‘turn the public off’ (Straight Furrow 1985c).26 The Canterbury branch proposed a seven-point direct action plan to the Federated Farmers’ Meat and Wool Council in November 1985. The branch said Federated Farmers had to prevent farmers’ dissatisfaction being channelled into uncoordinated, destructive, action. Canterbury wanted the Council to adopt their ‘seven-point progressive plan’ which had direct action building up over a month. The plan included industrial action by farmers, a ‘national black Friday’ with silent marches by farmers wearing black armbands, and flocks of old ewes driven through main streets of cities to local saleyards during rush-hour traffic. ‘If all else fails’, there should be pickets on all major export ports preventing primary produce export until the Government had taken the action they asked. The Canterbury member who put forward the plan said his farmers were in dire straits and action must be taken now. ‘We’re not asking for a U-turn, subsidies or handouts but it is essential to have national co-ordination to fight on farmers’ behalf’. But only Canterbury supported the plan with the rest of the Council firmly of the view that such action could result in a backlash against farmers. Although the plan was soundly rejected, the South Island High Country delegate warned the Council of farmers’ mood for action. ‘Those farmers are getting desperate’, he said. ‘How can they let steam off — they are sick of restraint and if we don’t help them take action they will take irresponsible action’. Manawatu warned that its farmers were so angry they were considering protesting by cutting the main lines carrying electric power into the North Island from the South Island (Straight Furrow 1985d).27 Early in 1986, in South Canterbury, 5000 representatives of rural communities, not just farmers, attended a protest rally and marched through Timaru’s main streets before presenting a motion to the local MP. The organisers claimed the protest was to demonstrate to Government that the South Canterbury people were united in their efforts to make their worries heard. Elworthy said the Government’s credibility was

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all but lost with rural and related communities. His own reputation had been ‘severely tarnished’ as the Government had abused, distorted and crushed the Federation’s policy, and broken its promise made at election time of an even-handed approach (Bartley, C. 1986).28 The Federation’s leaders decided in March 1986 that they were out of step with rank and file farmers and the Dominion Council decided on a complete change of strategy. The Council decided the Federation must ‘go out on attack’ and start leading the farmers’ militancy. Government members had made triumphant comments that the Federation had asked for the changes implemented by Government. That had changed the Federation’s feeling against the Government. The North Otago representative said the Government have ‘twisted our policy to look as if we are supporting them’. He said: ‘the pussy footing must stop’. The Federation’s leaders were seen by members as having no guts, as being affluent men who had not come up in farming the hard way. The leaders were seen as too close to the Government and should position themselves away from the Government. Some members thought the Federation should turn its back on dialogue with the Government completely. The Mid-Canterbury representative expressed most clearly what caused the problems—when the Federation had advocated free market policies and articulated them in 1984, it had not considered carefully enough how the transition from ‘interventionism to a free market economy’ would be carried out. It was decided that the Federation should organise rallies in the provinces and in Wellington; explain to Members of Parliament just how farmers were suffering and show them by taking them to farms; pressure local bodies not to increase their rates; demand that meat inspectors be suspended without pay when freezing works were not operating because of industrial disruptions; convene a meeting of all exporters to discuss the effects of the New Zealand dollar’s high value. The campaign became known as the ‘Roar from the Hills’. The Dominion Council went to the Government to put their case but instead of meeting the Prime Minister as expected, they met Deputy Prime Minister, Geoffrey Palmer, who was the Attorney General rather than a Minister more directly involved in agriculture (Morton, S. 1986a).29 Elworthy sent an open letter to all farmers: You’ve waited long enough. You’ve sat and hoped, and we’ve talked to the Government, waiting for it to deliver on its promises to agriculture. It

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hasn’t happened and now farmers are staring in the face the worst prospects they’ve seen since the Depression. We say enough, it’s time to act now! Farming has to show its spirit and fight back. The time has come to be outspoken, and to explain to people who don’t understand that if agriculture goes down the whole economy is in trouble. And that means convincing most city people and a number of Members of Parliament. That’s where you come in. Unless we’re all in this together, we won’t win. And what will happen to farming and New Zealand then (Elworthy, P. 1986)?30

3000 from Canterbury marched in protest in Christchurch; Waikato Federated Farmers arranged a protest march of 5000 rural people in Hamilton. The main protest was a national protest when thousands on April 30th marched through Wellington to deliver a unanimous resolution to Parliament, repeating the message that the Federation had been pressing on Government since the days of Muldoon’s Government: That this rally, representing the total rural community and recognising the most serious financial and social crisis facing rural New Zealand and New Zealand agricultural exports since the 1930s, demands that the Government adopt immediately policies which will increase rural incomes through a reduction in interest rates, the rate of inflation and the exchange rate.

Elworthy summarised in his speech: ‘All politics is about pressure. We cannot guarantee politicians will listen, but we can guarantee they will ignore us if we do not make our presence felt, our voices heard, That’s why we’re here today’. At the time of the protests, Bob Engelbrecht, a Canterbury farm adviser, reported to Straight Furrow ‘cold, hard realism’. Farmers had to realise their perception of the rural crisis was quite different to that held by the urban public, and in the long run, it was the perception of the urban public that would carry the day. Whether farmers liked it or not, they were regarded as a privileged group. Roger Douglas had said his policies would bring pain, but the pain would be felt in areas in which it could be borne and farming was one of those areas. To the urban dweller, that emphasised what he already believed—farmers were a wealthy group who had had it too good for too long and who needed to be brought back into line. ‘Seen from that point of view, everything the Government has done to date, has been quite reasonable’.

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Federated Farmers perhaps turned to militancy because the leaders had lost their influence on Government and felt a need to influence Government through militancy. And perhaps to influence their members by demonstrating leaders were now alongside their members rather than too close to Government. But the militancy had no greater effect on Government than the policy of being close to Government. The Prime Minister, David Lange, called the protests ‘doing rain dances outside Parliament buildings’.

The Government Response and Farming’s Survival The Government view was put by the Prime Minister when interviewed by Straight Furrow. The Prime Minister said there were about 8000 farmers in a critical situation, but he said this number would not go off the land because financiers would not sell them up since financiers would collapse their own security by doing so. He said some farmers would leave the land but believed others would come in their place. The Government had a duty to keep the heat on the private sector and would not give any assistance which would just relieve pressure on private sector financiers. He believed the private sector should bear a greater proportion of the cost of the current farming downturn because it had gone into farming for its own commercial benefit. Lange said the Government had not slashed all support to agriculture as ‘our friends in the rural sector’ were portraying. The rural sector first accused the Government of having moved far too fast but then of being far too slow. The subjects of both their approbation and disapproval usually tended to be the same thing. All the ‘huge suspicion’ in the rural sector about Government support for industry was misleading, sometimes down-right wrong, occasionally utterly dishonest. The rural section had been conditioned to believe Government was favouring manufacturing industry at agriculture’s expense. Lange said one of the problems of the Federation was that you would not get specifics. That was a problem of the Federation’s structure. Who actually was it speaking for? Lange said he had tried to convey to Federated Farmers that the time for simplistic sloganeering solutions was past. There was a solid core of expertise in Federated Farmers which could work out the real guts of the thing and let others do the rain dance down outside Parliament Buildings. Federated Farmers, by and large, were competent farming business people and they had a very genuine

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commitment to their sector. They did not regard farming as a business, they regarded it as a livelihood. They were good to deal with and put their arguments coherently when they did develop them thoroughly. Lange was confident that the rural crisis would not bring down New Zealand’s economy. There was a resilience in the economy and it would adapt (Morton, S. 1986b).31 Early in 1987, Elworthy described how he saw the farming crisis brought on by Rogernomics. He said that while he was Federated Farmers’ President, the farming situation had never looked bleaker, there were now thousands rather than hundreds of farmers, potentially, not being able to survive on their farms. He blamed the Government for not honouring its promises to develop acceptable interest, exchange and inflation rates for agricultural exporters (Christian, G. 1987).32 All through the 1980s Federated Farmers’ leaders never openly doubted that the right steps had been taken in pushing for reducing farming’s financial support, always claiming it was Government tardiness in dealing with other sectors that created the financial crisis for farmers. It seems never to have occurred to the Federation leaders that a new Government would eagerly take the chance to reduce farming’s financial support, not having anticipated that a Labour Government would come into power with, perhaps, prejudice that farmers were far better off financially than other sectors of the community and had offered to give up their subsidies. The Managing Director of the Wool Board and former General Manager of the Dairy Board, Bernie Knowles, gave his version. There was too much belief that the farmer runs a Mercedes and the rest of the public should at least be able to afford a Toyota. Now that action was being taken to change the economy, someone’s saying, ‘the farmer’s strong, he can carry the brunt of it’ (Morton, S. 1985).33 The Federation policy was to prevent mortgagee sales. For cases where debt compared with farm value was horrendous, farmers needed to be reestablished and mortgagee sales avoided. But Taranaki thought Federated Farmers had to be careful to avoid confrontation about refinancing and mortgagee sales and the Federation’s role was to provide the best available advocacy. If farmers had to move off their farm, Otago wanted them to leave with dignity, with sufficient relocation finance available. Waikato adopted a pragmatic approach facing up to the fact that in some cases the Federation simply could not help. Elworthy told the Federated Farmers Dominion Council that farmers’ grit and determination had enabled them to cling to their farms

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when even the Government advisers believed farmers would be walking off in their thousands. Most farm families had more mental and physical endurance than the Government thought. The continuing challenge for the Federation was to make sure farmers in financial stress could hang onto their farms (Kerr, P. 1986).34 The Federation met regularly with the private financial sector and parliamentarians to explain the position. The Federation’s view was that many townspeople, politicians and the private financial sector still failed to recognise the farming crisis severity. The Federation discussed with Government measures whereby when farmers decided to leave the industry they could leave with dignity. The Federation would defend farming families that decided, following good professional advice, that they could be viable and stop them being forced unjustly to a mortgagee sale. By mid-1987, the Federation considered that farming had survived the crises but only with many scars that would never heal. There was no question that farming was moving to a confident, forward-looking future. An independent view 20 years later was that of Jeff Grant, a former Chairman of the Agricultural and Marketing Research and Development Trust. He thought Rogernomics was an essential step in not only preventing long-term economic disaster but in making farms ‘much more efficient and productive’ (Wallace 2014f).35 Many farmers whose stories are told by Wallace agreed, even those that had suffered from the subsidies’ withdrawal. The overall impact seems to have been not a decrease in farm ownership but a levelling off new farms coming into production (Fig. 14.1).

Take Away Points The Federation proposed to increase considerably farming exports. The Federation recognised Government policies including increased support for farming were dangerous for New Zealand and decided not to seek compensation for cost increases; the Government’s priority had to be reducing inflation. Federated Farmers pressed its ideas on economic reform at an Economic Summit Conference. A new Labour Government immediately removed most assistance for farming and intended to introduce competition for domestic industries, including liberalising import licensing, but over the Government’s lifetime rather than immediately.

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84000 82000 80000 78000 76000 74000 72000 70000 68000 66000 64000 62000 1978 1979 1980 1981 1982 1983 1984 1985 1986 1988 1990 1991 1993

Fig. 14.1 Number of Farms in New Zealand (Source New Zealand Digital Yearbook [Statistics New Zealand])

Removing farming subsidies without reducing farming costs caused a short-term disaster for the rural community compounded by severe droughts. The Federation’s leaders decided to start leading the farmers’ militancy in a campaign known as the ‘Roar from the Hills’. But the urban public’s perception of the rural crisis was different, farmers who were seen as a privileged group.

Notes and References 1. FF 1980. (Federated Farmers), Dominion President speeches 90343-06-02, 01/10/1980: 1–8. 2. FF 1981. (Federated Farmers), Dominion President speeches 90343-06-02, 21/07/1981: 1–19. 3. Straight Furrow, 1981. ‘News From Our Head Office: Hill Country Financial Position’, 20/11/1981: 31. 4. Straight Furrow, 1982a. ‘SMPs Lift Farm Incomes’, 19/03/1982: 11.

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5. Straight Furrow, 1982b. ‘Inflation the Key to Budget’, 04/03/1982: 10. 6. Wallace, 2014a. When The Farm Gates Opened (Dunedin: Otago University Press): 23. 7. Straight Furrow, 1982c. ‘Inflation the Key to Budget’, 04/03/1982: 10. 8. Straight Furrow, 1987. ‘Farmers Question the Economy’, 21/10/1987: 5. 9. Straight Furrow, 1982d. ‘Storey Faces SMP Critics’, 02/04/1982: 3. 10. Straight Furrow, 1983. ‘SMP Letter to Prime Minister’, 16/03/1983: 9. 11. Chamberlin, B. 1989. ‘A Turbulent Decade’, Straight Furrow, 06/12/1989: 3. 12. Wallace, 2014a. When The Farm Gates Opened (Dunedin: Otago University Press): 17. 13. McKinnon, M. 2003, Treasury: The New Zealand Treasury 1840– 2000 (Auckland: Auckland University Press): 319. 14. Wallace, 2014a. When the Farm Gates Opened (Dunedin: Otago University Press): 50. 15. ESC 1984a. (Economic Summit Conference), 1984, Proceedings and Conference Papers, Address by Federated Farmers President, Peter Elworthy: 59. 16. ESC 1984b. (Economic Summit Conference), 1984, Proceedings and Conference Papers, Address by Federated Farmers President, Peter Elworthy: 61. 17. FF 1984a. (Federated Farmers) 90-343-06-02, Dominion President Speeches, P. Elworthy Speech to South Canterbury Province, 19/10/1984: 1–3. 18. NZPD 1984. Parliamentary Debates (New Zealand), Oct 4–Nov 3 1984, V458: 1419–1420. 19. Christian, G. 1984. ‘An Uneven-Handed Blow for Farmers’, Straight Furrow, 09/11/1984: 4. 20. Straight Furrow, 1985a. ‘We Got What We Asked for’, 23/01/1985: 3. 21. FF 1984b. (Federated Farmers) 90-343-06-02 Dominion President speeches, P. Elworthy Speech to Oxford Branch, 29/11/1984: 4.

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22. FF 1984c. (Federated Farmers), 90-343-06-02 Dominion President speeches, P. Elworthy Speech to Oxford Branch, 29/11/1984: 5–8. 23. Wallace, 2014a. When the Farm Gates Opened (Dunedin: Otago University Press): 9. 24. Wallace, 2014a. When the Farm Gates Opened (Dunedin: Otago University Press): 65. 25. Straight Furrow, 1985b. ‘Explaining the Federation’s Policy’, 06/11/1985: 4. 26. Straight Furrow, 1985c. ‘From The President’, 04/12/1985: 3. 27. Straight Furrow, 1985d. ‘Black Band March Rejected’, 06/11/1985: 13. 28. Bartley, C. 1986. ‘Fiery First Farmers’ Protest Rally’, Straight Furrow, 05/03/1986: 7. 29. Morton, S. 1986a. ‘Decision: Go Out on Attack’, Straight Furrow, 19/03/1986: 2. 30. Elworthy, P. 1986. ‘Open Letter to Farmers: It’s Time for Action Now’, Straight Furrow, 19/03/1986: 3. 31. Morton, S. 1986b. ‘Lange: 8000 Farmers are Vulnerable But They Won’t Be Sold Up’, Straight Furrow, 21/05/1986: 4–5. 32. Christian, G. 1987. ‘Farming Situation Never Looked so Bleak’, Straight Furrow, 04/02/1987: 3. 33. Morton, S. 1985. ‘Farmers are the Fall Guys—Knowles’, Straight Furrow, 09/10/1985: 17. 34. Kerr, P. 1986. ‘Brickbats and Bouquets’, Straight Furrow, 19/11/1986: 4. 35. Wallace, 2014a. When the Farm Gates Opened (Dunedin: Otago University Press): 9.

CHAPTER 15

A Comprehensive Strategy for Agricultural Economics and Food Policy

Introduction Anger lingered among the farming community at its treatment by Government in the mid-1980s, but Federated Farmers responded positively by developing a comprehensive strategy for agriculture and food policy that gives a thorough insight into the thoughts of farmers essential for implementing such a policy.

Lingering Anger When the Government in 1988 asked Federated Farmers to repeat the 1984 Economic Summit Conference to form a ‘compact’ between Government, employers and unions, Brian Chamberlin, who had played a major role in setting the Federation’s policies earlier in the 1980s, looked back angrily at how farming had been treated. He said the sceptics saw the Government’s request for a new Summit as an excuse to avoid deregulating the labour market and reducing protectionism at a time when it was desperately needed. He was a ‘very reluctant starter’. He had taken part in the 1984 Economic Summit Conference and viewed the communique from that Conference as a ‘compact’. That communique had called for export-led growth and said that restraint from all sectors would be necessary to achieve that growth. The ‘captains of industry and the unionists’ © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_15

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then walked out of the Conference and practised everything but restraint. There was a completely unnecessary burst in inflation as the cost/plus system took off with a wage-price spiral. The politicians showed no leadership whatever as they helped themselves to pay increases recommended to them by a Higher Salaries Commission that should have been made redundant years ago. They were still at it three years later. The farming sector—the one sector that could provide the exportled growth—was stripped of its support and expected to compete for resources with manufacturers that were protected by tariffs and workers that were shielded from reality by compulsory unionism and a national award system. Farmers were forced to pay crippling interest rates charged by the deregulated financial sector, the costs forced on them by the cost/plus sector but to take prices set on a competitive international market. The prices to farmers were further depressed by a New Zealand dollar boosted to unrealistic levels by high interest rates. Farmers had been forced to suffer and to make all sorts of efficiencies on their farms. Some lost their farms, and others were likely to. They fought for policies that would reduce interest rates and provide for greater efficiency and lower costs in their servicing areas. Their suggestions were often turned back by people who said that ‘exports didn’t matter’ and that ‘farmers had had it too good for too long’. Other businesses were going to replace farming as wealth producers. They didn’t. Most went broke, while farming continued to provide the major portion of the country’s export earnings. Now, the Government wanted to make a new compact with farmers. He believed the Government motives were honourable, but he needed convincing that a compact would deliver the goods. He would take part in the process, but believed, in retrospect, the 1984 Economic Summit Conference had ripped farmers off and he had no intention of repeating that (Chamberlin, B. 1989).1

Meeting the Challenge of Change: A Strategy for Farming In mid-1987, the Federation took a positive, forward-looking, step by mapping out a strategy for the future of agriculture. Elworthy said:

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It will provide a direction for the entire industry. We are not asking for easy options. We are accepting the challenge with a positive attitude. (Straight Furrow 1987a)2

The strategy claimed New Zealand is caught in the turmoil of a changing world. Federated Farmers believes that there is no turning back for this country. The only way to go now is forward. That may not always be easy and presents a considerable challenge. Agriculture has accepted that challenge and is determined to meet it with vigour and dynamic innovation. The future living standards of all New Zealanders will depend upon export-led growth. Agriculture has greater potential than any other industry to provide the country with this growth. For more than a century, land-based industries have capitalised on the natural advantages of climate and soil, enhancing these assets by skilful use of science and technology. This innovation and enterprise have meant the agricultural industry has been able to overcome the handicap of distance from major world markets. Family farming has played a tremendous role in this development, with women making a great contribution to the industry. But in the last decade soaring inflation has eroded all exporters’ ability to compete on the world market. The economy will not prosper until inflation is below the level of New Zealand’s trading partners. Defeating inflation will mean that change in structures and attitudes must take place throughout the economy. Such change presents an immense challenge, but only by meeting that challenge will the standard of living of all New Zealanders rise. This is the Federation’s strategy for essential change (Straight Furrow 1987b).3 The Economy The future of the Economy is closely tied to the performance of the agricultural industry. Land-based industries generate 60% of New Zealand’s export earnings and no other industry is likely to replace those earnings in the near future. During the past few years, the productive sector has been deeply damaged by poor economic management. This has led to uncontrolled inflation caused by high domestic protection, an inflexible labour market, escalating internal deficit and incorrect sequencing of economic reform. As a result, farmers face excessively high interest rates and a structurally over-valued exchange rate. This has led to the worst debt crisis

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since the great depression. At the same time, the nation also faces a huge, unsustainable build up in internal and overseas debt. Agriculture, the country’s prime exporter, has been penalised unfairly for many years because New Zealand’s inflation rate has been many times that of its international trading partners, which has made exporting less competitive. This has reduced dramatically farm profitability. The key to future prosperity is to reduce inflation to a level below New Zealand’s trading partners. This policy aims at addressing this fundamental problem by creating a competitive, market-related economy, treating all sectors equally. It holds that a low internal deficit is crucial to successful economic adjustment. It pinpoints four key areas which must be reformed: Government spending, particularly the cost of social policy; domestic and international protection; the labour market; and the taxation system. Exchange Rate A free-floating exchange rate is an integral part of this policy. This will only deliver benefits to the economy if the fundamental economic reform outlined in this strategy is carried out. Government Spending Dramatically reduced Government spending is essential for successful economic reform, because when it is too high it puts upward pressure on interest rates and the exchange rate which penalises exporters. Government spending has been far too high during the past decade, and as a result, the internal deficit has risen to an excessive level. The most effective way to reduce the deficit is to cut Government spending. Two areas must be changed: Government funding of social services, which has been especially high, and the way in which the state organisations operate in the economy. This will be improved by increasing the efficiency and accountability of Government services. Private sector capital should be introduced wherever possible. Federation Strategy • Privatise or corporatise Government departments where possible • Improve administrative efficiency by introducing accountability into

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management systems • Adopt commercial principles in running Government departments and corporations.

Labour Market Labour, one of the key economic resources, continues to be bound by rigid statutory control. This increases the unit costs of production, reduces job opportunities and hampers development of new industry particularly in provincial areas. In order to promote growth in a deregulated economy, the labour market must be freed and placed on a competitive market basis. Federation Strategy • Repeal registration provisions which support union monopoly • Replace the national award system with negotiated contracts between employer and employee • Base wage increases on productivity rather than the Consumer Price Index • Cover all employees in work place with one contract • Make employers and employees accountable for contracts thus preserving sanctity of agreement • Remove Government intervention in wage setting and award enforcement • Have parties to a dispute go for conciliation and mediation services • Amend the state pay fixing mechanism to incorporate performance and market demand • Introduce a legal mechanism to prevent secondary strikes. TAXATION Excessive Government spending has led to high levels of taxation which inhibits production, investment and saving. A real reduction must be made in the total tax collection by reducing Government spending. Some sectors have escaped their fair share of taxation and the system must be made more equitable. Farming incomes are subject to large fluctuations caused by climate and international market price movements. To make taxation of agriculture fairer, these wide fluctuations and the need for continuing investment should be recognised. Federation Strategy

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• Reduce the taxation burden on individuals • Create equitable taxation • Remove potential for tax evasion • Reinstate tax deductibility for development expenditure • All taxation liability arising from the new livestock tax system should be written off in full • Introduce a simple and equitable system for taxing livestock which must not be a disincentive to production. Social Policy Social welfare policies should provide disadvantaged members of the community with a reasonable standard of living. These policies should encourage these people to help themselves rather than being reliant on the Government. Present social policies do not target resources effectively and should be reformed. Every New Zealander should have an equal opportunity to obtain the education and skills they need to take a full part in society. They should not be disadvantaged by isolation. Policies should be developed which ensure full and economic use of education facilities. The Government has a responsibility to ensure that a comprehensive health system operates efficiently. Future policies must educate and encourage individuals to become increasingly responsible for their own health care. A successful health policy will combine public, private and individual initiative. Accident Compensation Corporation Escalating costs of accident compensation are totally unacceptable. The entire function and structure of the Accident Compensation Corporation must be rigorously examined and changed to ensure greater flexibility and accountability. Federation Strategy • The cost of the first four weeks of any incapacity should be the responsibility of the individual • Accident Compensation Corporation should deal with accidents only • Introduce an incentive or penalty system to reduce accidents in the workplace • Eliminate employers’ obligation to carry the cost of non-work-related accidents.

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The Land The land is the very basis of New Zealand’s wealth. It is the source of most of the country’s export earnings and will continue to be the principal earner of foreign exchange for many years to come. This precious resource must be carefully husbanded to maintain its productive capacity. Changing world market and economic conditions require a flexible approach to planning and land management. The most effective way to create a vigorous, innovative approach to land management, and to increase output, is freehold tenure of land. Farming must continue to be based on the family farm concept to maintain this environment. Currently, the concept of freehold tenure by the individual is under pressure. Many farmers with reduced incomes, increasing debts and falling asset values are feeling seriously threatened as landowners. Corporate land companies purchasing farms and acquisition of land for various public purposes all add to the pressure felt by the individual. Where land rights are taken away, generous compensation should be automatic. Federation Strategy • Retain freehold tenure of land and the family farm • Prohibit foreign ownership of land except by owner operators with ministerial consent • Give the Queen Elizabeth II National Trust sufficient funding to allow it, by mutual agreement, to continue to take and maintain covenants over land • Ensure that environmental and economic policies are compatible, based on commercial criteria • Encourage a flexible land use policy in rural planning and land settlement. RURAL BANK The family farm has been a significant factor in the strength and efficient output of our land-based industries. The Rural Bank was established to meet needs of the rural community and to promote the family farm. By providing finance and expertise, the Rural Bank successfully assisted qualified young farmers to settle on their first properties. This deliberate policy must be continued. The bank should be expanded to provide a wider range of financial services for farming.

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Federation Strategy • Retain and expand the Rural Bank to provide a wider range of financial services for farming • Continue concessional rates of interest for a finite period for first farm purchase to enable qualified first farmers to compete for land. The Rural Bank or other agencies could be used to deliver such Government policy • Provision of a land settlement programme through Landcorp. LAND LEGISLATION Several important statutes governing the use of land urgently need amendment. The Mining Act should require all those wanting to mine the land to acquire an access agreement conditional to granting licences under the Act. The purpose of such an agreement should be to settle the principles of compensation such as loss of production, disturbance payment and loss of negotiation. The Water and Soil Conservation Act should ensure farmers are entitled to have their property rights in wetlands protected and to have adequate compensation when they are prevented from draining their land. Greater flexibility in settling compensation claims should be built into the Public Works Act. Amend the Town and Country Planning Act and Historic Places Act to ensure that they cannot unfairly restrict the rights of landowners without compensation. Marketing New Zealand’s primary industries must be market led. Past emphasis on production must be matched by dynamic market led policies to meet the demands of the international marketplace. Producer Boards Producer Boards have provided a structure through which farmers can exercise a measure of control over the direction of their industry. The boards must be dynamic and respond to the demanding challenges of the international market.

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Federation Strategy • Retain Producer Boards for primary products where producers seek such representation • Determine the function of each board through the industry they represent • Require each board to have a majority of producer members. Research and Development New Zealand’s future success in marketing will depend largely in keeping in the forefront in the development of new products designed to satisfy consumer demand. To achieve this, research and technology must be encouraged and rewarded.

Live Animal Export The opportunity to export live animals, particularly sheep, has provided the meat processing industry with competition. Federation Strategy • Remove all statutory impediments to the export of livestock • Abolish the Live Sheep Export Committee • Maintain adequate welfare and animal health practices. Port Industry More rapid change is needed to create efficiency and to reduce cost excesses on the waterfront. These excesses have been brought about by inefficient administration, cumbersome employment structures and through inadequate commercial accountability. Federation Strategy • Fully commercialise Harbour Boards • Abolish the Ports Authority, the Waterfront Industry Commission and the National Ports Levy • Form one employer group and one employee group • Retain Port Conciliation Committees and the Waterfront Industry Tribunal.

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Regional Development Unbalanced economic policies are causing social stress in rural and urban areas and are depriving provinces of growth, opportunities and population. Federation Strategy • Abolish national award structure to recognise in wage rates the cost of living variation in regions • Remove Government incentives, including all frontier protection which favour the location of industry in or near large markets • Abolish Government schemes which offset the cost of living in urban areas, such as subsidy of urban transport systems and housing • Introduce economic policies which will improve the profitability of farming, and increase rural spending power. Local Government Current legislation applying to local Government amalgamation disadvantages rural people who should have the same opportunity as urban people to determine the form of proposed local body structure. Federation Strategy • Determination of any proposed local body amalgamation by a majority of ratepayers in each area affected by the merger • Ensure that any ratepayer within any local authority be entitled to vote in any poll which may affect the general level of rates payable. Strategy for the Future The future prosperity of agriculture is tightly linked to sound economic management, which means continuing the process of change. The strategy for growth should embrace change in social and economic environments and in attitudes. A competitive, market-related economy must be created by eliminating inflation through a low internal deficit, achieved by reducing Government spending and dramatically reduced protection and a free labour market. The freehold family farm will continue to be the cornerstone of the farming industry and will act as a springboard for future change. Federated Farmers is prepared to meet the challenge these changes offer in order to build a dynamic nation for the future.

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Market Distortion Through Protection Within New Zealand In Federated Farmers’ strategy, there was also a section on Protection reflecting the Federation’s long-term concern that import protection, either tariffs or import licensing, hindered farming’s exports, either, by raising costs because farmers had to buy domestically produced items that were more expensive than foreign, or because the cost of imports were increased by tariffs. Also, it was perceived that New Zealand’s attempts to liberalise global agricultural trade were hindered because New Zealand was itself a protectionist country, restricting imports from manufacturing countries. Federated Farmers’ 1987 Strategy included that—Protection is a duty, or tax, on imports into a country. It reduces the range of choice open to consumers, increases costs and limits job opportunities. New Zealand exporters are severely hampered by protection barriers in the form of import controls and tariffs. They face international competition but are forced through protection to buy over-priced goods and services on the domestic market. As well, protection reduces the flow of goods into a country, which increases the exchange rate and lowers the producer’s return from exports. Import controls and tariffs must be eliminated on all products, including those under Industry Plans so that resources can be used to their best advantage, which would increase productivity and reduce unit costs. At the same time, provision should be made to prevent unfair competition from dumped or subsidised imports. Protectionist policies outside New Zealand impede the flow of international trade. For this reason, it is essential that New Zealand continues to work in international forums, especially the General Agreement on Tariffs and Trade, to foster free trade. Federation Strategy • Eliminate protection devices such as tariffs and create a neutral domestic environment with resources used to their best advantage • Remove all remaining import licences • Abolish export incentives • Pursue international trade reform. Import Licensing With the Uruguay GATT round negotiations underway, New Zealand’s internal policy came under increased focus. New Zealand’s import licensing had been used, first, as an emergency remedy for critical

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shortages of overseas funds and, second, as a means of assisting development of its domestic manufacturing sector. The paper industry and the motor vehicle assembly and component manufacturing industries were among those established while licensing controls limited competition from imports. Import licensing was first introduced in 1938 because overseas reserves were dwindling. When high wool prices helped reserves recover in the early 1950s, the import licensing system appeared largely redundant, and by 1957, some 75% of imports by value were exempted from licensing requirements. But rising internal inflation, escalating imports and falling export prices caused New Zealand’s overseas exchange reserves to slump and full import controls were re-imposed to stem the flow of currency. By the early 1960s, improving terms of trade permitted further freeing up of imports, but the development of domestic manufacturing, partly to diversify New Zealand’s exports, steadily assumed more importance. A National Development Conference in 1969 considered import licensing necessary to promote steady industrial development. But the Conference recognised also that import licensing raised costs not only within the manufacturing sector but also other sectors of the economy and to consumers. In June 1971, the Government adopted a policy replacing import licensing by tariffs as the main measure of protection. Over the following 16 years successive Governments kept to that objective. Various programmes removing import licensing operated during that period. Initially, emphasis was given to exempting goods clearly outside the range of domestic manufacture, particularly industrial raw materials and major machinery items. Among the other early exemptions were products in which New Zealand had established its international competitiveness, such as wool, meat, dairy products, newsprint and paper pulp. The main mechanisms for import liberalisation were those which applied across the whole range of goods still subject to licensing. The annual rate at which basic licences were increased was accelerated in several years from the earlier modest adjustments of 5 to 10% (serving mainly to compensate for inflation) to levels as high as 25%. Since basic licences were allocated only to established traders, supplementary schemes were also introduced to allow newer companies to acquire licences. The implementation of a tendering programme in November 1984 accelerated the liberalisation process still further and, even more importantly, set criteria by which the great majority of goods were to become

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exempt. The process of offering fixed values of licence for tender at regular intervals allowed the commercial community rather than the Government to determine the allocation of licences, a reduction of bureaucratic intervention which was consistent with the broad thrust of Government policy. By July 1988, the only goods still subject to import licensing were those covered by formal industry development plans, representing less than 5% of the value of all imports. The system could not be withdrawn instantly without creating further inequities, and it was phased out over a decade, to allow manufacturers to become more competitive or to diversify into more productive forms of enterprise. By 1990, the sole purpose of licensing was providing assistance to local manufacturing, and tariffs were preferred as the principal means of industry assistance. Only goods covered by industry development plans were still subject to licensing. Most plans anticipated ending licensing. Objection by Federated Farmers to licensing was that protecting the manufacturing sector was paid for by the farming sector, which had to pay higher prices for their domestic inputs while having to accept internationally competitive prices for their produce. Insulation from overseas competition also tended to deprive manufacturers of the stimulation necessary to achieve maximum efficiency. The reservation of predictable shares of the New Zealand market for domestic producers also encouraged investment in areas which were inherently uncompetitive, either because there were already sufficient producers to meet the demand or because inevitably short production runs resulted in high unit costs. Tariff Policy Revenue collection was the prime reason for introducing tariffs in the nineteenth century, but at the start of the twentieth century there was a gradual shift of emphasis towards using customs duties to protect New Zealand industries. The percentage of taxation derived from customs duties began to fall, although the actual amount collected increased considerably. In the late 1890s, three-quarters of all taxation was through customs, but as Government spending began to increase, other kinds of taxation were to feature more and more. By 1920, customs and excise duties accounted for just over 30% of the total, and this decline continued with the figure being under 10% from the late 1970s.

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In 1921, the tariff was reviewed after consultation with interested groups, signalling the change to protecting domestic manufacturers. Also, ‘anti-dumping duties’ were introduced to prevent goods from overseas that were also manufactured in New Zealand being imported at a cost lower than they would sell for in their country of origin. It also gave further preference to imports from British Empire and Commonwealth countries. There were further reviews in 1927 and 1933, and the format established by the latter review remained largely unchanged until the 1960s. In 1950, the Government formed a Board of Trade and the board completed a review of the entire tariff by 1957. A change of Government meant that the new tariff, with its revised and internationally compatible format, was not implemented until 1962. Two further major revisions were in 1978 and 1987. From January 1988, a new tariff came into effect which was ordered under the international Harmonised Commodity Description Coding System (the Harmonised System). The tariff retained its a major role in assistance to industry.4

Take Away Points The Government wanted to repeat the 1984 Economic Summit Conference. Brian Chamberlin looked back angrily believing the 1984 Economic Summit Conference had ripped farmers off. In mid-1987, the Federation mapped out a future strategy. New Zealand living standards depended upon export-led growth and agriculture had the greatest potential to provide that growth. The future prosperity of agriculture was tightly linked to sound economic management. A competitive, market-related economy must be created by eliminating inflation through a low internal deficit, achieved by reducing Government spending, reduced protection and liberalising the labour market. The freehold family farm would continue to be the cornerstone of the farming. Protectionism outside New Zealand impeded international trade. It was essential that New Zealand continued to work to foster international free trade, but attempts to liberalise global trade were hindered because New Zealand was a protectionist country, restricting imports from manufacturing countries.

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Notes and References 1. Chamberlin, B. 1989. ‘Conference Questionable’, Straight Furrow, 08/02/1989: 3. 2. Straight Furrow 1987a. ‘Agriculture Has Survived’, 17/06/1987: 3. 3. Straight Furrow 1987b. ‘Agriculture Strategy for the Future’, 06/05/1987: 10–12. 4. The paragraphs on import licensing and tariffs is based on a summary in the New Zealand 1990 Yearbook published by the Department of Statistics.

CHAPTER 16

Enforced Change in Farming Practices

Introduction In parallel with Federated Farmers seeking major change in Government financial policy, the 1980s was also a time of enforced change in New Zealand farming practices forced by the uncertain markets since the 1970s financial crises. Dairy processing went through significant changes partly because of Government stepping back from a strong involvement. The meat industry was in a ‘state of crisis’ and solutions were not immediately clear. The impact of forestry on farming and the rural community was becoming significant.

Dairy The Chairman of the Federated Farmers’ Dairy Section, Owen Jennings, at the start of 1982 reported that the Federation had carried out a regionby-region study of the dairy industry’s potential for growth and how it could be achieved. That gave an optimistic assessment that the industry could grow by 3.5% annually over the next 10 years. But it was unclear whether that could be achieved because Government threatened to cut back, as part of a 3% cut in Government spending, the Ministry of Agriculture research needed to assist the export drive in dairy products. If the

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dairy sector was determined to achieve growth the investment would have to come from within the industry. Jennings said a 1% increase per year in productivity had been set by ‘planners’. Farmers, dairy companies, researchers and advisers in the dairy industry needed to work together to raise on-farm productivity and processing capacity. There was little profit in high-producing cows if the extra production could not be accommodated in the local factory. Or if the local factory had to install expensive equipment for peak production periods only to have it lie idle for the rest of the year. The capacity for extra growth was based not on increasing dairy herds, but upon better results for those already in existence. Much would depend on farmers putting the best genetic material into their breeding herds and feeding them according to techniques worked out by the highest producers on the land. Farm Improvement groups were needed with several farmers in one area employing collectively a good technical man over a period of years. While some farmers had increased the profitability of cows and pasture by applying new techniques, others were up against the limitations of farm size, the price of labour and the need for investment (Wright, G. 1982a).1 Later in 1982 Jennings reported to the Dominion Dairy Conference his concern that the dairy processing industry was moving towards a centrally controlled, uncompetitive, structure. A basic tenet of the co-operative system was involvement and participation in the decisionmaking process by all shareholders but that was in danger of being ignored. The only way the trend could be changed was by shareholders expressing their demands firmly. Jennings claimed the ‘present decision makers’ in the industry were either quite happy with the present position or unable to assess the longer-term impact of their decisions. Amalgamations under the present rationalisation process had resulted in fewer people in key decision-making positions. The new large companies now included company executives who were not farmers and who might not necessarily make the decisions producers would like to see. He pointed out changes in the structure of recently constituted Dairy Board Committees. One recent committee set up to make recommendations on payment procedures had only company executives to the exclusion of farmer directors. Jennings saw a great need for more informed and influential farmer decision makers trained in the subtle art of ‘directing’ with confidence

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and expertise to counter the mounting involvement of non-farming executives. There needed to be a balance between youthful enthusiasm and experience. It was currently too much a drain on a young farmer with heavy commitments to undertake an important role in the industry, yet it was those people with ‘mud on their boots’, who were going to demand the decisions needed to maintain a growing, viable industry (Straight Furrow 1982a).2 In 1983 the dairy industry was facing similar problems in its processing plants to those in the meat freezing industry, such as cost efficiency and the introduction of new technology. Changes through rationalisation and centralisation had changed the whole working environment beyond recognition. Where there used to be a factory in nearly every small rural town in the dairying areas, economies of scale urged amalgamation. And where before, the workforce had all known each other and rubbed shoulders both while at work and once their day was finished, they fell out of touch in the new working environment. A former Chairman of Federated Farmers Dairy Section, Gordon Gibson, described this as: there was a factory on every corner and farmers’ sons and sons-in-law made up the staff. You’d get the situation where if someone was sick, another person would take their place’. The present Chairman, Owen Jennings, described this as - everyone knew everyone. It was a happy family situation, undoubtedly to everyone involved the good of the total industry was uppermost.

