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- Date published:
10:30 am, June 14th, 2026 - 36 comments
Categories: climate change, Debt, Economy, Environment, ETS, exports, farming, overseas investment, spin, tax, uncategorized -
Tags: methane, nitrous oxide
Dave Kennedy at Local Bodies recently published this post. It seems like an apposite commentary after looking at the feel-good Mystery Creek field day coverage. Reposted with permission.
The farming sector is enjoying a boom time at the moment. Beef prices are experiencing a 60 year high, the farm gate milk price is almost $10/kgMS, wool prices have achieved a 10 year high, lamb is getting $2/kg more than last year and fruit prices are also strong. If the sector is the ‘backbone of the economy’, as is often claimed, then why is it that we are struggling to stand upright economically at the moment. Unemployment is sitting at 5.3% (over 11% for Māori and Pasifika) and households are generally struggling to make ends meet.
The problem with agriculture is that most New Zealanders get little value from the sector. While it earns around 85% (dairy is 30%) of our export income it only adds only 5% to our total GDP. It employs just 5% of the workforce and contributes a measly 1-3% of total tax income. The income generated mainly goes to the likes of Fonterra (15 staff earn over $1 million pa), various corporates (many overseas owned) and increasing equity for farm owners who pay minimal tax. Total farm debt was almost $65 billion at the end of 2025 that helped feed the $7.5 billion net profit for our Australian owned banks. New Zealand exports are mainly raw and semi-processed goods sold in commodity markets and those buying them make even more money from adding further value. Our low level of productivity is partly because we do little manufacturing ourselves. We are rely on quantity over quality.
More and more of our agricultural production is now owned by overseas corporates that funnel profits off shore: 50% of our forestry cutting rights, 40% of wine production and 25% of our food and beverage manufacturing.
Even in the dairy industry there are more overseas players…
Yili Group: The Chinese dairy giant owns several major New Zealand operations, including Oceania Dairy near Waimate and Westland Milk Products in Hokitika.
Bright Dairy: This Chinese state-owned enterprise is the majority owner (roughly 65%) of Synlait.
The a2 Milk Company: Now predominantly overseas-owned, they acquired the Yashili NZ processing facility in Pōkeno.
Other Multinationals: Global firms like Danone, Nestlé, FrieslandCampina, and Singapore-based Olam Food Ingredients (Ofi) also own or utilize local processing assets.
Fonterra recently sold its global consumer brands (including Mainland, Kapiti, Fresh & Fruity and Fernleaf) to the French dairy giant Lactalis in a landmark $4.2 billion deal. The divestment allows Fonterra to transition into a pure business-to-business (B2B) dairy ingredients and foodservice provider. While it gave each farm a $400,000 windfall, consumers are unlikely to see the prices of dairy products fall and, after the initial sugar high, more dairy profits will end up heading offshore.
New Zealand households are expected to pay prices for food grown and produced in our country that are often higher than the countries we export to. Farm intensification has made most of our lowland rivers too polluted to swim in and slash from forestry has caused major damage during high rainfall events.
Farms produce the majority of our green house gases through the methane and nitrous oxide (both more potent than carbon dioxide) and ordinary tax payers will have to foot the inevitable bill for those emissions if we don’t meet our targets.
Intensive agriculture also adds considerably to our current account deficit (around $4-5 billion a year of imports). Millions of tonnes of grain/palm kernel, fertilizer, fuel and farm machinery are all imported. With the focus on exporting so much of what we produce on our farms we have forgotten to ensure we can feed ourselves first and now import increasing amounts of food we could produce locally. A few years ago a Groundswell farmers’ protest drove past our house and one enormous tractor had a placard attached claiming, ‘Don’t bite the hand that feeds you!’, but very little that our local farmers produce ends up in our local supermarkets. Dairy farms dominate agriculture in our region and all the milk they produce is dried and exported, our supermarket milk is bottled and trucked from another region. We have no orchards, few market gardens and our supermarkets are full of Chinese garlic, Californian lemons and Australian bacon. Even our tinned apricots are sourced from South Africa.
