Small farms feeling the pressure
Ajay Jina, owner of 95-year-old business Jina’s World of Fresh Produce, has noticed big changes over his career supplying wholesale fresh fruit and vegetables around New Zealand.
Horticulture used to be dominated by small growing operations. Now, a more limited number of growers increasingly control the market.
Around Wellington where Jina is based, small-scale growers have gone. In the Hutt Valley, there used to be a lot of Italian tomato growers and Chinese market gardeners, he says.
‘‘They’ve all gone, all housing. A lot of this is driven by export markets. It’s about economies of scale. They have got to produce enough and then control all of that production.’’
Huge amounts of produce are sent to foreign markets, he says.
‘‘That demand will only increase. You need the expertise of large growers to get into those markets and to expose New Zealand to that demand.’’
It’s part of a wider trend, says economist Tim Morris. He says farming is consolidating, globally, and small, family horticulture operations may have only a limited time before they get swallowed up by bigger, more hitech operators.
This is largely driven by economies of scale and the drive for greater efficiency in global supply chains, he says.
Large-scale modern farming requires capital and infrastructure: farmers have to be able to level fields, own greenhouses, create genetically unique cultivars, own harvesting equipment, do ice-cooling in the field, and more.
‘‘You’re looking at a significant chunk of change just for that gear.’’
Morris refers to the 80/20 rule, where 80 per cent of the production comes from 20 per cent of the growers. It’s the 80 per cent of farmers producing 20 per cent of the produce that are unhappy.
Broccoli is a good example. Three growers produce roughly 80 per cent of all the broccoli in the country, Morris says. ‘‘[Struggling farmers] need to stop growing broccoli and do something else.’’
The benefits of supply chain efficiency made it easier to plan sales for continuity of supply and price stability. Being bigger also helped with compliance, food safety and the health and wellbeing of staff, he says.
Property Brokers rural general manager Conrad Wilkshire says supermarket vegetable supply chains have been consolidating for decades.
The best soils are often near urban centres, and housing demand has seen ‘‘extraordinary appreciation in land values’’. Well-located market gardens have been swallowed up by this trend, he says.
Another reason farmers may be influenced to sell is the increasing cost of compliance at the expense of profits.
‘‘It’s often a compelling proposition to sell, particularly if you are in the autumn of your growing career with no obvious family succession to take the business forward.’’
Large-scale operations can afford to invest in the best compliance and audit technology and are able to maintain multiple sites, mitigating price volatility, he says.
Jina says there will always be a need for niche players, because small, family farms produce products that others won’t. He has five suppliers of salad mix, for example, because the business needs a steady supply.
Anthony Tringham, a heritage tomato grower near Auckland, says there is an opposing trend away from consolidation, with a growing number of niche players.
‘‘Society is changing, and people want an intimate connection with the people who grow their food.’’
Tringham’s business, Curious Croppers, mostly supplies restaurants and farmers’ markets. Years ago, Tringham started out supplying cherry tomatoes to supermarkets, but they wanted a two-week shelf life from the time the produce hit the distribution centre, he says.
‘‘[Now] the stuff we grow needs to be consumed within days of picking. And because we can pick it riper, the flavour is better.’’
Eat New Zealand chief executive Angela Clifford says there is push-back happening against the industry consolidation, through things like farmers’ markets and vegetable box deliveries.
Her collective of producers, chefs and tourism operators is involved in a number of initiatives to strengthen local food supply chains, including setting up a local grain economy driven by an interest among bakers and chefs to source local grain; a know-your-fisher campaign based on a number of smallscale fishermen who want to deliver locally; small cheesemakers who are interested in countering the ‘‘big-dairy’’ story; and setting up a platform to connect local food producers and businesses that are looking to use local ingredients.