But Gibson recognised that change had to come about because the industry was not viable. The move toward greater efficiency involved small local factories closing down with workers going to the factory in the next town, and the industry had grown away from the personalised contacts which had been all important. The manager was no longer someone the workers talked to every day, whether it was work or social related. The factory set up became more urbanised and industrially complex with some workers having no affinity with the rural sector. Mechanisation in the newer factories broke down contact between the workers, the manager and the board and directors and shareholders. Breaking down links with the rural community meant also weakening links between Federated Farmers and the dairy processing industry (Christian, G. 1983a).3

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Federated Farmers had encouraged reduced intervention by Government and one consequence was that from the start of the 1987/88 season the Government withdrew from the Dairy Board affairs. The Board retained its power to control all dairy exports but became a selfregulatory single seller. That weakened Federated Farmers influence in the Dairy industry (Kelly, M. 1986a).4 The sections of the Dairy Board Act 1961 which gave the board its wide powers to control dairy produce exports were retained but the Government’s former responsibilities to the industry were removed, to some an abdication by the Government of its responsibilities. The Dairy Board’s Economic Adviser, Jack McFaull, regretted that links with the Government had been weakened, it had been a good thing because there had been a close exchange of information between the Board and Government. Government departments would tend to be weakened without that close contact. The Dairy Board of the 1980s had been formed in 1961 by combining the Dairy Marketing Commission and the original Dairy Board. The new board took over the political role of the old board and the commercial functions of the Commission. Because the dairy industry was one of the biggest individual exporters, the Government and the industry worked in tandem with a price stabilisation system linked to Reserve Bank accounts. But the Labour Government elected in 1984 abandoned the system with pricing mechanisms now determined by industry consensus with the Board setting milkfat prices by establishing a set of rules in consultation with the industry. Government representatives on the Dairy Products Prices Authority were removed as were Reserve Bank accounts and associated guarantees including the requirement that the Minister of Finance approve financial transactions and disposal of surpluses. But the board still had to comply with the Government’s general trade policy (Kelly, M. 1986b).5

Meat and Wool The Chairman of the Federated Farmers’ Meat and Wool Section, Tim Plummer, told the Dominion Meat and Wool Conference in 1982 that the meat and wool industry was in a state of crisis. Farmers had responded positively to the call by the Government for increased production but inflation had swallowed up any gain from the increase. Sheep farming was not profitable. A poor season, credit restrictions, industrial stoppages, and

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depressed returns in an uncertain market had left farmers disheartened by a lack of support shown by the Government. He thought Government was complacent toward meat and wool farmers, partly because the public had viewed SMPs as an easy handout for farmers. Plummer thought farmers were ‘fobbed off’ with SMPs because the Government would not tackle inflation. Jim McAloon describes how the Muldoon Government’s ‘ultimate industry policy was the collection of major projects which collectively became known as ‘Think Big’, a shorthand for a number of capital and energy intensive projects developed with state support (McAloon 2013).6 Plummer said no doubt the Government had good reason in promoting those projects, but the best ‘Think Big’ investment the Government could promote was investment in farming. He claimed the return from development of South Island high country, irrigation over the Canterbury Plains, and intensification of North Island hill country, were all areas that would return the best value per dollar invested in overseas exchange. He saw the forthcoming Budget as a last chance and if there were no positive policies, ‘frustrations of disbelief’ would fall upon Government. Farmers wanted no more than a return that would sustain production and allow for further increases which in turn would maintain viable agricultural servicing industries. Plummer repeated the Federation’s approach to the economy—it should be free from regulation with a fiscal policy dictated by market forces. The Federation believed the key motivator of efficiency was competition. Meat farmers now had a processing industry, being shaken out of a protected environment and endeavouring to restructure itself in the face of competitors. Though that was being frustrated by the ‘over-riding conservatism’ of the freezing worker’s union, Plummer said most employees were responsible and carefully considered any dispute before taking action but there were a few hard-headed people in the unions, hell-bent on using others to further their personal ambitions or political philosophies. Plummer did not want those people in the meat industry and wanted Government to change industrial law to weaken the union’s influence. An, integrated, co-ordinated marketing approach was needed involving everybody, from farmers to retailers. Farmers must be conscious of market requirements and recognise that to produce lamb wanted by the market needed a reconsideration of breed and strains of sheep. He recognised that wool production and the nature of farms could limit optimum meat

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production. Farmers along with those beyond the farm gate needed to fully reassess lamb carcase production. Plummer thought farmers must be aware of market trends as reflected in the price and lead the companies and the Boards towards more effective marketing. The difficulties in getting markets to accept the price for New Zealand produce had to be the key area that needed improvement. If the UK importers could not show a greater determination in marketing lamb, those with the statutory power in New Zealand to direct product flow, price and presentation must play a stronger role. He did not believe farmers were ready for such a move but repeated poor seasons might change that. He did not believe farmers wanted the New Zealand Meat Producers’ Board further involved in actual marketing but the Board was in a position to oversee marketing policies and ensure marketing programmes gained the maximum return for farmers (Straight Furrow 1982b).7 A year later Plummer wanted farmers, not Producer Boards, to maintain control of the meat and wool industries and Federated Farmers’ role was to ensure that farmers’ concerns were being listened to, to promote and gain action on trends and requirements and needs of the farmer. The Producer Boards’ role was quite separate. They were there to oversee their respective industries and they must be in a position to react and adjudicate on the political pressures which conformed them. Federated Farmers role was to question their actions (Smith, V. 1983).8 But major debate on reforming the meat and wool industries during the first half of the 1980s mainly bypassed Federated Farmers which was reduced to ‘questioning’ actions of the boards. A Task Force was set up to review the meat industry, the only contribution from Federated Farmers was the vice-president, Brian Chamberlin, who was a member of Task Force but as an individual because of his knowledge and expertise rather than to represent Federated Farmers. The Task Force recommended that Meat Board should control all export lamb and mutton through a national pool. Also, that a new organisation, the ‘Meat Industry Council’, work with the Meat Board to formulate and review long term industry wide planning including agreeing annual marketing plans for the industry. The Meat Industry Council would comprise the chairman appointed by the Meat Board, two Meat Board members, one meat processer representative, one exporter representative, the Director-General of the Ministry of Agriculture and

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Fisheries (or nominee) and two members selected for their commercial experience. There was no representative of Federated Farmers. The Meat Board would provide the administrative and financial support for the Council. The Meat Board would remain as the central statutory organisation but the Meat Industry Council would be responsible for export, distribution, supply, management and pricing (Christian, G. 1983b).9 Plummer was not convinced by the Task Force recommendations. He thought the Force had ‘clearly backgrounded’ the problems facing the industry because of the world recession and the over production of sheep meats. He asked whether the proposed Meat Industry Council was just another organisation under the Meat Board to fob off the decisions the Board should be taking. A ‘Meat Exporters Council’ and the ‘Joint Meat Council’ had been unsuccessful in the past, would the proposed new arrangement be any more harmonious? Plummer was concerned that the Meat Board would become ‘its own judge and jury’. Farmers want someone to monitor the industry closely and the strategies adopted, but the proposed body would not be in the position to administer the strategies. Plummer thought farmers were not ready to accept total ownership of produce by the Meat Board, there was a divergence of opinion. That divergence was demonstrated by a repeat of the wool acquisition debate of the 1970s with formation of a Meat Producers Action Committee to oppose the proposal for a national pool, with Herb Styles, who had initiated the Woolgrowers Action Committee of the 1970s again playing a lead role and Aubrey Begg in support (Straight Furrow 1983a).10 Brian Chamberlin felt he had to justify why he, as a member of the Task Force, had supported a national pool. He was worried that if a complete private enterprise system was introduced there could be product left unsold and he thought that unacceptable to farmers. Different markets returned different prices and a national pool would ensure farmers were treated equitably. He reported that there were suggestions that freer and better markets should be left to the private enterprise companies, while uncommitted produce and/or that for single buying markets should be left with the Board. But that gave the companies the good markets and left producers responsible for the rest. Chamberlin said over the previous two years, farmers, through the Meat Board, had built up a $200 million debt while a number of meat companies had traded profitably right through the crisis. Members of the Task Force were very anxious for the

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best of the marketing companies to be preserved as agents or distributors for the Meat Board. Chamberlin said the proposed Meat Industry Council had the allimportant task of planning New Zealand’s meat marketing and its membership has been carefully designed to involve producers, marketers, processers, the Ministry of Agriculture and outside expertise. It had been suggested that the Meat Board had the ultimate power and the Council lacked teeth. Chamberlin thought a Meat Board which failed to take notice of a body composed of such important people would not last long. The Board would come under scrutiny from the Meat Industry Council, which would also monitor the Board’s performance. Chamberlin’s colleagues wished to reverse the roles of the Board and the MIC. He wondered if he was losing touch with farmer opinion, but he very firmly believed that no market reform proposal would be supported by the majority of farmers if it wasn’t seen to be producer controlled (Chamberlin, B. 1983).11 Following the withdrawal of SMPs the Federation found itself excluded from Government discussion of a potential new payments system. The Acting President, Peter Elworthy, reported that the Minister of Agriculture considered the discussion to be on budgetary matters and ‘couldn’t be discussed beyond the two parties (the Government and the Meat Board) (Christian, G. 1984).12 Wool had been less dependent on Government subsidy than the meat and dairy sectors and was far less involved in Federated Farmers attempts to change Government policy. The Wool Board managing director said after the changes introduced by the 1984 Labour Government the Wool Board had not had substantial Government support … any benefit from SMPs for sheepfarmers was for meat rather than wool production (Straight Furrow 1986c).13 The Board acted independently of Federated Farmers. It kept the Federated Farmers Meat and Wool Section informed but did not seek the Section’s advice. For woolgrowers’ views the Board depended more on the Board’s Electoral Committee that chose Wool Board members. The Board’s Managing Director said in 1986 if growers wanted to change the rules under which the Board operated ‘they can get on the Electoral Committee’ (Kelly, M. 1986c).14

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Forestry Another concern mentioned by the President, Allan Wright, at the 1980s start was that Federated Farmers wanted to ensure that ‘land was used for the good of the individual and the nation’ and it was vital to protect land most suitable for pastoral farming from the encroachment of commercial forestry and prevent forestry’s adverse impact on rural infrastructure. The Forest Owners Association suggested that forestry’s introduction was welcome in rural communities for adding employment opportunities and supporting existing services. But the Forest Research Institute in Rotorua, pointed out that in settlement patterns, forestry predisposed people to live in district centres and small towns rather than in the dispersed residential patterns of pastoral farming districts. The number of jobs provided by both farming and forestry might be similar but the respective settlement patterns could well be different. The real conflict was the feeling at local level that traditional privately owned packets of land forming a community of interest were about to be invaded by a new and different sort of professional with a different point of view. At a Forestry Conference in 1981 the concept of the ‘farm forester’ emerged as an important element. Farm Forestry involved farmers integrating small batches of trees within their farms and it reconciled the contradictions between farming and forestry. There were hopes that blending afforested hill country and farmed valleys with scattered shelterbelts and woodlots would be an ideal mix of land use plus harmony in the landscape (Straight Furrow 1982c).15 Concerns over forestry became a common topic at Federated Farmers’ meetings. Many issues came up in addition to concern that young farmers were prevented from getting their own land. There were concerns about the impact on rural communities and the strain they were put under when forestry arrived. The prejudices that drove farming concerns were demonstrated in 1981 in the Bay of Plenty where land blocks marked out for development farms were planted with pine trees without the local community being consulted. The land lay between the 14,000 hectares Matahina Forest, planted by the company Forest Products, and highly fertile dairying country. The earlier intention had been that 2200 hectares would be settled by young farmers. Local farmer, Colin Holmes, maintained that by agreeing to forestry the Lands and Survey Department had given up too easily on the possibility of dairy farming. Holmes said that many men

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that he knew would be content to go on to the bare land and make something of it. Holmes contacted Federated Farmers which made sure the tree plantings were stopped until the land’s future could be looked at again. A Lands Committee was appointed, including representatives from the Bay of Plenty Federated Farmers, to review the situation. Local Federation members, including Holmes, the Provincial President, and Chairman of the Rerewhakaaitu branch, Brian Herbert, visited the Minister of Agriculture, Duncan McIntyre. They objected to plantings going ahead unknown to nearby communities while farmers were still eager to continue holding some of the land on short-term leases. In Herbert’s area young farmers had expressed interest in buying development farms but that had been refused when the company, Tasman Pulp and Paper, bought 850 acres using the excuse that they needed access to their other forests. The young farmers appealed to Federated Farmers who raised the matter with McIntyre and the Director General of Lands. The outcome of the meeting was that two Lands Settlement Board members would review how the blocks were used. John McIntosh and Graeme Shirley lived at Manuwahe where Tasman Pulp and Paper had bought up four fully developed farms and one partially developed property to put in forests. McIntosh and Shirley were interested in obtaining more farmland and wanted local farmers to come together to negotiate sales. Tasman had said they would not buy good farmland, but McIntosh and Shirley claimed they were and that ‘where you have forestry coming in you’re going to get social problems’. In Manuwahe there were many empty farmhouses or houses on short-term rents. ‘If people are only going to be in the community for a short length of time, their attitude is not going to be the same. Also, the roads deteriorate with heavy truck use, and the Council thinks there’s no use spending more money on their upkeep when the whole area’s going to be in trees’. The Tasman company claimed farmers were mistaken seeming to think that forestry companies had a bottomless pit of money, sending out agents with blank chequebooks to buy up land. Tasman claimed forestry brought stability and increased the population in rural areas. Workers worked in small contractual units, and many lived in rural communities. The image of forestry workers being ‘9 to 5 Gangsters’ was no longer correct. Tasman hoped the solution to the farming versus forestry clash would be more cooperation between the two groups, with farmers growing trees

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for Tasman on parts of their land too steep for grazing (Christian, G. 1981).16 At the end of 1981, Federated Farmers convened a working party on farming and forestry and concentrated on how to measure returns from different land uses. In addition to Federated Farmers representatives there were representatives from the Forest Service, Meat and Wool Economic Service, Ministry of Agriculture and Fisheries, Ministry of Works, Institute of Economic Research and Forest Owners. The working party compared returns for farming and forestry per hectare; considered manpower and capital requirements; assessed the impact on local communities, roading and harbours; and assessed the risks in market terms for products from agriculture and from forestry. The main conflict identified was between pastoral farming and large-scale forestry. Small scale forestry and farm forestry tended to be complementary rather than competitive. Farm forestry enabled diversification through the dual use of land (Wright, G. 1982b) (Fig. 16.1).17 The working party claimed the commercial forestry decision maker had no interest in the social and environmental impacts of changing the land use. The costs of those impacts were met by someone else 4.0

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and not the commercial forester. That meant national and commercial perspectives may diverge, and reliance on commercial interest was inappropriate to determine land use. The working party reported a recent Planning Tribunal decision that important social and economic factors needed to be considered when determining whether land should be used for production forestry. Impacts that had to be considered included: changes to service industries and servicing patterns; effect on employment opportunities; general economic effects on region; adjustment costs; and environmental effects. While the working party noted that both King Country and East Coast land-use studies claimed a net gain in employment through forestry, it considered the available evidence to be too fragmentary. Preliminary research indicated there was little to choose between farming and forestry as job providers. There was a lack of comprehensive employment data for rural localities and that made employment demand and supply difficult to predict. It was not clear whether labour displaced from agriculture would find a place in forestry. The skills needed in forestry were lower than in agricultural work except for the highly skilled work of logging. There were different employment characteristics and associated settlement patterns. Agricultural workers were usually settled adjacent to the farm, and frequently the property’s sole worker. Forest workers were often located away from their work, travelled to the forest daily or as required and they normally worked in groups. Indirect and processing employment were implied by some studies to be larger for forestry than for agriculture, but that depended on uncertain effects such as farm gate/forest ride; primary processing region; point of sale within NZ; the port used for export. In the first rotation of forestry there would be fluctuating labour demands and skill requirements. In particular there would be low labour requirements in years 10–25. However, continuous planting within a region, or the management of forests on a sustained yield basis, would result in steady or increasing employment opportunities (Straight Furrow 1982f).18 A dominant theme of the 1981 Forestry Development Conference was that a massive expansion in new planting was expected to be taken up by farmers and private companies, with a proportionally reduced role for the state. But the Government’s economic difficulties made forest planting by the Forest Service in 1982 likely to be reduced in real terms. A 3% cut was being made in Forest Service spending, forcing reduction in new

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plantings from 16,000 hectares to 13,000 hectares, with a consequent loss of about 400 jobs. For the farm forester the outlook was unclear. Incentives and assistance to the small grower, under review 12 months earlier, were still being looked at by Government officials. The new Minister of Forests, Jonathon Elworthy, attended the Farm Forestry Association Conference to find out whether the existing incentives system was working. If not, the Ministry would have to make it work. That would involve tax reform, perhaps the system used for farmers— forest development spending would be deductible from taxable income. The Minister feared that forestry was inhibited by the ‘intrinsic fear of forests’ through the farming establishment. He hoped that resistance would not translate into local authority decisions on district or regional planning schemes. It would have a vital effect in discouraging investment. But the Minister acknowledged the difficulty that the farming community had in competing for land with large forest companies (Johnston, K. 1982).19 Federated Farmers, despite its traditional opposition to planting exotic trees on farmland, joined with Forest Owners and the Farm Forestry Association to promote new ventures by organising a seminar in Hawke’s Bay on potential joint farming—forestry ventures. The three national associations were hoping that friction which had arisen in the past with joint ventures had been eliminated. A joint venture allowed the farmer to retain ownership of his land, while planting trees in previously non-productive areas. The Government would pay 45% of the timber company’s investment costs and eventually recoup this in tax from the profits shared by the farmer and the timber company. The Hawkes Bay seminar attracted large numbers. Model Agreements had been formulated with sufficient flexibility to be adapted to the needs of a particular venture. Several schemes were already underway including a venture announced in Dunedin with the formation of a tree farm company between the forestry company Odlins Limited and a group of Otago farmers. Another was about to get underway in Hawkes Bay; three farmers hoping to complete a deal with Odlins. The Minister strongly supported the proposed schemes and said it could have as much impact on New Zealand agriculture as aerial topdressing had had thirty years ago. The next steps include passing legislation to allow registering joint ventures on titles making the shares a saleable item and developing a valuation system to assess forest value during the growth period (Edmond, K. 1983).20

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Take Away Points An optimistic assessment was that the dairy industry could grow by 3.5% annually but cut back in Ministry of Agriculture research threatened the export drive. Extra growth was based upon better results for existing herds rather than increasing herds. The Government withdrew from the Dairy Board affairs. The Board retained control of all dairy exports and became a self-regulatory single seller. The meat and wool industry was in a state of crisis. Inflation had swallowed up any gain from productivity increases. A Task Force recommended that Meat Board should control all export lamb and mutton. Also, that a new organisation, the ‘Meat Industry Council’, work with the Meat Board to formulate industry wide planning. Wool was less dependent on Government subsidy and less involved in attempting to change Government policy. Another concern was to prevent forestry’s adverse impact on rural infrastructure. The ‘farm forester’ concept emerged with farmers integrating small batches of trees within their farms.

Notes 1. Wright, G. 1982a. ‘Confidence in Cows’, Straight Furrow, 22/01/1982: 11. 2. Straight Furrow, 1982a. ‘Strong Words on the Dairy Board’, 03/07/1982: 18. 3. Christian, G. 1983a. ‘Dairy Unions: Handling the Headache’, Straight Furrow, 16/03/1983: 2. 4. Kelly, M. 1986a. ‘Price Smoothing Scheme in Balance’, Straight Furrow, 03/12/1986: 5. 5. Kelly, M. 1986b. ‘Price Smoothing Scheme in Balance’, Straight Furrow, 03/12/1986: 6. 6. McAloon, J. 2013. Judgments of All Kinds (Wellington: Victoria University Press, 2013): 307. 7. Straight Furrow, 1982b. ‘We Are in a State of Crisis’, 06/07/1982: 6.

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8. Smith, V. 1983. ‘Board Roasts Meat Exporters’, Straight Furrow, 08/07/1983: 16. 9. Christian, G. 1983b. ‘The Meat Industry Taken to Task’, Straight Furrow, 07/09/1983: 4. 10. Straight Furrow, 1983a. ‘A Sidestep?’, 07/09/1983: 4. 11. Chamberlin, B. 1983. ‘Why I Supported the Task Force’, Straight Furrow, 28/09/1983: 10. 12. Christian, G. 1984. ‘Surveying Snap Elections and SMPs’, Straight Furrow, 06/07/1984: 10. 13. Straight Furrow, 1986c. ‘Wool Board Follows Brierley Example’, 03/12/1986: 12. 14. Kelly, M. 1986c. ‘Wool Board Follows Brierley Example’, Straight Furrow, 03/12/1986: 13. 15. Straight Furrow, 1982c. ‘Harmony in the Landscape’, 05/02/1982: 13. 16. Christian, G. 1981. ‘The Fight Against Forestry’, Straight Furrow, 04/12/1981: 8. 17. Wright, G. 1982b. ‘Conflict? What Conflict?’, Straight Furrow, 05/02/1982: 12. 18. Straight Furrow, 1982d. ‘A “Market Failure” Approach’, 14/05/1982: 4. 19. Johnston, K. 1982. ‘More Farmers as Foresters?’, Straight Furrow, 28/05/1982: 11. 20. Edmond, K. 1983. ‘Joint Venture Forestry’, Straight Furrow, 29/07/1983: 33.

CHAPTER 17

Reforming Their Own Organisation

Introduction Following the major reforms of farming and Government economic policy it became clear that reform of farmers own organisation, Federated Farmers, was needed. Attempts were made to merge the Federation and the many affiliate groups that had come into being following diversification of farming but the most that was achieved was a regular forum for discussion rather than a closer relationship. The Federation was arguing for an end to compulsory unionism and was embarrassed by the compulsory nature of its levy funding. It decided to give up its levy funding and reformed in line with its new financial state. Northland province refused to accept the change and a long, legal, saga ensued over the status of provinces vis-à-vis the national organisation.

A Need to Reform Farmers’ Own Organisation In 2001, Brian Chamberlin, one of the key architects of the 1980s reforms, summarised the outcome of the reforms noting that a ‘new attitude’ had emerged—‘getting on with the job and meeting the competition’. Chamberlin reported:

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Productivity in farming was increasing at 4% whilst the rest of the economy achieved only 1%. The Dairy industry had grown ‘spectacularly’ with dairy cattle numbers increasing by almost 500,000. Change in land use was most pronounced on the plains of Southland, Otago and Canterbury as traditional sheep, beef cattle and grain farming were affected markedly by dairy expansion. Expansion of the dairy industry was mainly at the expense of the sheep and beef cattle sectors, but despite the decrease in livestock numbers the amount of meat produced had held up with improved productivity. Total wool production had declined and average production of wool per animal had not increased. Deer farming had continued to grow, the kiwifruit industry was doing well and the wine industry earnings had nearly tripled between 1996 and 2000. (Chamberlin 2001a)1

The dramatic reforms of the 1980s, incited partly by farmers wanting the national economy to be changed, eventually led farmers’ leaders to recognise that reform of their own organisation was becoming necessary. Through the 1990s pressures for reform of Federated Farmers grew and became essential when the Federation could no longer justify, to itself, funding from a levy on farm produce. The decade ended with reform introduced. Federated Farmers’ Public Relations Executive, Judi Ashley, reviewed the Federation at the 1990s start. She claimed the whole organisation was directed by farmers who used the Federation’s network to communicate expectations and problems. Most of New Zealand’s farmers, dairy, arable and meat and wool farmers, enjoyed the benefits of direct Federation membership. In addition, orchardists, market gardeners, deer farmers and many others participated through their organisations’ affiliation with the Federation. Membership was not compulsory, the benefits from Federation’s work filtered through to all farmers, members or not. Both members and non-members were saving the same seven cents per litre on diesel after the Federation successfully campaigned against excise tax on fuel. That represented a saving of at least three or four times the annual membership fee. Ashley claimed that over its 44-year history, Federated Farmers had earned respect and credibility. The Federation kept a high public profile and was very ‘approachable’. Dozens of organisations contacted the Federation for opinions, assistance, input, ideas or to invite submissions on a wide range of topical issues. In such cases it was the Federation’s job

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to act on farmers’ behalf and provide the appropriate response, with farmers’ welfare and prosperity uppermost in mind. Federated Farmers had an outstanding record in improving farming policy and communicating the farmers’ needs to Government (Ashley, J. 1989).2 The Federation, as described by Ashley, was still operating as planned 44 years earlier through its branches, provinces and commodity groups. The specific issues might have changed but the way in which they were raised and dealt with reflected the organisation as originally envisaged. But the President in 1988, Brian Chamberlin, was concerned that there had been a very big change in the industry since Federated Farmers was set up and the Federation had not ‘streamlined’ its structure since then (Widerstrom, R. 1988a).3 Mick Calder and Janet Tyson gave an outside view of the Federation in 1990 as: Federated Farmers as a whole was facing the need to redefine and reassert its role … It was already facing a loss of membership and criticism for lack of relevance and unwieldy structures that blocked enthusiastic newcomers … It had developed an industry in issuing press releases critical of everything that contravened right-wing philosophy. (Calder and Tyson 1999)4

A New Merger of Farming Groups? By the end of the 1980s the diversification of New Zealand agriculture was reflected in the affiliates of Federated Farmers. Affiliates were the Mohair Producers Association; National Beekeepers’ Association; Deer Farmers’ Association; Farm Forestry Association; Fruitgrowers’ Federation; Grape Growers’ Council; Poultry Board; Vegetable and Potato Growers’ Federation; Pork Industry Board; the Tobacco Growers’ Cooperative; Market Milk Federation; Women’s Division of the Federated Farmers; and Young Farmers. Federated Farmers discussed with those organisations whether they should all merge into a single entity to act as a consolidated voice for all New Zealand primary producers. Chamberlin said rural land users could no longer afford to have their resources ‘scattered’. Urban organisations were re-organising, for instance, there was now a Council of Trade Unions which merged state and private sector unions. Manufacturers and the Chambers of Commerce were discussing whether to combine their

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strength. But Chamberlin recognised that any new organisation must allow each product group autonomy to deal with matters that affected their own commodities. It must not seem as though the Federation was taking over the other organisations. The issue was discussed at a Federation Dominion Council meeting. Chamberlin pointed out that to an outside observer there were numerous people who claimed to speak for farming—the Meat Board, Federated Farmers, the Electoral committee, and now there was a situation in which the meat industry was dominated by farmer-owned companies, and a Meat Industry Association whose shareholders were mainly farmers. Chamberlin said Federated Farmers could work with other rural organisations in such things as the business of the commodities, economic policy, social policy and land use (Widerstrom, R. 1988b).5 When briefing the Dominion Council on progress on forming a new rural grouping, the Federation’s Chief Executive, Rob McLagan, said it had all begun with the question: is the Federated Farmers’ structure still working in a very much changed world? The Federation’s executive had felt the answer was no, and had asked former President, now, Sir Peter Elworthy, to review the issue. Elworthy suggested a new organisation using the combined strength of the rural sector, and the Dominion Council had subsequently drawn up proposals. A key issue was that the affiliate system of Federated Farmers was not working. Affiliates felt they were not an integral part of the organisation. That led to poor attendances at Council meetings, and, when they did attend, a feeling, that they were there as outsiders. It was agreed that Federated Farmers and affiliates would meet monthly to consider common issues and explore the possibility of a new organisation. McLagan said with farmer numbers declining, environmental pressures growing and important changes in regional Government in the pipeline, the farming industry in general had no alternative but to harness its resources (Aplin, J. 1988).6 At the end of 1989 McLagan reported on progress to the Dominion Council. It had been agreed that the new structure would be achieved on a step-by-step basis over a period of three years, or less. Non Federated Farmers’ organisations would increase their contributions to the all-farmer activities of the organisation. A review to determine a timetable for a fully integrated organisation and full financial contributions would be made after four years (Harris, E. 1989).7

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But the proposal for an ‘umbrella’ organisation stalled, possibly because McLagan, one of the main drivers for the change, resigned from the organisation in 1993 and Chamberlin was no longer the President. The idea resurfaced towards the 1990s end when Brian Peat, the Federation’s industry development manager, said the future survival of New Zealand’s rural sector depended on the various groups combining with a collective voice. Peat said many groups were spending a great deal of money and time on administration that could be more effectively used if groups merged together. Some smaller sector groups with 300–1000 members would probably not survive without joining a bigger umbrella group. Peat said that many groups he had approached had been positive but others felt they might lose their autonomy or their identity by becoming part of a larger group. A task force was set in October 1998 to discuss an ‘umbrella’ rural lobby group. The task force comprised Federated Farmers, New Zealand Vegetable and Potato Growers’ Federation, NZ Fruitgrowers’ Federation, FloraFed, NZ Berryfruit Growers’ Federation and the NZ Deer Farmers’ Association. Federated Farmers president Malcolm Bailey said the time for a united organisation that embraced all rural people had arrived. Everywhere, farmers supported the idea because they thought rural people were not getting a fair deal and that strength could only come from unity. Brian Gargiulo, president of the Vegetable and Potato Growers Federation, wanted to bring this to fruition. He wanted to retain the strength the existing organisations had in dealing with their own issues and build on that. FloraFed Chairman Simon Ensor said each participating organisation should retain its separate identity and continue to deal with its sector-specific issues. Whether people were deer farmers, mohair producers, fruit growers, dairyfarmers, sheep farmers, beef producers, grain growers, ostrich or emu farmers, home-kill butchers, poultry producers, pig farmers, flower growers, beekeepers or farm foresters, they would retain separate identities to deal with their specific sector issues. But equally important, each would be a part of the umbrella group handling over-arching issues such as resource management, property rights and economic policy that affected all rural people (Straight Furrow 1999a).8 Brian Chamberlin reflected in 2001 that despite all the efforts that had been made over the years, there has never been an organisation representing all the farming groups in the country. Many of the pastoral and arable farmers were members of Federated Farmers but the fruit and vegetable organisations and some other smaller sectors preferred

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to run their own organisations while remaining affiliated to Federated Farmers and participating in the National Council and Conferences. Chamberlin called those forums the closest things to a farmers’ parliament (Chamberlin 2001b).9 Eventually the many organisations agreed to regular meetings to discuss common interests and this arrangement became known as the Land Users Forum.

Giving Up Levy Funding The Commodity Levies Act of 1990 meant that the levy that had been partly funding the Federation’s National Office would lapse at the end of 1995 unless the Federation sought a new levy under the Act. The existing levy accounted for 77% of Federated Farmers’ National Office income. But any new levy would be subject to a referendum of all who would pay the levy. It was unclear whether there would be a majority. The alternative was to rely solely on membership subscription income and that alternative was proposed by North Canterbury at the Dominion Conference in 1993. John Vincent studied ‘Federated Farmers of New Zealand 1941 – 2001’ a part of his participation in a Farming Leadership Course. The project covered the history of the Federation from the 1940s but mainly covered activities in the 1990s and the status of the Federation at the start of the twenty-first century. It is particularly thorough in following the debate over giving up the levy. Vincent reports that by 1991 questions were being asked of Federated Farmers regarding the compulsory levy, especially in the light of their support for labour market reform, under the proposed Employment Contracts Bill. The minutes of the National Executive Committee, 11 March 1991 recorded that: ‘the committee noted that the Federation presented its submission to a Select Committee and that much of the discussion revolved around justification of the Federation’s meat levy’. During the period of the fourth Labour Government [1984] and National after 1990, Federated Farmers found itself in a compromising position regarding the levy. The organisation was being seen to support a ‘deregulation frenzy’ based on an ‘ideology premised on individualism, laissez-faire economics and free market’. (Vincent 2001a)10

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The Federation decided to allow the levy ‘to lapse’ at the end of 1995 because it was inconsistent with its policy of opposing compulsory unionism and the levy was, as Keith Holyoake had noted in the 1960s, a form of compulsory unionism. Also, at the time the Federation was campaigning for changes in the Meat and Wool Boards, criticising how the Boards used their considerable income from compulsory levies. Chamberlin says: One of the key planks in the Federation’s policy was that the country should embrace voluntary unionism and the labour market should be deregulated. Continued use of the compulsory meat levy … was inconsistent with such a policy, and it was given up. (Chamberlin 2001c)11

But within a decade the Federation was regretting giving up the levy. Chamberlin noted that the Producer Boards, which remained levy funded had been set up to carry out specific tasks but had become more involved in farming political issues. That meant expanding into activities previously led by Federated Farmers. Vincent says: Staff and elected members agree that in retrospect the internal debate over the removal of the levy mainly revolved around ideology and consistency of policy, with the free loader and public good issue being given little regard … the Federation’s 1995 Annual Report this ideological stance is still being justified: “It (Federated Farmers) has also practiced what it preached by placing its fate firmly in the hands of subscription-paying farmers”. The Federation’s economist during that period recalls that the dropping of the levy was in part a response to external criticism, and a desire by the Federation to appear consistent in both its internal and external policies relating to compulsory unionism. He agreed that it was important to be consistent, but that perhaps the Federation did overlook the difficulty of attracting funding when the “public good” nature of the services provided by the Federation are effectively available to all farmers irrespective of whether they are members or not. “From an economist’s point of view if the bulk of the benefits we provide are so called public good then a compulsory levy is a legitimate funding method. The alternative is to provide exclusive membership benefits in addition to the traditional advocacy and representative services, so that farmers are compelled to become members to receive those benefits”. (Vincent 2001b)12

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The President, Graham Robertson, said over the previous decade most organisations in New Zealand had undergone considerable change, some had even disappeared as the country restructured. Change driven by the imminent loss of levy funds now confronted Federated Farmers. The levy currently met a significant part of national office costs in recognition that Federated Farmers worked for all farmers and not just for its members. When the levy expired the Federation would be funded totally from voluntary subscriptions. To succeed under this the Federation had to trim expenditure and improve services to members. Efficiencies had to be made in national office activities without compromising the Federation’s effectiveness. Improving services was essential because excellence in this area would attract new membership and justify the increased subscription necessary to replace the levy. Vincent reports also: At the 48th Annual Conference of Federated Farmers, July 1993, the Federation had its final debate regarding the compulsory levy. Moved and seconded by delegates from the Waikato Province, an amendment to a motion moved by North Canterbury was put, which stated: “That Federated Farmers adopt the proposal of funding based on voluntary subscription”. The amendment was carried. Conference debate had been backgrounded by a report tabled by Roger’s and Partners who had been commissioned to audit and analyse the performance of the provinces. In speaking to the report Roger’s and Partners director Mr Graham Roger’s: “The Federation is a mature organisation exhibiting classical signs of decline. If it is to be rejuvenated, it needs to be challenged to consider new ideas, values and assumptions”. (Vincent 2001c)13

Robertson gave his view on what Federated Farmers would be like in the future. The core activity would continue to be to provide quality representation for farm families wherever that was required—be it the local council, the Government or GATT. The Federation would communicate better—both in providing information to members and listening to them. The Federation would provide more leadership training. Structures would change. Traditional branch meetings were once an important part of the Federation’s activities but were not so in the mid-1990s, attendance was poor. Busy people would only be attracted to activities of real quality and interest. Provincial and branch leaders throughout the country were

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experimenting with new formats to meet modern farmers’ needs. The Federation would become an important information resource. Farmers would come first to Federated Farmers for information such as how to obtain a resource consent or draft an employment contract (Robertston, G. 1994).14 The Federation hoped there would be more farmers joining. Some farmers chose not to belong because they had to pay the levy, so why should they pay a subscription as well? Those farmers were now expected to join. More tangible benefits, such as discounts on purchases and access to legal services, would be wanted as subscriptions rose. An informal survey of members in the Canterbury region revealed a willingness to stick with the Federation but in return they wanted exclusive benefits such as discounts on cellphone air-time and for the Occupational Safety and Health manual. Farmers also wanted exclusive access to information, news updates or summary sheets of information on changes which affected their operations (Straight Furrow 1995).15

Reforming Federated Farmers In March 1997 the Federation employed a new Chief Executive, Tony St. Clair, previously Chief Executive of the Australian Victoria Farmers Federation Pastoral Group. The impact of losing levy funds was becoming obvious in 1996/97 and led to a deficit in the Federation’s budget. A group of Northland Federated Farmers’ members led by the province Treasurer, Ian Walker, called for the Federation’s national leadership to resign because of financial mismanagement and not fighting hard enough against rising costs such as local body rates. Also, the Federation was losing members because it ignored farmers’ needs. The Northern Wairoa-Kaipara executive passed a vote of no-confidence in the Federation president, Malcolm Bailey. But the Northland President, Laurie Copland, disagreed with the criticism. He said members were hurting from the low prices, particularly beef farmers and some were not happy with the direction the Federation had taken. But policy was determined democratically and might take time to get a result for members. Copland claimed Northland was ready to restructure with six other provinces into one region to free-up resources but he was soon replaced as President by Walker (Brosnahan, T. 1997; Reid, D. 1997).16,17 The Federation’s new Chief Executive told the National Conference in 1997 that the Federation had to move into the twenty-first century

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or it would cease to exist. The Federation had evolved in the 1950s and had not changed because it was ‘too comfortable’. Now the compulsory levy had gone membership had to be won and the Federation run as a business. Restructuring would not be ‘mucking around at the edges and doing cosmetic work’, the revamp would be total. The Federation’s present focus was 80% administration and 20% policy, he wanted to see those numbers reversed (Grant, S. 1997).18 The President, Malcolm Bailey, announced in April 1998 that Federated Farmers had been redesigned while keeping the values that made it New Zealand’s most effective rural voice. The Federation had a stronger staff organisation spanning the country working as one team to service farmer members and promote rural interests. Members would be able to access more professional services from the new Federation. Through using a national freephone network, members could contact Federation personnel around New Zealand. The new Federation would also use the members’ collective purchasing power nationwide to bargain for real cash benefits. Members would be able to access substantial purchase discounts worth more than their membership fee. Bailey said that the Federation was now ready to begin the next century in great shape to grow and continue fighting for New Zealand farmers. He reiterated that although a loss had been made in 1996/97, the Federation was now in a strong financial position with more than adequate reserves to cover the current loss. Good news was that the Federation now had a leaner, more efficient organisation. Bailey claimed a majority of provincial presidents supported the reforms and had been consulted throughout the reform process (Bailey, M. 1998a).19 The Chief Executive gave more details of the changes. Federated Farmers 24 provinces plus the Wellington office had employed 91 staff, the majority being involved in administration, that was now reduced to 53. The majority of those 53 would work on general and industry policy analysis and in providing services. Federated Farmers had rationalised administration while expanding its policy and field staff units, as well as enhancing the services provided to members. Duplication was a thing of the past, the theme now was cross-boundary cooperation and co-ordination of efforts. Now, no matter where a member lived, through the Federation’s new 0800 telephone network members would have immediate access to the whole array of services that Federated Farmers provided. Whether it be a resource management or local Government issue, an employment problem or needing to discuss a policy issue, the

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telephone was now the first gateway to the unified organisation’s total resources. Personal contact with staff was paramount and maintained with three regional support centres and staff strategically placed throughout New Zealand. The restructuring was driven by reducing staff while not reducing services to members. Staff were reduced by doing away with provincial offices and it was claimed that that had the advantage of doing away with the ‘us and them’ attitude of provinces vis-à-vis Wellington Head Office. All staff now belonged to one unified organisation, though the provincial identities remained in terms of elected officials. One major change was that, in place of just eight staff in Wellington, the policy group now had twenty staff based throughout the country and led by Catherine Petrey former manager of resource policy with the Ministry of Agriculture. Perhaps as an indication of Fairbrother’s claim that farming had become ‘feminised’ in the 1990s, half the new policy group led by Petrey were women. St. Clair said the organisation now had the strongest policy team in the country, bringing the Federation back to its core business of providing members with excellent advocacy and positive results. ‘We will aim to put money in our members’ pockets and protect them from the excesses of local and central Governments’ policy and rule making’. The Federation’s key offices were in the Hamilton and Wellington. Hamilton was the centre for national administration and membership services; Wellington the centre for policy and lobbying, in conjunction with other regional policy managers and staff. Hamilton and Palmerston North looked after the administration needs of all North Island provinces, with Hamilton staff including the national marketing manager, two policy analysts and administration personnel. The 17 staff based in Wellington included the Chief Executive plus a solicitor, public affairs manager, seven policy staff and a support team. A service centre in Dunedin cared for the needs of all South Island provinces. There was a total of nine field representatives, responsible for promoting the organisation and acting as the direct links between members and the organisation (Grant, S. 1998).20 Bailey described the impact on the Federation’s financial position. After losing the levy the Federation had budgeted to run deficits but now the days of deficit budgets were finished. The Federation was committed to putting itself back in the black in 1999. There would be no repeat of extraordinary restructuring costs. For 1999 the Federation was starting

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with a budget in the black rather than the red for the first time since 1995 (Thompson, A. 1998).21

The Northland Saga The Northland province had concerns with the restructuring and decided not to be involved. In an echo of the difficulties caused by the Auckland region when Federated Farmers was originally being formed, a few individuals in Northland decided to keep their branch of Federated Farmers separate from the rest of the organisation. Bailey said the Northland action was ‘plain stupid’, especially at a time when rural New Zealand needed to work more closely together. The best solution for all farmers would be for the Northland dissidents to set up a new organisation with a new name. This would be the honourable course of action. It was fortunate for the rest of New Zealand’s farmers that the Northland rebels had no credibility with the Government and the other key organisations that the Federation lobbied (Bailey, M. 1998b).22 But the dispute with Northland continued into the twenty-first century. The Federation decided it had to resolve the problem because it raised issues of wider application on the autonomy of provinces within the Federation—how autonomous should they be and what rights did they have to use the name and branding of the Federation? After much toing and froing and mud-slinging, in February 2000 the parties reached agreement to work towards reconciliation in good faith. But agreement on transitional arrangements could not be achieved and in December 2000 Federated Farmers National Board decided that negotiations had irrevocably broken down which meant, according to the February 2000 agreement, the dispute should go to arbitration (FF 1993a).23 At the start of the dispute Northland paid an affiliation fee and the Federation treated Northland as being an affiliated organisation. But Northland ceased to pay the fee in 2001 and the Federation removed Northland’s name from its annual Directory for the 2002/2003 year and from that point did not consider Northland entitled to receive communications from the Federation. Northland’s position on whether it was an affiliated organisation was ambivalent. Northland passed itself off as the Federation, for instance in contact with local and central Government. It issued of a credit card branded ‘Federated Farmers of New Zealand’ and set up a website called ‘FederatedFarmers’ (FF 2002).24

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It was 2003 before the arbitration took place and the key points to be considered were: Had the negotiations under the February 2000 agreement irrevocably broken down? If so, was the breakdown caused by a failure of the Federation to act in good faith? If the Federation was able to solicit for members in Northland, do those members belong to Northland (FF 2003b)?25 The Arbitrator decided the negotiations had broken down but that was not caused by the Federation failing to act in good faith. Northland, not being a Federation member, was not, in the absence of any contract, bound by the rules of the Federation, or without any further consent on its part bound by any change in the rules of the Federation and in particular by amendment to the rules in November 1997. The Federation appealed, first to the High Court and then to the Court of Appeal. The Court of Appeal considered the implications of the Incorporated Societies Act of 1908 and the Amendment of 1920. The 1908 Act had given no power for a society to legally establish branches and the 1920 Bill was introduced to facilitate the setting up branches with separate funds and local management and their own separate corporate personality. The necessary ‘linkage’ between the two separate corporate personalities could be achieved by interlocking rules. Branch members were deemed to be members of the parent body, thereby creating a dual membership scheme. The Court called this a ‘hybrid’ situation. In most areas, the branch was completely autonomous but for ‘membership’ there was an interlocking relationship. There was nothing in the legislation that required a branch to ensure its rules were consistent with the parent’s rules after incorporation, or to stop the parent changing its rules to the detriment of a branch. This had come about because Parliament thought branches would be created ‘top down’, and it was not anticipated that the parent-branch relationship might degenerate into ‘internecine warfare’. In the Court of Appeal’s view, branch ‘membership’ was determined first, by the rules of the parent society, and then, to any special rules that branch may have. Hence if the parent society rules said, ‘You must be a farmer’, the branch society rules might (additionally) say, ‘Yes, but

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you must also be an active (not retired) farmer in the Wairarapa’. But to achieve the statutory ‘linkage’ of dual membership, the branch member had to comply with the membership rules of the parent body which included the paying of a fee to the parent branch, and actual membership then arose. Northland members first had to comply with the membership rules of the parent society. The Northland members had also to comply with any local membership rules. If both were complied with, they were then ‘deemed’ members of the Federation even though, ironically in this case, they were already ‘actual’ members of the Federation by virtue of having paid their national subscriptions. The Court gave the Federation and Northland some non-legal advice—‘we do say that it is plainly in the interests of these long-standing antagonists to come to terms and devote their undoubted industry to something other than litigation’. The Court summarised that the appeal was allowed, on the express basis that the membership of Northland is to be determined by ascertaining: first, whether those persons have complied with the membership rules of the national Federation, and only then, any relevant special rules that Northland may have (FF 2005a).26 Federated Farmers insisted that Federated Farmers (Northland) should change its name and the High Court agreed with the judge recognising that Northland had a status as a branch under the law but this was meaningless following the Court of Appeal’s decision that branch membership depended upon membership of the parent and that the parent controls who it admits to membership, i.e. the Federation would not accept as a member someone who wished to be a member of Walker/Guest Northland. The judge recognised that under the law as stated by the Court of Appeal Northland would have no members and should be wound up (FF 2005b).27 In September 2005 Northland accepted that and its lawyer wrote to Federated Farmers that Federated Farmers (Northland) would recommend to its members that the province be wound up. In 2007 Federated Farmers (Northland) was placed into liquidation (FF 2009).28 Eventually a new Northland province was set up within Federated Farmers but Walker and Guest demonstrated their stubbornness by setting up ‘Farmers of New Zealand’ as a separate organisation which continued in parallel with Federated Farmers at least until Guest’s death in the middle of the next decade but remained a rump organisation restricted to a few farmers in Northland.

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The New Federation In June 1998 the Federation distributed to each member a ‘Membership Reward Booklet’ which offered manufacturers’ special rates for goods that ranged from vehicles to office products. The booklet consisted of coupons redeemable with the many manufacturers. The Membership Reward Booklet was the first of special deals targeted at the Federation’s members. It was claimed that members could recoup their membership fees by using the coupons (Straight Furrow 1998).29 Other discounted services for members included: Discounted health insurance. Hotel and resort discounts. Remuneration survey. Employment contracts. Skilled negotiators available. Farm information brochures and “how-to” manuals. Ford Ltd discounts. Legal and financial help desk services. Information Services. Cellular phone package discount. At the end of the 1990s the Federation, perhaps seeking to demonstrate that restructuring had not harmed the Federation’s activities, claimed major accomplishments in 1999. Those included: Personal Property Securities Act allowed farmers better protection in the event of processing companies collapsing Abolition of stamp and estate duties, saving farmers an average of $2800 per year. Accident Compensation Corporation (ACC) Reform saving farmers an average of 30%, on their ACC costs. Animal Products Act kept the right of NZ farmers to professional home kill services. Made seventeen submissions to Parliamentary Select Committees. Stopped four Bills progressing in their current form: Hauraki. Gulf Marine Park Bill, Farm Debt Mediation Bill, Paid Parental Leave Bill, RMA Costs Amendment Bill.

