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NZ and its rural productive model. Learning from a global agricultural leader.

NZ and its rural productive model. Learning from a global agricultural leader. JULIAN RAMIREZ – LUNA BUSINESS DEVELOPMENT MANAGER. DEREK FAIWEATHER CHIEF EXECUTIVE OFFICER DAIRY SOLUTIONZ - WAIKATO INNOVATION PARK HAMILTON, NEW ZEALAND. Points to be shared.

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NZ and its rural productive model. Learning from a global agricultural leader.

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  1. NZ and its rural productive model. Learning from a global agricultural leader. JULIAN RAMIREZ – LUNA BUSINESS DEVELOPMENT MANAGER DEREK FAIWEATHER CHIEF EXECUTIVE OFFICER DAIRY SOLUTIONZ - WAIKATO INNOVATION PARK HAMILTON, NEW ZEALAND

  2. Points to be shared • What´s happening around the world – dairy sector. • What Can be learnt from the New Zealand and its International Experience ? • Two situations related to the NZ rural development that could useful for Colombian current situation

  3. 1. GLOBAL SITUATION: Current state

  4. The supply of food to meet human nutritional needs over next 40 years is quantitatively equal to the amount of food previously produced in the history of human kind.  D.E. Bauman – US News & World Report NZ = Free range, lowest cost of production, high quality, safe protein, 2% of world formal production Global leading Agtech Cluster for ongoing productivity improvement tech & systems Unsubsidized Wealth Others = Corn based, corn price linked to oil price, high capital, high cost, est 90% of worlds formal production Marginal Business seeking subsidy / protection to sustain high local prices

  5. Concentrate feed Prices

  6. Food Prices and Oil prices

  7. NEW ZELAND

  8. NEW ZELAND • Population: 4.4 million • Area: 270.000 square km • Dairyproduction: for 100 million of people • 11 million head of cattle

  9. Profitable NZ Grassland Farmingwhat is it all about? • Effective farm surplus per hectare, farming for profits not liters per cow • Lowest cost industrial production and highest quality • US 22 to 23 cent per liter • Payment based on International prices • US 42 cents per liter, • No subsidies: impossible for a small country to subsidize its No1 export industry at over NZ$15billion per year • 95% export • 40% global trade • 2-3% global production • Our forecast indicates that annual demand increase for dairy is greater than 5 times the total annual production of Colombia. • Best NZ farmers are achieving NZ$4,000 EFS / hectare

  10. 2. LESSONS FROM THE EVOLUTION OF THE NZ DAIRY INDUSTRY

  11. 1980´s economic crisis in nz

  12. Scale over time; more cows, fewer herds 1980 - 2010

  13. Productivity growth per cow and per ha

  14. Evolution in farming & processing 100 years

  15. Key Learning / Universal Truths • Individual farmers have no commercial power • Milk Production gravitates to where the factors of production are the cheapest • Value gets created and captured at both ends of the value chain, either/both the farm level or in consumer Brands • Political solutions to commercial problems do not last

  16. Key Learning / Universal Truths.. Cont. • New Zealand is low cost because it has to be. Farmers respond to price signals. They must be clear, accurate, transparent • Farmers deal best with production issues. Processors / marketers deal best with the customers / consumers • World Price and Domestic price will inevitably converge

  17. 3. OTHER KIND OF LEARNINGS OF THE RURAL DEVELOPMENT OF NZ

  18. Twoexperiencestotakeintoaccount: 1. maoriexperience2. ww2 – afterwarsituation

  19. The Treaty of Waitangi (Māori: Tiriti o Waitangi) is a treaty first signed on 6 February 1840 by representatives of the British Crown and various Māori chiefs from the North Island of New Zealand. • The Treaty established a British Governor of New Zealand, recognised Māori ownership of their lands and other properties, and gave the Māori the rights of British subjects. maoriexperience

  20. ww2 –afterwarsituation

  21. Components of a Dairy Farm Land Races Irrigation / Effluent Fences Milk Parlour Sheds accommodation Milk Parlour Sheds, accommodation Tractors, bikes & equipment Cows

  22. The Landowner – NZ Gov Land Races Irrigation / Effluent Fences Milk Parlour Sheds accommodation Milk Parlour Sheds, accommodation

  23. The Sharemilker (Small rural family) + Employs and pays for farm workers Tractors, bikes & equipment Cows

  24. Revenue milks the cows and sells the milk to… manages the farm… Sharemilker 50% percent of milk revenue to both the Sharemilker and the Landowner a milk processor who pays … Landcorp

  25. Practical explanation

  26. Then.. A good lesson for Colombia Highlights • The NZ Government established Landcorp with NZ$167 million most of which was land • The NZ Government has never been asked for more capital • The NZ Government has been paid over NZ$400 million in dividends • Landcorp has grown its assets from NZ$167 million to NZ$1.7 billion in the last 25 years

  27. Farmers, Processors, Government agencies all pulling in the same direction will be a powerful force. Your Future is in Your hands

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