21 Nov 2013

Labour proposes Fonterra-type model for meat industry

4:22 pm on 21 November 2013

The Labour Party has suggested a Fonterra-like co-operative model would benefit the fractured meat sector.

The party's leader, David Cunliffe, appeared before farmers at the Federated Farmers National Council in Wellington on Wednesday telling them a future Labour government would want to work with rural and regional New Zealand to get those areas humming.

Mr Cunliffe explained some of the party's policies, such as its view that agriculture needs to be included in the Emissions Trading Scheme and he criticised the current Government for turning its back on global climate negotiations.

He said Labour is deeply concerned that despite a $350 million growth partnership the trend appears not to be towards higher value processing and specialised exporting of branded goods, but now exporting carcasses for further processing in China.

Mr Cunliffe said Labour recognises the value of Fonterra-style models that could help New Zealand exports and sheep and beef farmers in marketing products and ensuring that the profits stay in New Zealand.

Labour's plans for a capital gains tax

Should it win next year's election Labour is proposing to introduce a capital gains tax.

At the National Council meeting board member William Rolleston asked him if the party had thought through the impact of the tax on farmers.

Dr Rolleston said many parents sell their farms to their children, and if that triggers a capital gains tax it would stop the practice and affect many people's retirements.

Mr Cunliffe replied that much of the value of farming is attached to the capital gain of the property which was why in the dairy sector some 10 per cent of farmers had multiple land holdings.

"We don't think that is good for the economy. We think a better system is where we are farming for profit not farming for capital gain. Or at least have more neutral investment signals so that the market can take care of where the value naturally falls.

"At the moment there is absolute tax bias toward capital gain as an incentive, and farming is a business like any other business and I have heard your leadership say that many, many times.

"Well, let's treat it as a real business and give it a tax structure which neutralises the incentives ... one of the effects there, is that the children of farmers will make a better income off the farm and the passage of the capital asset won't be what it's all about."

Greens say more partnerships needed

Green party co-leader Russel Norman told the Federated Farmers Council central government and primary industries should be working more in partnerships to add value to exports.

He said Fonterra has had a long-term strategy of adding value to dairy products.

Dr Norman said there should be a partnership between central government and the dairy sector, in particular on doing what's possible in central government to add value in that sector.

He said dairy is just one example, and in forestry, around half of all the trees that are chopped down are being exported as raw logs.

Dr Norman said the sector has introduced a levy to fund more research, but there is a bigger role for government as well in partnering with the sector to support development.

In the fishing sector, he said, foreign charter vessels are the worst example where fish is caught by foreign vessels and then sent to China for processing.

Russel Norman fielded challenges from farmers on the Greens' views on environmental issues including land farming in Taranaki - the practice of spreading waste from oil drilling onto farmland.

Norman debates land farming in Taranaki

Russel Norman had to explain his party's opposition to land farming in Taranaki, when he appeared at the Federated Farmers National Council meeting.

It was one of a number of issues farmers debated with him.

Land farming is the term used to describe the process of spreading the spoil from oil and gas drilling on farm land.

A report by soil scientist Dr Doug Edmeades, commissioned by the Taranaki Regional Council, found the practice, combined with irrigation and fertiliser, produces high quality pasture that can increase the value of marginal land tenfold.

Dr Norman was asked why, in view of that, the Green Party continues to oppose land farming.

"What was interesting about Doug's report was that the level of hydrocarbons in the soil on those farms is currently above the level it needs to be to achieve the resource consent when it's released from its land farming activities and I think that's a bit concerning.

"I don't think that our consumers, if you think of parents feeding their children infant formula are going to take very kindly to that kind of product."

Mr Norman was told that the hydrocarbon levels weren't a problem because they dissipated with time and farmers could still have the production gains.

But he pointed out that Fonterra is having to send milk samples from those farms for testing in Australia, to check for hydrocarbon contamination.