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Made eighteen submissions to Government environment and food safety reviews. Made nine submissions on Government transport reviews. Made nine submissions to general economic and regulatory reviews. Made twelve other submissions to Government bodies and regulatory authorities. Delayed the establishment of a national Biodiversity Strategy, until there was better recognition of biodiversity on private land. Made fifty-six substantial Resource Management Act Submissions. Represented farmers and sharemilkers during the Dairy Industry Restructuring Act. Fought for better levy payer control of the Meat and Wool Boards. Fought for world agriculture trade reform at the WTO talks in Seattle. Fought the US Lamb Tariff decision with US Embassy protests and hosting a meeting with Australian Deputy Prime Minister and NZ Trade Minister. Made more than thirty Annual Plan submissions. Developed and used the Local Government Rates Template, enabling farmers to challenge overcharging by district councils and made five councils move to itemised rates bills. Freed farmers from having to gain special endorsement for driving a tractor. Discovered $19 million of ACC overcharging “Livestock Farmers”. Gained refund of $8 million, plus interest. Electricity lines—fought excessive access regulations and the electricity reforms that failed to guarantee supply or competition to rural consumers. Co-ordinated help during adverse climatic events—droughts in Hawke’s Bay. Wairarapa, Marlborough, North and South Canterbury and Otago regions; floods in Waikato, Bay of Plenty, Ruapehu, Otago and Southland regions. Gained Government funding for the FarmSafe programme. Recruited more than 1200 new members. Provided membership services—Telecom Xtra, Power Club, Membership Rewards Booklet, FMG Recover, Accident insurance for members, Help desk services. News service and on-farm OSH inspections.

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152 pages of Federated Farmers news and information in Straight Furrow (Straight Furrow 1999).30 Brian Chamberlin summarised that the changes had made Federated Farmers much more efficient and had given the average member better access to national leaders, but they had to a large extent shifted the control from the provinces to the national office (Chamberlin 2001d).31 Take Away Points 1980s reforms had led to a new attitude in farming—‘getting on with the job and meeting the competition’. Reform in the farmer’s organisation, Federated Farmers, became essential when the Federation decided to end the levy at the end of 1995 because it was inconsistent with opposing compulsory unionism. Farmers discussed whether all rural organisations should all merge into a consolidated voice, the farming industry had no alternative but to harness its resources, rural people were not getting a fair deal. Eventually the many organisations agreed to regular meetings as a Land Users Forum. The Chief Executive said the Federation had not changed since the 1950s because it was ‘too comfortable’. Now the compulsory levy had gone the Federation had to run as a business. Northland refused to transfer to a reformed Federation raising issues of wider application on the autonomy of provinces. After several years of litigation a new Northland province was set up within Federated Farmers but the rump organisation continued for another decade.

Notes 1. Chamberlin, 2001a. Farming and Subsidies Five Years On (Pukekohe, Euroa Farms [Publishing Division]): 1/2. 2. Ashley, J. 1989. ‘What’s It All about?’, 10/05/1989: Straight Furrow, 15. 3. Widerstrom, R. 1988a. ‘One Rural Group for All Farmers?’, Straight Furrow, 09/11/1988: 1. 4. Calder, M. and Tyson, J. 1999. Meat Acts: The New Zealand Meat Industry 1972–1977 (Wellington: Meat New Zealand): 302.

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5. Widerstrom, R. 1988b. ‘One Rural Group for All Farmers?’, Straight Furrow, 09/11/1988: 1/5. 6. Aplin, J. 1988. ‘Positive Response to New Organisation’, Straight Furrow, 23/11/1988: 20. 7. Harris, E. 1989. ‘Umbrella Group Agreement by March Next Year?’, Straight Furrow, 22/11/1989: 4. 8. Straight Furrow, 1999a. ‘Umbrella Group Mooted’, 06/04/1999: 9. 9. Chamberlin, 2001b. Farming and Subsidies Five Years On (Pukekohe, Euroa Farms [Publishing Division]): 11. 10. Vincent, J. 2001a. Federated Farmers of New Zealand (Inc.) 1941–2001, Federated Farmers Kelloggs Rural Leadership Programme: 11/12. 11. Chamberlin, 2001c. Farming and Subsidies Five Years On (Pukekohe, Euroa Farms [Publishing Division]): 12. 12. Vincent, 2001b. Federated Farmers of New Zealand (Inc.) 1941– 2001, Federated Farmers Kelloggs Rural Leadership Programme: 12. 13. Vincent, 2001c. Federated Farmers of New Zealand (Inc.) 1941– 2001, Federated Farmers Kelloggs Rural Leadership Programme: 13. 14. Robertston, G. 1994. ‘Federated Farmers Faces the Future’, Straight Furrow, 23/05/1994: 5. 15. Straight Furrow, 1995. ‘The End of the Levy—What It Will Mean for Federated Farmers’, 04/12/1995: 6/7. 16. Brosnahan, T. 1997. ‘Feds Debate Criticisms’, Straight Furrow, 14/04/1997: 3. 17. Reid, D. 1997. ‘Northland Won’t Be Patronised: New Chief’, Straight Furrow, 09/06/1997: 9. 18. Grant, S. 1997. ‘St. Clair Signals Drastic Federation Shake-Up’, Straight Furrow, 04/08/1997: 3. 19. Bailey, M. 1998a. ‘To Fight Without Compromise for Farmers’, Straight Furrow, 27/04/1998: 6. 20. Grant, S. 1998. ‘New Feds, Bigger, Brighter and Much, Much Better’, Straight Furrow, 13/04/1998: 9. 21. Thompson, A. 1998. ‘Feds Plan to Be in the Black in 1999’, Straight Furrow, 28/09/1998: 8. 22. Bailey, M. 1998b. ‘Northland Rebels’ Action Plain Stupid’, Straight Furrow, 28/09/1998: 4.

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23. FF, 2003a. (Federated Farmers), Award of Arbitrator, Northland Correspondence, 1993–2005: 1. 24. FF, 2002. (Federated Farmers), Northland and Other Constitutional Issues, National Board Meeting, February 2002: 3. 25. FF, 2003b. (Federated Farmers), Award of Arbitrator, Northland Correspondence, 1993–2005: 12. 26. FF, 2005a. (Federated Farmers), In the Court of Appeal of New Zealand, CA144/04, Judgment of the Court, 23/06/2005: 20– 23. 27. FF, 2005b. (Federated Farmers), To Federated Farmers National Board Chief Executive from Legal Adviser, Northland Federated Farmers, 20/07/2005. 28. FF, 2009. (Federated Farmers), Federated Farmers of New Zealand (Northland Province), Liquidators Report, Price Waterhouse Cooper, 02/04/2009. 29. Straight Furrow, 1998. ‘At Federated Farmers We Want to Do More Than Fight for Farmers’ Rights’, 08/06/1998: 11. 30. Straight Furrow, 1999b. ‘Plenty of Benefits for Members’, 07/12/1999: 24. 31. Chamberlin, 2001d. Farming and Subsidies Five Years On (Pukekohe, Euroa Farms [Publishing Division]): 13.

CHAPTER 18

Producer Boards’ Reform

Introduction Farming reform eventually reached the Producer Boards. The Government initiated a review of Producer Boards because of its concerns that the boards had been set up under entirely different marketing conditions and whether their mixture of regulatory and commercial activities was still appropriate. That was the start of a continuing review through the 1990s of the appropriate structures for the meat, wool and dairy industries. Federated Farmers partly drove changes in the Meat and Wool Boards but was very much left on the sidelines in the Dairy Board debate.

Dairy The Dairy industry through the 1990s was evolving towards merging the Dairy Board and Dairy Companies into a single company, Fonterra, at the start of the twenty-first century and in 2001 the Dairy Industry Restructuring Act provided for the transition of the New Zealand Dairy Board to a wholly-owned subsidiary of new cooperative and its conversion into a company 12 months after the commencement of the Act. That was very much driven by the milk processing companies, mainly Dairy Group and Kiwi, that accounted for more than 70% of the market in 1999. The Dairy Board, the single buyer of New Zealand dairy produce for export, © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_18

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had an efficient and effective overseas marketing and evolution towards integrating processing and marketing was well supported throughout the industry (Easton, B. 1999a).1 Lind describes the manoeuvres that eventually saw the two companies merge with agreement that the Dairy Board would be integrated into the new organisation. Lind says the new company: would be organised on co-operative principles and owned and controlled by New Zealand’s dairy farmers. Voting would be in proportion to the supply of milk solids and the over-riding goal would be to enhance longterm shareholder value “by maximising efficiencies of scale and scope and pursuing excellence in all key areas”. All of the Dairy Board’s branding and marketing value would be preserved in the new company, along with the intellectual property from the Board’s research and development activities. (Lind 2013a)2

Federated Farmers Dairy Section was renamed Dairyfarmers of New Zealand in the mid-1990s and the Chairman, Mark Masters, defended the group from accusations that it offered neither leadership nor direction in the debate on restructuring the dairy industry. He defended the Federation’s ‘apparent silence’ following the Government announcing a deadline for deregulating Producer Boards. He said it was difficult to make objective comment before the Dairy Board had identified the issues which needed to be addressed. That lack of comment was perceived as a lack of direction. Masters said the Federation could have independently stated what it believed would have been the best position but it would have been a statement based on ignorance. That was a reflection that the Federation was an observer rather than a significant contributor to the debate (Easton, B. 1999b).3 Lind reports that: Despite progress toward a single company, the industry was far from settled. There was widespread confusion among farmers about exactly where it was heading. Organisations like Federated Farmers made much of the lack of clarity and transparency. (Lind 2013b)4

Federated Farmers did its best to keep its lines of communication open with key players in the merger, claiming farmers could be satisfied that their industry leaders had made significant progress in building consensus. There was a realisation that the status quo was unacceptable and a ‘Mega’ Company delivering the industry strategy was by far the preferred option,

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having enormous commercial attraction (Pedersen, C. 1999).5 The evolution towards a ‘Mega’ Company reflected the fears of the early 1980s that activities were driven by ‘company executives who were not farmers and who might not necessarily make the decisions producers would like to see’. In October 1997 the Federated Farmers’ Dairy Section was excluded from the Dairy Board’s Annual Meeting and the Board also decided not to consult the Section about the Board’s upcoming audit. Some members of the Board and company directors had a ‘certain level of discomfort’ with Dairy Section involvement in the Board’s affairs, some of this discomfort came down to a personal level. Many were thought to be fearful of change and were trying to hold on to the status quo. It was a case of ‘old men with entrenched attitudes’. At a time of change the ‘pool of consultation had become significantly smaller’ (Reid, D. 1997).6 Two other organisations were formed, Dairy Insight and Dexcel, the first a levy funded body to promote research and development, and the second to carry out that work funded mainly by Dairy Insight and also by organisations such as the New Zealand Foundation for Research, Science and Technology. In 2007 Dairy Insight and Dexcel combined to form DairyNZ which, through levy-funding, carried out research and development to create practical on-farm tools, to support good practice farming, promoting careers in farming and advocating with central and regional Government.

Meat and Wool For the Meat and Wool Boards, debate was started by the Government reviewing Producer Boards in the late 1980s. In 1991, the findings were reported to the Minister of Finance by the Treasury and the report gave a comprehensive picture of the Boards’ activities. The Report summarised that Producer Boards were started in the 1920s because New Zealand’s farmers considered that they were being exploited by British wholesaling firms. Without effective producer control of exporting and marketing, New Zealand farmers would remain at the mercy of British importers. That found a sympathetic response from Government and the Government set up Producer Boards with a philosophy of producer control and maximising returns to producers. By the 1990s marketing and distribution networks had changed significantly since Producer Boards were established. The wholesalers of the 1920s were being replaced by major

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supermarket chains. There was now a need to serve the demands of those chains which were ever more exacting in terms of the variety, quality and timeliness of supplies. The Report identified that the powers and functions of Producer Boards fell into three categories: regulatory and control functions, including licensing exports and exporters; imposing grading, quality control and packaging requirements; controlling domestic prices; controlling storage and transportation facilities; commercial activities: including buying, processing, storage and marketing of product; acquiring related facilities; and other trading and commercial activities; leadership and industry servicing activities including advocacy; formulation of marketing strategies; and provision of technical, advisory, information and promotional services. The Wool Board had the power to acquire all wool for export, subject to a grower referendum, but this power had never been used. The Board’s main involvement in the market was through the operation of its stockpile: it bought wool to support the market and sold that wool when it judged market conditions were right. It also licenced wool exporters. The Meat Board had the power to acquire all sheep meat for export. This power was exercised between 1982 and 1985. It also licenced meat exporters. The main question in debate about Producer Boards was—should they be abolished? But, in addition, there were several questions about the powers and functions of boards that did not necessarily imply abolishing them. For example, was it appropriate for commercial and regulatory activities to be combined in a single organisation? Debate often focussed on the interests of producers but there was a national interest in ensuring that New Zealand’s resources were allocated efficiently, not just in protecting growers’ financial interests. The Boards’ control of marketing could be through compulsory acquisition, single-desk selling or licensing of exporters. In the Treasury’s view the benefits of producer control of marketing were likely to be minor and to apply in a narrow range of circumstances. Control of marketing by a single organisation stifled the innovation and efficiency gains which

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flowed from competition, and discouraged the entry of innovative, efficient New Zealand firms. This was likely in the medium term to reduce New Zealand’s share of export markets. Statutory control of marketing, with the exception of exports to quota markets, should be phased out. The Treasury said the Meat and Wool Boards had wide-ranging regulatory functions including export licensing and quality control of exports. All boards had some statutory involvement in the allocation of storage and shipping facilities, price control and allocation of rights to export to quota markets. The Treasury pointed out that separation of regulatory and commercial roles of organisations had been one of the underlying principles of public-sector reform in recent years. Advantages were the power to regulate was in effect a law-making power and as such should be exercised by Government directly rather than through an agency which was not part of the Government; there was always a risk that, if powers to make or administer regulations were given to an organisation with commercial goals, that organisation may use those powers to further its commercial goals, rather than the wider interest. Government control would encourage the development of more specialised and independent expertise in regulatory issues, such as assessing when and where regulations were desirable. In particular, the conflict-of-interest problem was of increasing importance as the Boards’ commercial activities expanded. For example, the Meat Producers Board had the power to licence exporters and, through its subsidiary Freesia Investments Limited, was a substantial shareholder in certain meat companies. Although the Board had gone to some lengths to separate its regulatory and commercial arms, other companies remained concerned that the Board might exercise its powers to favour those companies in which it had invested. Treasury considered that the advantages of separating regulatory from commercial roles outweighed the disadvantages and that regulatory functions should be administered by Government. Producer Boards were major commercial organisations with significant assets accumulated over the years by retaining part of the payout for product which would otherwise have been made to producers. For many producers, these sums represented a large proportion of their net investment in their industry. It was therefore important who owned Producer Boards and what rights the owners had. In the Treasury’s view there would be major benefits from Boards having the structure of a public company with tradeable share-capital. The

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benefits would primarily flow from separating producers’ investment in boards’ assets from their interest in their farms as producers. A share price would allow monitoring of performance of companies by producers and others. This would be an incentive to efficient management. Producers would benefit from being able to use their investment in boards’ assets more flexibly than at present and would not be encouraged to overproduce product. To allow control of board assets to pass to whoever valued them most highly, including non-producer interests, would ensure the most efficient use of those assets. However, while creating tradeable equity, producer control could be retained using different classes of share including some without voting rights. Each Producer Board was empowered, subject to various conditions, to impose a levy on producers as a means of obtaining the revenue needed to cover administration costs and other expenses not directly associated with buying or selling the product concerned. Substantial sums were involved. For example, levy collected by the Wool Board in 1989/90 totalled $80 million. In general, each board had some discretion as to the levy size, subject to a ceiling imposed by regulation or ministerial assent. There were no statutory provisions requiring accounting for use of the levy. Compulsory levies might be justified to prevent free-rider problems. However, they also by their nature represented a tax imposed on a minority for the benefit of a majority. In view of the compulsory nature of the levies, it was important that they only applied when it could be demonstrated that voluntary levies were ineffective or impracticable, and applied only when it was demonstrated that a substantial majority of levy-payers supported the levying and there was strong accountability to levy-payers for the purposes for which the levy was made. The levying powers contained in each board’s legislation were deficient in at least some of these respects and the Treasury considered that levying powers should incorporate the above principles. Legislation allowing levies to be imposed on various commodities, primarily arable agricultural crops, had recently been reviewed. The review results, which took the above principles into account, were incorporated in the Commodity Levies Act 1990. It was desirable for provisions concerning levying of primary products to parallel those of the Commodity Levies Act unless there was good reason for them to differ. The Treasury saw advantage in reviewing the legislative framework of boards to ensure that legislative and regulatory instruments governing boards were consistent. The exercise of far-reaching statutory powers

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implied a requirement for accountability to Parliament. Legislation should provide for the regular review of statutory powers exercised by boards, and clearly and precisely stating their roles and powers and which activities had statutory backing. Current legislation was deficient in all of these areas (ANZ 1991).7 In 1995 Federated Farmers decided to assess farmers’ views on the need for changes to the Meat and Wool Boards. It commissioned a review and then held 27 meetings with meat and wool producers at its various provinces to discuss the review outcome using the outcome to propose a draft policy to be endorsed by its Meat and Wool Section. The policy including changes similar to those proposed by the Treasury four years before and were clearly influential in the legislation finally agreed in Parliament in 1997—the Meat Board Act and the Wool Board Act. The Federation proposed a much tighter focus for the Meat and Wool Boards with removing board powers that were no longer appropriate. Both boards should divest their commercial operations and return the proceeds to meat and wool farmers. There had to be stronger board accountability to levy-paying farmers. Federated Farmers wanted to see profitable meat and wool farming enhanced by financially strong processing and exporting companies with significant farmer shareholding. That should be underpinned by an environment that minimised Government intervention and maximised the commercial sector’s ability to perform. Such an emphasis required change to the institutional arrangements of both sectors. The Federation considered the core activities of the Meat and Wool Boards should be research and development (R and D), promotion and training. The Meat Board also was involved in essential market access work. Those activities were legitimate and funded by mandatory levies given that this work could never be done by individual farmers. The boards had a major role in commissioning on-farm R and D projects. However, in funding off-farm R and D the boards had to ensure their efforts did not displace desirable private sector R and D. R and D had to produce real benefits to farmers. The effectiveness of promotion expenditure needed to be scrutinised carefully. A particular concern was whether generic promotion was a disincentive for companies developing their own brands. Joint funding of promotion by producers and the private sector was endorsed to help ensure value for money. Generic meat promotion should focus on food safety, animal welfare and consumer education.

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Application of the results of R and D, and the development of training programmes were important functions of the boards and should continue. Ensuring markets remained open was primarily a Government responsibility. However, the Meat Board could play an important supporting role including gathering intelligence, reducing apprehensions of producers in offshore markets and promoting free trade. Wool exports did not face the same access problems. Statutory control powers of the boards should be reduced to those few areas where the benefits were very clear. Currently, the control powers of the two boards were extensive, although in recent years many had not been used. Retaining the powers injected uncertainty into the meat and wool industries, discouraging investment by innovative companies. The statutory regime meant potential Government interference also added uncertainty, discouraging investment. Retaining intervention powers raised unrealistic farmer expectations that the boards would step in during downturns. The boards’ powers to regulate shipping should be repealed, as there was no evidence that those benefitted farmers. Shipping services were essentially a commercial matter, to be determined by exporters. There was no reason why the boards would achieve better results than meat companies driven by commercial imperatives. The boards’ powers to control or buy meat or wool products should be dispensed with. In the past acquisition had been used for price smoothing, to set up a single seller and to impose penalties for breaches of export licences. Price smoothing through boards buying and selling carried greater risks and costs than allowing the market to reflect true prices to farmers, who generally preferred to manage their own risks. The boards themselves rejected single desk selling. The threat of an exporter having its business commandeered was a disincentive to investment. Penalising breaches of export licences by taking over product may well be too extreme. A better approach was to find other penalties. Voluntary cooperation between meat exporters was supported and would be appropriate in some commodity markets. The Federation thought licensing exporters was only justified in relation to managing access to quota markets or where foreign Governments imposed entry conditions. The claim that exporting licences could be used to support export prices was weak. Despite using these powers over many decades, allegations were still made of so-called weak selling. Justifying withdrawing a licence for alleged underselling would

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be almost impossible in a Court. Export licensing was not used in other successful export sectors, such as forestry, wool or manufactured products. However, in quota markets or where foreign Governments imposed special conditions, New Zealand had to control access if the benefits were to accrue in New Zealand rather than offshore. These circumstances were best managed using licensing powers. Greater product differentiation and branding were encouraged to maximise freedom of choice and minimise the costs of doing business. Meat Farmers supported using standard grading as the basis for payments. Any mandatory grading system had to achieve demonstrable benefits for the overall industry, while still encouraging companies to develop their own product specifications for export. The Wool Board required exporters to provide independent evidence that products met the specifications declared. The board believed retaining some powers should be necessary. The Federation intended to work with the board and wool exporters in defining what those powers might be. Divesting all investments in meat and wool processing companies was strongly supported by Federated Farmers. By holding shares in meat or wool companies both boards had fundamentally undermined their moral authority and ability to take a leadership role, because of potential conflict of interest. There was also widespread concern about the player/referee conflict and to what extent policy decisions were influenced by investments. There was confusion about whether investments were purely commercial or aimed at achieving industry-wide benefits (Straight Furrow 1995a).8 To resolve these problems each board could divest by aggregating investments and issuing shares to farmers. Alternatively, investments could be sold to the highest bidder and the proceeds returned via levy reductions. If the boards judged that they needed to fund the development of a new technology, then grants or subsidies to existing companies to do the work made more sense than direct investments in the commercial companies by the boards. Accountability to levy-paying farmers needed to be enhanced. Producers should have an opportunity to influence board membership and attend annual general meetings. The requirement for each board to have an annual statement of corporate intent and present an annual business plan to farmers was supported by the Federation.

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Every five years farmers should be able to vote on the levy they had to pay the boards. Referenda would cover the amount taken from farmers to fund the boards’ core activities, i.e. research and development, promotion and training. Direct elections and annual general meetings (AGMs) invited farmers to advocate levy cuts. However, in response, too often research and development and promotion were the first to be curtailed, when they should be the last. Five yearly referenda would enable farmers to make a commitment to core activities. Farmers would insist that a set proportion of their investment go into core activities, as opposed to administration. Currently 62% of the Wool Board’s budget and 75.5% of the Meat Board’s budget went into core activities. Accountability for the remainder of the boards’ budgets would be via their statements of corporate intent, annual business plans and AGMs (Straight Furrow 1995b).9

The New Meat and Wool Boards The Federated Farmers’ survey of farmers enabled Government to finally revise the ideas proposed by the Treasury with the confidence that there would be support from within the farming community. The Government’s and Federated Farmers’ reviews and consultations produced the Meat Board and Wool Board Acts in 1997.10 Those redefined the objectives of the Boards, increased accountability and changed how directors were elected, including replacing the Electoral Committees with direct elections. The Acts defined that the Boards’ objectives were to help achieve, in the interests of meat and wool farmers, the best possible returns while making the best possible contribution to the New Zealand economy. Their functions were to maintain confidence of consumers in the New Zealand meat and wool industries and obtain improved access to markets. To conduct (whether alone or jointly with other bodies) research and development into methods for improving meat and wool farming output, to encourage more efficient meat and wool farming procedures and to collect and process information that assisted in achieving the best possible meat and wool returns. The Boards needed to account to meat and wool farmers on the Boards’ activities and its use of levy money and other resources and to report regularly to the Minister on the performance and present state

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of the New Zealand meat and wool industries and the Boards’ achievements of their objectives, performance of their functions, and any other matters the Boards thought fit or the Minister requested. The Boards had to maintain statements of strategic and consultative intent in relation to the nature and scope of its operations, its income (including levy income) and expenditure objectives, performance targets, and policies and its significant assets. Also, how the Boards intended to consult livestock farmers and representative organisations about the Boards’ activities. The Boards had to make copies of current statements of strategic and consultative intent available free to any livestock farmer who asked for one; and for that purpose had to ensure that at every annual general meeting copies were available for livestock farmers. As soon as was practicable after an annual general meeting, the Boards had to give the Minister a copy of its current statement of strategic and consultative intent. The Boards were to be managed by boards of directors. For the Meat Board there would be seven directors elected by livestock farmers; four elected by processors or exporters of meat products and two directors appointed by the Minister on the Board’s recommendation. Livestock farmers, to be eligible for voting, had to have at least 250 animals that were sheep or goats; or 50 beef cattle or 100 dairy cattle, with the number of votes depending on the total of livestock owned. For the Wool Board there would be six directors elected by growers and four directors appointed by the Minister on the Board’s recommendation. Wool farmers, to be eligible for voting, had to have at least 250 sheep, with the number of votes depending on total sheep owned (MWBA 1997).11 Further change for the Boards followed a major report on the wool industry in 2000, the McKinsey Report into ‘improving profitability’. In August 2000 a referendum was held in which growers overwhelmingly endorsed by over 90% the McKinsey recommendations. Following that, the Wool Board refined the McKinsey proposals and developed the detail necessary for their implementation.12 This process resulted in the establishment of the grower-owned commercial companies, Wool Equities Ltd., and Merino Grower Investments Ltd. Another grower referendum supported the winding up of the Wool Board and the apportionment of its assets to growers on the basis of sheep numbers. The changes were confirmed in the Wool Restructuring Act of 2003. Further change took place in organisation of the meat industry in June 2004 when Parliament passed the Meat Board Act 2004 that had two prime functions:

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To merge Meat New Zealand and the Wool Board into Meat and Wool New Zealand to represent farmers and growers and to provide industry-good services; To establish the New Zealand Meat Board to administer the allocation of New Zealand country specific export quota to meat exporters and to be responsible for the management of meat industry’ reserves (collected through the meat Commodities Levies Act). This legislation allowed for the separation of the quota management and reserve management functions (now administered by the Board) from the industry-good and commodity levying powers (Evans and Grace-Webb 2007).13 Following disestablishment of the Wool Board, in 2010 Meat and Wool New Zealand changed its name to Beef + Lamb New Zealand Ltd., to reflect that it had become a meat-only organisation. The name is shared with Beef + Lamb New Zealand Inc., which is responsible for promoting beef and lamb domestically. Take Away Points The Government initiated a review of Producer Boards asking whether their mixture of regulatory and commercial activities was still appropriate—should they be abolished? The dairy industry evolved towards a merging the Dairy Board and Dairy Companies into a single company, Fonterra. For the Meat and Wool Boards, the Treasury thought producer control of marketing gave only minor benefits. Marketing by a single organisation stifled the innovation and efficiency gains from competition. Producer Boards had wide-ranging regulatory functions but separating regulatory and commercial roles was an underlying principle of recent public-sector reform. Treasury considered that regulatory functions should be administered by Government. The Treasury saw advantage in ensuring that legislative and regulatory instruments governing boards were consistent. Accountability to levy-paying farmers needed to be enhanced. Following farmers’ reviews and consultations, the Meat Board and Wool Board Acts were approved in 1997. Those redefined the objectives of the Boards and increased accountability.

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Further changes early in the twenty-first century saw the Wool Board disestablished and the Meat Board becoming Beef and Lamb NZ.

Notes 1. Easton, B. 1999a. ‘Antonie’s Spring to Dairy Fame’, Straight Furrow, 23/03/1999: 5. 2. Lind, 2013a. Till the Cows Came Home: Inside the Battles That Built Fonterra (Wellington: Steele Roberts): 82/3. 3. Easton, B. 1999b. ‘Masters of Dairy Restructuring Debate’, Straight Furrow, 23/03/1999: 13. 4. Lind, 2013b. Till the Cows Came Home: Inside the Battles That Built Fonterra (Wellington: Steele Roberts): 355. 5. Pedersen, C. 1999. ‘Calm Follows Tempestuous Week’, Straight Furrow, 19/10/1999: 15. 6. Reid, D. 1997. ‘Dairy Board Spurns Federation’, Straight Furrow, 27/10/1997: 3. 7. ANZ 1991. ‘To Minister of Finance from Deputy Secretary to the Treasury’, 11/01/1991: 1–16, AALR W5427 873 Box 1941 Record Number 82/78 Part 8, Treasury File T82/78. 8. Straight Furrow, 1995a. ‘Now Is Your Last Chance to Have a Say’, 03/04/1995: 22. 9. Straight Furrow, 1995b. ‘Now Is Your Last Chance to Have a Say’, 03/04/1995: 23. 10. Calder, M. and Tyson, J. 1999. Meat Acts: The New Zealand Meat Industry 1972–1997 (Wellington: Meat New Zealand): 390–393. 11. Meat and Wool Board Act 1997. 12. Brotherton, R. 2012. Last Shepherd: Anecdotes and Observations from Five Decades in the Wool Industry (Wellington: Ngaio Press): 294–296. 13. Meat Industry Performance and Organisational Form 2007, The New Zealand Institute for the Study of Competition and Regulation, Victoria University of Wellington, Lewis Evans and Eli Grace-Webb: 15.

CHAPTER 19

Reform to Reduce Farming Costs

Introduction The period of major farming reform encouraged farmers to press for reform of the service industries that in their eyes hindered exports through unnecessary costs. The waterfront, coastal shipping and the freezing industry were all subjected to major changes at the behest of farmers.

Waterfront Federated Farmers proposed waterfront reform, waterfront costs being a major cost inhibiting farmers’ returns and adding to export prices. The Arable Council chairman said the Federation wanted to create a sense of urgency about the need for change at ports so that the whole issue would not be ‘swept under the carpet’. Provinces should put pressure on MPs and Harbour Board members, as well as fertiliser companies which had a major interest in the ports. The Federation claimed that it was cheaper for Europeans to send dairy products to Singapore than it was for New Zealand even though New Zealand was much closer. The difference was that the onshore costs in New Zealand were much higher than those in Europe. Almost 40% of New Zealand’s shipping costs were actually incurred in New Zealand before the ships left. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_19

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Chamberlin stressed the need to get public support for issues like waterfront reform. He said the Federation had investigated the problem and ‘said things, and advocated things that other people haven’t the guts to say’. But he warned there was a danger that waterfront reform could be ‘put in the too hard basket’. To avoid this, Federated Farmers, at Dominion level, was keeping in contact with people in crucial areas so malpractices on the wharves were exposed (Straight Furrow 1988).1 During 1989 the Labour Government initiated major reforms of the waterfront industry. Port companies were established and took over assets of the defunct harbour boards. The intention also was to reform employment practices by abolishing the Waterfront Industry Commission that was responsible for employing waterfront workers (Orman, T. 1990).2 The Federation believed that cost savings through improved management and efficiency would be achieved by removing the protection and special treatment the industry was accorded by law. It said that there was no longer any need to regulate the employment of waterfront labour, and employment structures should be deregulated. The aim of a reform programme should be to ensure that goods moved across the waterfront safely and efficiently with the least possible cost, and that could be achieved by unrestricted competition of cargo-handling services on wharfs. The Federation wanted to make sure that the pooled labour employment system in the present Waterfront Industry Committee Act, which was about to be repealed, was not carried forward in documents covering the terms and conditions of future employment of watersiders. The Federation feared that the present Government proposals perpetuated current structures. The Federation gave high priority to arguing before the Select Committee reviewing the proposed changes because the Bill was a ‘onceonly’ chance to get ‘common sense’ prevailing on the waterfront. The waterfront industry had to be sorted out to ensure efficiency in the New Zealand export industry. Most people were aware of extreme wastage and consequently increased costs, which was something New Zealand had been able to pay for when it was a wealthy country, but the position had changed dramatically. Malcolm Lumsden, the Federation’s Junior Vice-President, was the Federation’s spokesman on waterfront reform. He said that the Government intended to remove restrictive practices but a clause in the new Act was in direct contradiction to that intent. The slate had to be ‘wiped clean’ to force unions and employers to renegotiate agreements. The onus

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would then be on port employers to provide an efficient and competitive ports system. Potential savings to exporters and importers were around 50%. The demarcation of labour, task inflexibility, restrictive practices and gross overmanning on wharfs should not continue. New Zealanders had had enough of the ‘nonsense’ that amounted to little more than ‘blatant extortion’ (Harris, E. 1989).3 Other amendments suggested by the Federation included providing clear guidelines for rationalisation in waterfront employment practices aimed at cost reduction and increased efficiency. Proposals for change should not be restricted to those from registered employers. The Federation considered that the registered port employers operated as a ‘privileged club’ and had already moved to lay the groundwork for a locally based pooled labour system which, according to the Federation, would restrict freedom of entry of newcomers to the industry and eliminate the possibility of the significant cost savings (Straight Furrow 1989b).4 The Government refused to legislate to remove references to pooling systems and left it up to the port employers to negotiate new work practices. Federated Farmers were concerned that the Association of Waterfront Employers showed little inclination to ‘stand up’ to watersiders and that any newly negotiated agreements would be no different to those of the past. The Federation now had to influence port employers to grasp the opportunity for change (Straight Furrow 1989c).5 But watersiders’ strikes continued making the Federation fear that employer-negotiators were ‘softening’. Lumsden said it was outrageous when all but three New Zealand ports were on strike, and there was an ominous secrecy about progress to settle the whole business. The Federation was ‘especially furious’ to hear that the Watersiders’ Union was making excessive wage demands. Lumsden said New Zealand can no longer afford to pay that unproductive cost. The situation was ludicrous. The framework had been set by the recent legislation to put all anomalies right and port employers must not be blackmailed into letting the chances for change slip (Straight Furrow 1989d).6 The most effective change was achieved at the end of 1990, when a National Government, led by former Federated Farmer Jim Bolger, was elected and soon introduced employment legislation that met Federated Farmers long-term wishes for unionism, such as that operating in the waterfront industry, to be weakened by abandoning compulsory unionism and wage awards made nationally. The Act made relations between employers and employees controlled by direct contracts, either,

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with employees as individuals, or, within individual workplaces. The right to strike was allowed only at certain points in negotiation procedures (Lind 2013).7

Coastal Shipping Through the 1990s Federated Farmers campaigned to reform coastal shipping and that gave the Federation its first experience of how Mixed Member Proportional Representation (MMP) might change New Zealand politics. Accompanying the 1993 General Election had been a referendum in which electors supported introducing MMP for future elections. Conor English, Federated Farmers’ Executive Officer, had played a major role in the Federation’s coastal shipping campaign and summarised that that the debate was politically fascinating. English claimed that by the ‘fluke of timing’ the proposed shipping reform became a significant political catalyst because it was one of the first major parliamentary issues since it was known that future elections would use the MMP system. English claimed political parties used the issue to hone and test new identities and mark out the territories they would hold under MMP. While united in their opposition to the reform, they still scrapped bitterly among each other in the battle for their futures. For the Federation it highlighted that, under MMP, lobbying the Minister alone was not enough. The Federation had had to lead a vigorous debate to clearly answer all who opposed coastal reforms (English, C. 1994a).8 In the early 1980s the Bay of Plenty and Hawke’s Bay provinces had argued there should be better use of their local ports, Tauranga and Napier, respectively. In 1988 South Island arable farmers complained that Aucklanders were eating bread made from Australian grain rather than New Zealand because of the cost of getting grain across the Cook Strait into the North Island. The use of Australian grain was driven partly by its higher quality but Federated Farmers claimed the Cook Strait, the Strait, 22 km at its narrowest, separating the North Island from the South Island, was a ‘massive brake on New Zealand’s economy’ brought about by protecting New Zealand’s domestic shipping industry (Straight Furrow 1994a).9 The Federation was persuaded by arable farmers that poor shipping services around the coast inhibited arable farming. With wheat deregulation in 1987, the high transport costs across Cook Strait compared to

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those for the Tasman Sea had a devastating impact by halving the wheat industry. The Federation considered that it was obvious from ‘simple common sense’ that all New Zealand would benefit if coastal shipping was reformed. International ships brought goods to and from New Zealand and had to sail between New Zealand ports. The current law banned New Zealanders from using the spare space on those ships to transport goods between New Zealand ports. The Federation wanted overseas vessels already visiting New Zealand to be allowed to ship goods around the New Zealand coast claiming the benefits would be: provincial New Zealand gaining a coastal shipping service where previously there was none; increased opportunities for commerce between different parts of New Zealand, especially between North and South Islands, with benefits nationally in terms of import substitution and employment; utilisation of space currently wasted on international ships already transiting the coast; existing operators would have to sharpen up their act; less stress on the existing land-based transport infrastructure. The Federation claimed also there would be environmental gains through reduced CO2 emissions. Coastal shipping reform would be the first chance politicians had to do something constructive about greenhouse gas concerns. The Federation released a report which showed modern transit ships emitted 50% less carbon per tonne-kilometre than rail, and 90% less than road transport (Straight Furrow 1994b; English, C. 1994b).10,11 Several local MPs were encouraged to support their provincial ports in getting a coastal shipping service, with the Federation pointing out that various regions had no significant coastal shipping service and local commerce was shut out of other domestic markets. Space now wasted on international carriers already plying New Zealand’s coasts could be used for the benefit of the country as a whole. The domestic shipping industry was not acting in the national interest in its efforts to deny most of New Zealand access to coastal shipping services. The Federation argued that no part of the transport sector should have regulation to protect its existence. The New Zealand shipping industry opposed the Federation’s campaign arguing that the Federation might destroy New Zealand’s maritime industry by preferring foreign shipping which would charge

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the highest possible rates, rather than locally owned competitive shipping companies. Also, the Chartered Institute of Transport believed there was a substantial and unquantified risk of damaging the New Zealand shipping industry. There were no guarantees the quality of service would improve and there was a significant risk of damaging domestic economic stability. New Zealand Rail’s Executive Manager said South Island farmers would be hit with increased freight rates if coastal reforms went ahead. He said the open coast policy was an unfair threat to all modes within the domestic transport industry and would disadvantage primary producers, processors and manufacturers (Straight Furrow 1994c).12 The Federation partly appealed to the romanticism associated with New Zealand’s ‘isolation’ to support its campaign. Paul Jackman of Federated Farmers claimed the ‘tyranny of distance’ had always marked life in New Zealand. For the Polynesians who first sailed to Aotearoa, the original name for New Zealand, the distances they traversed in their open boats made their exploits arguably the greatest achievement in human exploration. For European settlers, coming to New Zealand was literally coming to the world’s end. New Zealand’s isolation had dominated its imagination, history and economic life. At every turn New Zealanders had sought to break that isolation. Jackman argued that the current ‘struggle’ to give New Zealand a provincial shipping service resonated with a wider historical and cultural meaning. Prior to road and rail, New Zealand’s coastline had been alive with coastal shipping but now there were only minimal services between a few major ports. For the rest of New Zealand there was virtually no coastal shipping. By international standards transport costs within New Zealand were high, reflecting low population densities. That inhibited commerce and contributed to unemployment. Federated Farmers claimed that space was being wasted on international container ships already in New Zealand waters and could be used to carry domestic cargo. The unemployed in provincial towns would benefit the most. Commercial activities that were now marginal could become viable with extra staff taken on. The proposed reform made environmental sense. The New Zealand economy was set for substantive growth which would put pressure on land-based transport systems. By contrast the sea was the best highway of all, never needing resurfacing. There were no rock slips, no valleys and rivers to cross. A revitalised coastal shipping service offered the best way of sparing the taxpayer from having

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to invest in transport systems. Coastal shipping also made good environmental sense because, in terms of tonnes carried, distance covered and carbon dioxide emitted, it was very efficient. Allowing international ships already in New Zealand waters to carry domestic cargo between New Zealand ports was a simple measure that cost the taxpayer nothing. It was another step in ending New Zealand’s isolation. The reform would lower international shipping rates to and from New Zealand. It would see more trade through New Zealand ports (Jackman, P. 1994).13 Rob Storey had become a MP on retiring from the Presidency of Federated Farmers. Storey successfully proposed the coastal shipping reform in Parliament and the industry was deregulated in early 1995 with passing of the Transport Law Reform Act. The reform allowed foreign ships visiting New Zealand for delivery of imports or collecting exports to carry domestic freight between New Zealand ports (Straight Furrow 1994d).14 In 1997 the head of the Australia-New Zealand Direct Line shipping company claimed the Federated Farmers’ campaign for coastal shipping deregulation had led to a healthy resurgence in the trade that was crucial in the wake of changing international trends. He said deregulation did not lead to the wholesale elimination of New Zealand ship operators as predicted by unions. Instead, it expanded the trade making it more competitive with rail and road transport, giving consumers more choice. Globally there was a trend towards larger ships calling at fewer ports. This would mean greater opportunity for the coastal trade, with smaller ships carrying cargo to and from the port in which the larger vessel was berthed (Straight Furrow 1997).15

Freezing Works One cost imposition that for a while seemed to have been partly resolved in the 1970s was the impact of militancy in the freezing industry. Perceived success of militancy in freezing works had been one element in persuading farmers in the 1940s that they needed a stronger, single, organisation to argue for them. A strong prejudice among meat farmers that continued into the 1970s was that workers at freezing works too often stopped work without justification. The Federated Farmers’ President said in 1970 that ‘Delays and stoppages in our freezing works have got completely out of hand. It’s the law of the jungle and to hell with the other bloke’ (Straight Furrow 1970a).16

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Freezing workers had always been a traditional enemy of New Zealand farmers. But efforts were made towards a greater understanding. Ken Frindlay of the New Zealand Freezing Workers’ Research Foundation was given space in Straight Furrow to explain the workers point of view. He encouraged the view that farmers and freezing workers had a common interest in dealing with the freezing companies. The farmer has his stock processed by them—and in most cases sold his stock to them. The freezing worker sold his ability to work to the freezing company in return for wages. Frindlay said that everywhere workers have learned from bitter experience that all important industrial progress has been made through taking strike action. Farmers were probably puzzled over why some freezing works have more stoppages than others but the ‘hard, unpalatable fact’ was that those works generally have far higher wages than those who never stopped work. Arbitration on its own never led to important gains. But direct action was not taken lightly or without responsibility. No man lightly deprived himself and his family of the means of life. Freezing workers were entitled to the full proceeds of their own labour but were not getting anything like that. Many farmers were unable to even begin to imagine the conditions inside a freezing works—the noise, the dirt, the blood—and the monotony of doing heavy work for long hours. Many stoppages were protests against these conditions. Frindlay said freezing workers had no quarrel with farmers and he saw many encouraging signs that farmers and freezing workers were at last moving closer together. He saw the biggest obstacle facing both freezing workers’ and farmers’ leaders was convincing ordinary farmers and freezing workers of the wisdom and need to reach an understanding. Farmers should direct their attentions to the very large profits returned by meat operators. Both farmers and workers could protect themselves only by taking collective action (Straight Furrow 1970b).17 In 1970, when a dispute arose over pay for mutton slaughtermen, representatives of freezing workers’ unions took the initiative and requested a meeting with Federated Farmers. Union representatives spoke about their differences with the employers. They claimed there had been a steady erosion of the relative pay for mutton slaughtermen compared with other workers in the freezing industry. The unions stated that they wanted the claims for mutton slaughtermen agreed to and settled before discussing the claims of other workers. The unions also discussed industrial relations generally in the industry.