The external costs of farming (impacts on land, water and climate) are being subsidised by our rates and taxes and farmers continue to demand an even greater representation at local government level to enable their businesses further. At the end of the day each farmer is running a business, like any other business, and yet there is an expectation that more and more of the risks and environmental impacts should covered by the rest of us.
The arts generated $18.5 billion of our GDP last year and our creative people (in film making, online gaming, digital design, music, publishing and literature, fashion, cultural heritage, web site design, advertising…) have potential to earn even more. When agriculture exports have to deal with NZ’s geographical isolation, the online digital world has no such barriers. Our students lead the world for creative thinking but the government’s new curriculum and funding priorities are all about narrowing what is taught and assessed that will potentially destroy creative opportunities. We are losing an amazing human resource as our talented young job seekers leave New Zealand for countries that will value them.
I think we need a strategic rethink regarding the real value and potential of different sectors and question whether our agriculture sector is providing the value they claim.
Very good article, thank you.
We are living under oligarchy, and the sooner we all realise it, the better.
Support your local farmers market….produce grown locally by locals……these are the real hands that feed us not the industrial farming sector…….
I suspect the government's game plan for Hawkes Bay is for the Ruataniwha dam scheme to be resurrected under the Fast-Track Approvals Act.
Irrigation can then kick off (thanks to huge financial backing from HB Regional Council) to enable intensive dairying in that region.
That is why PM Luxon was talking about “more flexible land use” at the Hamilton Fieldays event. He’s desperate for the rural vote.
The environmental consequences will be dire, but the politicians want economic growth at any cost.
Dave Kennedy. Thankyou for this revealing expose of the actual reality behind the myth of the NZ farm backbone.
The socialising of the hidden costs while privatising the ever increasing profits.
And re the NZ Farm Giants. Never mind about so called Big Pharma….IMO much more of concern for NZ is Big Farma!
And I hear you re Groundswell. My Rural area has had howl-offs (I think it was farmdogs? : ), much ute horn honking,and of course the Anti 3 Waters travesty (Imo quite racist, and very much Anti Jacinda Labour/Greens etc : (
TBH, I personally did know some of it…but its a great article with informed and informative links.
Onya : )
So, I've railed against Fonterra often enough on this site.
The left since 2008 does a lot of moaning about externalities but largely struggles to promote new successful business.
The left most certainly has a track record of enabling New Zealanders to flip houses for profit. Same as National.
And sure if we don't want to be grateful for the production of farmers, their companies, and what they export and hence what we get taxes from to redistribute to the needy, we don't have to.
But.
Dairy, tourism and gaming are our growth industries. No there aren't others of note.
We don't have to be thankful to our exporters and all the tax it brings in, but there's no point denying that we are really good at agriculture. We all rely on it.
It would be great if we were even better at super-high-productivity and super-high-salary sectors and not close down the Callaghan Institute, so before we have another predictable crack at the farmers maybe we should be honest about what they contribute, and acknowledge the very weak policy alternatives from either Labour, Greens, or even Opportunities.
The alternative offered by The Greens, is, "don't smash the environment, do the opposite".
What don't you like about that, Ad?
It's not the role of the valid objector to provide the viable alternative – that's the responsibility of the destroyers. Heaping responsibility for providing a non-destructive pathway onto those who say, "this is the ruination" is an old, tired, invalid trick, used over and over by the beneficiaries of exploitation.
Come on, Ad, you can see the harm – what's your advice for those who ache for a true path forward???
I don't like weak economic development policy.
If you intend to rule the country as the Greens, then you had better show you are ready for that responsibility and do a tonne more than just whine about bad things.
My advice would be to go back tot he Anderton policy of 1999-2002 and form clusters of industries around nodes of expertise. Versions of that got us our new strengths in food and beverage, film and screen industry, and high-tech groups in Wellington and Christchurch.
