Perils of the digital drought
Farmers would prefer greater access to fast broadband than cash handouts in tomorrow’s Budget, writes Nathan Penny.
The Government has ambitious goals to grow New Zealand’s economy, which rest heavily on expanding the country’s export sector. Outlined in the Government’s Business Growth Agenda, the goal is to increase real exports as a percentage of gross domestic product from 30 per cent to 40 per cent.
Rural businesses are a big part of New Zealand’s export story and the Government has some big goals for the rural sector too – for example, to double primary industry exports in real terms from $32 billion in June 2012 to $64b by 2025.
Bold goals such as these require a bold response. And that’s what the rural sector will be hoping for in tomorrow’s Budget announcement.
Other jurisdictions such as the European Union and Australia may resort to cash handouts, but our farmers would prefer the tools to lift their ability to compete on the global stage.
Today, those tools require broadband and connectivity. Eighty per cent of farmers own a smartphone, and mobile devices are changing the way modern farms operate.
Mobile stock-management tools based on real-time data and cloudbased software are examples of the technology farmers are using on the field to help them work more productively.
Yet, large areas of rural New Zealand are currently without broadband access and mobile coverage. Extending investment in rural broadband may be just what’s needed to turbo-charge the rural sector towards New Zealand’s export targets – particularly in this tough global environment.
Gone are the days where an internet connection at the farm’s home office alone is enough. Farmers need fast broadband and connectivity all over the property in order to adopt precision agriculture and the technologies that can help boost productivity.
We may not be far from the ability to control a farm’s major functions from a mobile device.
The ‘‘internet of things’’ (where web-enabled machines communicate with each other) might present agriculture with a competitive advantage in the same way refrigeration did in 1882.
New Zealand can be proud to boast great examples of homegrown digital innovation that can help give New Zealand agriculture businesses the jump on their international competitors.
ASB has invested significantly to ensure its rural customers have the capability to take up new technology, partnered with tech companies Figured and Xero, and provided free or discounted software to a large number of farmers across the country.
However, it’s a huge challenge to get farmers to collaborate with us and other rural professionals in the cloud when they are constrained by a lack of connectivity on the field.
Slow broadband, or no broadband at all, on some areas of New Zealand farms is holding back the ability of many farmers to seize the benefits technology can offer their operations.
The New Zealand Government’s $150 million commitment to rural broadband connectivity through the second Rural Broadband Initiative (RBI 2) will help to address the connectivity challenge.
That will commit $100m to extend the RBI into more homes in rural areas and a further $50m to fill in black spots in the mobile network to improve safety on highways and better serve remote tourism locations.
But as it stands, the RBI simply doesn’t go far enough to maximise coverage of broadband and mobile at the speeds needed to accelerate rural sector growth.
Specifically, the RBI won’t achieve the optimum goal of 70 per cent broadband and mobile coverage across New Zealand’s land area. (Effectively, that’s 100 per cent coverage if you leave out places where very few people live, work and play, such as our alps, non-commercial forests and hard-to-get-to national parks.)
And if turbo-charging the rural export sector is the goal, the challenge for the Government is to lift the download speed targets and shorten the investment timelines.
Moreover, we need to futureproof the broadband network so it can support farmers’ technology requirements in this decade and the decades to come.
Challenging economic times at home and abroad are not a reason to shrink from investing in key infrastructure for one of our country’s key productive sectors.
On the contrary, the tough environment for dairy farmers in particular is the very time they need a competitive edge.
And the best tools for agricultural businesses today, by and large, rely on connectivity.
With this in mind, a bolder Government commitment to the RBI is needed. In particular, the challenge for the Government is to break the rural broadband drought for good by:
Lifting the target from 99 per cent of New Zealanders being able to access broadband at peak speeds of at least 50 megabits per second to at least 100 Mbps; and
Bringing forward the rural broadband target dates from 2025 to 2022.
There’s plenty of evidence that broadband can contribute to economic prosperity. Better connected rural communities do well, which means more businesses and more jobs.
Beyond our shores, a US Department of Agriculture report reveals rural communities with broadband have higher populations, higher farm earnings, more businesses and more jobs than those without broadband.
And an Alcatel White Paper published in 2012 estimated the 20-year economic gains to the Kiwi dairy industry, achieved via rises in farm productivity, at $9.1b.
Investing more to extend broadband and mobile coverage, and to facilitate competition as deep into the network as possible, is a smart step the Government could take to help accelerate rural sector growth, and to provide the boost our rural businesses and communities need in these competitive and challenging times. Nathan Penny is ASB’s rural economist.