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Following that meeting with the unions, the Federation’s representatives met employers’ representatives. The employers stated that the claims of the mutton slaughtermen should not be considered in isolation from those of other workers. The employers’ representatives gave a detailed account of events in the current dispute. They also stated that they were quite willing to discuss the mutton slaughtermen’s claims first, but final settlement would depend on subsequent discussions concerning the rest of the workers and the other provisions in the award. The Federated Farmers’ president, P. S. Plummer, emphasised at both meetings the Federation’s concern to see settlement. He stated that the Federation should remain neutral. Following the meetings Plummer said the meeting provided the Federation’s leaders with an opportunity to inform the union leaders of the very serious problems affecting the farming industry because of widespread drought. He also expressed the concern felt by farmers about the grave effects on farming of industrial disputes at freezing works. He cited instances of serious financial losses to the farmer and to the economy as a whole (Straight Furrow 1970c).18 The Government threatened, with or without the agreement of trade unions, legislation to ensure the killing of stock in transit when strikes developed at freezing work. This was made clear in a statement by the Minister of Labour after a three-hour meeting with representatives of Federated Farmers, the freezing companies, freezing workers’ unions and members of the Government Caucus Committee on Industrial Relations. It was agreed that before legislation was introduced an effort should be made to reach agreement and to settle the matter before the killing season commenced (Straight Furrow 1970d).19 Talks continued and agreement was reached between Federated Farmers and freezing workers’ unions on stock in transit when a stoppage occurred. Most importantly, the agreement covered the killing of stock in works’ yards. Also, Federated Farmers and the unions agreed to six-monthly meetings to enable both parties to advise each other of practical measures that could be adopted in the interests of the unions, farmers and the industry in general. Welcoming the agreement, the Dominion President, Alec Begg, asked Government to withdraw draft legislation proposed for dealing with this problem. The secretary of the North Island Freezing Workers’ Union said that wherever possible a two days’ warning would be given before workers stop. He acknowledged the real concern shown by the unions for the farmers’ difficulties. The Acting Minister of Labour said the Government

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welcomed the agreement as a great advance in cooperation between the unions and farmers (Straight Furrow 1970e).20 But the terms of the agreement were not kept when killing stopped at the Fielding Freezing Works during a dispute and 5686 lambs were left in the yards. The Fielding sub-branch of the New Zealand Meat Workers’ Union expressed deep regret at the inconvenience caused to farmers by mutton slaughterers downing tools without first killing all stock in the yards. But the episode must have given doubts on whether agreement with the Freezing Workers’ Union had any value (Straight Furrow 1972).21 In presenting his 1978 budget Muldoon reported that deterioration in industrial relations in the freezing industry had imposed a cost burden on the farmer and it would be unreasonable to expect farmers to bear the full costs of the wage settlement negotiated by the freezing industry unions. As a ‘temporary expedient’ the Government agreed to meet part of the settlement’s costs to allow time for a more lasting solution. The long-term solution was that, simultaneously with terminating the Government contribution to freezing worker wage costs, all Government inspection fees at freezing works would be cancelled. Freezing companies were expected to absorb the additional wage costs or to recover them by increasing killing charges but increases for farmers would be more than offset by the benefit received from cancellation of Government inspection fees (NZPD 1978).22 Allan Wright, President of Federated Farmers at the start of the 1980s, had made several critical references to industry relations and the high costs of freezing works. The rare agreement reached in the 1970s between Federated Farmers and the freezing unions had come to nothing. Usually, Federated Farmers could only watch and complain, farmers had little choice but to accept whatever conditions and costs freezing works offered. But at the 1980s start, the Federation’s influence with Government enabled it to try to ensure greater efficiency in freezing works through introducing more competition. Competition was restricted by the firm grip of freezing works’ owners on issuing licences for new works through their position within the Meat Industry Authority. Federated Farmers pressed for delicensing and, after reviewing the meat industry, the Government agreed and delicensed the meat processing industry by reducing the powers of the Meat Industry Authority. Again, optimism rose that freezing works after decades of

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complaint from Federated Farmers might at last become more efficient with costs coming under control. Federated Farmers provinces, especially, Southern Hawke’s Bay and Wairarapa, had pushed for delicensing long before the national body (Wright, G. 1981a).23 When the national body took up the campaign Tim Plummer, Chairman of the Federated Farmers’ Meat and Wool Section, considered that the strength the Section had mustered to get behind delicensing was the ‘foremost achievement of the Section over recent years’. There had been continuing requests from farmers in the period leading up to delicensing for a closer scrutiny of cost structures in the freezing industry. These were coupled with requests for processing companies to explain why they needed to pass on increases in killing charge costs. Following a Federated Farmers’ analysis of farmer feeling about factors restraining production it became clear that companies had been protected by licensing so they were able to justify increased costs to their shareholders by paying out dividends even in the face of adverse industrial problems (Straight Furrow 1982a).24 It was obvious that the main restraint on production even above taxation were the costs on and off the farm and the ability to kill stock when they were ready to be harvested. What brought the whole matter to a head was that applications to the Meat Industry Authority for licences incurred costs associated with lengthy hearings. Also, the difficulties of potential new companies being able to prove the economic necessity for another works against the existing companies’ ability to refute it. It had taken almost 2 years and almost $2 million to establish a licence for a small works in Hawke’s Bay. The meat company, Pacific Freezing, had been through two long and unsuccessful hearings with its applications for licences opposed by all other freezing works in the lower North Island. Pacific was unable to get killing space in existing works. The frustration was too much for the owner of Pacific Freezing, Graham Lowe, and, supported by local farmers from the outset, his persistence was credited with changing New Zealand’s freezing industry. Also, local MP, John Falloon, had used his influence in caucus and in December 1980, the law was changed (Wright, G. 1981b).25 The Government accepted the need to encourage innovation and get away from the traditionalism and protection that it considered had got the meat industry into ‘the plight it was experiencing’. Federated Farmers, in its submission to Government, said delicensing would mark an important

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turning-point in the key industries that serviced farming. The killing end of the meat industry had tended to stagnate. The same number of people had worked on the floor, and the industry has not been prepared to grapple with the improvements necessary. Delicensing would encourage much more competition and would make companies more conscious of how much they could pass on in costs while remaining competitive. That should lead to longer-term and more satisfactory industrial wage settlements and lower killing costs (NZPD 1980).26 After delicensing had been introduced, Plummer said that delicensing the freezing industry awakened management to their responsibility to improve efficiency within the industry. That was already being seen in some areas and the real advantages would come about with competition nationally. There would be hardships in the transitional period, but, hopefully, the processing industry would improve its efficiency, enabling New Zealand meat exports to maintain a competitive edge on world markets. Already three inefficient works had closed and two new ones opened, all in the North Island. Despite reducing staff by 2200 staff the industry had retained its ability to process all available stock in the normal seasonal pattern. There was clear evidence that those plants that could achieve the greatest number of days loading were able to operate at low unit costs and that would accentuate the trend towards smaller plants strategically placed in stock producing areas. During wage negotiations, the old union adage of pay up and shut up would not work in a competitive environment. The overall industry viability was at stake but at last competitiveness was assisting the determination to hold costs (Straight Furrow 1982b).27 The high expectations of improving the freezing industry at the 1980s start had disappeared by mid-1985. Federated Farmers’ Meat and Wool Council found itself ‘standing firmly’ behind the Meat Companies when the Companies decided on united resistance to the Freezing Workers’ claims for a 25% wage increase. The motion on this was unanimously supported by the Council. The Council explained that the issue was over relativities. The meat companies had offered the unions a 5.2% increase in line with the tripartite agreements. If the companies agreed to a 25% wage increase, tradesmen at the Freezing works would receive 57.4% more than their colleagues outside the industry. Some Council members were angry that the Government had not helped the situation but the majority agreed that if the Government was asked to intervene directly, it was likely that a soft settlement would result. The Council decided it was imperative that a firm stand be taken as the

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industry viability was under threat. The only positive note was that this was the first time the freezing companies had actually stood together and shut all the doors at the same time (Taylor, C. 1985).28 By the 1990s major changes were taking place in employer-worker relations. Calder and Tyson report: The Employment Contracts Act of 1991 (ECA) represented a watershed in industrial relations. It swept away the structure of awards and arbitration and put the employment relationship on the same basis as any other commercial contract. It also encouraged direct negotiations between employer and worker, removing the special status of the union as a bargaining agent. The Freedom of Association clause allowed people to choose which, if any, union they wanted to belong to. One of the most significant changes was the removal of ownership of work, defusing all demarcation disputes in one stroke. In some respects, however, the ECA only clarified and codified what was already underway. Both unions and employers had seen the writing on the wall even if the message was different. The employers hand was on the pen, their view was in the ascendancy, perfectly fitting the aspirations of the National Government elected in 1990. (Calder and Tyson 1999a)29

Unemployment also weakened union power. In 1994 two major employers, Fortex and Weddel, went into receivership with considerable loss of employment for freezing workers. The average wage of the meat processing worker slipped down the national averages but productivity increased (Calder and Tyson 1999b).30 Take Away Points Through the 1990s Federated Farmers campaigned to reform coastal shipping and waterfront costs; the Government deregulated coastal shipping and initiated major reforms of the waterfront industry. Another cost imposition was the impact of militancy in the freezing industry. Agreement was reached between Federated Farmers and freezing workers’ unions on stock in transit when a stoppage occurs. But the agreement was not kept by Freezing workers.

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The Government accepted the need to get away from the traditionalism and protection that had got the meat industry into ‘the plight it was experiencing’. Unemployment also weakened union power. Two major employers went into receivership. The average wage of the meat processing worker slipped decreased but productivity increased. The most effective change in waterfront and freezing works reform was achieved when Government introduced employment legislation making relations between employers and employees controlled by direct contracts and the right to strike was restricted.

Notes 1. Straight Furrow, 1988. ‘Effort Urged’, 09/11/1988: 7. 2. Orman, T. 1990. ‘More Waterfront Reform Needed’, Straight Furrow, 04/04/1990: 1. 3. Harris, E. 1989. ‘Bill Will Perpetuate Absurd Structure’, Straight Furrow, 22/02/1989: 5. 4. Straight Furrow, 1989a. ‘Federation Critical of Waterfront Bill’, 22/02/1989: 1. 5. Straight Furrow, 1989b. ‘Waterfront Ball in Employers’ Court’, 22/03/1989: 6. 6. Straight Furrow, 1989c. ‘Latest Port Strike “Outrageous”’, 22/11/1989: 5. 7. Lind C. 2013. Till the Cows Came Home: Inside the Battles That Built Fonterra (Wellington: Steele Roberts): 219/20. 8. English, C. 1994a. ‘Raw Politics Centre Stage in Shipping Debate’, Straight Furrow, 22/08/1994: 5. 9. Straight Furrow, 1994a. ‘Feds Chalk Up Shipping Victory’, 21/11/1994: 11. 10. Straight Furrow, 1994b. ‘Opposition MPs Fail in Coastal Shipping Bid’, 20/06/1994: 3. 11. English, C. 1994b. ‘Raw Politics Centre Stage in Shipping Debate’, Straight Furrow, 22/08/1994: 5. 12. Straight Furrow, 1994c. ‘“Pie-in-the-Sky” Nonsense’, 21/03/1994: 7. 13. Jackman, P. 1994. ‘Answering the Tyranny of Distance’, Straight Furrow, 04/04/1994: 4.

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14. Straight Furrow, 1994d. ‘Transit Option Support “Common Sense”’, 04/04/1994: 5. 15. Straight Furrow, 1997. ‘Coastal Shipping Enjoys Healthy Resurgence’, 14/07/1997: 18. 16. Straight Furrow, 1970a. ‘Jungle Law Ruling Freezing Workers Says Mr. Plummer’, 30/07/1970: 6. 17. Straight Furrow, 1970b. ‘Farmers and Freezing Workers Unite?’, 21/10/1970: 13. 18. Straight Furrow, 1970c. ‘Federation Takes Initiative in Freezing Talks’, 04/03/1970: 4, 13. 19. Straight Furrow, 1970d. ‘Stock in Transit Action Assured’, 09/09/1970: 1. 20. Straight Furrow, 1970e. ‘Union/Farmer Agreement on Works’ Stoppages’, 02/12/1970: 3. 21. Straight Furrow, 1972. ‘Feilding Freezing Workers’ Regret’, 29/11/1972: 3. 22. NZPD 1978. (New Zealand Parliamentary Debates), Appropriation Bill—Financial Statement, 01/06/1978: 537. 23. Wright, G. 1981a. ‘SHB—Centre of a Revolution’, Straight Furrow, 04/12/1981: 4. 24. Straight Furrow, 1982a. ‘Well Served by Three Sections’, 20/09/1982: 3. 25. Wright, G. 1981b. ‘SHB—Centre of a Revolution’, Straight Furrow, 04/12/1982: 4. 26. NZPD 1980. (New Zealand Parliamentary Debates), October 2– November 5, 1980: 3994/5. 27. Straight Furrow, 1982b. ‘Well Served by Three Sections’, 20/09/1982: 3. 28. Taylor, C. 1985. ‘Praise for Freezing Companies Stand’, Straight Furrow, 10/04/1985: 6. 29. Calder and Tyson, 1999a. Meat Acts: The New Zealand Meat Industry 1972–1977 (Wellington: Meat New Zealand): 288. 30. Calder and Tyson, 1999b. Meat Acts: The New Zealand Meat Industry 1972–1977 (Wellington: Meat New Zealand): 290.

CHAPTER 20

Environment

Introduction The Environment was a topic that in the twenty-first century would become as important to farming as the national economy had been in the 1980s. Farmers found themselves subjected to a new series of constraints and a new set of organisations that regarded farming no longer as New Zealand’s backbone but as a threat to New Zealand’s quality of life. At the 1990s start, Rob McLagan, the Federated Farmers’ Chief Executive, warned that New Zealand farming had so far escaped the worst excesses of the environmental and conservation lobbies. However, given the experience of many Northern Hemisphere countries, it seemed inevitable that environmental and conservation considerations would bear more directly on how farmers operated. Farmers were already having to adapt traditional ways. Environmental considerations were likely to dominate decision making on agricultural economics and food policy over the 1990s. The economic well-being of farmers and of nations could no longer be addressed without assessing environmental impacts of individual and community decisions. McLagan said conservation in its truest sense was known to farmers as an aspect inextricably interwoven into their livelihoods. Successful and profitable farming ventures relied on working with nature and not against it (McLagan, R. 1989).1

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Politically, a recent development had been the integration of the “green movement” into mainstream parties. McLagan said for agriculture, a challenge was to promote conservation values into a viable and sustainable agricultural industry. Conservation was in the landowner’s best interests and a sound financial case could be made for integrating the best conservation practices into daily farm management decisions. He said many involved in the environmental movement overlooked that farmers were extremely conscious of acting responsibly not only out of selfinterest in maximising both short- and long-term output, but also because farmers had a strong empathy with nature and the need to preserve the environment for future generations (Straight Furrow 1990a).2

Drought and Irrigation In 1981 an early example of the growing pressures was the conflict between the need for irrigation and environmental concerns. Farmers argued that irrigation allowed increased stock units, each bringing increased overseas exchange. In most cases, livestock capacity was doubled. Extra opportunities through horticulture and dairying were also possible in areas impossible without irrigation. Irrigation at least doubled the number of on-farm jobs and brought extra workers and their families into country areas benefitting not just the farming community, but the whole country (Broad, H. 1981a).3 Arguments for irrigation were strengthened by drought in the late 1980s/early 1990s. The Federation’s strong advocacy in the 1980s that there should not be Government intervention was relaxed in seeking support from Government when farming was hit by exceptional weather conditions causing droughts in the late 1980s/early 1990s, first in the South Island and then the East Coast of the North Island. Neal Wallace described the droughts as ‘the likes of which were only seen every 50 years’ and demonstrated how those droughts compounded farmers’ financial problems caused by removing subsidies in the mid1980s. Federated Farmers pressed Government to provide financial relief and, following the South Island drought, the Minister of Agriculture announced ‘a drought assistance package’ that comprised a guaranteed family income to be based on a modified special-needs grant; a stock trust provision; roll-over climatic relief suspensory loans; a new-start grant of $45,000 for each farmer who decided to leave voluntarily; a commitment

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to reassess the need for further farming rehabilitation support postdrought; an undertaking to meet the costs of stock slaughter on farms, if required under the Animals Act; and, finally, a guaranteed payment of independent farm appraisals sought by farmers who wanted to restructure their operations. The package did not include specific assistance to farmers who wanted to restock and to re-establish crops. However, it did include a commitment to reassess the need for further farming rehabilitation support post-drought (NZPD 1988c).4 Three months later Federated Farmers’ Provincial Presidents in the South Island drought area followed up the Minister’s commitment to reassess need for further rehabilitation support. The Presidents proposed the Government must implement policies which improved farmers’ cash flow and gave them confidence and financial stability for the next financial year. The Presidents had met in Timaru with representatives of the Ministry of Agriculture and the Prime Minister’s Department, to formulate submissions on the drought package. The Presidents agreed that the farmers who were viable prior to the drought should be able to continue in business. The Presidents recommended to Government: That the drought-created debt be set aside, secured by the Government for a five-year period. The Government to negotiate appropriate interest rates with financiers for debt set aside. That Government guaranteed seasonal advances from financiers for rehabilitation purposes. That a commercial market for tax trading losses be established. The introduction of income averaging for tax assessment. That all adverse-event suspensory loans prior to 1987 be written off. That the application period for Adverse Events Family Income Support be extended to a minimum period of six months. That MAF put together an information package on post drought management. The removal of the Excise Tax on Diesel, rebated to 1 January 1988. Federation representatives intended to refine those proposals and discuss the matter further with Government officials. They said it was imperative that Government gave an urgent clear statement on this matter, so that farmers could do their financial and farm management planning for

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the new season. If the package was implemented, it would restore confidence to farmers, and provide a much-needed boost to flagging regional economics (McCaw, E. 1989).5 The Government agreed a scheme with financiers whereby the Government would guarantee 80% of each qualifying loan made for specific rehabilitation expenditure for up to 4 years. The Government would pay interest for 2 years (NZPD 1989).6 Through 1989/1990 a severe drought affected the East Coast of the North Island. The region’s Federated Farmers made a submission for broad financial assistance that went well beyond the South Island provisions. The Prime Minister, Geoffrey Palmer, said this proposed additional assistance could not be supported by Government. He said the secret of effective intervention was to provide measures which helped farmers to help themselves, and to draw in resources from the financial institutions. In March 1990, the Government agreed a $30 million drought recovery package for the North Island East Coast region. Palmer said the impact of the drought on the East Coast from Wairarapa to East Cape had been just as damaging as that in the South Island, but it appeared to be less well appreciated because it was less spectacular. The Government had been able to draw heavily on recent experience gained from the South Island drought. The package was targeted to specific cases of need, and farmers would qualify depending on their degree of need. He believed the measures to be humane and realistic. He said Federated Farmers, Ministry of Agriculture personnel, and Parliamentary colleagues, had spent long hours to get the Government’s decisions to the people of the affected area as quickly as possible so that people knew where they stood. The package contained five principal measures: Farm management consultancies; New Start Grants; Adverse events family income support; Technology transfer programme; Drought Rehabilitation loans. The Federated Farmers President, Brian Chamberlin, welcomed the package for the East Coast of the North Island saying it would assist the recovery of the whole region, town and country alike. The measures would make it easier for farmers to borrow to rebuild flocks and restore

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pastures. The recovery package was based on the assistance measures the Government devised for the South Island but tailored to the differing circumstances prevailing on the East Coast where farmers were, in general, in a stronger financial position (Straight Furrow 1990b).7 But future damage by droughts could be mitigated by irrigation. It was claimed that large areas in New Zealand that could be irrigated were situated near major ports which could transport products overseas more easily. It was vital for the future well-being of New Zealand that all major irrigation schemes proceeded. The Federated Farmers Agriculture Section Chairman, Ness Wright, reported to his Section’s annual conference that drought had seriously affected Canterbury farm production. Most crops had been hit, yields and returns were down, wheat had to be imported, wool condition was impaired by dust and dirt. Sheep lost condition and lower bodyweight in ewes threatened lower lambing percentages in spring. Winter feed crops had largely failed to establish and many had been resown. Wright said it was important to maintain progress on irrigation, particularly in Canterbury, where increased production would create more jobs and benefits to the community and New Zealand as a whole. The time was now ripe for a rapid expansion of irrigating the Canterbury Plains and other areas throughout New Zealand. A management plan should be prepared with all organisations working closely together to safeguard their interests. A committee should comprise county councils, Government departments, agriculture research stations and agricultural universities and acclimatisation societies working together to bring out the positive aspects of major schemes (Straight Furrow 1982).8 An example of the conflict between irrigation and environmental concerns was when Federated Farmers found itself trying to broker an agreement with conservationists over developing 65,000 ha of the Rakaia countryside using irrigation with 30,000 ha of surface water from the Rakaia river and the remainder from groundwater sources. The scheme’s opponents included enthusiasts in angling, forest and birds, wild and scenic river and recreation activities together with a salmon farming operation. A Rakaia River Association had been formed and taken a hard line of “absolutely no compromise”. A demonstration of the emotions generated was ‘the sane hope’ expressed by the newly elected MP, Ruth Richardson, that the debate would get out of the ‘warfare concept’ and be put on an ‘intelligent footing’.

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The chairman of the Lower Rakaia Irrigation Association, Brian Cameron, had spent some 12 years battling for the irrigation scheme up to the early 1980s. Opponents pointed out the scheme’s considerable expense. The head of the Ministry of Agriculture Economics Division had said that irrigation development had probably produced a lower return on development funds than almost any other form of land improvement. For pastoral farming schemes with livestock, the cost of irrigation schemes was becoming prohibitive with returns of only 8 or 9%. Conservationists argued also that if irrigation was decided on, the whole scheme could be supplied from groundwater. Conservationists argued that the Rakaia debate was special because protecting the river would be in the nation’s interests, both in terms of economics, and in terms of wildlife habitat. In particular, the Rakaia river was the last major habitat of the Wrybill plover (a bird with a beak which is bent to the right—the only such bird in the world). Losing this habitat would be an international tragedy (Broad, H. 1981b).9,10 The first discussions between Federated Farmers and the conservationists ended in complete failure with the North Canterbury President of Federated Farmers, Arthur Mulholland, saying that while he hoped to have a reasonable discussion and reach some compromise the meeting ended in rancour with conservationists taking an extraordinarily unrealistic and unrelenting approach (Broad, H. 1981c).11 In 1981 the Water and Soil Conservation Act had been amended which gave environmental groups the right to apply for a conservation order which would restrict some or all future water rights from being granted. A conservation order placed on the Rakaia river was one of the first agreed by the Planning Tribunal. Federated Farmers, together with associated agricultural groups, had been represented at a seven-day hearing before the National Water and Soil Conservation Authority in 1984 at which 33 witnesses were called. The Planning Tribunal ruled on issues that clearly had adverse effects on farming interests in the Rakaia and other river and lake contexts. The Tribunal felt the test of balancing competing interests, a test which applied to water rights, was inappropriate for conservation orders and conservation had to be given a clear priority. Once it was decided that a conservation order was to be made, the Tribunal’s view was their role was to protect the outstanding features and not take into account competing

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users. Following that judgement, the Federation on behalf of the agricultural interests appealed the decision to the High Court on several points of law. In a judgement issued on 17 November 1986, the High Court judge ruled substantially in favour of the Federation that the multiple use of water resources was a proper part of the decision-making process and allowed conservation orders to fairly take into account the needs of primary and secondary industry. Conservation orders were not designed to lock up rivers solely for their recreational and fisheries values. Using water reserves for irrigation could also be seen as a legitimate use. Federated Farmer’s legal adviser, John Matheson, said the High Court decision exposed the many difficulties of interpretation of the conservation statute in the context of a ferocious debate between conservation and development for irrigation purposes. The legislation was prolix, vague and imprecise. Those factors had encouraged a mass of litigation. The Federation considered that the judgement marked an important legal victory for the Federation, providing an important precedent for all other conservation order applications (Straight Furrow 1986).12

Environmental Legislation The Labour Government elected in 1984 set up a working party to advise on possibilities for establishing Government organisations for both planning and nature conservation. Federated Farmers criticised the Government’s working party for not including anyone closely associated with the land or with experience in the present system of lands administration, claiming the working party comprised those who had little understanding of the pastoral lease tenure, let alone farming in the South Island High Country (Bartley, C. 1985a).13 Federated Farmers’ legal officer, Ewan Chapman, said changes had been made over the last ten years which had increased environmental input. That made new major changes unnecessary. There was general support for a Ministry for the Environment but concern at the extent of its proposed powers. Federated Farmers supported a Ministry which had an advisory rather than an operative, function. The Federation considered it important that the policy function be established first, before the Department had any operative functions. There was particular concern that it was anticipated that the Ministry should control the Town and Country Planning Act and the Water and Soil Conservation Act and also

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be an advisory body providing impartial advice on community views. The advisory effectiveness would be weakened by the considerable time spent on statutory planning. Federated Farmers reported a deep-rooted fear that the proposed machinery could be extended to the private sector. The Town and Country Planning Act affected both private and Crown lands. If the Ministry had powers to administer Town and Country Planning, it could also advise changes to the Act. Once the machinery was in place it could be used as an entree into private land and administration of district schemes. Priority might be given to conservation and preservation rather than the present multiple use recognised as the best way of using resources, the Federation wanted to keep that present way (Bartley, C. 1985b).14 After the Government’s working party had reported, delegates at the Federated Farmers’ annual Dominion Conference completely rejected the party’s proposals. The party had said a new Department should have powers over farming interests, including uncommitted land and Crown leasehold land. It proposed also a separate conservancy department and that caused the greatest concern in the agriculture industry. With a primary objective of conservancy, there were concerns that this would preclude any development, even where this would benefit conservation in the long run. There was no recognition of the contribution of sustained stewardship to the nation’s wealth which occupiers of so much land in question would continue to deliver, whatever tinkering the administrative superstructure may undergo. Early proposals for a Crown Estate Commission anticipated a powerful role for it in overseeing both the conservancy and development departments. But its composition seemed to be weighted in environmentalists’ favour. Federated Farmers were concerned that this important body would at worst consist of nine urban dwellers and only one rural representative. Federated Farmers claimed such a Commission would have insufficient expertise and 26,000 Crown leasees have no voice. As an alternative, Federated Farmers, along with the Forest Service and Lands and Survey Departments, argued that it would be more feasible to modify existing structures than create upheaval with new. The Land Settlement Board had recently added two environmentalists as observers, and if they were given voting powers this would be a major improvement (Bartley, C. 1985c).15

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The Government Bill was introduced in July 1986 and took a broad definition of the term ‘environment’ including not just natural and physical resources but also the social, economic and cultural conditions affected by changes to those resources. It established the office of Parliamentary Commissioner for the Environment, and a Ministry for the Environment. The Commissioner would have a watchdog role borrowing from the ombudsman concept. The Commissioner would be an environmental auditor to ensure the right balance between development and conservation. The Commissioner would have the function of improving the environment quality by reviewing systems established by the Government to manage the allocation, use or preservation of natural and physical resources. The second body established by the Bill, the Ministry for the Environment, was given statutory recognition and authority as a state department to underline its importance and its permanence. Its role would be to advise the Government on how its environmental management would improve the quality of the environment. The ministry would advise the Government on both public and private sector proposals that might have a significant environmental impact. The first major steps in reforming environmental management were to be fundamental reviews of the Town and Country Planning Act and the Water and Soil Conservation Act (NZPD 1986).16 The Director of the new Environment Ministry, Roger Blakely, summarised how he saw the Ministry operating. He said farmers carried out activities which impacted on the environment and on the community’s surroundings. There needed to be a framework in which farmers could make their decisions about land uses. The rules should be clearly defined and a process spelled out which ensured that all parties affected by the decisions got the opportunity to fully participate in the decision. The process needed to be efficient in terms of the speed at which decisions were made and there needed to be the opportunity for public participation and ensured adequate environmental control. At the earliest stage of any planned development Blakely said the person responsible should identify what the environmental impacts were and encourage participation by those who might be interested. Then collectively they should seek to resolve problems with all the parties concerned (Christian, G. 1987).17 Federated Farmers welcomed the idea of a policy-making body like the Ministry for the Environment but there was concern that it could be involved in ‘empire building’. The Federation lawyer, Ewan Chapman,

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said the Ministry wanted some control in environmental assessment procedures which may duplicate existing processes and cost farmers time and money. A better approach would be to make sure that existing procedures in the Soil and Water Act were adequate. Chapman said there were still conservation areas of concern to farmers. These could interfere with existing trespass legislation to give unlimited access to conservation areas (Straight Furrow 1987).18 The Government had said they would review the Town and Country Planning functions which were currently held by the Ministry of Works. It was proposed that they be vested in the Ministry for the Environment but Federated Farmers was concerned because that might give the Ministry for the Environment a free hand to introduce overriding controls to protect native bush on private land. No farmers’ ownership rights had yet been taken away but the Federation intended to protect the rights of Crown leaseholders under the new administration and to review any environmental legislation (Christian, G. 1985).19 The Ministry for the Environment reported in 1988 that New Zealand agriculture had developed by the comprehensive destruction of natural ecosystems, using fertilisers and agricultural chemicals to reduce genetic diversity. The Ministry of Agriculture begun to explore using organic farming to achieve sustainable agriculture. The Minister for External Relations, Mike Moore, who was soon to become Prime Minister, warned that while he was not advocating arable farmers ‘go organic tomorrow’, he advised them to be sympathetic to consumer concerns and increasingly careful about using fertilisers and sprays which could tarnish New Zealand’s ‘clean green’ image. There was much research could do to provide the technology to reduce dependence on chemicals. US chemical companies were already turning their research towards solving pest and disease problems by biological means. A recent survey in the USA pointed to food safety and quality as being the most important factors to consumers buying food (Straight Furrow 1989a).20 The other major environmental issue that the Federation had to ensure protection of farmers’ interests was the Government’s proposals for new Resource Management procedures to balance development and the environment. The Federation made submissions to the Select Committee reviewing the proposals. The Federation advocated that sustainable management of resources must always include consideration of economic effects. Federated Farmers was also concerned at the potential extra

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costs. No revision of local Government funding mechanisms had been announced and the Federation was concerned that costs of Resource Management procedures would fall unfairly and unequally on the farming community. Other concerns were the proposed power for regional councils to terminate existing water rights before expiration of the full term without compensation, and, to a proposed Heritage order mechanism for land-based values. The Federation thought current mechanisms were sufficient to protect those values and objected that a Heritage order might be lodged with insufficient rigour and not taking into account the intrusive effect on landowners’ rights (Straight Furrow 1990c).21 Alan Wise was both Chairman of the Southland Meat and Wool Section of Federated Farmers and a Southland regional councillor. He was able to give a balanced view of how progress that secured everyone’s support could be made. He said the Resource Management Act (RMA) was resisted by rural people wanting to hold on to existing rights. The consultation process was user-unfriendly. Rural people saw added costs; rules were seen as barriers; there was too much paperwork and reports which switched people off; the RMA was seen as complicated and boring. Suggestions to improve the situation included simpler messages, a better understanding of what sustainability meant, a need to explain what needed to be achieved and why, field staff to advise on issues, and a need for practical approaches and guidelines. More than anything education was needed, including information packs, newsletters, school visits, disposal do’s and don’ts, field days, monitor farms and booklets. There was a need to highlight the advantages and quantify those, to encourage both rural and urban landcare groups to involve the whole community in partnership projects. Plans and rules had to be practical, workable and affordable, allowing time to adjust with a strong need to identify roles clearly. There needed to be financial incentives to promote environmental outcomes and consultation throughout to gain community ownership. Technical jargon and buzz words needed to be avoided; there had to be a self-monitoring and “hands on” approach. Mistakes must be avoided when developing policies by involving interested parties and enabling them to have an input that could change at the planning stage (Wise, A. 1994).22 All Federated Farmers’ provinces were putting significant resources into representing farmer interests in the consultative planning process being undertaken by local authorities. That had been enhanced by employing regional policy executives capable of interpreting draft plans

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and assisting provinces to prepare professional, reasoned and researched submissions. Many of the submissions emphasised the need for councils to avoid unnecessary regulations. Plans had to determine what outcomes were needed by the community sector groups and individual companies to allow equal input into the planning process. Planning decisions had to reflect the balanced needs of the wider community not the wishes of a vocal minority (Straight Furrow 1994).23 Attempts were made at reconciling differing views on the environment but some were notably unsuccessful, merely succeeding in hardening attitudes. Federated Farmers’ High Country farmers sought a greater understanding of the Forest and Bird Society’s concerns over the Crown Pastoral Lands Bill in 1995 and invited the society’s regional field officer, Eugenie Sage, to the High Country conference. Sage said the Bill was a disaster because it promoted private ownership by farmers who historically had no aspirations of sustainable land management. Preoccupation with maximising returns on capital and human energy meant future management would continue to marginalise protecting nature. It was unreasonable to expect conservationists to be happy with farmers’ “trust me” approach, given the destruction of more than three quarters of pre-European tussock grassland areas through 140 years of pastoralism. Farmers’ opposition to district council plans to secure and conserve areas of environmental importance made hollow their claims to being conservationists. So too did lessees’ unwillingness to have nature conservation values considered in their applications for discretionary consents. Farmer Gary Eckhoff, ironically, congratulated Sage on driving the wedge even deeper between conservationists and farmers. The high country was not some kind of fantasy land for elitist, middle-class, bornagain environmentalists who, having polluted their cities, now wanted heaven in the high country at someone else’s expense. Federated Farmers Meat and Wool Section chairman Bill Garland told Sage it was important to remember cooperation was best achieved through consultation rather than confrontation, especially in conservation matters where farmers considered their efforts were not being recognised. If there was one thing which really ‘stuck it up’ landowners, it was being told how to do things (McCaw, E. 1995).24

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Protecting Farming from Pests Dealing with the incursion of pests was always a key element in maintain farming production and traditional pest control methods became a topic objected to by environmentalists. That was demonstrated when, in 1990, the newly-formed Green Party expressed concern about the ‘misuse’ of chemicals for agriculture. The Federated Farmers Arable Section Chairman, Stuart Collie, said Green Party spokespeople should get their facts straight, comments by Green representatives had been an appalling misrepresentation of the true situation, branding farmers as bogeymen intent on poisoning the general public. Collie said producing sufficient, safe and nutritious food could only be guaranteed by sensible use of scrupulously tested agricultural chemicals. If farmers were not using some forms of chemicals the public would be at extreme risk from deadly, food borne, naturally produced organisms. “Chemical” was not necessarily a dirty word—as some attention-seeking people with political aspirations would have the public believe. Without chemical application to food crops, health risks would dramatically increase, production levels would dramatically decrease, prices would sky-rocket and many basic foods would simply not be affordable by much of the population. Those at greatest risk from chemical misuse would be farmers and their families. Farmers themselves could least afford any over-application of agricultural chemicals and would be the first to call for tightening controls if their own health was being affected. Using unfounded emotive arguments to create unnecessary fears in the minds of the public was in this case a pathetic ploy for political purposes (Straight Furrow 1990d).25 The Arable Council chairman said pesticides’ safe use should be resolved by scientific evaluation and not by some ‘paranoid anti-pesticide lynch mob’. Claiming the environment was a major political issue in many western countries, he warned farmers to be careful of politicians and bureaucrats who become attracted to the Green movement without evaluating issues in a balanced and scientific manner. A balanced approach would recognise that primary producers had real economic, marketing and environmental constraints on using pesticides. Sustainable agriculture required that plants’ natural mechanisms to inhibit pest attacks should be supplemented at times by plant protection agents. A balanced approach would respect farmers’ desire to act responsibly and not be seen as environmental villains. Robertson advocated using market forces to determine pesticide use. If sufficient consumers chose to eat food produced

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organically, it would lead to a greater emphasis on organic production. Conversely, those who chose to use pesticides should accept responsibility for their use. He called for a common-sense, scientifically based, approach that recognised farmers had the right to go about their business with the minimum of bureaucratic interference (Straight Furrow 1989b).26 Federated Farmers brought together the primary industry players to get consensus on the Government Industry Agreement (GIA) for biosecurity, protecting production from pest, weed and disease incursions. Joining GIA allowed farmers to work together and with Government to develop the financial and practical tools needed to deal with future biosecurity shocks. Joining GIA gave farmers a stronger voice across the entire biosecurity chain. It strengthened the Ministry of Primary Industries attempts at eradication and weeded out interventions which were not cost effective. Federated Farmers was disappointed in the response to a Great White Butterfly incursion expecting there would have been more than just two years of monitoring. The Federation thought there was poor support from the levy-funded bodies. With more support from those bodies the strength of the Federated Farmers network would have been better utilised. This was a pest which would have cost the livestock industry over $5 million per year in control measures alone. In the end it was the Department of Conservation (DOC) who stood up and took the responsibility for eradicating it (FF 2017).27 Federated Farmers welcomed the response to Mycoplasma bovis (M. Bovis) but in the early days the lack of knowledge from some authorities about farming systems was a real worry. The discovery of M. bovis had been devastating to those faced with culling their herds and far reaching with massive impacts on graziers, service bull providers, calf rearers, sharemilkers and others caught somehow as collateral damage. It would change farming and question how good biosecurity responses were for events that affected livestock (FF 2018d).28 The Chairman of Federated Farmers Arable Industry Group said in 2016 the past 12 months had been a rollercoaster. The year started quietly with no biosecurity incursions until along came velvetleaf. This was not specifically an arable industry weed as it was across all farming types and the arable industry was able to manage this weed better than most. However, it highlighted how crucial biosecurity was to the well-being of our industry and the country as a whole. The Ministry for Primary Industries (MPI) had done an outstanding job in responding to the velvetleaf

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incursion by mobilising large numbers of staff from its networks with the aim of eradicating velvetleaf from New Zealand (FF 2016d).29 The incursion was overseen by a group which included Federated Farmers, Foundation for Arable Research, DairyNZ, Beef + Lamb, DeerNZ and regional councils, and in particular the Waikato Regional Council which had considerable success in managing this weed in the past. There were 250 known incursion sites throughout New Zealand, however all those fields have been visited and the velvetleaf removed. MPI was moving to long-term management of this weed working with Federated Farmers and other stakeholder groups. Other incursions include blackgrass, which had been isolated to two seed lines of Nui and all trace backs from these lines had been explored including straw, offal and other paddocks sown with the parent seed line. Noogoora burr was a worry for the Arable Industry Group and there were serious concerns about how unprocessed corn originating from Bulgaria was transported around the middle of the North Island. As a result of the Federation’s persistent focus on this issue, MPI was working on revised transport protocols for the movement of imported grain to New Zealand. The Federation was working with MPI to get answers to remaining questions related to the shipment and the auditing of the processes involved in its importation from the pre-border space through to the end milled product (FF 2016e).30

Wood from Indigenous Forests Another area where views were becoming polarised was using wood from indigenous forests for export as hardwood chips to Japan and Taiwan. The Royal Forest and Bird Protection Society wanted Government to intervene with an export ban. Federated Farmers Senior Vice President, Owen Jennings, strongly opposed an export ban because New Zealand was a property-owning democracy and individual property rights should be observed to the full. Jennings said the Federation objected to ‘mechanisms’ that added to the ‘growing list of arbitrary devices’ which removed property rights. Farmers had the right to say it was their land to do with as they like. But if farmers had a right they also had responsibilities. The Federation’s policy aimed at safeguarding the right and acknowledging responsibility. The Federation suggested a levy on exported indigenous wood to be used to encourage reafforestation of marginal land. However, the Royal Forest and Bird Protection Society opposed proposals to

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fund conservation programmes from levies on ‘environmentally damaging practices’. The Society spokesman believed few farmers would be affected by an export ban on woodchips. Only a small area of native forest was on land that was potentially agricultural land and most good soils were already in production. The Federation supported retaining and enhancing indigenous forest but believed that the guiding principles for conservation should be encouragement and education rather than compulsion or compensation. Controls under the Town and Country Planning Act were rejected by Federated Farmers as being an unjust infringement of property rights. Jennings said Federated Farmers had been working on landowners’ behalf in trying to secure the best possible deal, given Government’s determination to proceed. Covenanting indigenous forests should be the principal means of attaining their retention and enhancement. There was a growing national clamour for wood-chipping to stop and if the nation wanted that, then it should pay. Federated Farmers advocated an annual per hectare payment to farmers who put their land under convenant, recognising the landowner’s contribution to the nation. The Federation also suggested that if individuals exercised their right to cut down native trees then it should be done according to a management plan. They had to ensure that the land would be reafforested or used as high-quality agricultural land (Harris, E. 1989).31 Take Away Points Environmental considerations were becoming important for agricultural economics and food policy. Economic decisions needed to take into account environmental impacts. Severe drought strengthened arguments for irrigation but that conflicted with environmental concerns. After much legal debate, the High Court decided using water reserves for irrigation was a legitimate use. The Minister advised farmers to avoid pesticide practices which could tarnish New Zealand’s ‘clean green’ image. Government’s proposals for new Resource Management procedures to balance development and the environment. Planning decisions had to reflect the balanced needs of the wider community not the wishes of a vocal minority.

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Views became polarised on using wood from indigenous forests for export as hardwood chips.

Notes and References 1. McLagan, R. 1989. ‘Editorial’, Straight Furrow, 22/02/1989: 2. 2. Straight Furrow, 1990a. ‘Environment Dominant’, 06/06/1990: 4. 3. Broad, H. 1981a. ‘What Potential for Irrigation!’, Straight Furrow, 18/12/1981: 17. 4. NZPD 1988. ‘New Zealand Parliamentary Debates’, 8/11/1988, Vol. 493: 393. 5. McCaw, E. 1989. ‘“Think Carefully Before Accepting Grant”, Farmers Advised’, Straight Furrow, 08/02/1989: 8. 6. NZPD 1989. ‘New Zealand Parliamentary Debates’, 15/08/1989, Vol. 500: 252. 7. Straight Furrow, 1990b. ‘Drought Package for East Coast’, 21/03/1990: 13. 8. Straight Furrow, 1982. ‘Looks a Bleak Picture, Severe Pressure for Arable Industry’, 25/06/1982: 8/9. 9. Broad, H. 1981b. ‘Resources Clash on Rakaia’, Straight Furrow, 18/12/1981: 18. 10. A Wrybill was reported at the Waikanae River Estuary in North Island, far from the Rakaia, in the late 1990s. 11. Broad, H. 1981c. ‘Resources Clash on Rakaia’, Straight Furrow, 18/12/1981: 19. 12. Straight Furrow, 1986. ‘Farmer Victory on Rakaia’, 03/12/1986: 7. 13. Bartley, C. 1985a. ‘Will Environmental Proposals Hurt Farmers?’, Straight Furrow, 21/08/1985: 8. 14. Bartley, C. 1985b. ‘Will Environmental Proposals Hurt Farmers?’, Straight Furrow, 21/08/1985: 9. 15. Bartley, C. 1985c. ‘Will Environmental Proposals Hurt Farmers?’, Straight Furrow, 21/08/1985: 9/10. 16. NZPD 1986. ‘New Zealand Parliamentary Debates’, 15/07/1986, Vol. 472: 2980. 17. Christian, G. 1987. ‘Living by Quality of Environmental Advice’, Straight Furrow, 04/02/1987: 4.

