BULLETINS
& ARTICLES
CO²
tax is latest crisis
Tony Ivicevich
Chairman, Tomato Sector
After seven years as Fresh Tomato Sector chairman
preparing for this presentation does not get any easier, especially
as most of the issues seem to stay with us year after year. I checked
back to what I said last year and previous years and I will make
a conscious effort not to be too repetitive. The one issue that
has died for the time being is PSTVd but the others: market place,
retailing, grower profitability (or lack of), rising energy and
other input costs just continue. They would not be issues if we
could pass on costs and there are not many signs on the horizon
that things will improve. I guess the old adage of what does not
kill you makes you stronger applies here and we excel in managing
to survive.
REGULATIONS
All growers suffer the weight of regulation and compliance with
its obstacles to growth and debilitating costs. However, this is
the world we live in and over the years this Sector and Vegfed have
spent your money to make conditions as palatable as possible. Most
probably the latest is from the NZ Food Safety Authority who are
currently undertaking the Domestic Food Review on how food is regulated
in NZ. This is when I thank the foresight of those within our industry
for getting the likes of Approved Supplier Programme and GROWSAFE
up and going in spite of a lot of grower protest at the time. These
hold our industry in good stead and make those growers who have
gone to the expense of meeting these standards well prepared for
our part in food safety, as regulators and consumers fine more things
for us to do to stay in business.
Water regulation
for supply and quality is on the horizon and nutrient run-off control
is right in front of us. Watch this one closely.
The Nutrient Run-off Code of Practice is in its last consultative
round and will hopefully serve to limit onerous regulation. The
pilot work to remove nitrates from run-off looks promising too.
At this point I want to highlight the Sector’s investment
in research that always looks for practical use for tomato growers.
Another useful task we should be looking at is to facilitate and
contribute to getting registrations for some newer safer chemicals.
If we don’t, we will get left behind. OSH is another regulator
on the horizon as they go through one industry after another. Our
new OSH issue may be focused on operator safety when working at
heights in trolleys. We have already been approached because of
several accidents. A suitable labour supply or really its shortage
is another issue we are working on with WINZ and the Immigration
Service. The Sector has also played its part in encouraging young
New Zealanders into our industry.
LATEST
CRISIS
The latest crisis our industry faces is the Carbon Tax, coming up
all too fast in April 2007, unless there is a change of government
in September. From the first day of government consultation the
Tomato Sector recognised the treat, took a proactive approach and
got stuck in to understand the process. We established that we could
tick all of the boxes to qualify for a Negotiated Greenhouse Agreement
and were the first to approach officials to talk about an industry
NGA. However, it was not expected that small industries would qualify.
We were obliged to wait for some years to see the Small and Medium
Enterprise (SME) package to deal with the large number of small
businesses with high energy inputs that would be badly affected
by such a tax. While we waited we spent money on researching our
energy uses through surveys, commissioned research on energy savings
and funded overseas exports for more information. We have also worked
closely with the hamstrung officials and have clearly demonstrated
to them and Government that we are serious about this issue.
The SME package
for badly affected industries such as ours offers help through part
funding the study of ways and/or pilot technologies to reduce energy
to offset the tax. However, this scheme has a fishhook. If an industry
like ours takes up the offer, it disqualifies itself from applying
for an NGA. These agreements involve reaching world’s best
practice or better by 2012 to be partially or fully exempted from
the tax. The NGA process, in spite of some changes and claims to
the country is onerous, obstructive and expensive. Nothing so far
has convinced us and those in other industries that this government
wants very many NGA’s, or at the least as few as possible
for small and medium businesses.
