Flex­i­bil­ity key to farm­ing change

Matamata Chronicle - - Rural Delivery -

There is grow­ing con­sen­sus that New Zealand farm­ers are en­ter­ing an era of in­creas­ingly rapid and com­plex change, that the en­vi­ron­ment New Zealand farm­ers con­tinue to face is be­com­ing in­creas­ing dif­fi­cult to pre­dict and can be clas­si­fied as tur­bu­lent.

The main char­ac­ter­is­tic of this tur­bu­lent en­vi­ron­ment is an in­crease in shocks and un­cer­tainty.

The in­crease in the fre­quency and sever­ity of droughts is just one ex­am­ple of the prob­lems that oc­cur when faced with a tur­bu­lent en­vi­ron­ment.

An­other ex­am­ple has been the change in the mar­ket for dairy prod­ucts. Prices have gen­er­ally moved to a new level, but price volatil­ity is also much greater.

To cope with a tur­bu­lent en­vi­ron­ment, New Zealand farm­ers need to de­velop re­silient farm­ing sys­tems that can cope with greater lev­els of un­cer­tainty.

It has been ar­gued that there is the need to shift the em­pha­sis from short­term op­ti­mi­sa­tion and ef­fi­ciency (i.e. sta­bil­ity) to fos­ter­ing long-term adap­tive ca­pac­ity.

Re­silience is the ca­pac­ity of a farm­ing sys­tem to pre­pare for un­cer­tain events, re­spond to dis­tur­bance by seiz­ing op­por­tu­ni­ties for re­or­gan­i­sa­tion cre­ated by the shock while main­tain­ing pro­duc­tiv­ity ca­pac­ity in face of vari­abil­ity in pro­duc­tion, fi­nan­cial and mar­ket re­lated fac­tors.

This def­i­ni­tion makes ex­plicit that re­silience is not just about cop­ing with down­side risk but it is also about be­ing able to take ad­van­tage of up­side risk that oc­curs as a re­sult of un­cer­tainty in the en­vi­ron­ment.

Fo­cus­ing too much on down­side risk can mean that sys­tems per­for­mance is se­verely con­strained and op­por­tu­ni­ties are missed.

Re­silience can be sep­a­rated into three ele­ments: 1) buf­fer ca­pac­ity, 2) adap­tive ca­pac­ity and 3) trans­forma­bil­ity.

Th­ese ele­ments suit dif­fer­ent de­grees of change in the en­vi­ron­ment and re­quire dif­fer­ent de­grees of change in the strate­gies and tac­tics a farmer needs to bring about.

Buf­fer ca­pac­ity de­scribes the amount of change a farm­ing sys­tem can un­dergo and still func­tion un­der its cur­rent ba­sic struc­ture.

Buf­fer ca­pac­ity is used not only to mit­i­gate the ef­fects of down­side risk (e.g. a drought), but it is also used by farm­ers to take ad­van­tage of up­side risk (e.g. a good sum­mer).

Buf­fer ca­pac­ity is use­ful for cop­ing with variation in the cur­rent en­vi­ron­ment but it is found want­ing when that en­vi­ron­ment changes.

In this sit­u­a­tion, adap­tive ca­pac­ity is im­por­tant. Adap­tive ca­pac­ity is de­scribed as the de­gree to which the farm-sys­tem is ca­pa­ble of re­spond­ing to change. There are two ele­ments to this. First, a farmer must be able to iden­tify when there is an im­por­tant shift in the en­vi­ron­ment.

The sec­ond el­e­ment of adap­tive ca­pac­ity is the farmer’s abil­ity to de­velop strate­gies and as­so­ci­ated tac­tics to min­imise neg­a­tive as­pects of the new en­vi­ron­ment (down­side risk) and take ad­van­tage of the pos­i­tive as­pects (up­side risk). Learn­ing is crit­i­cal for adap­tive ca­pac­ity. The en­vi­ron­ment can change to the de­gree that adap­tive ca­pac­ity is in­suf­fi­cient to cope with the change and the sys­tem is in dan­ger of be­com­ing non-vi­able un­less it trans­forms.