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18. Straight Furrow, 1987. ‘Empire Building Concern’, 04/02/1987: 4. 19. Christian, G. 1985. ‘How Will Environmental Decision Affect Farmers?’, Straight Furrow, 09/10/1985: 26/7. 20. Straight Furrow, 1989a. ‘Capitalise on the Clean, Green Image’, 08/11/1989: 6. 21. Straight Furrow, 1990c. ‘Federated Farmers on Resource Management’, 04/04/1990: 3. 22. Wise, A. 1994. ‘Take the Act to the People’, Straight Furrow, 25/07/1994: 4. 23. Straight Furrow, 1994. ‘Top Priority Is Getting Plans Right’, 25/07/1994: 5. 24. McCaw, E. 1995. ‘Sage Attack Ruffles Farmers’ Feathers’, Straight Furrow, 03/07/1995: 2. 25. Straight Furrow, 1990d. ‘Green’s Rhetoric Angers Farmers’, 24/10/1990: 4. 26. Straight Furrow, 1989b. ‘Beware “Paranoid Anti-Pesticide Lynch Mobs”—Robertson’, 22/11/1989: 4. 27. FF 2017. (Federated Farmers), (Federated Farmers), President’s Address to National Council, 15/02/2017. 28. FF 2018d. (Federated Farmers), President’s Speech, National Conference 2018. 29. FF 2016d. (Federated Farmers), Speech by Guy Wigley, Chairman of Federated Farmers Arable Industry Group at the Arable Industry Conference in Ashburton 30/05/2016. 30. FF 2016e. (Federated Farmers), 30 May 2016 Speech by Guy Wigley, Chairman of Federated Farmers Arable Industry Group at the Arable Industry Conference in Ashburton. 31. Harris, E. 1989. ‘Forest and Bird Society, Federated Farmers Clash Over Native Forest Export Ban’, Straight Furrow, 25/10/1989: 1/3.

CHAPTER 21

Water Quality: ‘Clean and Green’ Versus ‘Dirty Dairying’

Introduction In 2001 the Ministry for the Environment commissioned a report to estimate the value for New Zealand’s export trade of its ‘clean green’ image. The report assessed the potential consumer reaction if there were a decline in New Zealand’s cleanness and greenness. It reinforced the qualitative evidence that the clean green image was valuable and strongly indicated the vulnerability of exports if New Zealand’s environment was perceived to be degraded. The image was estimated to be worth at least hundreds of millions, possibly billions, of dollars—aggregating value elements from dairy, tourism, and organic produce, and extrapolating to other sectors such as meat. The report assessed that New Zealand was relatively clean and green, mainly because the low population density resulting in relatively benign environmental pressures. However, there were problems sufficient to question the sustainability of New Zealand’s image. There was a need for vigilance. Problems included air quality in Christchurch and Auckland, erosion on steeper landscapes and visual impact caused by some land use practices (e.g. logging), contaminated sites and marine environment quality, especially estuaries and harbours near main population centres. The main problem associated with farming was degraded freshwater quality especially from dairy industry practices. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_21

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The Ministry claimed the report supported the need for effective environmental management including regulation. The Resource Management Act 1991 and the Hazardous Substances and New Organisms Act 1996 underpinned economic gains for industries whose markets depended on the clean green image. The report underlined the importance of positive actions already undertaken in the primary production sector to find environmentally friendlier production methods (FF 2001).1

Farm Effluence Disposal Concern about farm effluence disposal grew in the 1990s. In Taranaki the Catchment Board was attempting to control pollution of natural watercourses. But Taranaki Federated Farmers, led by the Provincial President, John Boddy, campaigned against the Catchment Board’s water rights policy for dairy cowshed effluent. Boddy was refusing to apply for a water right for his spray irrigation unit. The chairman of the Cardiff Federated Farmers had paid for a water right for discharging his cowshed effluent via an oxidation pond and he was annoyed at paying an annual resource management levy as well when there were about 480 dairyfarmers in the province who were, like Boddy, still refusing to apply for water rights, and so not paying the levy. The Federated Farmers’ Dominion Council policy was to pursue general authorisations throughout the country rather than intervene in the Taranaki dispute and the Council treated it as a local issue for the provincial Federated Farmers. Boddy said he was not polluting under the terms of the Water and Soil Conservation Act. Federated Farmers legal advisers had assured him that the onus was on the Catchment Board to prove individual discharges were breaching the act. Boddy hoped the Board would prosecute him. Boddy said the Act did not make water rights mandatory for milking shed discharges. The Catchment Board had decided in the 1970s that it would require dairyfarmers who channelled the washings from their cowsheds into oxidation ponds to apply for water rights. There were some 2700 dairyfarmers in the province and about 1250 of them used oxidation ponds and most of the farmers now had water rights for their operations. The remaining 1450 farmers discharged the washings from their milking sheds onto paddocks through spray irrigation units, and the Catchment Board, until 1987, did not require water rights for these discharge systems. Since then the local Federated Farmers Dairy Section has

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been campaigning against the decision, claiming that spreading cowshed effluent on paddocks was a cheap form of natural fertiliser and in most cases did not pollute natural water courses. About 480 dairyfarmers using spray irrigation units were still holding out against the Catchment board and refusing to apply for water rights. Boddy said he did not support the pollution of natural water courses in any form, and if he knew of dairyfarmers who were contaminating creeks or streams he would inform the Catchment Board. As long as spray irrigation units were managed properly and shifted around the paddocks regularly, the discharge would not pollute natural water courses because it must first leach through the soil. He wanted the Catchment Board to look at each cowshed effluent discharge system individually and require water rights according to whether they were necessary. Instead, the Board had a policy which made water rights mandatory for all dairy shed discharge systems irrespective of whether pollution was occurring and that upset him (Wallis, R. 1989).2 The Chairman of the Water Committee of the Taranaki Catchment Board, V.J. Ford, explained the Board’s concerns over farmers’ failure to comply with ‘good environmental management’. He said the Board relied on farmers’ integrity to apply for the necessary water rights, to manage systems correctly and to use their common sense. Sadly, there was a small minority in Taranaki, unable to conform to the above criteria, including Boddy, the current Federated Farmers’ Provincial President. Ford said Taranaki was a unique province with numerous small streams and very intensive dairying. Over the previous two decades water resources had diminished because of land drainage and industrial and agricultural development. Demands for water had doubled. There were now tens of thousands of tonnes of cow manure from dairy sheds which required to be disposed of and assimilated into the environment annually. Dairy waste disposal had proved to be the major water quality issue in Taranaki. The combined effect of dairy wastes on water resources totally outweighed effects from the highly publicised petrochemical plants operating in Taranaki. Ford said if the Taranaki community did not manage wastes’ disposal very carefully, water would simply not be there in sufficient quality and quantity to meet future demands. Already most streams had bacteriological levels higher than public health standards and groundwaters were polluted with high nitrate levels. In summer most streams had substantial algae problems caused by nutrient run-off.

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Ford said that in 1987 the Board had amended its dairy waste disposal policy to enforce a requirement that all farmers disposing of dairy-shed waste whether by spray irrigation systems, oxidation ponds or otherwise were required to obtain a water right and thus have their activity fully licenced. The licencing process provided the opportunity for public comment and for the Board to adequately monitor and ensure that systems were being managed correctly. The Board had extended the water right requirement to spray irrigation systems simply because most poor waste management practices were associated with those systems. During the dairy season, the Board received approximately 40 complaints per month which related to dairy shed waste disposal systems and the vast majority were from spray irrigation systems. Because spray systems required a far greater operator involvement than other systems, operator error caused far more pollution incidents. Ford said the Catchment Board had taken a very responsible position in trying to manage water resources wisely. Part of that process was ensuring that all dairy shed disposal systems were licensed and managed correctly. It was unfortunate that a small minority of dairyfarmers did not have the foresight to recognise what the future might hold if the Catchment Board did not undertake this task with the utmost diligence. Ford agreed that it was unfair that 80% of farmers were paying levies because they had water rights while others without water rights were not paying these levies. Clearly, those people not paying were not fronting up to their responsibilities to their neighbours and the Board would be working actively to ensure the matter was addressed (Ford, V. 1989).3 More concern on water quality in New Zealand waterways was raised in 1994 in a report commissioned by MAF together with the Ministry of Environment. The report found waterways in sparsely developed areas to be in good condition but in a very poor state in intensive dairying regions. Many South Island rivers and the headwaters of North Island major rivers which had sparsely developed catchments were in good condition. But for lowland rivers in agriculturally developed catchments water was in very poor condition. The most widespread problem was animal faecal contamination. Many lowland river, streams and creeks were often not suitable for swimming and in intensive dairying areas streams receiving multiple dairy farm and discharges may not even be safe for stock watering. Regional councils were well aware of the problems and had put in place monitoring

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and remedial plans. In many instances the work had seen water quality improve over the last decade. Farm management practices had improved in recent years with regional councils requiring oxygenation systems for effluent disposal. Dairy shed waste was still a major problem but regional councils were working with the farming industry to overcome the problem. In terms of farm practices some areas needed immediate attention. Agricultural managers, researchers and policymakers were poorly informed and farming practices reflected that lack of understanding of the consequences of their activities. The Resource Management Act would necessitate a major re-evaluation of some farming systems and practices and their acceptability to society may be brought into question. To assist in the process of change those within the agricultural industry needed to be educated about agricultural effects on freshwater systems (Stevenson, P. 1994).4 Federated Farmers’ policy analyst Gavin Forrest said the Government now had a responsibility to ensure it commissioned other appropriate agencies to study the effects on waterways by activities other than farming. Water quality was lowered by all uses of land, whether that was a dairy farm, human sewage, industrial use, run-off from roads and so on. It was important to decide what were realistic and necessary goals for water quality. Society must not set unreasonable environmental quality standards and leave it to farming to sort it out. Other industry leaders claimed that the issue was already being tackled. John Boddy, now Federated Farmers’ Dairy chairman, said effluent disposal systems were under scrutiny by the Federation in conjunction with the Livestock Improvement Corporation and the Dairy Research Institute. Some existing disposal methods may not be working to best practice and overcoming the problems were being examined. Boddy agreed the industry needed to take a long look at some farming practices (Straight Furrow 1994b).5 In 1994, Federated Farmers took positive steps towards resolving concerns over dairy effluent. The Taranaki Regional Council had suggested it might restrict farmers’ use of nitrogen because it was concerned about damage to the soil and the environment. Taranaki Federated Farmers organised a meeting with the council to resolve the disagreement and agreement was reached. The Council agreed there was no need to impose restrictions on the use of nitrogen, farmers would

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carry out their own forms of nitrogen regulation. Federated Farmers’ Taranaki chief executive said the Council decided to allow self-regulation after it saw how responsible the farmers were in their approach to the issue (Wynard, J. and Brosnahan, T. 1994).6 The Federation joined with other interested groups, including the Dairy Board and Dairy Research Institute, to look for improved methods of treating and disposing of dairy effluent. The intention was to bring together and co-ordinate research on treating effluent to help farmers to be environmentally responsible and retain the marketing advantage of New Zealand’s relatively clean and green farming systems. The groups thought that much would be gained by leading on environmental issues rather than waiting to be pushed by regulatory pressure. The groups convened meetings of representatives from all institutes researching different methods of dealing with dairy shed effluent and measuring the environmental impacts. The meetings demonstrated that a wider range of treatment options would become available to farmers but the systems would have to be well-matched to soil type, average temperatures, rainfall and proximity to waterways (Bailey, M. 1994).7

Attacks from Outside Government In addition to the pressures from the Ministry of the Environment, the Federation needed to defend farming from sensational statements when farming was attacked by the New Zealand Ecological Foundation’s head, Guy Salmon. He belittled the dairy industry’s record on effluent disposal and threatened to launch an international campaign suggesting the poor environmental record of New Zealand dairyfarmers. The Foundation said groundwater contamination with nitrate was above safe levels in almost half the wells in the Hamilton basin. It said most lakes in Waikato were severely degraded as a result of silt and nutrient inflows, and most dairy districts in New Zealand were similarly in an advanced state of environmental degradation. National milk production, which almost doubled since 1990, would double again over the next few years if present trends continued. If regulatory authorities continued to exempt dairy farm runoff from the provisions of the Resource Management Act the severe impacts of dairying on the environment could be expected to get much worse. Federated Farmers’ President Malcolm Bailey called the statements treacherous. Bailey said the statements flew in the face of the record

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of dairyfarmers in environmental concerns, let alone their legal requirements under the RMA. If farmers did not keep to the rules as set down by regional councils then they would be prosecuted and expect to be prosecuted. He said that if farmers were to make progress they should be offered encouragement and support, raising concerns so they can be sorted out, rather than ‘kicking farmers in the teeth’. The dairy industry has been very pro-active in this area, and Salmon knew that. But he was saying consumers may think twice about buying New Zealand dairy products if they know what we do with our waterways, and the Foundation was threatening to put it on social media. Bailey said that could cause enormous damage. There was no problem with constructive criticism. If there were ways to better deal with effluent disposal then they should be looked at. But Ecological Foundation did not do that. It not only threatened dairyfarmers, but also the thousands of jobs that relied on the dairy industry (Stephens, S. 1999).8 The Food and Fibre Minister, John Luxton, agreed that the Ecological Foundation needed to be careful about spreading false information about the dairy industry. He said the Foundation should check its facts before undertaking to destroy New Zealand’s clean, green, environmental image and called the Foundation’s claims about the industry’s environmental records as an attack on dairyfarmers. He said the group should look at the environmental report of New Zealand’s largest dairying region, Waikato, published by Environment Waikato. The report suggested that downstream from Hamilton levels of human and animal waste were high between the early 1950s and 1970s. They had since fallen to well below those in the 1950s. At Mercer, human and animal waste levels fell tenfold between 1970 and 1980 because of better waste treatment. Over the last 30 years Waikato River quality has improved. The Ecological Foundation needed to be careful that in spreading false information it exposed itself to potential damages claims from industry participants. Federated Farmers’ Dairyfarmers of New Zealand section chairman, Charlie Pedersen, described the Foundation’s claims as scandalous and bordering on treason. When he initially heard the comments he dismissed them because he thought they were made to evoke a reaction. Farmers were aware of problems associated with effluent run-off—probably more than anyone else. But it was a community issue. It was wrong to ‘simply point the finger at farmers’ (Straight Furrow 1999b).9

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Steps to Improve Water Quality Phil Holland reports that: The “Dirty Dairying Campaign” was a campaign started by NGO Fish and Game (an organisation of fishers and hunters) in 2002 as a way to voice their growing concern and mobilise public opinion in the fight against the declining ecological health of freshwater in New Zealand. The issue was brought to a head by their receipt of a 2002 NIWA (National Institute of Water and Atmospheric Research) report that they had commissioned. This outlined a substantial and on-going decline in water quality in dairy farm areas … In addition to this report there has been a growth in pressure from government agencies and environmentalists for higher environmental standards. (Holland 2014)10

A consequence of the NIWA Report was that in 2003 the Dairying Clean Streams Accord came into being. It was an agreement between the Fonterra, all New Zealand’s Regional Councils, and the Ministries for the Environment and Agriculture and Forestry. The stated goal of the policy was: To work together to achieve clean healthy water, including streams, rivers, lakes, ground water and wetlands, in dairying areas. In particular, the goal is to have water that is suitable, where appropriate, for: • Fish; • Drinking by stock; • Swimming (in areas defined by regional councils)

Holland pointed out flaws in the Accord: it had a limited number of stakeholders involved in its drafting. Protagonists like Fish and Game and Forest and Bird were excluded. Fonterra were also criticized from within the industry for their lack of consultation with farmers. Dairy Farmers of New Zealand chair Kevin Wooding went on record as saying dairy farmers are disappointed with the lack of consultation. None of the evaluations relate directly to the measurement of water quality. Instead, the measurement criteria all relate to on-farm objectives, such as

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fencing off streams and swamps to exclude stock, compliance with consents and the writing of nutrient budgets. The reality is that even as compliance with the Accord code has increased, water quality has continued to decline. There was ‘ambiguity’ in the way the percentage of waterways fenced was reported and the data about compliance was collected by farmers’ selfreporting. (Holland 2014a)11

In 2007, Federated Farmers took steps to improve water quality, collaborating with other primary sectors to implement a Primary Sector Water Action Plan which recognised the importance of water for New Zealand’s agriculture, horticulture, forestry and tourism. In addition to Federated Farmers, partners were Fonterra, the horticulture and arable industries, Irrigation NZ, Meat and Wool New Zealand and the NZ Forest Owners Association. It was recognised that there were emerging problems with water allocation and availability in areas where competing demands for water had increased. Surface water quality had deteriorated in a significant number of lowland areas as a result of reduced flows, excess nutrients, sediment and microbes entering waterways. It was noted that these trends, if not addressed, threatened to degrade economic prosperity and general well-being and there was a need to understand society’s expectations of environmental quality and performance. The plan aimed at promoting sustainable freshwater management within the land-based primary sectors by catalysing and supporting the different sector initiatives. Specific goals were to maintain and/or enhance water quality from primary production land and to improve the efficiency of water use by the primary sectors. Those were to be achieved by identifying activities that might impact on water systems and encouraging using tools that addressed the adverse environmental effects while maintaining or enhancing farm economic viability. Also by developing sustainable water management. Priorities were to be set by working with Government to identify where primary sector impacts were greatest and working with regional councils to identify water systems at risk from primary sector impact. Also, implementing and developing activities to deliver environmental benefits while continuing to deliver national, regional and district economic outcomes from primary production. The partnership intended to report

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annually to ministers on progress. Targets included starting at least ten new community-primary producer initiatives each year from 2008 to 2013 to address local water quality issues from productive lands. Federated Farmers commitment was to advocate for regional councils to identify priority water bodies and their critical issues and disseminate this information to appropriate industry sectors; promote tools and mitigation practices to its members; to address priority areas and specific issues; continue to lift awareness and encourage best management practices; endorse the other industries and sectors agreed targets and agreements; and, maintain dialogue with councils to update priority areas and mitigation (FF 2007).12 The 2003 Sustainable Dairying: Water Accord expired in late 2013 and was replaced by the 2013 Sustainable Dairying: Water Accord, an agreement between a larger group of stakeholders. To address the first flaw reported by Holland for the 2003 Accord, inclusiveness, the 2013 Accord partially addressed the problem by including a much larger crosssection of the stakeholders in the industry and by being led by DairyNZ. But there was still an absence of any of the protagonists for clean water and of the Department of Conservation (DOC). The new Accord had a tighter monitoring with a higher level of compliance, but again measured outputs such as the fencing of streams and the bridging of stock crossings rather than direct measure of water cleanliness. It was not clear that the problem of ambiguity in the reporting and monitoring had been addressed. The voluntary nature had been addressed in many places in the new document with provision for financial penalties and exclusion from supply more prominent. But that still relied on the will of the industry and Government agencies to both fund and undertake this work. Holland concluded that: the health of waterways in dairy farming areas needed to be dealt with by a policy that requires direct measurement of the public’s desired outcome ‘clean water’. To achieve what is required is a process that involves all of the stakeholders, the industry to be seen to be doing the right thing, as well as having a genuine desire to do so. (Holland 2014b)

At the 2017 Federated Farmers National Conference, the President, Bill Rolleston, spoke of farming unfairly under attack. He said towards the end of 2016 the dairy industry felt as though it was being solely blamed for all New Zealand’s water woes. Dr. Mike Joy and Greenpeace blamed

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the dairy industry over contamination of Havelock North’s water. A third of the town’s entire population suffered a waterborne gastro illness from the water supply. The crisis sparked concerns about industrial agriculture—not just in the Hawke’s Bay but across New Zealand. A public health professor, Michael Baker, said New Zealand’s drinking water was ‘under huge pressure from … intensification of dairying, which is obviously contaminating surface water a lot more’. The reasonable thing to do in the face of the Hawke’s Bay crisis would be to say: ‘enough is enough, it’s time to start putting human health and the health of our waterways before industrial agriculture’. Rolleston said the source was not any massive super intense overindustrialised dairy farm, which anyone who had ever actually been to Havelock North would have known because the area was predominately horticulture and viticulture with the nearest dairy farm some 40 km away. The initial source was actually some sheep from lifestyle blocks surrounding the bore head (FF 2017a).13 The Government Inquiry into the contamination recommended several measures on how to better control the safety of water supply but made no mention of a need to change farming activities. In 2017 Rolleston addressed the Local Government New Zealand Fresh Water Forum (FF 2017b).14 He said many countries around the world had scarce water resources. Many had to share their water resources with others downstream. New Zealand was blessed with abundant water and had it to itself. Water made New Zealand the lucky country but whether it was the smart country depended on how water was harnessed, utilised and managed for the benefit of its people and the environment. Rolleston asked—how is the primary sector getting behaviour change to meet the challenge of improving fresh water? The water debate had made one thing very clear to Rolleston, farmers hate being told what to do but give them a problem and they want to fix it. Farmers had seen the problem of over allocation of water in the Selwyn and were working hard to address this. They recognised the effect nutrients were having on Te Whaihora and were working to fix that too. In coastal South Canterbury farmers reacted strongly and negatively to the potential imposition of rules restricting water use and allocating nutrients. However once they had become engaged and once they understood the issues they moved quickly from reaction to pro-action. Farmers engaged with each other and, for the most part, wanted to be good neighbours, but you could always find an exception to the rule.

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Unfortunately for farmers it was the exception which the media tended to paint as the ‘typical’. Vilifying farmers only enraged and alienated them. It pushed them further away from the problem they were trying to be made to understand. Vilification created winners and losers and built resentment (FF 2017c).15 Andrew Hoggard, Chairman of Federated Farmers’ Dairy Section, said farmers were investing heavily in improving the environment and would continue to do so. Stream fencing, riparian planting, wetland creation and erosion control all cost money, and farmers were investing more and more in these. Taxing farmers to provide money for those activities would reduce farmers’ money spent on the activities. Problems created on farms needed solutions on farms, taking money off farms and putting into the general fund would not help pay for the work needed on farms (FF 2017d).16 Rolleston said farmers ‘dryland cousins’ had been the main contributors to the establishment of covenants protecting private land for conservation at a real and opportunity cost of 1.2–1.4 billion dollars. Levy-funded bodies spent millions of dollars on research on water issues. Catchment by catchment, farmers and other locals were working together to come up with solutions which were sensible, practical and affordable. Finally, science was beginning to develop tools to reduce farming’s environmental footprint through topics such as precision agriculture, good farming practice, managed aquifer recharge and targeted stream augmentation. Federated Farmers itself was looking for tools, solutions and answers— for example running a Sustainable Farmers Fund trial investigating the effect of medium to long-term irrigation on soil water holding capacity. Behaviour change was already under way. 80% of catchments had water either improving or steady with respect to water quality. That change happened when the players engaged constructively rather than being forced down a narrow set of unworkable rules. Behaviour change happened when led by good science not activist rhetoric. Rolleston said farmers cared about their land and it showed. Recent reports from the Prime Minister’s Chief Science Advisor, and from the Ministry for the Environment, showed that farmers were just one part of the water puzzle and while it would take years, even decades, to reach the quality targets, progress was being made. The penny was finally starting to drop for the media which had started to articulate the farmer’s side of

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the story. Farmers were on a journey to improve water quality. Now the rest of New Zealand needed to get behind them (FF 2017e).17

Government Regulations for Healthy Waterways Federated Farmers made its position clear when the Government announced on 5 August 2020 final regulations for achieving healthy waterways (FF 2020).18 The regulations included: New (revised) National Policy Statement for Freshwater Management (NPS-FM) National Environmental Standards for Freshwater (NES) Resource Management (Stock Exclusion) Regulations 2020. Federated Farmers pointed out that regional councils and communities had already invested a significant amount of time and resources into developing new regional water plans under the 2017 National Policy Statement for Freshwater. Many of these plans were nearing the end of the process and starting to bear fruit. There was significant uncertainty for councils, communities and farmers as to whether to progress with their existing planned changes, what was the status of current plans and the new NES, and farmers resources consents. The new NPS-FM required all the 30-plus regional water plans to undergo a major review over the next four years. This review would have significant financial and resourcing implications for both councils and communities. During this four-year period the risk was that all the work would have to be thrown out and started again as the Government looked to replace the Resource Management Act with a new Act or Acts. The Federation asked—what gains would be made for the environment from the substantial financial and emotional costs borne by regional communities? Some regulations required a fundamental shift away from the current application of the RMA and management of resources. The final regulations also contained a significant number of major technical flaws, including major internal inconsistencies and ambiguity in the use of terms, that would risk many years of litigation to address. While some minor changes were made to the final regulations the Federation’s considered view was that the final regulations were not fit for purpose. Working

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through the regulations’ details heightened the Federation’s concerns as more and more fundamental problems were identified, ranging from high level concerns to serious technical flaws. An example of how impractical many of the regulations were from a practical farming perspective was that one regulation had determined in precise terms what constituted a fence, contrary with the firmly established definition of an ‘adequate fence’ in the Fencing Act 1978. To comply with the new regulation some riparian fences would have to be largely rebuilt. The regulations were riddled with such examples. The Federation claimed the regulations were a stark example of how an ill-informed process had resulted in a bad outcome. A further example of the Federation’s high-level concerns was the NPSFM requirement that freshwater ecosystems should be prioritised above all else (such as community social and economic values) and that a healthy freshwater ecosystem means ‘the absence of human disturbance or alteration (before providing for other values)’. Both responsible Ministers for these regulations had publicly stated that this was not their intent. In September 2019 Minister Parker stated publicly that ‘I also want to debunk another myth – that we are seeking a return of our waterways to a “pristine” or “pure” state, in a way that it was before we had cities and farms. That is simply not true’. The Federation’s President, Kate Milne, who took over from Rolleston, said the Federation was always optimistic that eventually New Zealanders would begin to realise farmers had been working to improve waterways and water management for more than a decade, and this work would continue into the future. This would show up in improving water quality outcomes, so it’s not just about changing urban people’s perceptions but also the reality (FF 2017g).19 Take Away Points New Zealand’s clean green image was valuable and exports were vulnerable if New Zealand’s environment was perceived to be degraded. The main problem associated with farming was degraded freshwater quality especially from dairy industry practices. Concern about farm effluence disposal grew in the 1990s. Lowland rivers in agriculturally developed catchments water was in very poor condition. The most widespread problem was animal faecal contamination.

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If regulatory authorities continued to exempt dairy farm run-off from the provisions of the Resource Management Act the severe impacts of dairying on the environment could be expected to get much worse. Fonterra, all New Zealand’s Regional Councils, and the Ministry for the Environment and the Ministry of Agriculture and Forestry agreed to work together to achieve clean healthy water, including streams, rivers, lakes, groundwater and wetlands, in dairying areas. Federated Farmers took steps to improve water quality, collaborating with other primary sectors to implement a Primary Sector Water Action Plan which recognised the importance of water for New Zealand’s agriculture, horticulture, forestry and tourism. When the Government announced in 2020 final regulations for achieving healthy waterways, Federated Farmers The Federation claimed the regulations were a stark example of how an ill-informed process had resulted in a bad outcome.

Notes and References 1. FF 2001. (Federated Farmers), National Board Meeting, July 2001, From Acting Chief Executive Ministry of the Environment to Chief Executive Federated Farmers of NZ Inc., 20/08/2001, Valuing New Zealand’s Clean Green Image: 1–3. 2. Wallis, R. 1989. ‘“Prosecute Me—Boddy Invites Action Over Taranaki Water Rights Issue’, Straight Furrow, 09/08/1989: 13. 3. Ford, V. 1989. ‘Catchment Board Replies to Criticism on Taranaki Rights’, Straight Furrow, 11/10/1989: 4. 4. Stevenson, P. 1994. ‘Water Quality Report Released: Dairying Regions in Poor State’, Straight Furrow, 07/02/1994: 10. 5. Straight Furrow 1994. ‘Clean Water Issue Flows from Report’, 21/02/1994: 2. 6. Wynard, J. and Brosnahan, T. 1994. ‘Farmers, Council Agree on Nitrogen’, Straight Furrow, 24/10/1994: 28. 7. Bailey, M. 1994. ‘Dairy Effluent Mess Needs Solution’, Straight Furrow, 07/11/1994: 7. 8. Stephens, S. 1999. ‘Foundation Statement Under Fire’, Straight Furrow, 13/07/1999: 8. 9. Straight Furrow 1999. ‘Real Attack on Dairy Farmers’, 13/07/1999: 8. 10. Holland, P. 2014a. Lincoln Planning Review, 2014, 6, 1–2: 64–66.

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11. Holland, P. 2014b. Lincoln Planning Review, 2014, 6, 1–2: 67/8. 12. FF 2007. (Federated Farmers), National Board Meeting November 2007, Primary Sector Water Partnership—Draft Action Plan Version 7, 07/11/2007. 13. FF 2017a (Federated Farmers), President’s Address to the Federated Farmers National Conference, June 2017. 14. FF 2017b. (Federated Farmers), President’s Address to the Local Government New Zealand Fresh Water Forum, 30/05/2017. 15. FF 2017c. (Federated Farmers), President’s Address to the Local Government New Zealand Fresh Water Forum, 30/05/2017. 16. FF 2017d. (Federated Farmers), Andrew Hoggard’s Address to the Dairy Council at Federated Farmers’ National Conference, 20/06/2017. 17. FF 2017e. (Federated Farmers), Address to Local Government New Zealand Fresh Water Forum, Dr. William Rolleston 30/05/2017. 18. FF 2020. (Federated Farmers), Position Statement on Government’s Final Regulations for Achieving Healthy Waterways, August 21, 2020. 19. FF 2017g. President’s Address to National Council, 22/11/2017.

CHAPTER 22

Farming and M¯aori, New Zealand’s Indigenous People

Introduction New Zealand’s indigenous people, M¯aori, were swamped by European immigration in the second half of the nineteenth century after sovereignty passed to the British Crown through the Treaty of Waitangi in 1840. M¯aori did not fully grasp the impact of signing the Treaty. For farming in New Zealand into the twentieth century, M¯aori were employed mainly as casual labour but with M¯aori becoming urbanised the disadvantages for M¯aori became more prominent. The Waitangi Tribunal was instigated to investigate breaches of the Treaty of Waitangi and, where necessary, recommend recompense for M¯aori. When that recompense threatened farmers’ equity Federated Farmers developed a policy towards M¯aori accepting the need for recompense but not accepting impact on privately owned property.

Before European Settlement Before colonisation by Europeans in the nineteenth century, New Zealand was occupied by M¯aori with land and property used for communal purposes rather than permanently ‘owned’ by individuals. M¯aori food

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supplies were a mixture of cultivated crops, hunting, fishing and from collecting naturally growing food. Danny Keenan reports that when M¯aori first came to Aoteoroa, the M¯aori name for New Zealand, from eastern Polynesia forty-one generations before the twentieth century, they intended to cultivate the new land. When James Cook, the English explorer, visited New Zealand in the eighteenth century he was able to distinguish cultivated ground that had recently been turned up, with furrows and new plants clearly visible. There were kumara, taro and a plant ‘of the cucumber kind’. Plantations varied in size from 1 to 10 acres with excellent tillage (Keenan 2013a).1 Jules Crozet, who visited New Zealand in 1772, noted M¯aori planting techniques in some detail. All persons took part in the tasks of clearing and preparing the ground for planting, tending and gathering the crop; chiefs, warriors, commoners and women—old and young (Keenan 2013b).2 Eldson Best reports that when M¯aori first arrived they found that the conditions differed widely from those in tropical Polynesia and had to spend more time fishing and collecting food supplies including shellfish, berries, roots and the birds. It was probably during that period that the M¯aori began to utilise the rhizome of ferns, as a food supply. The taro and sweet potato were introduced and cultivated. Some areas may have produced crops sufficient to form the main food supply, but most were compelled to rely principally on products of the forest, birds and berries. In a coastal districts of sterile soil or lands unsuited to the cultivation of the sweet potato, the two main sources of food supply were the sea and the forest (Best 1976).3

¯ The Relationship Between Maori and Settlers in the Nineteenth Century Missionaries encouraged M¯aori to develop European agricultural methods (Keenan 2013c).4 The relationship between settlers and M¯aori was defined by the Treaty of Waitangi in 1840. Keenan summarises the uncertainties for M¯aori in the Treaty through which ‘sovereignty’ over New Zealand passed from M¯aori to the British Crown: The Treaty of Waitangi represented one of the earliest steps taken by Government to acquire M¯aori land. According to Evelyn Stokes, M¯aori were never fully informed in 1840 as to the radical nature of the land

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tenure reform facing them if they signed the Treaty. What was never adequately explained, Stokes writes, was the fact that ‘the Crown by the Treaty assumed title over all of the lands of the country.’ This assertion of Crown ownership represented a ‘tenurial revolution’ that was not fully understood by M¯aori who continued to live under the M¯aori customary law system, never suspecting the enormity of what they had signed away to the Crown. ‘In this legal fiction’ Stokes argues, ‘all land tides were vested in the Crown, though subject to the rights of M¯aori to alienate (or not) as guaranteed under Section Two of the Treaty’. (Keenan 2013d)5

The UK Government retained the sole right to negotiate M¯aori land sales. By 1856, when New Zealand’s parliament had been established and control passed to the British settlers, politicians were determined to take over the land despite M¯aori resistance to land sales. Conflicts between M¯aori and settlers over disputed titles were increasing. The New Zealand parliament wanted M¯aori land titles to have a status recognisable under English law and attempted to pass legislation to make this happen. The proposed conversion involved extinguishing M¯aori land titles as they then existed. In 1862, M¯aori still possessed almost 80% of the country and were consistently refusing to sell. Parliament now pushed through legislation extinguishing M¯aori land titles and expediting land sales to settlers. A new court, the Native Land Court, was established to ‘promote the peaceful settlement country’ by determining M¯aori ownership of specific lands. The Court imposed the idea of individual ownership and insisted that among a group of M¯aori owners; all owners had equal rights thus undermining centuries of functioning political and social structures. The Land Court’s impact on M¯aori agricultural development was disastrous. The adversarial system invited contention between parties, which produced a ‘morass in which M¯aori floundered for decades, frittering away their estates in ruinous expenses for often negligible reward’ (Keenan 2013e).6 James Belich reports that from the 1890s dairy farming by Europeans for export ‘began to take off … in regions that had been strongholds of independent M¯aoridom’. Dairy farming displaced M¯aori agriculture as a core business in towns such as New Plymouth and Tauranga. At the same time, sheep farming ‘ended complementary use of land by M¯aori seasonal hunter-gatherers and pastoralists’ (Belich 1996).7

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¯ The Relationship Between Maori and Settlers in the First Half of the Twentieth Century In the 1930s and 1940s, M¯aori was still a rural population; Martin points out that from the nineteenth century: M¯aori were central in supply of labour for P¯akeh¯a farms ... Occupational statistics gathered in 1926 showed that most M¯aori were employed in the rural economy with wage-earning occupations. (Martin 1990)8

Rural M¯aori-P¯akeh¯a9 relations by the mid-twentieth century were illustrated by the evidence to the Royal Commission on the sheep farming industry in the late 1940s, and the Commission’s response to that evidence. It was clear that up to the 1940s rural P¯akeh¯a had taken M¯aori for granted as domestic servants and casual farmworkers. But in the 1940s, the perception was growing that there was a reduction in the availability of M¯aori as casual labour; the causes were interpreted in diverse ways demonstrating diverse prejudices towards M¯aori by P¯akeh¯a farmers. This is illustrated by the following exchanges: Scaife – We have had evidence that it is much more difficult to get M¯aori labour now – that the M¯aori is not as fond of work generally as he was used to be. Tidswell – I can support everything that has been said in that connection. (AJHR 1949a)10

The Commission member Mr. Youren asked Mr. Powdrell of Federated Farmers: Can you get M¯aori girls to take on domestic work in farmhouses? ... They are an almost untapped source of labour?

Powdrell replied: By no means. They have been tapped to the nth degree, for freezing works, the canning industry, clothing factories in small towns, and as hotel assistants. They like the town life. (AJHR 1949b)11

Mr. Irving of Federated Farmers held the view that:

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One of the big troubles is that, with social security, the M¯aoris are getting too much money for very little ... it does not matter if they work. (AJHR 1949c)12

The Chairman also interjected at one point: when they have ... assistance [welfare benefits] they use that to live on instead of raising their standard of living. (AJHR 1949d)13

At that time, there was concern more generally over social welfare’s impact including that supporting P¯akeh¯a the perception was growing at Prime Ministerial level that, instead of simply alleviating poverty, social welfare was creating a P¯akeh¯a population expecting to work less hard and have an ‘armchair ride to prosperity’ (Bassett 2000a).14 Up the 1940s, cultural differences between M¯aori and P¯akeh¯a in using land had not changed significantly since the nineteenth century. Mr. Sutherland of Federated Farmers told the Commission: The individual system of individual ownership is a foreign concept to M¯aori. Prior to the advent of the European, the M¯aori tribe had an inherited right to occupy a certain area. This area, if not in dispute, meant a right to use it as they wished. No M¯aori would think of claiming it as his own. It was a communal holding lived on and roamed over by the community. That outlook survived. (AJHR 1949e)15

This brought the comment from the Commission member, Mr. Eddy: M¯aori did not set out as an individual but in a communal way of life. He is not doing so badly and we cannot expect him to reach our standards in a generation.

Mr. Jessep who was a Commissioner overseeing the farming of M¯aori land said: The best of the M¯aoris realize that they have a long way to go yet before they get a business or commercial instinct. (AJHR 1949f)16

The persistence of cultural differences was also demonstrated by views such as those of Mr. Powdrell of Federated Farmers who disagreed with:

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the educating of M¯aori and P¯akeh¯a children jointly. M¯aori children are totally different in outlook, in the age at which they reach maturity, and in everything else. (AJHR 1949g)17

There were strong views on how M¯aori land should be farmed. In the 1940s, some M¯aori land was farmed directly by owners and there was also farming under European ‘Commissioners’, such as Jessep, appointed by the Government. Federated Farmers’ representatives repeated the longstanding complaint of P¯akeh¯a farmers that there were large areas of M¯aori lands that were ‘a vast seed bed for the spread of noxious weeds and safe cover for vermin’. They felt that ‘for the greater prosperity of New Zealand it is essential to bring back into cultivation large areas of M¯aori land’ (AJHR 1949h).18 There was concern among European farmers with leases on M¯aori-owned land that those would not be renewed because Government wanted to reserve land for M¯aori use to support a growing M¯aori population. While the Commission had been forward-looking in taking evidence from women involved in sheep farming it chose not to take evidence from M¯aori despite encouragement from witnesses to do so. Mr. Irving of Federated Farmers said: I hope ... it [the Royal Commission] will get the M¯aori point of view. It will need both sides before it can judge.

The response of the Commission Member Mr. Scaife was: how can the M¯aori point of view be obtained ... They will not have any organization representing the whole of them.

Irving responded: They have various committees. (AJHR 1949i)19

In its report, the Commission said: We do not think justice would be done unless M¯aori were given the opportunity to state his side of the case. It has not proved possible for us under our order of reference to give consideration to this problem. Moreover, so intricate and difficult is the general subject of M¯aori lands that we do not consider ourselves competent to pass judgement.

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But the Commission did pass judgement by recommending that M¯aori land ‘must be farmed for maximum production in the national interest’ and ‘If a M¯aori owner does not wish to … farm the land himself, we consider the land should be handed over to the M¯aori Affairs Department for development’ (AJHR 1949j).20 The Labour Governments of the 1930s and 1940s were determined to treat M¯aori more equally than its predecessors. It changed the ‘Department of Native Affairs’ to the ‘Department of M¯aori Affairs’. It also changed M¯aori entitlement for social benefits to the same as that for P¯akeh¯a and gave a ‘substantial increase in funding for “native” schools’ (Bassett 2000b).21 However, the evidence to the Commission and the Commission’s responses demonstrate that M¯aori were still considered in rural areas as second-class citizens whose role was to provide a pool of casual labour for farmers. Aspirana Ngata, who was Minister of Native Affairs in the late 1920s, had introduced a programme for consolidating M¯aori land holdings into economic farms, and Government funding was provided to assist that programme (King 2007).22 But the schemes supported only a small minority of M¯aori and ‘some farms proved too small or otherwise uneconomic’ (Belich 2001).23 Most P¯akeh¯a farmers giving evidence to the Commission had little respect for M¯aori culture of land ownership and use and had no doubts that M¯aori should assimilate to European methods of farming but that assimilation lay sometime in the future. The failure to include M¯aori in the Commission’s activities was a major weakness in that it allowed publication of a series of prejudiced statements without an opportunity for rebuttal.

¯ The Relationship Between Maori and Settlers in the Second Half of the Twentieth Century From the 1960s, M¯aori became increasingly urbanised and disadvantaged. By the twenty-first century, less than 5% of New Zealand farms were farmed by M¯aori (SNZ 2020).24 Those farms were mainly in common ownership. M¯aori authorities and their subsidiaries received, managed and/or administered assets. By the mid-1970s, it was recognised that M¯aori was entitled to recompense for its loss of land. In 1975, the Government set up the Waitangi Tribunal to assess whether M¯aori claims of breaches in the Treaty of Waitangi were justified. Alan Ward tells how:

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the Waitangi Tribunal has had a crucial role in shaping relations between M¯aori and P¯akeh¯a … It was created … to provide a due process for mediating the sometimes troubled relationship between M¯aori and ‘the Crown’ over contemporary issues. (Ward 2004)25

The jurisdiction of the Tribunal was extended in 1985 to hear claims concerning actions of the Crown since 1840 ‘charging it with nothing less than a comprehensive review of New Zealand’s colonial history’. Ever since the Treaty was signed in 1840, M¯aori had made many complaints to the Crown that the terms of the Treaty were not being upheld. Often those protests fell on deaf ears. In 1877, one judge said the Treaty was a ‘legal nullity’. In the 1970s, M¯aori protest about unresolved Treaty grievances was increasing and sometimes taking place outside the law. By establishing the Waitangi Tribunal, Parliament provided a legal process by which M¯aori Treaty claims could be investigated. Tribunal inquiries contributed to the resolution of Treaty claims and to the reconciliation of outstanding issues between M¯aori and the Crown.26 The Tribunal reported on many issues, from M¯aori language to fresh water, underground resources and fisheries. Many recommendations were implemented by Governments. The Tribunal’s reports had contributed to many initiatives and new institutions, including M¯aori radio and the M¯aori Broadcasting Funding Agency. When Parliament allowed the Tribunal to investigate events dating back to 1840, many hundreds of historical claims were made. By the 1990s, M¯aori land claims and the increased emphasis on Treaty of Waitangi rights began to grow into a significant issue for Federated Farmers. At first, the Federation’s philosophy on M¯aori land claims recognised that there were genuine injustices in the past, those had to be heard and genuine ones compensated for. To make progress as a nation, New Zealand had to put those past grievances to one side and work together, recognising and honouring cultural differences (Straight Furrow 1994a).27

¯ Federated Farmers Policy on Maori Issues In 1995, the Federated Farmers public relations manager, Paul Jackman, drafted a more thorough philosophy. Jackman said there were two groups of New Zealanders who had a vital interest in the Treaty of Waitangi.