I don't, " intend to rule the country as the Greens", and I'm not whining about bad things. Those people who point out that the Emperor has no clothes aren't obliged to recommend and provide him with something to cover his naked butt and neither should politicians calling out environmentally-destructive behaviours be obliged to provide, alone, a comprehensive solution to the wicked problem created by the orcs they are calling out. The Greens will not be ruling the country but instead, take part in doing what's possible to redirect the county's future direction. If you're asking The Greens, "Got a better idea??" then I'd say, yes, they have and it requires support from all sides because the stakes are high and the environment can't stand being thrashed forever; parts of it are giving now and unless the Green message is taken seriously, now, there will be no stepping back from the brink. Rather than dissing The Greens, those who can see the writing on the wall, should contribute their understandings to put some wind beneath their wings. Imo.
Looks to me like you did not read the post. To put it crassly, waving around a picture of bull ball size like you just did has little to nothing to do with effective fertility levels when doing insemination with a straw with cows.
Dairy has a high revenue, but who gives a pigshit about revenue. It is only profitability and efficient use of resources that counts.
What is required is a sustainable profit to its host country. The simplest measure of that profit that gets taxed. Which is what we don't see. The level of profit of dairy and almost all pastoral farming is probably usually less than that of a minimart.
Farmers will be the first to tell you that they have a hard time getting a profit, and that is reflected in the average post cost profits and incomes at the farmers level. From what I remember of the most recent review by federated farmers (I'm on the move, so I don't have it to hand), the income per dairy farmer was something like 67k per annum, and that of farms wasn't that much higher.
These are enterprises with an enormous levels of capital tied up in them. You'll find mini marts with way less capital getting similar levels of profit. If you look at the returns on investment, outside of capital gains and property sub-divisions – the operational profits are completely miniscule.
That is just that side of it. The other problem is that farming requires enormous investments in public funded infrastructure. Most notably rural roading. If you ever look at the roads required in dairy areas you'll find that they are massively engineered. That is because they have to withstand daily runs by trucks with high numbers of axles, wheels, and weight per wheel.
If you ever look at the maintenance costs of dairy rural roads per kilometer vs what you can see of the tax and rates contributions by farming and the rural industries you'd realise that they are un-mapped urban subsidy to the farming industry. If the weren't subsided, farming probably wouldn't have any profitability.
That also pulls capital away from more efficient economic industries.
And I'd argue that they don't contribute a lot economically. They (like housing) suck up the capital that is required to build other enterprises, and they use that capital unproductively in speculative pyramid economics. But they aren't profitable for the country..
Certainly FedFarmers and National (and you) like to tout revenues. But for some strange reason they don't tout profitability. Nor do the proudly flaunt their contribution to the tax take and the development of our common infrastructure.
This problem isn't new. It was exactly why, in 1977, I decided that I wouldn't pursue a career in farming. The operational economics of it were shit and it largely depended on a shell game of capital gains property speculation.
Frankly I suspect that if we halved farming, kept the most profitable parts and ditched the marginal we'd be better off.
But hey – prove me wrong. Show where the profitability of farming and the ffarming industries is – start with the taxes raised from those profits. What you will find is a almost complete dearth of data and analysis, And don't look at 'lifestyles' or 'culture' – if no other community else can use that as a argument (aka groundswell) – then farming should not use it as well.
That is where I have been working for most of the last 4 decades. It is pretty easy to show a profitability at a tax level for the country with that. You get that just by the total taxes on employees probably exceeding that of farmers and most of the farming industries combined.
There is much potential in services exports, these made over $3 billion more than dairying in 2025 in export income and the externalities and imported inputs are minimal, the net profit to our country was much greater.
The game industry has massive potential too:
https://www.nzgda.com/blog/new-zealand-game-development-industry-breaks-records
As my post describes, while dairying does pull in the export dollars, a minimal amount provides any benefit for the rest of us. Most dairy profits are sucked up by Australian banks, building equity for farmers and the off shore companies that have a strong foothold in the agriculture sector here. It reality it is a low value part of our economy.