Trans­forma­bil­ity is de­fined as the ca­pac­ity to cre­ate fun­da­men­tally new sys­tems when eco­log­i­cal, eco­nomic or so­cial con­di­tions make the cur­rent sys­tem un­ten­able.

In New Zealand, for ex­am­ple, dairy farm­ers have trans­formed to ki­wifruit or sheep and beef farm­ing and vice versa in re­sponses to changes in the en­vi­ron­ment.

Learn­ing, the abil­ity to re­spond to signals of change, ad­just ex­ist­ing knowl­edge, and then de­ploy that knowl­edge as new skills and prac­tices is a key at­tribute of re­silience.

So for this drought it is use­ful to re­flect on what has been learnt from the ex­pe­ri­ence, the highs and the lows and iden­tify what you might change so that if an­other drought oc­curs, the busi­ness will come out of it in a bet­ter state.

Key ar­eas to think about in­clude the farm in­fra­struc­ture, the farm­ing sys­tem and the farm’s mar­ket­ing strate­gies.

The first ques­tion to ask is what in­fra­struc­ture needs to be im­proved so that the farm can bet­ter cope with drought.

For ex­am­ple, with some farms it wasn’t the short­age of feed that was the is­sue this drought, but the lack of stock wa­ter.

Things to re­flect on in­clude: wa­ter sup­ply, shade and shel­ter, soil fer­til­ity lev­els and drainage, pas­ture species, ac­cess to yards and weigh­ing scales, sub­di­vi­sion by as­pect and con­tour, an­i­mal ge­net­ics.

Fur­ther in­vest­ment in spe­cialised in­fra­struc­ture may re­late to: wa­ter har­vest­ing and/or ir­ri­ga­tion, spe­cialty pas­ture species (Lucerne, chicory, plan­tain), browse shrubs and fod­der trees and the har­vest­ing and feed­ing out of sup­ple­men­tary feed.

Any in­vest­ment in in­fra-struc­ture must, how­ever, be as­sessed to de­ter­mine that it is both prof­itable and fea­si­ble over time.

While it might seem per­fectly log­i­cal af­ter this sum­mer to ir­ri­gate ev­ery pos­si­ble hectare, you do need to do the sums to work out how sen­si­ble this is; it will be a trade-off be­tween more debt and less risk.

In terms of the farm­ing sys­tem, a key ques­tion to ask is whether it is flex­i­ble enough to cope with droughts.

In sheep and beef farms more flex­i­ble sys­tems have a higher pro­por­tion of cat­tle, where the ma­jor­ity of th­ese are trad­ing stock of­ten un­der a two year pol­icy to pro­vide fur­ther flex­i­bil­ity.

They may also run buf­fer mobs of trade lambs and ewe hoggets that can be sold if feed con­di­tions de­te­ri­o­rate. Th­ese sys­tems also fin­ish a large pro­por­tion of lambs and cat­tle be­fore Xmas.

To re­duce mar­ket risk, live­stock farm­ers are sell­ing when other farm­ers tend not to and buy­ing when other farm­ers are not in the mar­ket.

To re­duce mar­ket risk for bought-in feed, farm­ers are us­ing for­ward con­tracts or or­gan­is­ing sup­ple­ments and graz­ing ear­lier than other farm­ers.

When con­sid­er­ing which strate­gies to adopt, re­mem­ber that the adop­tion of a strat­egy may re­duce risk in one area, but in­crease it in an­other. Risk is rarely re­duced, but it is trans­formed into a dif­fer­ent form.

For ex­am­ple, in­vest­ment in ir­ri­ga­tion may re­duce ex­po­sure to pro­duc­tion risk, but it will also in­crease ex­po­sure to fi­nan­cial risk be­cause of an in­crease in debt lev­els.

Sim­i­larly, con­tracts may re­duce mar­ket risk, but ex­pose a farmer to con­trac­tual risk.

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