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The first was M¯aori and the second was farmers because the Treaty absolutely guaranteed farmers the right to earn a living from and to be part of the land. The Treaty was a charter for orderly settlement. Jackman said the issue was important because Federated Farmers had been caught in the crossfire of disputes between the Government and M¯aori over Treaty claims. Also, the Resource Management Act required farmers seeking resource consents to consult with M¯aori. Concern has been expressed that this could evolve into a power of veto. Debate over M¯aori sovereignty had implications for natural resources, especially water. There had been suggestions from the courts that Treaty principles should apply to all statutes. These were issues that the Federation could not ignore. Recently, a Federated Farmers’ task force had worked on the issue and three goals emerged for the draft policy—the Federation wanted to be fair to M¯aori, historically truthful and to assert the farmers’ vital interests. The draft policy laid out basic principles: (1) The Treaty of Waitangi was New Zealand’s founding document, by which the Government and State of New Zealand gained its legitimacy; (2) The Treaty bound the country and its peoples together. It guaranteed the right of every New Zealander to live in the land and be equal before the law; and (3) To M¯aori the Treaty acknowledged legitimacy of their communal way of life, while to farmers it provided an assurance that they too had a place as people who lived on and from the land. The draft policy said that the Treaty should be honoured, if need be, by restitution or compensation to M¯aori. However, it also said, most emphatically, breaches of property rights under Article Two (of the Treaty) must not be compensated by violating the property rights of other New Zealanders. Jackman said the more challenging aspects of the draft policy went far wider. Much of the debate about the Resource Management Act, Treaty claims and M¯aori sovereignty came down to difficulties over interpreting Article Two of the Treaty. On the surface, Article Two seemed to be a simple guarantee of M¯aori property rights. It was claimed that Article Two was a broad guarantee of almost all the powers that tribes held before the Treaty was signed, citing its reference to tino rangatiratanga, or, chieftainship. But the Federation’s approach was that before the Treaty M¯aori tribes were by any measure sovereign, they could and did wage war, the ultimate act of sovereignty. They could not do that in the 1990s. What were tribes, and therefore in practical terms how could Article Two be honoured? It was concluded that tribes were voluntary associations, based

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on kinship for the mutual benefits of members. On that basis, the draft policy said: Chieftainship or tino rangatiratanga, as in Article Two, came in the context of an acknowledgment of specific collective or communal tribal property rights. Article Two made those customary property rights lawful. Article Two also implied an acknowledgment of the communal context of M¯aori social life. The Crown and the community at large had an obligation to allow M¯aori communal life to flourish and to treat it with respect.

The draft policy rejected the idea that Article Two created a specific M¯aori property right in relation to rivers, lakes, foreshores, minerals, geothermal resources or water, Crown land indigenous fauna and genetic material. On this, the Federation had taken legal advice and concluded that prior to the Treaty these resources were not private, tradeable, property. Rather chiefs granted use-rights, just as regional and local Government did in the twentieth Century. Prior to the Treaty, when M¯aori tribes were the basis of government, those resources were public property and they should remain so, administered for the common good. Jackman said preparing this draft policy was a profound challenge for all those involved. They were confronting ultimate questions about what New Zealand was all about. Also, farmers were interested in practicalities and not fancy theories. However, what stood out above everything else was that New Zealand could not run away from the Treaty of Waitangi. Just as the Americans had their Declaration of Independence and the British the Magna Carta, so New Zealand had a founding document. If Federated Farmers was serious about farmer interests, then it could not be passive and leave to others interpreting so potent a document. But also, what was reassuring was that the Treaty belonged to farmers and provided reassurance to farmers, just as it did to all New Zealanders (Straight Furrow 1995a).28 Federated Farmers’ President, Graham Robertson, emphasised that farmers could not ignore the Treaty of Waitangi. He told the Federation’s national conference that it was time to agree restitution for M¯aori grievances, but issues had to be resolved lawfully and fairly. He said past injustices must not visit new injustices on present owners. Already there have been instances where some claimants had targeted privately owned land and disrupted sales. Privately owned farms must not be devalued because they were caught up in a land claim. The Government had

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to ensure that there was an adequate resource to both hear and settle claims so that farm families who bought their properties with clear title could retain their farm ownership rights. Robertson criticised the method proposed to return M¯aori Reserved Lands to the control of M¯aori by varying the terms of leases in a way that seriously devalued the interests of the present lessees. Robertson said the Government must accept that innocent lessees must not have their interest stolen from them. The Government had to recognise that their predecessors’ misdeeds must not be righted at the expense of innocent farm families. Governments must treat both the injured landowners and the innocent lessees fairly (Straight Furrow 1995b).29 Robertson said that Federated Farmers had been discussing the issues with M¯aori and knew that the ‘headline-grabbing extremism’ did not reflect the majority M¯aori view. The vast majority of claimants believed that the solution to their claims must not inflict new injustices on present day landowners (Robertson, G. 1995).30 Federated Farmers supported, the New Zealand M¯aori Council chairman, Sir Graham Latimer’s suggestion of a global settlement of M¯aori land claims. Latimer told Federation members that farmers would be shocked by the ‘telephone numbers’ when M¯aori land claims were totalled. The Federation’s senior vice-president, Bill Shepherd, a Northland dairy farmer, had been involved in land claim cases and said a global settlement would be the only means of compensating claimants without disrupting agriculture’s normal flow and investment. Individual claims could have devastating effects on farm business, with plunging property values and loss of equity, and were clearly too disruptive. It was unlikely New Zealand could afford to pay full market settlement for all claims. A global settlement agreed to by all parties would help resolve an issue that had been going on too long (Straight Furrow 1994b).31

¯ Impact of a Maori Land Claim The Treaty of Waitangi Act in 1975 included that the Waitangi Tribunal ‘shall not recommend … the return to M¯aori ownership of any private land; or the acquisition by the Crown of any private land’. But when in April 1992 the Waitangi Tribunal recommended that Crown land in Northland be returned to M¯aori Te Roroa, the land included five, privately owned, farms near Aranga (WT 1992).32 The recommendation effectively destroyed the farmers’ equity by making the farms unsaleable

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to anyone but the Crown. Federated Farmers claimed the Tribunal’s ruling had no force in law and could not compel the farmers to give up their land or the Crown to purchase it. The public furore aroused by the Aranga situation raised fears throughout New Zealand that the Waitangi Tribunal was free to recommend transfer of private land to M¯aori, and the Government responded by amending to the Treaty of Waitangi Act to make it clear that the Waitangi Tribunal must not recommend the return to M¯aori ownership of any private land or the acquisition by the Crown of any private land. The Justice Minister met the Aranga farmers at the Federated Farmers’ Northland conference in 1994 but still had no settlement offer. The five farmers, whose properties were recommended for return to Te Roroa were bitterly disappointed at the lack of action by the Government more than two years after the tribunal handed down its recommendation. The five farmers had freeholded their properties from Landcorp, the Government’s state-owned enterprise, a few years before the Te Roroa claims were lodged with the Waitangi Tribunal, and it was claimed Landcorp knew of the claims at the time of freeholding, before the claims were actually lodged. The farmers had been assured that the claims were an issue between Te Roroa and the Crown and they would not be affected. Federated Farmers tried to find new information about the case but had just about exhausted all the avenues. Court action had been considered but would be very expensive. In addressing the Northland conference, the Minister said privately owned assets must not be used to settle claims. There would be no pan-M¯aori settlement of land claims, it was not Government policy. He reaffirmed the Government’s intention to settle M¯aori claims by the end of the twentieth century and said settlements had to be based on what the country could realistically afford. It was going to cost billions of taxpayers’ money. The Minister said the Waitangi Tribunal’s recommendation on the Aranga farms had been ill-considered. One of the Te Roroa claimants, Daniel Amber, told the conference that any settlement of the Aranga claim had to be a just one, not only to the claimants but also the occupiers of the land. The conference passed a resolution calling on the Crown to enter meaningful negotiations with the five Aranga farmers, restoring equity in their farms and allowing them to leave if they wished (Cording, H. 1994).33 Federated Farmers 1994 national conference supported a Northland plea for a ‘get tough’ campaign in defending the five Aranga farmers. The

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Federation threatened the Government with legal action if it did not reach a satisfactory settlement with the farmers. The move followed the Federation’s approval of a land rights policy that every property owner had the right to full compensation when the rights of private property were compromised. National president, Graham Robertson, said the Aranga issue would be a test case of that policy, and of all those matters that were increasingly interfering with property rights. The Federation’s stance on the Aranga issue was a statement on behalf of all farmers. The Northland delegate to the conference Bill Guest said: ‘It will show members we’ve got the guts to come up with a policy and defend it’. The move also followed the Prime Minister, Jim Bolger, incensing delegates by telling them the Government would give no commitment. Conference speakers said the issue was important nationally. Many New Zealanders had land use options forced upon them, be it the Resource Management Act, the Waitangi Tribunal, or whatever. The Bay of Plenty President said farmers had to show strength of numbers and urged all farmers to support the Aranga farmers. The Northland president said the time for diplomacy was past. It was time the Federation put its money where its mouth was and be prepared to take legal action if necessary. Senior vice-president, John Boddy, said it was vital the Federation stood behind the land rights policy it had just agreed. The Aranga farmers had wanted out since March 1992, when the Waitangi Tribunal released its decision on the five privately owned farms. Despite a vigorous campaign spearheaded by Northland Federated Farmers, the Government had backed off buying them out (Straight Furrow 1994c).34 It was another two years before the Government announced that agreement had been reached. The Minister of Lands, Denis Marshall, announced in August 1996 that the Government had signed agreements with the five Aranga farmers. The agreements provided for the Crown to purchase the farms at current market value, and a process for deciding the value was spelt out in the agreements. In addition, each farmer would receive $71,000 each for their legal costs, valuations and removal expenses. The farmers would not have to leave their properties immediately as they would lease the land back under short-term leases from the Crown. Following the purchases, the farms would be managed by Land Information New Zealand until the Government sold them.

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Take Away Points Before colonisation by Europeans, New Zealand was occupied by M¯aori with land used communally rather than individually owned. In 1840, ‘sovereignty’ passed to the British Crown through the Treaty of Waitangi but the consequences were unclear to M¯aori. A new court, the Native Land Court, impacted disastrously on M¯aori agriculture. In the 1920s, Government funded consolidating M¯aori land into economic farms. But only a small minority of M¯aori was supported. Rural European farmers used M¯aori as domestic servants and casual farmworkers. M¯aori became increasingly urbanised and remained disadvantaged. The Waitangi Tribunal assessed M¯aori claims of Treaty breaches since 1840. Federated Farmers’ view was there should be restitution or compensation to M¯aori but past injustices must not visit new injustices on present owners. When the Waitangi Tribunal recommended land be returned including five, privately owned, farms Federated Farmers disputed the recommendation, and eventually, Government purchased the farms at market value.

Notes and References 1. Keenan, D. 2013a. Ahuwhenua: Celebrating 80 Years of M¯ aori Farming (Wellington: Huia Publishers): 19. 2. Keenan 2013b. Ahuwhenua: Celebrating 80 Years of M¯ aori Farming (Wellington: Huia Publishers, Wellington): 20. 3. Best, E. 1976. M¯ aori Agriculture, The Cultivated Food Plants of the Natives of New Zealand, with Some Account of Native Methods of Agriculture, Its Ritual and Origin Myths (Wellington: A.R. Shearer, Government Printer): 22. 4. Keenan 2013c. Ahuwhenua: Celebrating 80 Years of M¯ aori Farming (Wellington: Huia Publishers, Wellington): 17. 5. Keenan 2013d. Ahuwhenua: Celebrating 80 Years of M¯ aori Farming (Wellington: Huia Publishers, Wellington): 28. 6. Keenan 2013e. Ahuwhenua: Celebrating 80 Years of M¯ aori Farming (Wellington: Huia Publishers, Wellington): 29.

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7. Belich, J. 1996. Making Peoples: A History of the New Zealanders (Auckland, Penguin Books): 250/1. 8. Martin, J. 1990. The Forgotten Worker (Wellington: Allen and Unwin): 39. 9. P¯akeh¯a is the M¯aori word for those of European ethnicity. 10. AJHR 1949a. (Appendices to the Journal of the House of Representatives), Report of the Royal Commission to Inquire into and Report Upon the Sheep-Farming Industry in New Zealand, H46A, Evidence, Vol. 6, p6O5. 11. AJHR 1949b. (Appendices to the Journal of the House of Representatives), Report of the Royal Commission to Inquire into and Report Upon the Sheep-Farming Industry in New Zealand, H46A, Evidence, Vol. 6, p5X3. 12. AJHR 1949c. (Appendices to the Journal of the House of Representatives), Report of the Royal Commission to Inquire into and Report Upon the Sheep-Farming Industry in New Zealand, H46A, Evidence, Vol. 6, p6C4. 13. AJHR 1949d. (Appendices to the Journal of the House of Representatives), Report of the Royal Commission to Inquire into and Report Upon the Sheep-Farming Industry in New Zealand, H46A, Evidence, Vol. 6, p6O5. 14. Michael Bassett 2000. Tomorrow Comes the Son; a Life of Peter Fraser (Auckland: Penguin Books): 275. 15. AJHR 1949e. (Appendices to the Journal of the House of Representatives), Report of the Royal Commission to Inquire into and Report Upon the Sheep-Farming Industry in New Zealand, H46A, Evidence, Vol. 18, p22S1. 16. AJHR 1949f. (Appendices to the Journal of the House of Representatives), Report of the Royal Commission to Inquire into and Report Upon the Sheep-Farming Industry in New Zealand, H46A, Evidence, Vol. 6, p5R1. 17. AJHR 1949g. (Appendices to the Journal of the House of Representatives), Report of the Royal Commission to Inquire into and Report Upon the Sheep-Farming Industry in New Zealand, H46A, Evidence, Vol. 6, p5X3. 18. AJHR 1949h. (Appendices to the Journal of the House of Representatives), Report of the Royal Commission to Inquire into and Report Upon the Sheep-Farming Industry in New Zealand, H46A, Evidence, Vol. 17, p22J1.

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19. AJHR 1949i. (Appendices to the Journal of the House of Representatives), Report of the Royal Commission to Inquire into and Report Upon the Sheep-Farming Industry in New Zealand, H46A, Evidence, Vol. 6, p6C1. 20. AJHR 1949j. (Appendices to the Journal of the House of Representatives) Report of the Royal Commission to Inquire into and Report Upon the Sheep-Farming Industry in New Zealand, H46A, E, p84. 21. Bassett, M. 2000. Tomorrow Comes the Son; a Life of Peter Fraser (Auckland: Penguin Books): 250. 22. King, M. 2007. The Penguin History of New Zealand Illustrated (Auckland: Penguin Books): 292. 23. Belich, J. 2001. Paradise Reforged: A History of the New Zealanders from the 1880s to the Year 2000 (Auckland: Allen Lane): 202. 24. SNZ 2020. (Statistics New Zealand), Tables Relating to M¯aori Farms, 07/05/2020. 25. Ward, A. 2004. Foreword, The Waitangi Tribunal: Te Roopu Whakamana I te Tiriti o Waitangi, ed. Janine Hayward and Nicola R. Wheen (Wellington: Bridget Williams Books). Ward describes ‘the Crown’ as the people of New Zealand—including M¯aori themselves—acting through elected parliaments and Governments. 26. https://waitangitribunal.govt.nz/about-waitangi-tribunal/pastpresent-future-of-waitangi-tribunal, accessed March 2021. 27. Straight Furrow 1994a. ‘Global Settlement Best Way’, 21/03/1994: 6. 28. Straight Furrow 1995a. ‘Cross-Fire Sparks TREATY DEBATE’, 24/07/1995: 18. 29. Straight Furrow 1995b. ‘President Defends Private Owners’, 24/07/1995: 19. 30. Robertson, G. 1995. ‘Two Wrongs Do Not Make a Right’, Straight Furrow, 04/12/1995: 5. 31. Straight Furrow 1994b. ‘Global Settlement Best Way’, 21/03/1994: 6. 32. Treaty of Waitangi 1992. Te Roroa Claim, Wai 38, 03/04/1992. 33. Cording, H. 1994. ‘Minister Shocks Northland Farmers’, Straight Furrow, 06/06/1994: 1/5. 34. Straight Furrow 1994c. ‘M¯aori Land Claim: Feds Threaten Legal Action’, 08/08/1994: 1/17.

CHAPTER 23

Difficult Times in the New Millennium

Introduction Federated Farmers had successively represented farmers through the period of significant changes in global marketing and relationships and with New Zealand diversifying away from over-dependence on the British market. It had successfully secured significant financial support during the 1970s economic crises and had played a significant role in encouraging the restructuring of the New Zealand economy in the 1980s despite the severe impact on the rural community of giving up Government financial support. It had supported deregulation and increased competition in the national economy and gave up a significant source of funding when that seemed incompatible with its overall economic philosophy. But its influence was threatened by the reforms the Federation had encouraged. Farming produce was still the dominant means of earning foreign exchange still representing between 30 and 40% of New Zealand’s exports but competition from other exports was growing (Fig. 23.1).

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_23

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Fig. 23.1 Growth of New Zealand export sectors in the twenty-first century (Source of information—New Zealand Digital Yearbook—Statistics New Zealand)

The Problems Facing Federated Farmers Membership numbers became more important for the Federation after it became funded by voluntary subscriptions rather than a levy on slaughtered animals. At the 1980’s start, there were about 30,000 members but by 2000 that had fallen to about 16,000. A steady fall in membership started at the time of farming’s major financial problems following the removal of financial support by Government. Membership was steady for while in the early 1990s but following the move back to funding only through voluntary subscriptions in 1996 membership fell, partly because of the necessarily increased voluntary subscriptions. Membership recovered for a while in the early 2000s but stalled again in about 2004. Membership had halved in the two decades from 1980. The following decades it fell by only about 20% suggesting that the membership at the best might eventually stabilise at around 10,000. In 1981, membership represented 43% of farms, in 2016, only 24%. By 2007, it was decided that a new approach to recruitment was necessary (Fig. 23.2). Recruitment was mainly through field officers whose role had evolved over the years. The role had been established in the days when the Federation was province-based and levy funded. At that time, the role had little

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recruitment content and appeared to have been a back-up to the provincial president. By 2004, it was recognised that the field officer model was not working as membership growth had stalled. By 2006, the field officer role had evolved to where it was now a membership recruitment role. Changes were made but many field officers remembered the old field officer role with affection and that hindered field officers changing to a sales force seeking new members. In 2007, it was considered that the membership recruitment structure failed to reflect improvements in information technology, rising fuel costs and competition for farmer’s discretionary spend. The field officer role was difficult and arduous. Field officers were located unevenly, reflecting history rather than need or opportunity. It became recognised that it was not cost effective in recruiting new members. For the first six months of 2007, the average number of members signed up per day was 0.41 with the average cost of signing a member being $690 and the average number of kilometres driven 400. The field officer team was struggling to accept modern management and National Council decisions, learn new techniques based on a sales model and to focus on recruitment rather than traditional public relations activities.

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A new membership recruitment model was investigated recognising that both better retention and recruitment would lead to higher membership numbers. Both were important and focus on recruitment should not be at the expense of ensuring retention. The methods to achieve each of these goals were quite different. In the case of retention, the Federation was dealing with known members. Recruitment was of people not known to the organisation, although they might be known individually to members. The proposed model shifted from reliance on professional salaried recruiters to a reliance on paid passionate enthusiasts plus professional telephone recruitment. The new model depended on provincial officeholders and financial members supporting the model and getting involved in recruitment (FF 2007).1 When Conor English became CEO in 2008 he made clear the problems facing the Federation. He saw significant challenges, including the structural decline in membership continuing with pace, while the economic and political climate were both blowing headwinds against the Federation. Competitors who had emerged from the 1990s reforms were challenging from all angles—Meat and Wool NZ, DairyNZ, the Shareholders Council and the Sheep and Beef Council were all both pushing successfully into the Federation’s traditional policy and regional activity territory from the sides, while Young Farmers were attacking from below and making good strides into the Federation’s supply of leaders and participants. The Federation’s Investment fund had performed well relative to the market, but revenue was declining. Partners and sponsorship were becoming more difficult to find. English predicted that if no action was taken to challenge the status quo, in 2–3 years, Federated Farmers financial and membership base would be seriously eroded leading to a spiral of decline difficult to escape. The Federation had given up on many strategic advantages and had progressively narrowed the brand. There were positive aspects to build on—good progress on policy and visibility was being made at national level—but fundamental issues needed to be addressed. English reported he was focussing the management on six areas: Reviewing the overall strategy;

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Initiating a number of membership initiatives to increase membership and non-membership revenue; Developing a “grass roots” strategy to respond to competition in the provinces; Focussing on increasing visibility and “attribution”, not just at Board level, but also at staff, provincial and product levels; Developing an alternative membership revenue collection model; Reviewing all expense budgets with the aim of reducing costs by $1 million from the current budget.

An example of others encroaching on traditional Federated Farmers activities was Meat and Wool NZ which was seeking a new levy and wanting to move into Federated Farmers traditional areas. Also, DairyNZ, another levy-funded organisation. English met with the DairyNZ Chief Executive to discuss the respective roles of Federated Farmers and DairyNZ. English became particularly concerned about provinces and what was happening at their grassroots. Federated Farmers had left a vacuum that others were filling. Meat and Wool NZ, DairyNZ and other commercial operations, such as Agriculture NZ, were undertaking farm discussion groups discussing regional policy matters without Federated Farmers being represented. It was obvious that interest in the Federation at provincial level was under pressure. English said a grass-roots strategy was needed to reclaim the territory. Young Farmers had now developed a strategy pushing from the under 30’s into the 45-years-old age group and offering services and activities and stimulation directly at the Federation’s target segment. If the Federation failed to take action, the Federation’s model might need to be fundamentally changed (FF 2009a).2 English spoke to the Chief Executive of DairyNZ, Tim Mackie, asserting that DairyNZ was operating outside of its levy mandate by contributing to the various policy and advocacy initiatives underway within the dairy industry and wider pastoral sector. Mackie insisted that it had been agreed that the levy would cover promotion and advocacy on behalf of the dairy industry. Also, two additional stated uses of the levy, biosecurity activities including disease control and mitigation and

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publication of information to dairyfarmers, had clear policy and advocacy elements as well as technical. Mackie considered DairyNZ policy and advocacy work very much as complementary to the work being done by Federated Farmers pointing out that DairyNZ supported financially some of the Federation’s work, for instance, on the cleanliness of Lake Taupo. As a levy-funded organisation, DairyNZ was responsible to all New Zealand’s dairyfarmers to secure and enhance their profitability, sustainability and competitiveness. Policy and advocacy played a key role in achieving this vision, and there was a large amount of such work necessary (FF 2009b).3 English wanted Federated Farmers to return to funding by levy and the National Board reviewed a paper on changing the way Federated Farmers administered and collected its funds. It was argued that the present system was high cost requiring invoice generation and debt collections systems. In addition, significant resource had to be put into various marketing initiatives such as direct mail, sales channels and marketing overheads. Other organisations competing with the Federation were collecting revenue by deducting a levy from farmers produce under the Commodities Levies Act (‘the Act’) and were claiming they represented 100% of farmers. The challenge for Federated Farmers was that the benefits of its activities did not discriminate between those who did and those who did not pay their membership fees. This free ‘loader problem’ was increasing. The paper proposed that the Federation shift from invoicing to deduction at first point of sale under the Commodities Levies Act. The change would be risky but the risk of not changing was far greater. Currently, the Federation had the most democratic accountable system of any institution in New Zealand. That would not change but the Commodities Levies Act required a renewed mandate every 5 years. Farmers appeared happy with this accountability with the existing organisations who operated under the Act. Why should it be any different with Federated Farmers? The paper claimed the change would be a bold, radical, optimistic, strategic move, done from a position of relative strength. There was much to be gained. The timing was right. The opportunity must not be lost. In a year’s time, it would not be available. Both main competitor groups would be far stronger than the Federation. They would be on the front foot and have momentum with them. Right now the Federation had the strength and leverage to assert.

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But the proposal did not advance, possibly because there was still uncertainty because a referendum, as required by the Commodities Levies Act required, would have to include both members and non-members to support the proposal. But non-members were in the majority (FF 2009c).4

A Fresh View The possible future was well summarised in 2018 by Mark Hooper, a young farmer, who soon became the Taranaki Provincial President. Hooper participated in a Leadership Course and examined ‘the challenges impacting Federated Farmers’ future viability’. Hooper identified the ‘key disruptions and challenges’. Hooper said being predominantly a public good provider for the rural sector was a long-term problematic trend that enabled both members and non-members alike to enjoy the benefits of Federated Farmers’ success in lobbying and advocacy (Hooper 2018).5 The number one challenge Hooper identified was a perceived lack of relevance particularly among younger non-member farmers. Awareness of the scope of Federated Farmers among non-members was largely limited to contracts/agreements at best or only very vague notions at worst. A common theme was that the organisation lacked visibility in the farming community and as such was easily dismissed as remote and distant. Hooper said the implication of these challenges and the symptoms of decline that the organisation has experienced in recent years suggest that the current Federated Farmers’ membership model was not sustainable. He identified three key themes needed to ‘help bridge the perceived irrelevance gap and encourage growth’. Those were vision, identity and transparency. A clear vision and purpose was needed to attract new members, commercial partners and collaboration with other advocacy providers. Identity and/or belonging relates to realigning membership so that members identify more closely with and are better connected to their local province. Federated Farmers’ provincial structure was a unique strength as it provided nationwide representation and the best opportunity for growth and alignment with non-members at grass-roots level. Transparency related to the national governance structure. The lack of membership understanding and engagement in this process added to the

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perception of a remote and distant organisation. Also, the current structure potentially missed the opportunity to introduce specific skill sets that bring experience in the governance of large not-for-profit organisations. Hooper recommended: That Federated Farmers identifies a vision statement that encapsulates the Federations original purposes of; ‘protecting, fostering and advancing the interest of all farmers and of farming generally’. That Federated Farmers conducts a review of and analyses the opportunity to strengthen provincial operations to improve visibility and non-member perceptions. That Federated Farmers reviews its current national governance and representation model.

According to Statistics NZ, the average age of a beef cattle farmer in 2013 was 56 years, up from 53.5 in 2006. The average age of dairyfarmers in 2013 was 41.7, up from 40.8 in 2006, and the average age of sheep farmers was 53, up from 49.9 in 2006. The average age of deer farmers increased from 51.3 in 2006 to 55.8 in 2013, and the average age of mixed crop farmers increased from 43.9 to 49.1, respectively. The Federation’s membership in the second decade of the twenty-first century was probably mainly those who had been members for several years and not from a turnover of older members being replaced by younger. The club structure of Young Farmers NZ provided the common interest that once was provided by Federated Farmers branches. To ‘young farmers’ Federated Farmers must have seemed like an ‘old farmers’ association. They would come into contact with Beef and Lamb NZ and DairyNZ or their own association if in one of the smaller sectors—why join Federated Farmers? Also, the unjustified attacks treating farming as a major polluter weakened the incentive for young people to take on a farming career. A problem for Federated Farmers was how to answer the attacks. Since the 1980s there has been increasing militancy within the rural community but that had possibly been far less effective than the daily contact with politicians and the media provided by Federated Farmers. Militancy captured media attention but at the risk of damaging further farming’s image in urban communities.

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An Optimistic View Kate Milne, President from 2017 to 2020, at the end of the second decade of the twenty-first century, reported recent Federated Farmers activities demonstrating once more the broad front of issues the Federation dealt with. Those were in addition to the major problems facing the Federation because of a growing, global, dissatisfaction with farming (FF 2017a).6 Milne said we need young people to understand they can have a great career and lifestyle in farming, and that rural New Zealand is not just surviving but thriving. Thriving, not just surviving so farmers’ voices could be heard convincingly by the Government. She was competing against the voices labelling farming as something damaging for New Zealand and the world through its impact on the environment, both water and the climate (FF 2017c).7 Milne said the Federation had worked extensively with Government Ministers, officials and agencies on the development of regulations around animal welfare, gun ownership, water and irrigation management, Resource Management Act reform, stock exclusion, tax calculation and animal sentience. A sensible outcome had been agreed for the safe carriage of passengers on quad bikes used on farms. Cross-party support had been agreed that enabled installation of fibre optic cable along overhead powerlines crossing farmland, with a connection discount for the affected landowner. The Federation had launched a Dairy Apprentice programme. The programme soon had 44 employer registration enquiries, and about the same number of expressions of interest from young trainees. The Federation had played a big part in the response and recovery effort in rural areas following the Kaikoura-Hurunui Earthquakes, ranging from getting food in and cows out, to sourcing workers for land remediation. The Federation’s connections with, and lobbying of, Government agencies and Ministers secured funding for these initiatives. During the 2017 election campaign, the Federation and others highlighted the pressures facing rural communities, influencing the National Government to make funding commitments for things like extra funding for tourism infrastructure to address pressures caused by tourists and the need for additional resources for biosecurity. Milne said in any discussion about political influence, the usefulness of the Federation’s profile in the media should not be underestimated. The Federation was highly visible and vocal in wider public debates on

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such matters as the water tax, climate change, genetically modified organisms, immigration and so on. Urban New Zealanders were swayed by lobby group campaigns and a mainstream media that thrived on controversy. The Federation strove to get legislators and regulators to see that the Federation’s thinking was the best way forward—science-informed, practical, programmes harnessing all new technology. It was the Sensible, Practicable, Affordable way of addressing challenges. Milne said her three years as Federated Farmers President had taught her the value of responding positively to journalists and broadcasters. The way that leaders had been willing to front up on current issues, answer tough questions and in turn ask tough questions of our politicians and bureaucrats, had earned a lot of kudos. The Federation’s strength lay in the fact that it was a grass-roots, membership up, strong provinces type of organisation which united on common issues. The force of its arguments and the solutions offered rested to a large extent on the quality and hard work of its policy experts and wider staff. Members would be astounded if they could see for themselves the workload the organisation took on. An example was the June 2020 Policy and Advocacy Report—85 pages just listing the range of consultation documents, discussion papers and proposed law changes the Federation was engaged in and detailing strategies and policy positions. The value of membership was exemplified there and also when the Federation stepped up at select committees and pointed out shortcomings in legislation and provided solutions (FF 2020).8

Uncertainties Demonstrated in Budget Planning Budget planning for 2018 demonstrated the many uncertainties facing the Federation. The drop in membership of about 17,000 in 2005 to under 13,000 in 2017 was noted and that drop was serious because 80% of revenue came from membership subscriptions. Revenue generated was insufficient to cover 2018 operating costs. The Federation had to assume that the Primary Sector environment would be increasingly volatile and more competitive with groups like Fonterra, Beef and Lamb, DairyNZ wanting to control the relationship with ‘their’ farmer—did they really want Federated Farmers as an industry leader? Farm consolidation would reduce the number of farmers. Farmers would be younger and more technologically savvy. Membership numbers

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in 5 years might be less than 10,000. There would be increasing technological change and challenge. The worst-case financial scenario assumed losing around 800–1000 members p.a., if those were replaced the Federation would stand still financially. It was assumed that there would be no membership price increase but a 1.5% increase in staff salaries. The Federation, unless there was increased revenue, was living beyond its means and needed to cut costs by making some real strategic decisions. An option was to use its Investment Portfolio to provide a greater cash buffer in 2018, but it was considered unwise in the long-term to use capital to cover core operating expenses. It was questioned whether members and non-members really knew what the Federation did and what its value was. Perhaps, the biggest lack was good, consistent, local face-to-face farmer communication. The Federation collectively was not focussed on, or had a willingness to undertake, significant membership recruitment or retention expecting most of membership growth to come from 7 Territory Managers and a Membership Services Team. Major initiatives to increase membership were to leverage off groups like DairyNZ and Beef + Lamb; to attend more meetings of farmers within provinces; to have more local campaigns around what the Federation was doing in a local area; increased face-to-face visits to well qualified targets; target corporate farmers and key local influencers (especially Accountants); and build the Federation’s social media platform to better target younger farmers. It was also essential to cut core business costs. To break-even $800 k– $1 M in operating costs needed to be saved. Half could come from operational savings, the rest from staff cuts (up to 8 staff). Staff structures and responsibilities needed to be reviewed, before cutting costs. Other options were that there was sufficient cash-in-hand to ‘buy’ up to 12 months grace. A campaign could be mounted to attract more members and funds; some form of annual communication would be needed highlighting more effectively how Members’ money had been spent and what their return had been. Progress was needed on underlying strategic issues. To avoid staff cuts the Federation’s network needed to be more involved setting member and agri-business targets for the largest Provinces. Alternatively, perhaps charitable trusts could fund some of what in the past had been funded by the Federation.

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A concern was that staff cuts would weaken the Federation at a time when a new Government was finding its feet. The current business model was questioned—the Federation was 24 independent entities; how did they operate and fund the national services needed? There was a significant variation in Provincial income. How the Federation used capital was problematical. There appeared to be at least 6 Charitable and other Trusts across the Federation, with an estimated at least $10 m in capital. Who controlled the Trusts and their purpose was unclear? A review of the Federation’s structure was needed. There was a lack of operational agreements. Apart from the National Office having a Constitution (limited in what it stipulated), there appeared to be no written agreements across the Federation that stipulated how the Federation operated (including rules and procedures), or what it was collectively trying to achieve; how the Federation’s ‘brand’ was used. There was no appropriate business model and the resources required to deliver; no commitments on how capitations are used and no membership targets. A critical point inhibiting developing future plans was that there seemed to be no clear idea as to the true financial strength of the Federation, including its Asset Base (FF 2017b).9

Assessing Strategy By 2003, the Federation had more formal methods of assessing strategy and policy. Thorough reports were made to the National Board and those illustrate the broad range of issues the Federation was engaged upon in 2003. The Federation set for itself seven ‘Strategic Outcomes’ to help members and rural communities: operate their businesses in a fair and flexible commercial environment access independent professional advice and information share ideas, learn from each other and develop leadership skills access Federated Farmers’ developed services access services essential to the needs of the rural community

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apply responsible management and environmental practices receive appropriate support during civil emergencies

The specific topics the Federation had to cover to achieve those outcomes included: adverse events animal welfare biosecurity biotechnology commerce communication employment contracts environment farm safety field officers food safety free phone service, legal advice, website governance development growing membership local Government M¯aori treaty issues membership services and benefits personal property security policy formation rural electricity supply rural fires rural health/education/social policy/law enforcement rural infrastructure rural telecommunications Resource Management Act Science support services to elected representatives sustainable practices taxation transport. (FF 2003)10

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An Independent View An independent ‘stakeholder audit’ was commissioned by Federated Farmers in 2005 and, gave a thorough insight into the Federation’s interaction with Government and other bodies representing agricultural interests and the media. The single most significant criticism of Federated Farmers was that, too often and too early, Federated Farmers adopted a position of opposition, rather than one of constructive engagement. There was a sense that Federated Farmers’ default position tended to be disagreement with the Government driven by Federated Farmers needing, as a voluntary, member-based organisation, to be visibly active and tackling Government. Federated Farmers would often find itself at odds with Government policy. Some tension was inevitable as Federated Farmers pursued different objectives to the Government. Some officials felt that Federated Farmers lacked a strategic vision for agriculture and that contributed to a short-term, reactive policy mentality. However, it was pointed out that with a new Minister of Agriculture and new faces at Federated Farmers there was now an opportunity to move past those differences and problems. Indeed, it was generally felt that the current Federated Farmers’ executive had made significant efforts to repair the rifts of the preceding few years. For Government agencies with a less direct or more operational relationship with Federated Farmers, the relationship was seen as working effectively—and often based on good relationships between individuals. It was also noted that Federated Farmers’ staff had made an effort to build those relationships. Those agencies had a solid regard for Federated Farmers’ policy capability. The quality of Federated Farmers’ contribution to policy processes and, for instance, submissions to select committees, was generally regarded as sound. However, the comment was made that Federated Farmers tended to make submissions on issues not apparently of immediate interest to farmers and not the most important policy issues upon which it was going to focus. Feedback from the media was extremely positive. Several journalists noted that Federated Farmers was the best organisation they had ever dealt with. Federated Farmers was praised for being responsive to their inquiries, taking time to explain issues, providing comment when sought,

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and generally working hard to maintain an excellent and open relationship. It was able to communicate its messages and its story and mobilise farmers to achieve results. However, competing interest groups, such as environmentalists, were catching up with Federated Farmers and playing their part in an increasingly sophisticated contest for public minds. Media criticisms of communications with Federated Farmers were very few. One criticism was that Federated Farmers tended to comment on ‘anything and everything’ and on issues that some journalists saw as peripheral to Federated Farmers’ core interests. Another observation was that Federated Farmers was not doing enough to counter or pro-actively address negative perceptions about agriculture’s environmental impact and farmers’ attitudes towards environmental responsibilities. Also, there was significant variability of media capability among regional representatives but most journalists enjoyed the relatively straight up, spin-free, response of most farmers. Representatives of agricultural industry stakeholders (including levyfunded bodies and commercial players) recognised the importance of having a strong and well supported farmer lobby and, in most cases, the relationship with Federated Farmers was viewed as positive and working well. The levy-funded organisations saw the relationship as particularly important. They saw Federated Farmers as both an essential advocate for farmers, as a valuable communications vehicle for their own information and as a critical partner for their work in general. Where opinions differed, it was generally felt they were either resolved or, at least, both parties understood the reasons for disagreement. One relationship issue raised was the lack of clarity at times as to where Federated Farmers’ role as an advocate ends and the levy-funded organisations’ role as an industrygood provider begins. The relationship could benefit from some clearer role definition. Fonterra’s representative noted that the relationship with Federated Farmers had been strained by responses to public concern over cleanliness of streams. However, it was mentioned that a regular forum between the two organisations had been set up and was proving useful. Fonterra’s primary concern with the relationship was the different attitudes of the two organisations towards certain strategic issues, notably, the environment. Fonterra’s representative also noted that a powerful farmer lobby was an important cog in the agriculture wheel. However, Fonterra criticised

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Federated Farmers short-term, populist approach to many issues that had causes significant and unnecessary damage to Federated Farmers relationship with Government and Fonterra itself (FF 2005b).11 Take Away Points Membership halved when the Federation returned to funding by voluntary subscriptions rather than a levy on slaughtered animals. A young farmer identified a perceived lack of relevance among younger farmers. Attacks treating farming as a major cause of environmental damage turned young people against farming. Budget planning for 2018 demonstrated the many uncertainties, unless there was increased revenue the Federation was living beyond its means. Rural militancy was increasing. That captured media attention but risked damaging farming’s image in urban communities. A significant criticism was that too often Federated Farmers adopted a position of opposition. But other farm organisations saw Federated Farmers as an essential advocate for farmers.

Notes 1. FF 2007. (Federated Farmers), National Board meeting, July 2007, Membership Recruitment Discussion Document: 1–9. 2. FF 2009a. (Federated Farmers), National Board Meeting, April 2009, CEO Report: 39–43. 3. FF 2009b. (Federated Farmers), To Conor English, Federated Farmers, from Tim Mackie, CEO DairyNZ, 06/03/2009: ½. 4. FF 2009c. (Federated Farmers), Federated Farmers National Board Meeting, April 2009, Changing the Way That Federated Farmers Administers and Collects Its Funds, pp. 1–3. 5. Hooper, M. 2018. Examining the Challenges Impacting Federated Farmers Future Viability, Kellogg Rural Leadership Programme Course: 37. 6. FF 2017a. (Federated Farmers), President’s Address to National Council, 22/11/2017. 7. FF 2017c. President Katie Milne’s Address to National Council, 22/11/2017.

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8. FF 2020. (Federated Farmers), President Katie Milne’s Speech to the National AGM, 26/06/2020. 9. FF 2017b. Dr. William Rolleston’s Opening Address to Federated Farmers of New Zealand’s Conference 2017. 10. FF 2003. (Federated Farmers), National Board, April 2003: 1–35. 11. FF 2005b. (Federated Farmers), Stakeholder Audit Completed for Federated Farmers of New Zealand, 09/12/ 2005, Network PR.