Now tell us how much was paid to Aussie banks last year in interest on farm borrowing? How much for oil and gas , and machinery, farms bought offshore? How much we paid for pollution mitigation? For roads to farms? Fighting agriculture disease? Export subsidies?
Like house scalping, farmland scalping has reached a level where an actual farm business is uneconomic, without capital gains and Government help.
The export subsidies and brand building we all paid for. For Fonterra to sell off, for a few hundred thousand, untaxed, capital gains for each farmer shareholder.
Then, there is all the potential industries and employment we sacrificed to "Free trade" agreements and farmers demands for lower wages, to help keep up farming incomes.
I would be surprised if farming is even a net economic benefit. The community benefit to NZ is marginal at best.
Which is a shame ,because I have many family members who work on farms. Though most of them would be better off with a "real job". Farmers tend to be shocking employers.
Agriculture remains one of the key pillars of New Zealand's economy, but the political story we tell about it has not kept pace with what the sector has become.
The family farm still occupies a privileged place in our national imagination, yet much of the sector is increasingly capital-intensive, highly leveraged, and concentrated in relatively few hands.
In some respects we have recreated a modern version of the landed gentry that New Zealand spent much of the late nineteenth and early twentieth centuries attempting to dismantle.
The real problem is deeper than arguing over profit: It is about the concentration of economic and political influence that accompanies concentrated ownership of productive land. New Zealand once recognised that excessive concentrations of land ownership posed both economic and democratic risks. Today we seem far less willing to have that conversation.
This matters because the sector has been particularly effective at drawing on historical cultural narratives about the rugged, independent family farmer while resisting attempts to address environmental and social externalities.
The result is a curious contradiction. We continue to celebrate an image of farming that is increasingly disconnected from the economic reality of a highly capitalised and globally integrated industry.
The challenge is not that agriculture creates externalities. Every major industry does. The challenge is whether our political institutions are capable of addressing those externalities when they collide with deeply embedded ideas about national identity, property rights, and who gets to speak for rural New Zealand.
In that sense, the debate is not really about farming at all. It is about power, representation, and whether the stories New Zealand tells about itself still reflect the country we have become.
"…the stories New Zealand tells about itself…"
Well, here's the germ of a deep discussion: Who is "New Zealand"? Who's telling the stories and why? What stories are being told outside of the mainstream?
It's the same the world over. The victors write the history.
Here in Aotearoa, the imported agricultural industry spends big on telling its story and thanks to Country Calendar etc. we swallow it like a ewe takes its dose of whatever the hell it is farmers squirt down their throats.
Do these powerful stories reflect the country we have become? Only until we see them for what they are: constructs by industry to maintain and strengthen the mythology that keeps them in the black. Presently, those stories are getting great exposure. Are you able to counter their effect, Res Public? Most New Zealanders aren't, imo.
Which is why farming isn't producing taxes like the rest of NZ (the ETS in particular) and wanting to be subsidised with infrastructure and the rest of NZ paying more than their share to cover farming's lack of real profitability.
That is the expression of a small lobby screwing everyone else.
Yes, I think that is the practical expression of it.
The issue is not whether agriculture matters. It clearly does. The issue is that a sector can be economically important and still be politically overprotected.
If farming wants to be understood as a modern business sector, then it should be treated as one: valued for its output, but also expected to meet normal obligations around tax, emissions, water quality, infrastructure costs, and market accountability.
What frustrates me is the inconsistency and special pleading. When the sector wants capital gains, scale, favourable tax treatment, commercial freedoms, and political influence, it presents itself as a business. But when the costs of that activity are discussed, it retreats into the language of the family farm, rural hardship, and national identity.
Don't forget their ace-card, mental health.
Plus their back-stop argument "Without farmers there's no food"
The implication is that farmers are too important to be bound by society's laws.
Doesn't really matter when they are producing food for about 40+ million people, and our population is about a 10th of that – and we're importing half of the food for them.
Dave Kennedy – "The arts generated $18.5 billion of our GDP last year…"
Ya can't eat oil paint on canvas, Dave!
Butter, milk & beef – that's what the country relies on!