TAX
OUR CHOICE
We have to constantly remember that in spite of conflicting science
about climate change and the minimal effect that New Zealand’s
actions have on global warming, the carbon tax regime is not mandatory
under the Kyoto Agreement. It is purely one government’s policy
purportedly designed to influence behaviour with energy. We acknowledged
there is some fine-tuning our industry might need to do but at the
risk of being repetitive we don’t see savings that would eliminate
the effects of the tax. We continue to maintain that market forces
and extortionate energy costs have already forced us into the required
behaviour. Burning wood is not the answer either. It may be marginally
feasible for large growers only. It is fraught with unrecoverable
capital investment, risks of supply and high energy costs to process
and deliver raw material.
The Climate
Change Minister’s response to questions via the media about
plight of the greenhouse tomato industry demonstrates poor advice
or understanding and nothing short of an unfriendly attitude towards
us and NZ business in general. I think our skepticism about the
carbon tax hardens when we look across to our trading neighbours
and how their governments treat their productive sectors.
In spite of
all the above our industry has an open mind and is prepared to adapt
and take on anything to keep us in business and to that end our
primary focus for this conference is the Carbon Tax and what we
can do about it. We have invited Chris Plackett a technical advisor
to UK’s greenhouse industry to share their experiences and
later we have lined up an excellent panel to assist further.
This year was
our very first following the one grower one-vote-system and, as
signalled we co-opted a grower from Nelson to balance the geographical
representation. Every year, two positions come up for renewal and
the first round came up far too soon before the first retirees could
get to grips with the job. Thankfully the first two were returned
unopposed.
The Sector has
always been very conscious of the future with the change in size,
shape and number of growers and providing value for money back to
all growers. Your representatives have just reviewed the sector’s
role in the tomato industry especially to make sure it is useful
and relevant to growers today and in the future. Our previous review
was done in 1999. With the help of a professional from the Institute
of Management we looked at where we are today and where we want
to be in 5 years time. Firstly and most importantly all agreed that
there will be a place for small, medium and large growers and each
will have a market. We resolved that the Sector’s purpose
will be: the voice and guardian of the industry and its vision;
to facilitate information and to enhance the viability of the industry.
Viability means the ability to exist in a particular climate, it
does not promise profitability. As the vision states, communication
and information are the most important tasks.
Horticulture
New Zealand promises to strengthen NZ growers voice in political,
regulatory and public opinion spheres and I guess its formation
has benefited with the unusual situation of having two tomato growers
on its foundation board. Whilst its role is to deal with generic
horticultural-land-user issues and not Sector or Product Group work,
it is important to maintain an active tomato presence in Horticulture
New Zealand’s governance.
This year’s
Produce Plus Conference is about Heroes of Horticulture. I think
New Zealand fresh tomatoes and the greenhouse tomato industry are
among these heroes. In spite of every obstacle put in front of it
over the last couple of decades it still survives and flourishes.
It is innovative, adaptive to change and now fresh tomatoes have
pushed potatoes off as the top consumer vegetable. Tomatoes are
second only to bananas in this race. But what is an industry without
its people? I think NZ tomato growers are the real heroes for their
skills and tenacity for getting out industry where it is today.
All of us should be proud of our part in this dynamic industry.
SO WHAT
DO WE KNOW ABOUT OURSELVES SO FAR?
• Our
industry has a farmgate value close to $80 million. ($70 million
last year).
• Consumer spend on tomatoes is $118 million (food service
spend is not included).
• Tomatoes are still the hottest retail category in the produce
department.
• Wholesale returns for fresh NZ tomatoes continues to fall
reportedly at 5 cents per kilo each year. That has to be good for
the consumer.
• Our membership is 363 growers including some outdoor growers,
40 less than last year, a 10% drop.
• Our investment in greenhouse tomatoes is $300 million.
• Our greenhouse production is is 120 hectares.
• We directly employ 7000 people and there are many hundreds
more that derive a living from us upstream and downstream.
• Last year NZ imported $9million worth of tomatoes, mainly
from Queensland.
• Our exports are catching up, $1.4m 2002, $4.9m 2003, $7m
2004 and to the end of May this year $5.4m and we have 7 months
to go. (80% goes to Australia.)