CHAPTER 24

Increasing Pressures on Farming from the Outside World

Introduction Farming activities became more constrained by the growth of global concerns about farming practices. At a time of growing concern about global famine, concern that took second place behind the more publicised concerns that global warming was the main threat to civilisation, new farming procedures to increase production became increasingly difficult to adopt. Animal welfare, global warming and genetic modification were all areas in which pressures potentially constrained production. That the concerns were global and not a phenomenon in New Zealand alone was demonstrated by the ‘frustration’ of Peter Kendall who became President of the UK National Farmers Union (NFU) in 2006. While his attitude to conservation had changed significantly since the 1980s his public image had not because: the voice of the conservation lobby has got louder, better funded and more politicised. It has clearly been in the interests of these groups to talk up the negative environmental impact of agriculture and turn a blind eye to the myriad of positive benefits for which conservation-minded farmers have been responsible. In recent years the NFU has initiated frequent campaigns, such as ‘Care of the Countryside’ in 2002 and ‘Making Green

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Ground’ in 2005. They have all played their part in getting over key messages about farming’s positive contribution to countryside management, but they have lacked the impact better-funded campaigns with contrary messages by groups such as the Royal Society for Protection of Birds (RSPB) have had. (Smith 2008)1

Animal Welfare Animal Welfare became a topic in national Federated Farmers’ policy with the objectives being to ensure appropriate use of sound animal welfare practices and to ensure consumers and the general public recognised that New Zealand farmers used good practices. Animal Welfare had become an important consideration because of animal activists in the Northern Hemisphere rather than in New Zealand. Federated Farmers welcomed the New Zealand Animal Welfare Act that became law in 1999. The Federation’s Vice-President said it was important legislation for livestock farmers because it gave New Zealand the most modern animal welfare legislation in the world. Farmers and the marketers could assure consumers that animals were treated humanely with animal welfare friendly production systems. He said in the lucrative Northern Hemisphere markets public awareness of animal welfare issues was at an all-time high with consumers expressing a preference for food produced from ‘welfare-friendly’ systems. Animal welfare might be on the agenda in the next GATT round. The most visible response to increased consumer concern had been the proliferation of quality-assurance schemes established worldwide. Supermarkets in the UK had taken a lead in establishing animal welfare standards and made those specific requirements of their suppliers. Retailers could ignore international trade agreements and cut off a supplier’s livelihood by stopping contracts. World Trade Organisation (WTO) trading rules prevented countries from banning imports on animal welfare grounds but retailers were free to do so. The New Zealand Animal Welfare Bill recognised the duty to care for animals acknowledging animals’ needs in line with European Union principles. Also, there were twenty-one voluntary codes of care covering more species than previously. Codes of Welfare could be developed outside Parliament and amended more easily and quickly in response to changing practice, scientific knowledge or public attitude. The codes were based wherever possible on sound scientific knowledge and reflected a community view that economic considerations

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could be taken into account. That would prevent animal activists from capturing the code writing process but allow sensible input from animal welfare groups. This was important because there was a comprehensive public consultative process provided for in drafting and reviewing codes. Continued input from groups such as Federated Farmers would be vital. Already the codes were becoming an integral part of quality-assurance programmes as well as an educational tool. Failure to adhere to a code’s minimum standards would be used as evidence to support a prosecution under the main part of the Act (Polson, A. 1999).2 The Federation agreed a memorandum of understanding (MOU) with the Ministry of Agriculture recognising the commitment of both parties to animal welfare issues affecting the commercial agricultural sector. The MOU noted that Federated Farmers represented 15,000 livestock farmers including dairying, sheep, beef and goat farmers and was committed to the maintaining animal welfare standards that complied with the Animal Welfare Act and the Codes of Recommendations and Minimum Standards promulgated by the National Animal Welfare Advisory Committee (NAWAC). The Ministry and the Federation agreed to collaborate on any potential animal welfare issue relating to the commercial agricultural sector and agree on appropriate action. Also, to collaborate on relevant educational and media initiatives and provide mutual support as appropriate, including exchanging draft press releases to allow appropriate input from either party before publication. If Federated Farmers received a complaint on an animal welfare concern, the Federation would liaise with the Ministry. The Ministry would consult with Federated Farmers on the investigation and resolution of any major animal welfare concern involving a commercial farming operation (FF 2000a).3

Genetic Modification (GM) An environmental issue that started to become significant in the 1990s was genetic modification. A ‘Foresight in New Zealand Agriculture’ conference was held early in 1998 and included talks on genetic modification. A United Nations Advisor reported the importance, in his view, of genetic modification in agriculture’s future. He said in the future New Zealand could remain a world leader in the production of clean, green, food. The food New Zealand produced could be totally free of contaminants and produced and processed sustainably through intelligent

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biological control measures, genetic engineering and other biotechnologies. He agreed that there was consumer resistance to genetically modified foods and said you just had to remind people we had always been interfering with nature. Genetic modification was not substantially different from normal animal and crop breeding practices. Another scientist told the conference that through genetics agriculture could become ‘greener than green’ because genetic modification could remove the need for pesticides and chemicals. New Zealand Fruit Federation chief executive, Peter Silcock, said the technology offered consumers enhanced taste and health benefits such as increased vitamin C in apples. Because of the concern about the possible implications of genetic engineering some sort of approval system would be needed to ensure the health of people and the environment (Meylan, G. 1998).4 Straight Furrow carried out a survey and reported the outcome under the heading ‘Most Reject Genetics’ demonstrating the prejudices that needed to be overcome. The survey included questions such as whether those surveyed agreed with genetic modification being used to produce tailor-made people with human genes, docile bulls with tortoise genes and chickens with four legs. More than 80% disapproved.5 The President of the New Zealand Plant Breeding and Research Association criticised the reporting as overtly emotive against genetic engineering and damaged the credibility of Straight Furrow. The Association believed the use of genetic technology would be an integral part of future plant breeding. Certain aspects would need careful scrutiny but that should not justify total rejection of the technology (Ormsby, V. 1998).6 In 1999, Federated Farmers agreed a policy on genetic modification. It supported the need to assess and manage risks to the health and safety of people and the environment from the application of genetics’ technology. It also recognised the consumer’s right to acquire information relating to the products they were purchasing, but also believed that farmers had the right to determine what technologies they apply to their production. In developing the policy, the Federation was mindful that the safety of people and the environment must be assured before this technology was used in New Zealand to produce food. Only if consumers were confident, would it make sense for farmers to adopt the technology. But where the technology could be applied safely, it believed it was important that New Zealand farmers, like their competitors in other countries, had a choice to meet market demands using available technologies, whether they were conventional, organic or genetically modified (Straight Furrow 1999b).7

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Federated Farmers Grains Council Chairman, Neil Barton, said grain and seed growers felt singled out in the recommendation to the Government from the Independent Biotechnology Advisory Council (IBAC) that no genetically modified plants be approved for commercial release until IBAC had consulted with the public. Cropping farmers were concerned that their fundamental right to choose which crops they grew might be taken away. Farmers wanted to be assured that genetically modified crops were safe, as did the public, but they also wanted to decide which markets they targeted. New Zealand had a seed multiplication industry that earned $81 million a year at the farmgate. This industry had operated with a system of isolation distances, which have proven effective in avoiding cross-pollination over many years. Organic growers farmed next to other growers with apparently no concerns about contamination from non-organic crops. Barton said if New Zealand followed a GM-free path, then farmers could not be selective. To be GM-free, New Zealand would also have to reject the 20 or so different drugs that are derived from GM bacteria and the potential benefit from the 200 more that were in the clinical trial stage. Genetic modification of animals to produce compounds that were used in human medicine would also be disallowed. IBAC’s advice to hold off release of genetically modified plants appeared to compromise any decision that may be made by Environmental Risk Management Authority (ERMA). The advice was superfluous because there were no applications for release that could be approved before the March 2000 report date IBAC had been given. IBAC would be better to concentrate on their important role to help New Zealanders explore and consider the issues in biotechnology (Straight Furrow 1999c).8 The Pacific Basin Economic Council (PBEC) decided in 2000 that biotechnology was going to be an essential ingredient in the future agricultural food production. They recognised there were a number of issues and concerns surrounding using biotechnology in food. PBEC decided to hold a workshop prior to their annual conference to discuss some of these issues. The goals were to enhance the general understanding of the potential benefits and promise of biotechnology and to provide recommendations to Asian Pacific Economic Council Governments and businesses on reaping the benefits of biotechnology while protecting health and safety. New Zealand speakers contributed as did those from US, Canada, Philippines and China, and topics addressed included consumer benefits and perception, environmental protection, food safety regulatory issues and producer benefits.

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Key points that emerged were that, globally, 1.3 billion people lived on less than $1 a day and suffered hunger and malnutrition. Many of those lived in the Pacific Basin. Traditional agriculture had met its limits to deliver. Developing countries including India, China, Malaysia, Thailand and Philippines were well advanced with research using genetic engineering and had advanced to both field trials and commercialisation. China has approved over 50 genetically enhanced plant variations. Genetically modified (GM) crops included most third world staple crops including rice, soybean, sweet potatoes and plantains. Genetic traits being researched included those that enhanced insect and disease resistance, drought and salt tolerance, improved nutritional value, and assisted degradation of pollutants. But public perception of those positive benefits were dwarfed by the extremist label of ‘Frankenfoods’—equating GM to Mary Shelley’s fictional monster creation, Frankenstein (FF 2000b).9 The Grasslands general manager, John Hay, from the Manawatu Science Centre claimed that using New Zealand’s genepool to breed improved domestic livestock and plants could double the country’s export income from the primary sector within 20 years. New Zealand was already in the international forefront for advanced breeding of sheep, dairy cattle, deer, forages, exotic forest products, crops and fruit. ‘We have to couple our expertise in primary industry research and development with molecular biology to add value to our exports through a whole range of products we haven’t heard about yet’. Hay claimed transgenic plants and animals were already becoming established in the world. In 1998, there were 30 million hectares of transgenic crops sown in the USA, Canada and Argentina. New Zealand could choose to be part of this new wave of modern technologies or remain wedded to old. It could choose to slow down, or even stop, genetic engineering in New Zealand and lose ground internationally. Alternatively, it could choose to use the protocols laid down by the Environmental Risk Management Authority (ERMA), and the Hazardous Substances and New Organisms (HSNO) Act to lead a new export drive which would hugely benefit New Zealand. Hay stressed the need for more funding in biotechnology research, particularly by industries likely to benefit from the research. He concluded that science understanding had to be moved outwards, from the laboratories of Government Institutes and Universities onto farms, into businesses, schools and peoples’ homes. Helping the public understand what New Zealand scientists were achieving in this area would make them derive

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some comfort when they saw the beneficial outcomes (Straight Furrow 1999d).10 The Dairy Board chairman, John Storey, said the potential impact of biotechnology on New Zealand’s $13 billion agricultural export industries was incalculable. Widespread, rational and informed debate on biotechnology was a must. World competitors were pressing ahead with research into biotechnology which could severely erode, even wipe out New Zealand’s comparative advantage of pasture-based low-cost production. Storey said to ignore the threat was not an option (Straight Furrow 1999e).11 But those in favour of genetic modification were faced with action such as the ‘Wild Greens’ who destroyed a genetically modified potato field trial at Lincoln College. The Lincoln trial involved adding artificial genes to potatoes to make them more resistant to soft rot, to improve tuber quality and reduce pesticide use. There were also plants genetically modified to increase resistance to potato tuber moth, a major pest. Federated Farmers potato sector chairman, Quentin Wright, said the trial conformed to strict standards and had been approved by ERMA. If successful the trials would lead to varieties which were environmentally desirable because less spraying would be needed. Scientists had feared that such an attack could take place in New Zealand after widespread attacks on genetically modified crops in the UK. There was little they could do to stop it. A lot of effort had been put into enhancing public understanding of genetic engineering but trialists were up against people with political agendas such as Wild Greens spokesperson who was seeking publicity in support of his Auckland Central candidacy for the forthcoming general election (Straight Furrow 1999f).12 An alternative, less emotive, view against genetic modification was given by Otago University lecturer, Dr. Hugh Campbell, who said New Zealand should exploit the high-value export food markets by not growing genetically engineered food. By not exporting genetically modified (GM) food New Zealand could boost its trade prospects. A reputation for clean, green, food would outweigh any productivity gains from genetic engineering. More could be gained by not growing GM crops. Consumers did not like GM food and would want to buy nonGM labelled food. But Federated Farmers Grains council chairman, Alan Taylor, argued that GM crops were ideal for organic farming. Sprayresistant crops allowed growers to move away from traditional herbicides and insecticides (Straight Furrow 1999g).13

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Scientists and farmers wanted more informed debate and to avoid a moratorium on genetic engineering. The Parliamentary Commissioner for the Environment had called on the Government to consider placing a moratorium. He said the speed at which the country was adopting genetically modified organisms (GMOs) alienated the public. Brian Gargiulo, Vegfed president, strongly opposed a moratorium. ‘The world is not going to stop because NZ decides to have a moratorium on GMOs. It will happen and we can’t isolate ourselves’. Instead, he wanted more informed debate. The whole issue of GMOs was complex and fully understanding the issues was difficult. He admitted he did not understand all the issues himself. ‘And as a grower I certainly don’t want to grow something which is not safe’. He said scientists had to start talking in layman’s terms about what they were doing. (Straight Furrow 1999h).14 Federated Farmers presented it views to the Royal Commission investigating the subject. Questions from the Commission demonstrated that they wanted information on practical steps to prevent gene transfers, not that they questioned the possibilities of growing GM products. But the Federation was harshly attacked by the Green Party for supporting GM. The Federation was forced to issue a media release to challenge this ‘blatant misrepresentation of the Federation’s policy’. The Federation realised it had to remain vigilant against deliberate acts of political aggression and react quickly and forcefully to them. Because of the Federation credibility and very high public awareness, small or minor organisations could increase public awareness of their own views by attacking Federated Farmers (FF 2000c).15 Federated Farmers welcomed the key recommendations of the Royal Commission. The major theme was ‘Preserving opportunities’ which was generally consistent with the Federation’s policy. The idea of New Zealand being free of all genetically modified material was rejected. The Commission’s report strongly endorsed existing basic regulatory structures but contained recommendations that could increase the regulatory hurdle before the release of a genetically modified organism was approved. Federated Farmers decided that recommendations of special interest to the farming sector needed close study, for instance, proposals for managing the coexistence of different kinds of agriculture (organic, conventional and GM). The Federation’s National Board decided to establish a working group to study a commercially driven process for providing for coexistence. Its findings would be forwarded to Ministry

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of Agriculture who had responsibility for reporting to the Government on this part of the report (FF 2001).16 In 2016, the Federated Farmers President, Bill Rolleston, said we stand on the dawn of the genetic revolution. Science was offering new ways to manage farms and improve our productivity while reducing environmental footprints. Science and technology was accelerating animal and plant breeding through marker assisted selection or gene editing. The price to sequence a genome had dropped from several billion to a few thousand dollars in only a decade. Genetic modification, through gene editing, was more accurate, more accessible and cheaper than it had ever been. It would soon overtake conventional breeding in cost, speed and safety, and New Zealand needed to be prepared for it. Technologies already existed to place nitrogen fixing bacteria into the leaves of domesticated plants, providing free and valuable nutrient right at the place it is needed, minimising nitrogen leaching. AgResearch had used biotechnology to modify ryegrass. Laboratory trials indicate an increase in productivity and palatability, of 40%, reduction in methane emissions, 25% in water demand and 30% in nitrate leaching. Trials of this system were being carried out in the USA in alfalfa and soybeans but not in New Zealand because the regulations were too hard. He was told American farmers can’t wait to get their hands on it. The GM-free premium would have to be pretty high to make rejecting this technology worth it. Controls were also being developed using new genetic technologies for pest mammals, which were devastating our birds, spreading disease and competing for pasture, and for wilding pines, which were marching across the high country. New Zealand would be faced with a moral dilemma—use GM because it would assist reaching environmental and economic aspirations or reject it because we are scared of the market. If there were one place New Zealand could show environmental leadership, it was here. Rolleston said we need to be cognisant of global consumer views but should not be paralysed by fear when through science and evidence our intervention is better for the environment (FF 2016a).17 Andrew Hoggard, Chairman of Federated Farmers Dairy Section, said European cooperatives were trying to take advantage of grass-fed label and now they and other companies are considering further differentiating themselves with talk of “GMO-free” labels. This is how it should be—let the market decide. But because one company, wishes to use a GMO-free label it does not mean the entire country needs to go that way. Federated

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Farmers has fought for farmer and consumer choice. We think we can have both. Diversity builds strength. While some have pushed for New Zealand to be GMO free, companies and farmers will implement their own audit systems if the premium is worth it. Also worth considering was the strict rules in place in New Zealand. The recent GMO labelling law that had just moved through the US congress, did not require gene edited products to be labelled. We should ensure that our laws are in sync with those countries we aim to trade with and extract a product premium from. This would mean the anti-GM movement would have to give some ground (FF 2016b).18

Climate Change In 1994, Federated Farmers had considered global warming to be a problem more perceived than real and objected to proposals for a carbon tax to reduce CO2 emissions (Straight Furrow 1994a).18 Agriculture deserved recognition as a carbon dioxide absorber. According to Federated Farmers, the scientific evidence was not strong enough to determine for certain that global warming from greenhouse effects would happen. However, in its submission on reducing carbon dioxide emissions, the Federation said the risks were high enough to warrant an effort to reduce net emissions. New Zealand should fulfil its obligation by encouraging using carbon sinks to absorb carbon dioxide and by promoting further energy efficiency and conservation. Attempts to reduce emissions had to be justified on economic grounds and that meant that positive benefits could be achieved even if climate change proved over time not to have warranted any action. Economic instruments were not necessary, but if they must be used, tradeable emission permits would be the best option. The Federation opposed imposition of a carbon charge. Farming, with its emphasis on grass, crops and tree planting, was in the favourable position of being a carbon absorber. Carbon absorption activities must be given some recognition (Straight Furrow 1994b).20 The Federation’s relations with the Minister for Agriculture became strained when Federated Farmers responded to public resentment against agriculture following activities, such as the film An Inconvenient Truth, which inflamed the public to support action on climate change. Sutton announced that agriculture was creating half New Zealand’s greenhouse gas emissions. Farmers were seen as able to pay for climate change measures and were being painted as the ‘bad guys’ in the debate.

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The Government’s Emissions Trading Scheme anticipated that greenhouse gas emitters in New Zealand would be taxed on their level of emissions. The scheme included proposals on how farmers would be charged for methane emissions from stock flatulence. Farmers objected to paying this levy which acquired the simple name ‘Fart Tax’. The Government decided that instead of a tax based on emissions, a levy on stock would be used to raise $8 M for research into decreasing methane emissions from stock. Sutton told Parliament that the Government had exempted pastoral farmers from emissions’ charges that could have cost them an average of $30,000–$40,000 a year each. Instead, they were being asked to contribute an average of $300–$400 a year for research into helping to reduce emissions. The Green Party asked what would be the total sum collected from farmers if they were to be subjected to the same carbon tax level as the emitters of fossil fuels, and what was the difference between that total sum and the mere $8.4 million that the research levy was to cost? Sutton’s ‘best estimate’ was that the cost of an emissions tax equivalent to that proposed for other industries would approach a billion dollars from pastoral farming. That figure compared with the $8.5 million proposed for research. He went on to say New Zealand’s biggest contributor to this global crisis was its pastoral farming sector, which emitted more than half the country’s greenhouse gases and it would be totally inappropriate for that sector, which enjoyed an average taxable income of over $106,000 per taxpayer, to escape completely scot-free of any responsibility for tackling that problem (NZPD 2003a).21 David Carter, a National MP with a farming background and who was to become Minister for Agriculture later in the decade, reflected the anger felt by farmers. He said the Minister would be remembered as the man who brought in the flatulence tax and was then not prepared to attend any of the meetings to defend it. Carter claimed Sutton had told the Federated Farmers Conference to ‘stop whingeing’. Carter said if the farmers were whingeing, they had every right. They had had 18 new taxes in 4 years; the flatulence tax was the latest of ridiculous taxes heaped on farming (NZPD 2003b).22 The Government released its Sustainable Land Management and Climate Change proposals to reduce agricultural greenhouse gas emissions and to increase the storage of similar emissions in new and existing tree plantings. Federated Farmers responded positively while reserving judgement on the specific proposals until technical mechanics of how they

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might work had been reviewed. Farmers had accepted funding research to reduce non-methane and nitrous oxide emissions and the Federation worked with Government officials to understand how pastoral agriculture might be brought into a domestic emissions trading scheme. There were significant technical barriers but the Federation considered emissions trading to represent a less restrictive approach than regulatory controls. Federated Farmers was working also positively with Government to assist New Zealand’s commitment to the Kyoto Protocol. Critics accused New Zealand of producing more greenhouse gases per head of population than most other countries, and therefore had a greater ‘carbon footprint’. Critics also used the ‘food miles’ argument to persuade consumers in distant markets not to buy New Zealand-made produce. The Federation argued that the criticism was, ‘at best, spurious, at worst, wrong’. It was accepted that New Zealand produced more agricultural emissions (on a per head basis) than European countries, Japan and the US but that was because most countries consumed 90% of the food they produce and sold only 10% to international markets. New Zealand exported 90% of its meat and milk and consumed less than 10%. It was obvious why emissions were high per head of population. New Zealand was food producer to the world, not just its own population. The Federation also challenged the ‘food miles’ argument used against New Zealand—the distance a food item had to be transported from producer to consumer. The Federation argued that distance food was transported was an insignificant element of the footprint of a product going to market—the means of production was the core element and New Zealand was competitive against producers in other countries. New Zealand used shipping to transport its exports and that was a very efficient way to transport any product. It was pointed out that shoppers travelling to and from the supermarket 15 kms total distance generated far more emissions than huge ships packed with food travelling across the ocean from New Zealand to the UK. The Communications group of the Federation proposed that NZ farmers/producers should be proclaimed as ‘climate change heroes’ who produced and transported food with comparatively less emissions than food produced overseas. It claimed New Zealand was at the forefront of world research to find ways to lower animal and soil emissions and that New Zealand farmers were adopting new farming techniques to reduce emissions.

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The primary goal of the proposed campaign was to advance the notion that New Zealand farmers and food producers were ‘climate change heroes’ producing more food with less emissions than subsidised, more energy-intensive farmers in western countries. The main target audiences for this message were the New Zealand public, media, stakeholders and politicians. Key messages included the world was better off with New Zealand agriculture continuing to produce because meat and dairy products produced in New Zealand used less energy than food produced almost anywhere else. It was claimed the UK used twice as much energy per tonne of milk solids produced than New Zealand, even including the energy associated with transport from NZ to the UK. The UK had 34% more emissions per kilogram of milksolids and 30% more per hectare than NZ for dairy production, even including shipping to the UK. It was claimed the food miles argument took no account of the energy use/CO2 emissions in the production phase and wrongly assumed that a given product was produced to the same level of energy efficiency no matter where it was produced. The UK used 80% more fuel per tonne of milk solids produced. Between 1990 and 2000, there was a 10% reduction in total agricultural emission per kg of NZ milk solids produced, due to efficiency gains and better genetics. New Zealand agriculture had made a significant investment in climate change research, particularly through the Pastoral Greenhouse Gas Research Consortium. It was claimed that the consortium was carrying out world-leading research in reducing methane and nitrous oxide emissions using inhibitors and diet manipulation. Any breakthrough would be good for the environment and present commercial opportunities. There was also a broad range of research underway into increasing the digestibility of pasture with the co-benefit in terms of animal emissions. The Federated Farmers policy and advocacy team was already engaging with Government ministers and officials, who should already understand the ‘climate change heroes’ messages. However, it was important that politicians from all parties were aware of the Federation’s key messages through the media. While disseminating to a domestic audience, opportunities should be taken to reach out to an international audience through one-on-one interviews with foreign media (FF 2007).23 Rolleston in 2016 said the Federation had looked hard at climate change (FF 2016c).24 The scientific consensus was that climate change was happening and that humanity including agriculture was having an

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effect. Rolleston said farmers must play our part and we did. Already over the past two decades farmers had reduced their carbon intensity by 1.2% year on year. Farmers had planted trees for shelter, erosion control, amenity and water protection. Farmers had invested in science to accelerate productivity gains and reduce biological emissions. All took both the economy and the environment in the same direction. But New Zealand farmers had done more—telling their story to developing-country farmers so they could improve their own carbon efficiency and economic situation. In 2017 Federated Farmers, together with the World Farmers Organisation and the Global Research Alliance, hosted a group of farmers for that very purpose. Rolleston thought it unrealistic to think zero emissions from animals could be achieved but unprecedented levels of carbon efficiency had to be aimed for in our food production—it was good for us economically and environmentally. To achieve improvements access to all possible technology tools was needed. In 2017, Rolleston said some political parties in New Zealand were fixated on penalising New Zealand farmers by including biological emissions in a carbon tax or the Emissions Trading Scheme (ETS). What was worse, since farmers were carbon efficient protein producers any penalty would simply export production to other less efficient players making the global environmental problem worse, not better. In the climate change negotiations with the World Farmers Organisation, New Zealand advocated increased productivity and farmer resilience as the way forward to meet the dual challenges of climate change and food production, both of which were recognised in the Paris Agreement. Kate Milne, Federation Farmers President from 2017, told the National Conference in 2018 that while the world considered moving towards carbon net neutrality, and the New Zealand Government considered how and whether to get agriculture biological emissions embedded in that process, it should not be forgotten that there was another international agreement forged not long before the Paris Agreement (FF 2018a).25 Goal No. 2 of 17 under the 2030 Agenda for Sustainable Development was ‘Zero Hunger’. 17 development goals were signed up to by 193 countries at the United Nations in New York in September 2015. It was predicted that by 2050, the world’s population would be 9.7 billion. To adequately feed everyone, food production would have to rise by 50%—and from less water.

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Equally as important as climate change was how to produce enough nutritious food to support this population—particularly as it was predicted that sprawling cities would concrete over valuable soils, and climate volatility would change the growing profiles of farming districts. New Zealand could not feed the world but could—and did—feed many more people than lived in New Zealand. In addition to feeding five million New Zealanders, New Zealand farmers can produce enough food to feed another 35 million people (FF 2018b).26 Kate Milne said climate change policy development has been a huge challenge for Federated Farmers, and it continued to be. The Federation was working closely with the Government, legislators, fellow industry bodies and other agencies to make sure the discussions were robust and all encompassing. The was much discussion about greenhouse gases— methane emissions had increased by 4% since 1990 but in that same time, road transport emissions had increased by 78%. In terms of reducing carbon dioxide, transport was the ‘big ticket’ item for all to work on. While a lot of promising work was being done on methane emissions there was still no ‘magic bullet’ to solve mammals, especially ruminants, producing it. The fact it does not add to warming if the number of animals does not go up needs to be part of the discussion, along with the efficiency from animal production here versus other less efficient production and less secure food production (FF 2018c).27 Inhibitors were potentially important tools for primary producers to improve environmental sustainability. While there was no legislated definition of inhibitor in New Zealand, they were commonly considered to be compounds that could be applied directly or indirectly to animals or a place to inhibit the production of greenhouse gases or to reduce nutrient leaching. Inhibitors varied widely in how and what they inhibited. Common types of application include as feed additives, coatings on fertilisers or vaccines. Take Away Points Federated Farmers welcomed the New Zealand Animal Welfare Act as giving New Zealand the most modern animal welfare legislation in the world. Federated Farmers agreed a policy on genetic modification. where the technology could be applied safely.

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An alternative, less emotive, view against was that by not exporting genetically modified (GM) food New Zealand could boost its trade prospects. The Government’s Emissions Trading Scheme charging farmers for methane emissions from stock flatulence. Farmers objected. The Government decided that instead of a tax based on emissions, a levy on stock would be used for research into decreasing stock methane emissions. Over two decades farmers had reduced their carbon intensity by 1.2% a year. Farmers had invested in science to reduce biological emissions. By 2050, the world’s population would be 9.7 billion. Equally as important as climate change was how to produce enough nutritious food to support this population.

Notes and References 1. Smith, G. 2008. From Campbell to Kendall: A History of the NFU (Wellington, UK: Halsgrove): 198. 2. Polson, A. 1999. ‘Importance of Animal Welfare Bill’, Straight Furrow, 06/04/1999: 14. 3. FF 2000a. (Federated Farmers), National Board Meeting, July 2000, Memorandum of Understanding Between Ministry of Agriculture and Forestry Biosecurity Authority and Federated Farmers of New Zealand: 1/2. 4. Meylan, G. 1998. ‘Genetic Science Needs to Be Sold Through the Heart’, Straight Furrow, 13/04/1998: 5. 5. Straight Furrow 1998. ‘Most Reject Genetics: Survey’, 25/05/1998: 5. 6. Ormsby, V. 1998, ‘Genetic Technology “Integral” to Plant Breeding’, Straight Furrow 31/08/1988: 15. 7. Straight Furrow 1999a. ‘Feds Stance on GE’, 24/08/1999: 5. 8. Straight Furrow 1999b. ‘Arable Industry Feels Picked on’, 19/10/1999: 16. 9. FF 2000b. (Federated Farmers), National Board Meeting, April 2000, Pacific Basin Economic Council (PBEC): Biotechnology: Roadmap to the Future: 48/49. 10. Straight Furrow 1999c. ‘Export Income Could Double with Genetics’, 23/03/1999: 6. 11. Straight Furrow 1999d. ‘Huge Opportunity for Agriculture’, 23/03/1999: 7.

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12. Straight Furrow 1999e. ‘Debate Rages Over Genetically Modified Foods’, 23/03/1999: 7. 13. Straight Furrow 1999f. ‘Chance to Grow Exports’, 23/03/1999: 7. 14. Straight Furrow 1999g. ‘Informed Debate the Aim’, 23/03/1999: 7. 15. FF 2000c. (Federated Farmers), National Board Meeting, December 2000, Royal Commission on GM. 16. FF 2001. (Federated Farmers), National Board Meeting, July 2001, Policy Board Report. 17. FF 2016a. (Federated Farmers), President’s Address to National Council, 27/06/2016. 18. FF 2016b. (Federated Farmers), Dairy Chairman Andrew Hoggard Address to Federated Farmers Dairy Industry Group, 27/06/2016. 19. Straight Furrow 1994a. ‘Carbon Tax Move Danger Seen’, 18/04/1994: 13. 20. Straight Furrow 1994b. ‘Agriculture Absorbs Gases’, 20/06/1994: 19. 21. NZPD 2003a. New Zealand Parliamentary Debates, 22/07/2003, Vol. 610: 7139. 22. NZPD 2003b. New Zealand Parliamentary Debates, August, 27, 2003, Vol. 611: 8123. 23. FF 2007. (Federated Farmers), National Board Meeting August 2007, Comms Plan Climate Change Heroes: 1–7. 24. FF 2016c. (Federated Farmers), President’s Address to the National Council 27/06/2016. 25. FF 2018a. (Federated Farmers), President’s Address to the National Conference, 2018. 26. FF 2018b. (Federated Farmers), President’s Address to the National Conference, 2018. 27. FF 2018c. (Federated Farmers), President’s Address to the National Conference, 2018.

CHAPTER 25

Trade Agreements

Introduction New Zealand has successfully diversified its markets away from overdependence on the UK market but was in danger of becoming overdependent on China as a trading partner. New Zealand continually pressed for liberalisation of trade, encouraging others to give up subsidies. There were high hopes that the GATT Uruguay Round would achieve major changes but those hopes were not fulfilled. Brexit weakened trade links with Europe still further and the USA’s withdrawal from the TransPacific Partnership (TPP) threatened loss of gains expected from that partnership. New Zealand was also discouraged by the lack of progress towards liberalisation in international organisations, the failure of the Doha round of negotiations being a prime example. But New Zealand, itself, had doubts about how freely overseas investment in New Zealand land ownership should be allowed (Fig. 25.1).

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_25

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50 45 40

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Fig. 25.1 Main destinations for New Zealand exports—1989–2020 (Source of information—New Zealand Digital Yearbook—Statistics New Zealand)

GATT The General Agreement on Tariffs and Trade (GATT) involved countries whose objective was to agree multilateral deals to secure the best economic interests of members through a trading system based upon open markets and fair competition. But New Zealand considered that many of the contracting countries breached agricultural trade rules. The Uruguay round of negotiations that started in 1986 included negotiation on reforming agricultural trade. That was the first time a round had had agricultural trade as a central issue and that was largely as a result of strong pressure from agricultural trading nations such as New Zealand. It was estimated that, globally, Governments paid out annually US$220 billion in farm subsidies. The loss to New Zealand from agricultural subsidisation and protection in its potential markets was estimated to be approximately $13 billion per year. Even a slight reduction in market distortion would significantly benefit New Zealand. Federated Farmers contributed to the GATT negotiations on agriculture through the personal participation of the President, Brian Chamberlin, and the Chief Executive, Rob McLagan. New Zealand was part of the ‘Cairns Group’ of agriculture exporting countries which was

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proposing significant reductions in all agricultural subsidies, and a freeing up of access to markets. The GATT Director General made it clear that the status quo was not an option for agricultural trading, and that significant changes to rules could be expected. The GATT Director of Agriculture defined an efficient agricultural producer as ‘one who invests, produces, and sells his products without any Government assistance’. Roger Douglas’s actions in the 1980s enabled New Zealand to claim that definition applied to its farmers and New Zealand GATT delegates argued strongly that the Uruguay round must ensure that ‘efficient’ producers be given greater access opportunities and face less obstacles from subsidised competition. Chamberlin’s work when President of Federated Farmers had made him internationally known and respected with an in-depth knowledge of farming in New Zealand, of international agricultural policies and GATT negotiations. As President of Federated Farmers, he was an international advocate of ‘farming without subsidies’ visiting many countries in North America and Europe making the case that agricultural subsidies should be reduced. The major efforts of New Zealand to obtain a successful outcome of the GATT round was enhanced by appointing Chamberlin as ‘a special envoy with ambassadorial status’ when his term as Federated Farmers President came to an end. The appointment was part of a New Zealand Strategy Group embarking on a worldwide lobbying campaign for the GATT round and possibly beyond. Chamberlin undertook a major programme of speaking and media engagements in Europe, United States and Japan from July to December 1990 (Straight Furrow 1988).1 The Uruguay Round was completed in 1994. Graham Robertson, the Federated Farmers’ President, interpreted what he thought the agreement meant for farmers. He thought it timely for New Zealand farmers with the industry recovering from the 1980’s high interest rates and low returns. The GATT settlement promised new market opportunities that should enhance farm profitability. Robertson claimed that New Zealand’s elimination of all farm support in the 1980s had proved to be a powerful moral argument in international negotiations. He praised Chamberlin’s contribution in continually challenging overseas farming and consumer groups with the logic of having more liberal trade in agriculture. The risks that Chamberlin and other Federated Farmers’ leaders had taken in the 1980s had successfully impacted globally on liberalising agriculture trade.

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The most immediate gain for New Zealand was the certainty of access to traditional markets. Ever since the UK joined the European Community, annually New Zealand had to request retaining access. Access was now guaranteed and that would give the certainty that exporters needed to invest in that market. The agreement required both the US and European Union (EU) to reduce subsidising farm exports. That would increase international prices in dairy products, meat and grain. As New Zealand had diversified production away from Europe, it had faced increased competition from subsidised US and European surpluses that forced prices down. For the first time countries could no longer exclude New Zealand from their markets; future GATT negotiating rounds would enable further inroads to be made into any restrictions on farm trade that remained after the Uruguay round had been implemented. Robertson summarised—the GATT agreement had given New Zealand farmers an opportunity for fair access to international markets. Provided New Zealand continued to improve its marketing quality and retained its international edge for low-cost production, then the opportunities from the Uruguay Round would provide a more secure future for New Zealand agriculture (Robertson, G. 1994).2 To oversee implementing the Uruguay Round Agreement, GATT set up a new organisation the World Trade Organisation (WTO) and a former New Zealand Prime Minister, Mike Moore, was Director General from 1999 to 2002. But five years after the Uruguay GATT settlement, Chamberlin was disappointed with the implementation. He called the settlement ‘modest’ and regretted many countries ‘getting round the new rules rather than honouring them’. Overall Chamberlain felt New Zealand was much better off than it would have been without the settlement but he expressed concern that despite the benefit of trade liberalisation for New Zealand its role in trade liberalisation was being questioned. Domestic tariff reduction had slowed down. Also, the USA and Europeans saw state trading organisations such as New Zealand’s Dairy Board to be distorting influences on trade and were seeking their elimination. Chamberlain thought it would be advantageous for New Zealand to dismantle its single-buying organisations especially where they collected compulsory levies (Chamberlin 2001).3 There is no clear evidence that the Uruguay GATT round made a significant change for New Zealand. The only major change was the increase in trade with China which happened independently of the

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GATT Agreement. Apart from the increased trade with China trade there has been no significant increase in trade with other major markets. For instance, there has been no significant increase with the USA and the European Union, two markets in which New Zealand might have anticipated increases in a more liberalised trade world.

Other Trade Agreements Rolleston contemplated how Brexit had changed New Zealand’s position. Would the UK turn her head to New Zealand? Only time would tell, but New Zealand must give the UK every chance. Brexit had taken New Zealand one step further away from the biggest trading block in the world—the European Union. The UK’s membership of the EU over the past four decades had given New Zealand increased access to a continent which could be difficult to penetrate; it gave New Zealand opportunities to build European relationships. The strength of those relationships would now be put to the test. New Zealand had lost an Anglo-centric, rational, free market voice in the European Parliament just as New Zealand was starting trade talks. To trade with Europe, Norway has adopted 5000 EU laws and 70% of the EU Directives—rules which they, as a non-member, had no democratic ability to influence. Is that what the Europeans would be pushing for in negotiations with New Zealand? Contrary to scientific advice, the European States failed to approve the ongoing use of glyphosate in agriculture. When it comes to the regulation of agricultural science is Europe sinking into the abyss? Will glyphosate be a sacrificial lamb on the table of a trade deal? As a small economy the trade-game in an isolationist and protectionist world is one New Zealand will surely lose (FF 2016).4 The following year Rolleston was concerned about changes in the USA with the election of Donald Trump. It threatened world trade. The Wall Street Journal noted that 57% of Trump voters thought that world trade takes away jobs. The Rust Belt of the USA where the car and steel jobs had been lost would find that those jobs have gone not so much because of world trade or immigration but because of technology. Ironically, robotics and automation was allowing developed countries to bring manufacturing back home but the jobs would not be coming with them (FF 2017a).5

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A Trans-Pacific Partnership (TPP) which included the USA had gone for the meantime but Rolleston would not write off its long term prospects. The TPP took more than ten years to negotiate. A presidential term was four. New Zealand needs to hold the line in our trade with the USA and make small gains where we can but any trade deal can wait. ‘America first’ was not a good pretext for a balanced outcome. New Zealand had to be careful not to be caught in the crossfire of any trade war and the Government and our officials needed to play their cards skilfully and tactfully. There were opportunities in disruption. If there was any area of Government which needed investment priority, it was the Trade Department. If New Zealand cannot earn its way in the world, it could not afford the things it wanted and needed, like hospitals and social services. Rolleston had been at a Cairns Group meeting in Geneva in which he presented the New Zealand farmer’s view of free trade’s importance and the positive outcomes of deregulation. He had noted the dulling effect subsidies were having on the dairy supply response. He described the volatility in international prices caused by a thin market exacerbated by restrictions on trade such as tariffs and non-tariff trade barriers (FF 2017b).6 Rick Powdrell, Chairman of the Federation’s Meat and Fibre Council, said another emerging barrier to trade was the environmental penalties applied by Governments in developed countries, such as New Zealand, which, if based on production, have a negative impact on competitiveness and disrupt world trade. Just like export taxes these penalties reduce a country’s ability to pay its way and perversely to afford the environmental interventions it desired (FF 2017c).7 Powdrell said the US pulling out of TPP was a significant loss to New Zealand. TPP would have reduced our tariffs on beef into the US to zero after five years. But even more significantly it would have got us back on a level playing field with Australia into the lucrative Japanese market where New Zealand was losing market share. While New Zealand faced 38.5% tariffs the Australians were down to 28.5% and would eventually be down to 9% courtesy of their bilateral Free Trade Agreement. It would appear the new US administration was willing to discuss bilateral arrangements but to what level their self-protectionist beliefs influenced that process and what benefit New Zealand might gain was an unknown. It was heartening to see discussion from the remaining countries around the possible

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continuation of TPP minus the US. For farmers, the Trump effect manifested itself in two ways: disruption to trade and geopolitical stability and increasing currency volatility. If New Zealand could maintain existing US trade arrangements that would be a good starting point for a bilateral agreement. Powdrell said Brexit would be extremely challenging for the meat and fibre industry. 30% of sheep meat went to the UK and EU market; lamb was higher again at 41%. These two markets showed pressure from static to falling consumption, price level challenges versus other proteins, and in the UK a drive for more consumption of local product (FF 2017d).8 Hall concluded in 2017 that while the farming community in New Zealand remains its backbone, New Zealand needs a strong economic relationship with a dominant economic power that needs agricultural produce. The relationship with Britain benefitted New Zealand up to the 1970s at least; China is now filling the economic role previously played by Britain. But the relationship is different because there are not Belich’s ‘strong familial and sentimental links’ and the mutual trust that strengthened the relationship with Britain; lack of those links may stop [postpone?] New Zealand becoming China’s dairy farm (Hall 2017).9 Powdrell said another unknown was whether the US will end up in trade wars with other nations, notably China, which would disrupt world trade flows and potentially put New Zealand in a precarious position between major trading partners. Anything that upset the economies of our markets would create significant risks for our industries as was highlighted by the common saying ‘when China sneezes, New Zealand catches a cold’.

International Organisations New Zealand had been a member of the International Federation of Agricultural Producers (IFAP) but that organisation collapsed in 2010. By that time Federated Farmers, in common with its Australian equivalent, had become disillusioned with the IFAP and frustrated over its inability to advance the interest of free trade. In the Federation’s eyes, the IFAP had moved from an organisation focussed on advancing the interests of farmers globally to one preoccupied with becoming a quasi-aid agency focussed on developing nations. When 50 former IFAP members met in Brussels to form the World Farmers’ Organisation (WFO) early in 2011 Federated Farmers did not participate. It was sceptical about the ability of a new organisation

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featuring many of the same member organisations as the IFAP to alter course. But the Federation held positive initial discussions with Agri SA (South Africa) regarding the progress of the Transitional Board and the need for involving more Cairns Group members to ensure trade remained very much a part of the objectives of the WFO. Also, that New Zealand could influence other key policy areas including climate change, animal welfare, food security and biotechnology. New Zealand attended the first WFO meeting in South Africa but as an observer rather than a paid member. The Federation’s discussions prior to the WFO meeting was an effort to clearly articulate the factors that might affect a recommendation as to whether to become a member of the WFO. Those factors included: Objectives of the organisation — including that these objectives must include reference to trade (and reduction of barriers/subsidies). Governance — the need to ensure from the outset that the problems that beset IFAP were not repeated within the WFO and that the WFO became a genuine forum to progress the interests of farmers globally and not a quasi-aid agency. Membership — to be truly representative, a successful WFO would involve members from all continents and of all persuasions. The Federation shared with Australia concerns that the WFO would be dominated by ‘protectionist’ nations and that trade liberalisation would not be a key focus of the new organisation. Funding — previously, membership of IFAP was seen as an expensive exercise for both organisations. The Federation together with its Australian partner sought to ensure that the cost of being part of the WFO remained in keeping with the benefits and effort.

The core outcomes from the South African meeting were the acceptance of the Statutes of the organisation, which included amendments on trade, promoted by New Zealand and Australia. In relation to the Statutes, the Federation was keen to ensure that along with listed objectives, the WFO focussed on ensuring their activities linked to profitable, sustainable farm businesses and did not overlook trade liberalisation. After a debate initiated by Australia and New Zealand, a recommendation was accepted to ensure trade did not fall off the agenda though the wording

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was not as strong on liberalisation as they would have liked. Australia and New Zealand believed there would be scope to continue debate at this forum despite countries remain largely entrenched in existing positions on trade. Federated Farmers and its Australian equivalent were the only representatives from Oceania and with both attending as observers only. The Federation agreed to discuss the matter of membership with others in New Zealand and, should an agreement be reached to join, to contact other Oceania nations to discuss their intentions. It was agreed also that a report would be made to Cairns Group contacts. Eventually, both Australia and New Zealand decided that on balance, they were better off inside the tent than outside it. While they remained concerned that the WFO might lose focus on the main objective of promoting profitable and sustainable farm businesses, they decided the best way of ensure focus was to commit to membership (FF 2011).10 The World Trade Organisation had started the trade negotiation round known as the Doha Development Round or Doha Development Agenda in November 2001 under its director general Mike Moore who ten years earlier had been New Zealand’s Prime Minister. Its objective was to lower trade barriers around the world, and thus facilitate increased global trade. The Federation remained an active member of the Cairns Group Farm Leaders and the Group met in April 2010 to discuss the longrunning Doha Development. Farm leaders were frustrated with the lack of progress and call upon world leaders to demonstrate the political will and responsibility required to bring the Doha Development Round to a successful conclusion. The Cairn’s Group reminded others that trade played a vital role in economic growth and development, job creation and poverty reduction, yet imposed only a minimal fiscal burden on Governments. Trade was fundamental in addressing food security, and in supporting environmentally sustainable agricultural production. Protectionism had to be resisted and efforts to strengthen the rules-based multilateral trading system had to continue. Concluding the Doha Development Agenda remained the top priority of WTO Members. The Cairns Group continued to push vigorously for global trade reform in agriculture, which was critical to the development deliverables of the Round. The Cairn’s Group had to ensure that the positive progress made in the agriculture negotiations since the start of the Doha round was preserved

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and that the Round delivered agricultural reform including the elimination of all forms of export subsidies by 2013, substantial reductions and disciplines on domestic support, and substantial improvements in market access. There could be no weakening of ambition on these issues (FF 2010a).11 But the Doha round collapsed in 2015 because neither developed economies like the United States and the European Union nor developing countries like China and India were willing or able to make fundamental concessions.12 New Zealand had to fall back onto negotiating separate ‘free’ trade agreements.