We also won't be able to eat butter, milk and beef once the overseas companies who own it, price consumers out of it and ruin our enviroment whilst they are at it, but we shouldn't worry about that aye as "That's what the country relies on!" such bollocks
We actually don't. We consume well less than 10 percent of what is produced here in farming, We pay high prices for that. That is also we import increasingly large quantities of cheaper versions of the same or better quality level products.
Danish butter for instance
Should've remembered my /sarc rider!
"Butter, milk & beef – that's what the country relies on!"
Really? Half of NZ households can barely afford those items and as the industry pays minimal tax they do very little to help pay for the infrastructure and services they rely on (roads, rail, ports, hospitals, schools…).
My point about the arts is that they don't need $4 billion of imported inputs, probably pay more tax, and the arts have shown a growth in earnings (averaging 3.6% pa) well above the growth of the wider economy.
Well, yes, Dave Kennedy; that might be true but countries need their stories, their rock-solid myths and ours is animal flesh and exudates; meat & milk. Without the belief that New Zealand's backbone is made of those things, we'll be lost! No-ones ever going to believe the NZSO is our backbone, nor Len Lye nor Dave Dobbyn neither.
At least, no-one on the Right.
/sarc
I knew you was being Ironic an all. Some. not having seen your previous sparkling wit, might not : )
Wot wit?
(Hat-tip, Igor)
I think you have a narrow interpretation of the arts, it also involves the film industry, gaming and commercial design and advertising.
For instance Gladeye is one of many creative digital agencies in New Zealand that has international success. It has growing revenue and pulled in over $6 million last year.
Dave, refer to
True Backbone Believers…..
And if anyone wondered where That Guy, MPI had gone? Seems the stars had aligned. FFS.
What they want, what they really really want. (Well, what they can say in public…) And its another needy list.
Ol' FedFarm Wayne…."Get out of the way” ?
Hey Wayne….quite a lot of us are a tad worried about your prescription !
Langford's blunt, bass delivery of the Feds' demands, bare-faced and uber-confident reveals how far the pendulum has swung away from the progressive, environmentally-active Left.
Those orcs are cock-a-hoop and expect to bash their way through to complete domination over the landscape, physical and political.
Like sharks-of-the-land, they've smelled the effluent in the water and believe it's feeding-time.
Mercurio 8.1
Not so sure about the effluent in the water .…but they def got the aroma of avarice. Many Milky Million$.
And re Langford….I thought FedFarm Hoggard was enough? Maybe Ol' Wayne looking to future ACT MP-ship?
And just a wonder…what would happen if WE delivered Lists like those ?
Woke !Socialists!….Commies even. Gotta laugh.
Hoggard, Langford…
You've not stumbled upon Jason Herrick yet?
https://www.nzfirst.nz/southland_federated_farmers_president_jason_herrick_to_stand_for_nz_first
Watch that space.
Yep, have indeed commented past times on Ol' Jason Nitrate? Nothing to see here Herrick.
But that NZFist link is news to me? Have to say…going by his previous (and there are more) he's probably a good fit : )
The nitrate pollution should be a much bigger issue because of it being a known cause for bowel cancer. Southland has the highest rates of this cancer in the country and the rise in numbers coincided with the growth of dairying. From the early 1990s to early 2000s cow numbers went from 50,000 to 650,000. Things got so bad with lack of timely access to colonoscopies that it resulted in the creation of a charity hospital. https://www.sch.nz/about/
Poor water quality was seen as the major issue for Southland for the 2011 campaign by the Southland Times editor. Despite that water quality has declined further and farmers dominate the regional council to ensure that they can continue to avoid full responsibility.
Yes IMO its an indictment on all of them. Recently I made comment on The Standard about an article I read in the ODT exposing seemingly collusion …IMO quite disturbing.
Here is RNZ on same…
Keep up your work. Good to read, hear others concerns !
Great work by the ODT reporter, digging into an issue and finding facts that the regional council would prefer never saw the light of day.
That is real journalism, making the bureaucrats know they will be held to account. A rare thing these days.