Opposition to Investment in New Zealand An issue at the start of the 1990s that challenged the Federation’s ethos of liberalised trade was the question of foreign investment in New Zealand farmland. Several provinces asked that pressure be put on Government to control overseas farm purchases more strictly. The Federation’s legal adviser Ewan Chapman explained that the Land Settlement Promotion and Land Acquisition Act of 1952 limited the purchase of land by foreigners—with three exceptions. Australians could purchase any rural land on the basis that they had permanent residence in New Zealand, and New Zealand based companies (including Trusts) could purchase land. In addition, foreigners could purchase land by consent of the Land Valuation Tribunal, or the Ministers of Lands or Finance. The Federation Chief Executive, Rob McLagan, summarised arguments for and against. There was support in New Zealand for easy access to foreigners wishing to purchase land and farmers should have the right to sell their land to whoever they wish, especially in view of the financial pressures the agricultural sector faced. However, those in opposition to land purchase by foreigners were concerned that land would be taken out of production to be used as a retreat. If the practice became widespread, it would deny young New Zealanders the opportunity to buy farms. Federation Senior Vice President, Owen Jennings, said that land ownership was an emotive issue. Clearly a majority of New Zealanders had concerns about the entry of foreigners, especially to purchase land, if there were not clearly established and carefully monitored restrictions. There was an obvious tendency for the Government, for all the wrong reasons, to relax the restrictions. However, some investment in the form of finance, skills and ideas from outside could only be beneficial in the current depressed environment, particularly if it could be linked to market

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access. The mechanics of the restrictions and the monitoring process needed careful scrutiny and review (Harris, E. 1989).13 The Finance Minister, David Caygill, admitted that he found it difficult to make an economic case for protecting farmland for foreign ownership. He said protection of farmland from foreign investment was similar to using import licencing to protect domestic investment in manufacturing except it kept prices down rather than up. The Minister suggested that farmers would have benefited from more investment in their sector over the last two years, when ‘depressed farm prices sank farmers’ equity and left overwhelming debt’. In addition, he asked whether foreign investment in farmland would encourage new ideas, methods and technology into New Zealand farming. ‘Why deny ourselves the possibility of fresh ideas, outside capital or international marketing links?’ he asked delegates. Caygill explained that the Overseas Investment Commission (OIC) and Lands Department considered overseas ownership of farmland under different criteria. The OIC criteria were that it should add competition to local industry; lower prices and provide greater efficiency; introduce new technology, managerial or technical skills; develop new export markets or increase market access; make a net positive contribution to the country’s balance of payments: create new job opportunities; and promote New Zealand’s economic growth. The Department of Lands criteria was designed to prevent undesirable speculation in New Zealand land by overseas interests; restrict absentee ownership of New Zealand land by overseas interests except in certain circumstances, and to ensure land that could be required as a reserve did not pass out of New Zealand ownership. Federated Farmers’ Dominion Conference passed the remit—‘That the Federation reaffirms its land ownership policy and lobbies Government to disallow any controlling interest from overseas in New Zealand farmland without strict residential qualifications’. Moving the remit, Bay of Plenty encouraged ownership of New Zealand farmland by foreigners if they were prepared to be part of the rural community. Farmland was an important asset and should not be sold to an extent where New Zealand lost control over it. Responding to suggestions that foreign investment would increase the value of farmland Waikato asked how this would benefit a young farmer struggling to buy their first farm? Wanganui delegates were divided over the question of foreign ownership, but the majority came out in favour of the remit, as did North Canterbury. Southland spoke against the remit, saying the present situation was not liberal enough. Southland

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thought there had to be fair and reasonable open entry. Investment must be allowed to come into the country and overseas resources provided the opportunity for confident investment in New Zealand farming. Southland advocated a mechanism whereby foreigners wishing to sell farmland must offer it back to New Zealand interests. Waikato supported the current Act’s philosophy and called for Government to adhere to its spirit. The benefits of foreign ownership in terms of new technology and research should be monitored and if found lacking the land should be resold (Straight Furrow 1989).14 In 2010, an intense debate on overseas investment was started by the potential sale of the Crafar farms to Chinese backed interests (Natural Dairy [NZ] Holdings Ltd) and with Chinese company Bright Dairies taking a stake in dairy processor Synlait Ltd. The Prime Minister publicly expressed concerns about New Zealanders becoming ‘tenants’ in their own country. That concern was shared by farmers at the Federation’s National Conference but there was no clear agreement on a national position. The Government had been reviewing the Overseas Investment Act, originally with the intent to reduce barriers to overseas investment but it was emerging that there could be some tightening of the legislation. Concerns among farmers included that no reciprocal agreements were in place with some countries and New Zealanders would not be able to purchase freehold title in those countries. Land ownership and purchasing as determined by any current and future free trade agreements needed to be considered. People trying to sell land wanted the highest value they could get for it so that they could support themselves. To eliminate that would be dangerous. It was recognised that many foreign owners brought a fair number of benefits to New Zealand with overseas owners of land generally adding huge value to the economy and integrating into society. The Federation’s National Conference directed the Federation to develop an updated policy on overseas investment in farmland. The Federation assessed the fears being expressed about overseas investment in farmland. These included: outright opposition to any and all overseas investment. overseas investment from certain countries (especially China).

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overseas investment in farmland was helping to drive increased aggregation of land ownership and inflated land values, both of which were detrimental to the traditional family farm model. the combination of overseas investment in farmland and processing facilities could create a vertically integrated supply chain resulting in economic benefits being captured exclusively overseas.

But others wanted an easing of restrictions and supported overseas investment for its economic benefits. There was also support for protecting private property rights and opposing interference in the market, partly because restrictions on overseas investment would depress the price of farmland. The Federation thought that most New Zealanders were aware that an open economy was important for economic growth but despite this awareness overseas investment remained a contentious and emotive issue. The New Zealand economy had been developed largely thanks to foreign investment from the UK, Australia, Europe, the US and Asia, and it was inconceivable to think how New Zealand could have developed without overseas investment. More generally, overseas investment generated jobs, increased incomes, improved competition and consumer choice, improved productivity and assisted in the spread of technology and innovation. Profits generated by foreign investors accrued to the New Zealand Government through taxes. Despite concerns about the repatriation of profits overseas, surveys showed that around 90% of the value added by foreign companies remained in New Zealand, with employee remuneration accounting for the largest share. A major concern was that economic sovereignty would be lost but already New Zealand’s major companies (banking, insurance, oil, shipping, telecommunications, etc.) were largely overseas-owned. It could be argued that New Zealand had already lost control. Overseas investment provided New Zealand’s small and thin domestic markets with additional market participants. That was certainly the case for farmland, and it was recognised that land values would be considerably lower but for overseas-owned banks or other investors. The Federation claimed that regardless of what farmers thought about the benefits and costs of overseas investment, the reality was that it was necessary and New Zealand could not afford to close its doors to it. The New Zealand economy has been poorly performing over many years because there had

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been decades of spending more than was earned. New Zealand Governments, individuals and businesses had run up huge amounts of debt to sustain ‘first world’ living standards and to invest in productive assets. Most of this debt build-up had been sourced from overseas. This was as true in agriculture as it was anywhere else in the economy. High debt meant low domestic savings and an inability/unwillingness for New Zealanders to buy assets other than houses. Foreign investment was often the only option for growing businesses. The Overseas Investment Office reported that for the five years to June 2010 investors from 24 countries were given approval to invest in farmland, covering 154,855 hectares. According to Statistics New Zealand, the stock of land-based overseas holdings was estimated to be, in 2009, 1% of the total land value. Foreign investment in manufacturing was 9% of total value and 61% in finance and insurance. The Federation suggested that public concern around land sales when in fact these were very low in percentage terms was because the public has a greater attachment to land than to other business assets. Factors set out in legislation for assessing the benefits of overseas investment included: Creation of new job opportunities in New Zealand or the retention of existing jobs in New Zealand that would or might otherwise be lost. The introduction into New Zealand of new technology or business skills. Increased export receipts for New Zealand exporters. Added market competition, greater efficiency or productivity, or enhanced domestic services in New Zealand. The introduction into New Zealand of additional investment for development purposes. Increased processing in New Zealand of New Zealand’s primary products.

Also taken into consideration was whether there was or would be adequate mechanisms for protecting or enhancing existing significant indigenous vegetation and significant habitats of indigenous fauna; protecting or enhancing habitats for trout, salmon or protected

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wildlife; providing protecting or improving walking access; protecting or enhancing historic heritage. The Act had strict criteria for considering applications. As well as being the decision-makers on applications, Ministers had the power to provide policy directives to the Overseas Investment Office and make regulations. If a Government wanted to ‘stop’ or impede further overseas investment in farmland, then it possibly could under the current legislation. The Federation considered that in addition to land purchase, purchasing processing businesses should be included in any Federation policy. Many considered primary processing businesses to be ‘strategic assets’ that should remain in New Zealand ownership. But the meat industry had a long history of investor-owned firms, and many had overseas investment. Dairy processing had traditionally been New Zealand owned through the predominance of the cooperative model, but this was changing with overseas ownership beginning to make inroads—for example, Russian owned Nutritek’s shareholding in New Zealand Dairies Ltd and Chinese owned Bright Dairy’s shareholding in Synlait Ltd. The Federation concluded that overseas investment was entrenched in New Zealand’s economy. It had many benefits which many considered good for New Zealand. However, overseas investment in farmland was particularly contentious and emotive. In response to this concern, the Overseas Investment Act 2005 imposed controls on acquisition of farmland by overseas persons, controls that were more rigorous than those in the UK or Australia (but less so than in many other trading partners). Nevertheless, in the light of the debate generated by the proposed Natural Dairy acquisition of Crafar farms, it seemed probable that further restrictions would be proposed. The questions for Federated Farmers were whether to support changes to the Act and if so what changes. The options appeared to be: Retain the status quo; Introduce a new test of ‘substantial harm to the national interest’, where harms were specified as excessive land aggregation and creation of a vertically integrated supply chain; Introduce a provision of reciprocity for determining whether overseas persons may acquire land in New Zealand; Tighten the definition of an ‘overseas person’ by including those people with permanent residency, or in addition those people who are citizens but were not born in New Zealand;

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Declare primary processing assets ‘strategic assets’ making them subject to higher benefit thresholds; The deeming of some or all categories of primary processing as ‘strategic assets’. (FF 2010b)15

Take Away Points During the GATT Uruguay round, New Zealand advocated ‘farming without subsidies’. New Zealand gained from the GATT settlement the certainty of access to traditional markets and the US and European Community committing to reduce the subsidising farm exports that forced prices down. New Zealand’s state trading organisations were seen as distorting influences on trade. Brexit had weakened New Zealand’s relationship with the European Union. The US pulling out of TPP was a significant loss to New Zealand’s trade with the US and Japan. China filled the economic role previously played by Britain for New Zealand. But the relationship lacked the mutual trust of the British relationship. New Zealand thought the World’s Farmers’ Organisation might not promote profitable and sustainable farm businesses but decided the best way to ensure focus was to join. The Federation’s ethos of liberalised trade was challenged by doubts over foreign purchase of New Zealand farmland.

Notes 1. Straight Furrow 1988. ‘Federation Has Input in GATT Negotiations’, 23/11/1988: 7. 2. Robertson, G. 1994. ‘Marketing Key to GATT Gains’, Straight Furrow, 07/02/1994: 11. 3. Chamberlin 2001: 7. 4. FF 2016. (Federated Farmers), President’s Address to the National Council, 27 June 2016. 5. FF 2017a. (Federated Farmers), President’s Address to the National Council, 15/02/2017.

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6. FF 2017b. (Federated Farmers), President’s Address to the National Council, 15/02/2017. 7. FF 2017c. (Federated Farmers), Chairman’s Address to Meat and Fibre Council, 14/02/2017. 8. FF 2017d. (Federated Farmers), Chairman’s Address to Meat and Fibre Council, 14/02/2017. 9. Hall. 2017. Emerging from an Entrenched Colonial Economy: New Zealand, Britain and the EEC, 1945–1975 (Cham: Palgrave Macmillan): 306. 10. FF 2011. (Federated Farmers), National Board Meeting, October 2011, First General Assembly of the World Farmers’ Organisation, September 12–13, 2011, Joint Report Federated Farmers New Zealand and National Farmers’ Federation Australia, pp. 1–3. 11. FF 2010a. (Federated Farmers), National Board Meeting, June 2010, Report from Cairns Group Farm Leaders Meeting, April 2010, pp. 1–3. 12. https://www.nytimes.com/2016/01/01/opinion/global-tradeafter-the-failure-of-the-doha-round.html, accessed May 2021. 13. Harris, E. 1989. ‘Farmers Should Accept Foreign Ownership— Tapsell’, Straight Furrow, 22/02/1989: 1. 14. Straight Furrow 1989. ‘No Economic Case Against Foreign Ownership, Caygill Says’, 28/07/1989: 4. 15. FF 2010b. (Federated Farmers), National Board Meeting, October 2010, Overseas Investment in Farm Land—Issues Paper, pp. 1–15.

CHAPTER 26

Future Agricultural Economics and Food Policy?

A theme of this book has been how agricultural economics and food policy in a country such as New Zealand, where farming exports are a major source of maintaining living standards, is determined by Government and farmers working to achieve consensus on what is practical and achievable. When it was formed in the mid-twentieth century the challenge for Federated Farmers was how to influence Government. In the twenty-first-century influencing Government remained a prime role but added to that was an increased need to influence the public and to respond to attacks from groups making sensational claims about farming’s negative impact on the environment. Responses demonstrate how the sensational claims cause polarisation and inhibit a consensus in working towards acceptable solutions. Agricultural Economics and Food Policy is in danger of being determined by sensationalism rather than more thorough political, economic and scientific analyses. In its first decades Federated Farmers sought Government financial assistance and expected support for their exporting efforts including keeping costs within New Zealand under control. The economic crises of the 1970s meant New Zealand needed to increase exports and farming was the only significant industry capable of earning sufficient foreign exchange. But despite production increases farmers’ incomes did not match those increases because of cost inflation. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5_26

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The Federation’s close connection with Government and its research into policy issues enabled it to develop a thorough insight into the operation of the national economy. Farmers’ leaders such as Elworthy and Chamberlin recognised this and sought substantial change in national economic policy. Their efforts coincided with the election of the fourth Labour Government which, especially the Finance Minister, Roger Douglas, was determined also to move to neoliberalism matching the proposed policies advocated by Federated Farmers leaders. It was straightforward to stop financial support for farming but less easy to reform other sectors of the economy—the ‘even-handedness’ hoped for by Elworthy was not easy to achieve. Farming survived a major cut in income accompanied by a much-delayed reduction in costs but newcomers were discouraged from taking up farming. In the twenty-first century Federated Farmers was no longer as close to Government, other sectors of the economy—forestry, international tourism and manufacturing, were growing as earners of foreign exchange. Also, significant new pressures on farming arose because of environmental concerns that farming practices conflicted with New Zealand’s ‘clean green’ image. Major problems for agricultural economics and food policy in the second decade of the twenty-first century arose from growing, global, dissatisfaction with farming. Themes for anti-farming campaigns included water quality, climate change and genetic modification. New Zealand farmers had to face up to how New Zealand would deal with those problems. The difficulties faced by farming globally in the decade up to 2020 were illustrated by the Federated Farmers President, Bill Rolleston, in speaking to the National Party’s Advisory Group on Environmental Issues in 2016. He reported the phenomenon of ‘post-truth politics’ claiming that examples were the Brexit referendum in the UK and Donald Trump’s victory in the USA Presidential elections—politicians could blatantly make things up and be believed. Rolleston pointed out that ‘post-truth’ was the Oxford Dictionary word of the year for 2016. Post-truth politics was used to exploit uncertainties when the facts were unclear and lies could be used easily to influence voters. He wanted the Advisory Group to think how post-truth politics was used to exploit uncertainties when the facts were unclear, values were in dispute, stakes were high and decisions were urgent. Rolleston told the National Party Advisory Group that when formulating environmental policy they should be aware that decisions, made

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without the proper application of science, entrenched policies which had little value and were not easily reversible because in popular public perception the policies were effective when they were not. Bad news travelled fast and fear sold. This was why the expressions ‘Dirty Dairying’, applied to claims that dairying polluted New Zealand’s water, and ‘Frankenfoods’, applied to the use of genetic engineering, had been so powerful and effective in distorting public perception (FF 2016).1 Rolleston said his point was that bad news could be highly effective in influencing public perceptions even if it were not right. He called it ‘post factual science’. It was much harder for good news to penetrate (FF 2017a).2 He saw part of that challenge was in the media, both traditional and social. Articles that were well researched were needed to properly inform the public. He thought reporters faced huge pressure to just get words out and often had not had time to thoroughly verify their reports. Commentary and in-depth analysis from independent parties was needed but far too often the true experts were never heard (FF 2017b).3 Rolleston said ‘post factual science’ was an argument dressed up as science but, in order to persuade, abandoning the principles of evidence, balance and context. New Zealand decision makers needed to resist post factual science and pandering to fear. Local councils appeared to be particularly vulnerable. The problem was that once rules were notified in Regional and District plans the burden of proof to have them removed could become insurmountable. That was the case in the rules imposed by several councils on genetic modification and the use of glyphosate. Also, it was not acceptable for regional councils to notify plans that include fencing rules for hill country farmers which were patently impractical and detrimental for the environment as well as the economy. Councils needed to realise that they had to work with farmers if they were to effect change, they must sort out fact from fiction early on and set out with rules which were practical, doable and evidence based (FF 2017c).4 Andrew Hoggard, chairman of the Dairy Council, told his Council that critics of dairy and agriculture in general had really ‘cranked things up’. It was a worldwide trend not just in New Zealand. The anti-dairy movement was a key topic in International Dairy Federation meetings. The nuances were different in each country, but by and large it revolved around animal welfare and environmental aspects. Often the two were linked with the vegans pushing the animal rights side, pointing to the cobenefit of, in their mind, saving the planet by going vegan. Likewise, the

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environmentalists claimed that animal-based agriculture was not needed, nutrition could be got from lentils, mung beans and tofu. Hoggard said for dairying in New Zealand, the challenges were on the environment, animal welfare and employment. Some of the criticism was justified, but some was way over the top, and even when criticism might be justified it deliberately ignored the good work going on to improve the situation. Many farmers wanted to fight back but the problem was that if Federated Farmers, DairyNZ or Fonterra questioned organisations such as Greenpeace head on then they would be portrayed as corporate bullies targeting poor little activists. The challenge for the dairy sector was how to harness the passion of 12,000 farming families and connect them with the rest of New Zealand (FF 2017d).5 Mark Hooper identified succinctly the challenges for Federated Farmers: The growing demand for food security, safety and traceability with ever rising environmental and animal welfare standards has created a complex, highly politicized and crowded market space for Federated Farmers to operate in. Increased competition from levy funded organizations, other member based advocacy groups and rural support groups make it very difficult to maintain and grow a membership base. (Hooper 2017)6

The crowded ‘market space’ takes farming back to the days before Federated Farmers was incorporated with separate organisations speaking for farming and diluting the impact on Government. That is unfortunate at a time of growth in anti-farming campaigns. Originally, farmers united because of concerns over the influence of urban unions on Government. In 2021, concern was the Green Party’s influence on Government, holding the post of Minister for Climate Change and associate minister for the environment. A strong, unified, voice has become even more important to continue the consensus that has enabled New Zealand to successfully follow agricultural economics and food policies.

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Take Away Points Responding to attacks from groups making sensational claims about farming’s negative impact on the environment became important. Anti-farming campaigns questioned water quality, climate change and genetic modification. Rolleston claimed bad news could be highly effective in influencing public perceptions even if it were not right. He called it ‘post factual science’, an argument dressed up as science but abandoning the principles of evidence, balance and context. At the International Dairy Federation meetings the anti-dairy movement was a key topic revolving around animal welfare and the environment. For dairying in New Zealand, the challenges were on the environment, animal welfare and employment. Some of the criticism was justified, but some was way over the top ignoring the good work going on to improve the situation. Separate organisations were speaking for farming and diluting the impact of their messages on Government. That was unfortunate at a time of growth in anti-farming campaigns. A strong, unified, voice has become even more important.

Notes and References 1. FF 2016. (Federated Farmers), President’s Address to the National Party’s Advisory Group on Environmental Issues, 2016. 2. FF 2017a. (Federated Farmers), President’s Address to the National Council, 15/02/2017. 3. FF 2017b. (Federated Farmers), President’s Address to the National Conference, June 2017. 4. FF 2017c. (Federated Farmers), President’s Address to National Council 15/02/2017. 5. FF 2017d. (Federated Farmers), Chairman’s Address to the Dairy Council, 20/06/2017. 6. Hooper 2018. Examining the Challenges Impacting Federated Farmers Future Viability, Kellogg Rural Leadership Programme Course.

Index

A Accident Compensation Corporation (ACC), 228 Accountability of Producer Boards, 34, 280, 281, 283 Achievements in the 1940s, 68 Acland, Henry, 13 Acland, Sir John (Jack), 149 Affiliated organisations, 27, 266 Agricultural Development Conference (ADC), 109, 113–117, 121 Agricultural exports, 1, 6, 193, 202, 215, 379 Agricultural Research and Development Trust, 218 Agriculture, 3, 5, 6, 11, 21, 42, 66, 79, 89, 100, 109, 117, 119, 147, 152, 161, 164, 191, 198, 201, 202, 204, 207, 209, 214–216, 223–227, 232, 236, 249–251, 257, 270, 306, 309, 312, 314, 317, 331, 333, 334, 337, 341, 349, 352, 359, 368, 369, 373,

375, 376, 378, 380, 382, 384–386, 392–395, 399, 404, 411, 412 Agriculture Section, 42, 52, 136, 137 AGROW Programme, 201 Aid for Britain campaign, 69 A lack of even-handedness in the treatment of farmers, 209 Alliance Freezing Company, 60, 62, 63 American lamb market, 96 Anderson, Kym, 5 Animal diseases, 132 Apple and Pear Board, 31, 34 Arbitration Court, 112, 114, 130, 131, 199 Asia (The East, Far East), 97 Attitudes towards Asia, 97 Auckland, 26, 28, 59, 205, 266, 323 Australia, 33, 51, 52, 98, 144, 164, 206, 295, 396, 398, 399, 403, 405, 407 Avoiding Mortgagee Sales, 217, 218

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 D. Hall, Agricultural Economics and Food Policy in New Zealand, Palgrave Studies in Agricultural Economics and Food Policy, https://doi.org/10.1007/978-3-030-86300-5

415

416

INDEX

B Baker, John, 44 Barnes, Felicity, 3 Beef, 32, 97, 98, 126, 135, 173, 181, 188, 197, 198, 203, 256, 259, 263, 285–287, 362, 364, 365, 375, 396 Begg, Alec, 150, 160, 297 Begg, Aubrey, 149, 151, 245 Belich, James, 3, 341, 345, 397 Bewley, Joyce, 101, 107 Bovine tuberculosis, 42, 49, 110, 132, 137 Brucellosis, 132, 137 Bulk purchase, 3, 50, 51, 90–95, 102, 130 Butter, 41, 48, 91, 92, 95, 133, 134, 136, 143, 161–163, 173 Buyer’s Market, 98

C Cabinet Economic Committee, 162, 169, 172, 173, 194–196, 200 Calder, Mick, 98, 257, 301 Canada, 91, 92, 206, 377, 378 Canterbury, 11, 17, 115, 213–215, 243, 256, 260, 262, 263, 309, 310, 401 Chamberlin, Brian, 206, 212, 220, 223, 224, 236, 237, 244–246, 253, 255–261, 271–273, 290, 308, 392–394, 406, 410 Cheese, 41, 48, 92, 95, 143, 163 China, 98, 100–102, 377, 378, 391, 394, 395, 397, 400, 402, 406 Commonwealth, 1, 7, 158, 236 Compulsory acquisition, 145, 149–152, 278 Cost adjustment scheme, 171, 172, 183

D Dairy, 14, 16, 39, 41, 42, 44, 46–49, 51, 54, 82, 85, 91–95, 101, 111, 117, 125, 129–137, 147, 160, 161, 163, 170, 173, 175, 189, 190, 195–197, 234, 239–242, 246, 247, 252, 256, 275, 276, 285, 289, 323–330, 332, 333, 336, 337, 341, 349, 359, 378, 385, 394, 396, 397, 402, 405, 411, 412 Dairy amalgamation, 241 Dairy Board, 19, 32, 34, 45, 47, 48, 82, 94, 95, 101, 120, 127, 129, 130, 132, 134–136, 162, 190, 196, 217, 242, 252, 275–277, 286, 328, 379, 394 Dairy diversification, 100, 160 Dairy dumping, 95, 134 Dairy factories, 46, 136 Dairying state in 1950, 90 Dairy Loan Guarantee Scheme, 198 Dairy Price Authority, 136, 242 Dairy prices, 95, 173 Dairy produce marketing, 32, 90 Dairy Production and Marketing Board, 161, 163, 385 Dairy productivity, 256 Dairy Products Marketing Commission, 48, 94, 129, 130 Dairy reserve account, 82, 136 Day-to-day Federated Farmers activities in 1961, 173 Death duties, 29, 53, 78, 110, 111, 113, 114, 199 Death of Subsidies, 201 Deficiency payments, 128, 137 Dick, Colin, 210 Direct action, 25, 26, 179, 182, 212, 213, 296 Disenchantment with relations with the UK, 89

INDEX

Diversification, 4, 94, 98, 102, 113, 161, 249, 255, 257 Douglas, Roger, 207, 209, 210, 215, 393, 410 Dryden, Bruce, 162, 191 Dunlop, Bill, 178, 179, 181

E Easton, Brian, 276, 287 Economic background following World War II, 39 Economic Summit Conference, 207, 209, 218, 220, 223, 224, 236 Education, 29, 41, 43, 76, 228, 281, 315, 320 EEC Commission acknowledging New Zealand concerns over market distortion, 162 EEC impact on New Zealand, 162 Electricity - lack of in rural areas, 367 Elworthy, Peter, 207–211, 213–215, 217, 220, 221, 224, 246, 258 Engelbrecht, Bob, 215 England, 52 Environment, 76, 208, 212, 229, 232, 233, 241, 243, 270, 281, 300, 305, 306, 311, 313, 314, 316, 317, 320, 323, 325, 327, 328, 333–337, 363, 364, 366, 369, 376, 380, 381, 385, 386, 400, 409, 411–413 European Economic Community (EEC) applications for membership [by Britain], 157 European Economic Community (EEC) Common Agricultural Policy (CAP), 157 European Economic Community (EEC) Quotas, 161 European Union (EU), 374, 394, 395, 397, 400, 406

417

Evans, B.L., 32, 33, 36, 37, 51, 52, 56, 286 Exchange rate, 15, 208, 215, 225, 226, 233 Exporters, 5, 7, 93, 98, 128, 176, 192, 206, 214, 217, 225, 226, 233, 242, 244, 278, 279, 282, 283, 285, 286, 291, 394, 404 External/Foreign Affairs Ministry, 106 F Farm cadets, 116 Farmers’ Federation, 19, 20, 25, 28, 44, 51, 67, 126–128 Farmers offer to give up subsidies, 15, 200 Farmers’ Union, 9–21, 23, 25, 26, 28, 45, 51, 59, 64, 65, 67, 71 Farm financial arrangements, 211 Farming Anxieties at the start of the 1950s, 75, 141 Farming costs, 115, 129, 133, 137, 204, 219, 289 Farming incomes, 15, 133, 197, 199, 227 Farming productivity, 256 Farming profitability, 171, 226, 232, 393 Farm wives, 212 Farm wives’ need for change, 281 Federated Farmers (FF), 5–7, 9, 21, 26–31, 34, 35, 40–51, 53, 54, 57–59, 61, 62, 64, 67, 68, 70, 71, 75, 77–87, 90, 91, 93–97, 100–107, 109–117, 119–123, 125–135, 137, 139, 142–146, 148–151, 153–155, 158–166, 169–183, 185, 187, 190–201, 203–213, 215–220, 223, 225, 232, 233, 235, 239, 241, 242, 244–249, 251, 255–264, 266,

418

INDEX

268, 271–273, 275, 276, 281, 283, 284, 289–292, 294–299, 301, 305, 306, 308–320, 322, 324, 327, 331, 332, 334, 335, 337–339, 343, 344, 346–352, 355, 357–364, 366, 368–371, 374–376, 379–389, 392, 393, 397, 399, 405–407, 409, 410, 412, 413 Federated Farmers’ Dairy Council, 47 Federated Farmers’ Dairy Section, 47, 90, 129, 134, 160, 163, 193, 239, 241, 276, 277, 324, 334, 381 Federated Farmers’ Dominion Conference, 40, 46, 312, 401 Federated Farmers’ Dominion Council, 27, 79, 97, 149, 159, 324 Federated Farmers’ Dominion Dairy Conference, 134, 240 Federated Farmers’ Dominion President, 96, 143, 150, 178, 219 Federated Farmers’ formation, 49 Federated Farmers’ Meat and Wool Section, 49, 61, 127, 128, 142–144, 146, 149, 150, 157, 177, 242, 246, 299, 316 Federated Farmers’ Provincial President, 27, 94, 307, 324, 325 Federation of Labour, 19, 134, 191 Feminisation of agriculture, 265 Fertiliser, 12, 29, 43, 77, 80, 114, 118, 126, 136, 170, 182, 188, 189, 195, 198, 205, 209, 289, 314, 325, 387 First Labour Government, 13, 14, 33 Food and Agriculture Organisation (FAO), 64–68 Forrest, Gavin, 327 40-hour week—rural opposition, 18

France/French, 91 Franks, Peter, 176, 184 Free and unrestricted entry, 160 Freer, Warren, 101, 107 Freezing factories, 58 Fruitgrowers’ Federation, 9, 12, 14, 21, 27, 34, 81, 257, 259 Future markets, 100 G General Agreement on Trade and Tariffs (GATT), 1, 233, 262, 374, 391–395, 406 General Secretary of Federated Farmers, 91, 96, 101, 130 Government expenditure, 80, 112, 125, 131, 202 Grant, Jeff, 218 Grassland farming, 316 Greensmith, Edward, 51, 56, 143, 147, 153 Guaranteed Price, 14–16, 33, 34, 47, 48, 94, 125, 129–131, 137 Gustafson, Barry, 67, 68, 73, 78, 85, 174, 184 H Hall, David, 3, 4, 8, 57, 71, 97, 106, 160, 165, 397, 407 Hayward, Dai, 31, 32, 36, 46, 58, 59 Heath, Edward, 101 Herman, Phillip, 26, 34, 37, 151, 155 Hilgendorf, Charles, 190 Holland, Phil, 330 Holland, Sidney, 80 Holyoake, Keith, 67, 68, 78–85, 93, 98, 99, 110, 120, 121, 131, 159, 160, 169, 174, 261 Horticulture, 173, 306, 331, 333, 337 Hospital rates, 179

INDEX

House of Representatives, 119, 179 I Impact internationally, 64 Imperial Preferences, 3 Importance of primary production, 324 Import restrictions by New Zealand, 1, 164 Increasing Government support for farming, 169 Increasing New Zealand’s population, 1, 384 Influence on Economic Policy, 201 Integral part of Britain, 27 International Federation of Agricultural Producers (IFAP), 65, 66, 68, 397, 398 International trends, 295 International Wool Secretariat (IWS), 33, 144 J Japan, 98, 99, 163, 319, 384, 393, 406 Joint Concerns of Farmers’ Union and Sheepowners’ Federation, 14 Joint Organisation (JO), 51, 52, 143, 152 K Keenan, Danny, 340, 341 Kirk, Norman, 151, 176, 182, 187 Kneebone, John, 162, 190, 193, 194 Korean War impact on New Zealand, 141 L Labour Government, 13–15, 17, 18, 20, 22, 78, 101, 127, 130, 132,

419

176, 217, 218, 242, 246, 260, 290, 311, 345, 410 Lamb, 68, 93, 96, 97, 100, 101, 104, 176, 181, 183, 188, 203, 207, 243, 244, 252, 270, 286, 298, 362, 364, 365, 395, 397 Landcorp, 230, 350 Land legislation, 16, 230 Land reforms, 341 Lange, David, 207, 216, 217 Leptospirosis, 132, 137 Levy in support of Federated Farmers, 81, 121, 174, 183 Liberalising trade, 4, 393 Lincoln College, 379 Lind, Clive, 59–61, 71, 276, 292, 302 Living standards, 14, 225, 236, 404, 409 Lobbying government, 363 Local government rates, 17, 270 Lump sums, 45, 53 Luxembourg Protocol (EEC special arrangements), 160, 161

M MacIntyre, Neil, 205 Manpower shortage, 249 M¯aori, 1, 6, 11, 339–350, 352, 354 Market distortions, 4, 7, 89, 102, 161, 164, 165, 169, 233, 392 Market distortions dumping, 1, 89 Market distortions import restrictions, 1 Marshall, John (Jack), 110, 160, 169 Martin, D.L., 90, 91, 93, 104, 342 Mayfield, slaughter of ewes, 212 McAloon, Jim, 89, 90, 103, 109, 110, 121, 175, 176, 184, 243, 252 McKinnon, Malcolm, 206, 207 McNab, Tom, 150, 151, 177, 190

420

INDEX

Meat, 3, 14, 31–33, 35, 39, 42, 44–46, 49–52, 54, 57, 59, 60, 62, 64, 68, 75, 77, 82, 84, 85, 91–94, 96–101, 117, 125–128, 137, 143, 145, 173–178, 180, 181, 183, 188, 190–192, 194, 195, 203, 207, 214, 231, 234, 239, 241–246, 252, 256, 258, 260, 261, 275, 277–279, 281–286, 295, 296, 298–302, 323, 358, 359, 384, 385, 394, 396, 397, 405 Meat Board, 19, 31, 32, 34, 57, 58, 60–64, 68, 70, 71, 82, 93, 96, 98–100, 125–129, 137, 181, 190, 244–246, 252, 258, 278, 281, 282, 284–287 Meat exports, 32, 58, 61, 62, 93, 99, 100, 300 Meat Industry Reserve Account, 126, 128, 129 Meat prices, 42, 93, 176, 177, 181, 182, 194 Militancy - Freezing workers, 301 Militancy - Waterside workers, 46 Milk powder, 5, 101, 102 Minister for Industries and Commerce, 90 Minister of Overseas Trade, 110 Ministry of Agriculture and Fisheries, 209, 245, 249 Moyle, Colin, 151, 176, 177 Muldoon, Robert, 150, 169–172, 174, 175, 187, 194, 197, 198, 200, 202–204, 206, 207, 215, 298 Mulholland, Walter, 15–18, 20, 21, 23, 24, 64–66, 68, 70, 127, 128 Murphy, Stan, 98, 101 Mutton, 98, 99, 178, 244, 252, 296–298

N Nash, Walter, 39, 131 National party, 21, 78, 80, 85, 111, 175 Neill, Carol, 3, 8 Neoliberalism, 206, 207, 410 New Zealand adapting to change, 217 New Zealand aerial topdressing, 251 New Zealand Britain’s Dairy Farm, 41, 276, 330 New Zealand Comparative Advantage, 5, 379 New Zealand Co-operative dairying, 189 New Zealand dependence on farming, 3 New Zealand farms, 158, 345 New Zealand Regions, 329 1930s Concerns of Farmers, 13 Nixon, Richard, 101 O Observer, 100, 106 Oil price shocks, 29 Organisational structure, 29, 30 Ormond, John, 100, 157 O’Shea, Alec, 91, 92, 96, 159 Otago Provincial Council, 21 Overseas control of meat processing, 13 P Pacific Basin, 164, 378 Pacific Basin Economic Council (PBEC), 164, 165, 377, 388 Palmer, G., 214, 308 Parliament, 16, 21, 29, 80, 142, 151, 162, 171, 175, 176, 214–216, 260, 267, 281, 285, 295, 341, 346, 354, 374, 383, 395 Patrick, Charles, 101

INDEX

Pay rates for farm workers, 14 Perry, W.N., 79, 85, 158 Peterson, W., 131 Philpott, Bryan, 98, 106 Platform planks, 40 Plummer, P. S., 100, 297 Point Blank, 15, 16, 22, 23 Price Tribunal, 17, 20 Primary Production Advisory Committee, 80, 93, 103 Prime Minister, 10, 11, 17, 21, 45, 67, 80, 99, 106, 110, 112, 113, 116, 120, 121, 123, 127, 131, 151, 159, 169, 174–176, 178, 180, 182, 187, 191, 194, 207, 214, 216, 270, 308, 314, 334, 351, 394, 399, 402 Producer Boards, 25, 31, 34, 35, 41, 82, 113, 116, 120, 121, 159, 164, 174, 175, 188, 197, 205, 230, 231, 244, 261, 275–280, 286 Producer Support Estimate (PSE), 5 Protection for manufacturing industry, 216 Protection for urban community, 76 Pryde, John, 109, 117, 139, 160, 173 R Randall, David, 95, 105, 130, 138 Reference Price Scheme for export meat, 179, 181, 183 Referendum on wool reform, 151 Refrigeration, 3 Relations with Government, 5, 13, 14, 16, 53 Reserve Bank, 51, 80, 136, 143, 177, 188, 211, 242 Responses to financial support for farming, 169, 203 Restraint on farm incomes, 180 Richardson, Ruth, 309

421

Roar from the Hills, 212, 214, 219 Robertson, Paul, 3, 8, 98, 99, 106, 162, 166 Rogernomics, 207, 211, 212, 217, 218 Romanticism, 294 Rowling, Bill, 176, 187 Royal Commission on meat processing facilities in Southland, 70 Royal Commission on the Sheep Farming industry, 42, 75, 111, 342 Rural Bank, 195, 198, 204, 210, 211, 229, 230 Rural communities, 17, 76, 117, 169, 211, 213, 215, 219, 229, 239, 241, 247, 248, 355, 362, 363, 366, 401 Rushforth, Mr., 28

S Secondary industry, 204, 311 Sentimental links, 3, 397 Servicing Industries for Agriculture, 188, 199, 243 Sharemilkers, 49, 135, 170, 190, 270, 318 Sheepowners’ Federation, 9, 11, 13, 19–21, 26 Shipping, 6, 31, 32, 118, 126, 279, 282, 289, 292–295, 301, 384, 385, 403 Sinclair, Keith, 33, 37 Singapore, 289 Singleton, John, 3, 98, 99, 162 Skinner, C. (Jerry), 131 South Africa, 33, 51, 95, 144, 398 South Canterbury, 208, 213, 220, 270, 333 Southland Federated Farmers, 60–63 Southland meat freezing works, 315

422

INDEX

Special assistance for farming, 187, 200 Stabilisation, 20, 40, 42–46, 125, 126, 178–180, 183, 188, 190, 194, 197, 199, 242 State-owned enterprises, 350 Storey, Rob, 204, 205, 207, 295 Straight Furrow, 17, 18, 23–29, 31, 35, 36, 40, 42, 43, 45–49, 52–56, 60–68, 70, 72, 73, 77, 79, 80, 82, 85, 86, 90, 91, 93–98, 100, 101, 103–107, 110–113, 117, 119, 121, 122, 126, 128–139, 141–143, 145, 146, 148–155, 158–166, 171, 172, 174, 177–180, 182–185, 192, 200, 203, 205, 206, 211–213, 215, 216, 219–221, 225, 237, 241, 244–247, 250, 252, 253, 259, 263, 269, 271–273, 283, 284, 287, 290–300, 302, 303, 306, 309, 311, 314–318, 321, 322, 327, 329, 337, 346, 348, 349, 351, 354, 376, 377, 379, 380, 382, 388, 389, 393, 402, 406, 407 Styles, Herb, 245 Subsidies, 44, 45, 89, 128, 146, 161, 169, 173, 182, 190, 192, 198, 201–204, 206–209, 211–213, 217–219, 283, 306, 391–393, 396, 398, 400, 406 Subsidisation abolished, 5, 7 Suez Canal Invasion, 89 Supplementary Minimum Prices (SMPs), 197, 200, 202–209, 243, 246 Sutton, Jim, 382, 383 Swinnen, Johan, 5 Synthetics, 33, 141, 144–146, 150, 152, 169

T Tait, Peter, 64 Talboys, Brian, 148, 176 Tangowahine, 205 Taranaki, 132, 217, 324, 325, 337 Taxation, 16, 17, 40, 43, 53, 80, 110–113, 116, 120, 172, 196, 198, 204, 226–228, 235, 299 TheTimes , 159 Trade Talks with Britain, 95 Treasury, 113, 117, 134, 185, 206, 207, 277–281, 284, 286 Tyson, Janet, 98, 257, 301

U Unified organisation, 19, 25, 29, 35, 265 United Kingdom (UK), 1, 3–5, 17, 21, 26, 39, 43–45, 47–54, 64, 65, 69, 71, 78, 89–97, 99–102, 126, 131, 134, 142, 157–165, 176, 177, 183, 206, 244, 341, 374, 379, 384, 385, 391, 394, 395, 397, 403, 405, 410 United States of America (USA), 89, 91, 96–98, 100–102, 141–143, 152, 163, 206, 378, 381, 391, 394–396, 410

V Voluntary income equalisation scheme, 114, 176

W Waikato, 112, 132, 158, 191, 215, 217, 262, 270, 328, 329, 401, 402 Wairarapa, 92, 191, 268, 270, 299, 308

INDEX

Wallace, Neal, 204, 206, 207, 211, 212, 218, 220, 221, 306 W. and R. Fletcher, 60, 62–64, 71 Wanganui, 191, 401 Ward, Arthur, 33, 36, 41, 42 Watersiders, 25, 290, 291 Whangarei, 119, 133, 205 Women’s contribution to farming, 225 Women’s Division Federated Farmers (WDFF), 27 Wool, 1, 3, 13, 14, 21, 33, 34, 39, 42, 50–52, 75, 82, 98, 100, 117, 141–152, 169, 173, 175–179, 183, 188, 190, 191, 195, 203, 207, 234, 242–246, 252, 256, 275, 278, 281–285, 309 Wool Auctions, 153 Wool Board, 31, 33–35, 82, 84, 85, 127, 143, 145, 146, 148–151, 179, 190, 203, 217, 246, 261, 270, 275, 277–281, 283–287 Wool Board Marketing Plan, 144 Woolbrokers, 144, 145

423

Wool buyers, 145 Wool Commission, 144, 146, 148, 212 Wool Committee, 31, 33 Wool Conference 1945, 51 Wool Corporation, 151, 152, 154 Wool Disposal Account, 51 Wool Disposals Ltd., 51 Wool exports, 282 Woolgrowers Action Committee, 245 Wool Industry Reserve Account, 51 Wool Marketing Authority, 147 Wool Marketing Committees, 144 Wool Marketing Study Group, 146, 147, 153 Wool prices, 21, 127, 141, 142, 146, 148, 151, 170, 187, 234 Wool reform, 145, 152 Wool stockpiles, 51 World War II, 3, 16, 31, 32, 34, 39, 43, 44, 50, 52, 58, 75, 89, 90, 98, 141 Wright, Alan, 164, 201–204, 247, 298