Learning to love the rules

Compliance may be seen as a bugbear by many farmers, but world markets are set to demand more. By Phil Edmonds

For many, farm assurance is codeword for compliance. And compliance to most is a code for nuisance. But, without farmers having their operations subject to surveillance, next to nothing they produce would have a market.

With the prospect of any number of new assurance demands being placed on New Zealand food exporters, a white paper recently published by the Our Land and Water science challenge titled Enhancing Farm Assurance suggests now is the time to start loving, rather than loathing it.

Asking farmers to whistle while they monitor and record data for the benefit of others is, on the face of it, a provocative challenge. So to begin with, here’s a quick-fire digest of how farm assurance became a government-funded science project, and why it has recommended we need to stop treating it as an obstacle.

First, the impetus was not a means to find ways to bully farmers into filling out more forms. Rather, it was a response to the need to address a perceived increase in tension between urban and rural communities.

One of the white paper authors, director of The Agribusiness Group, Jon Manhire says it was felt farm assurance systems could be an important mechanism to help convey the good work farmers are doing as custodians of the land, and in so doing, help NZ’s urban communities better appreciate their rural counterparts.

Leaving aside judgement on the validity of the initial premise about tension between communities, the project findings broadly conclude that farm assurance does have untapped potential to help reassure consumers and the wider public that the food they are buying is produced in adherence with standards they expect to be met.

The white paper does, however, make it clear that assurance systems need to evolve. They need to better show their value and effectiveness to both farmers who are charged with meeting the stated requirements, and those demanding transparency of farming practices.

Feedback given to the project from the wide range of stakeholders consulted suggested farmers are increasingly doubtful about the value of assurance processes as they become increasingly complex and burdensome.

Equally, there has been prominent criticism from non-government organisations and independent studies, which have found the integrity of assurance systems can be compromised by factors such as audit fatigue, lack of resources, manipulation and cynicism. This undermines consumers’ trust in the process, but also farmers’ trust in what they are doing makes a difference.

While the project found the public supports the oversight facilitated by governments and regulators (which suggests the model is by no means broken), there is clearly room for the farm assurance ‘industry’ to elevate in order to continue achieving its purpose, which incidentally is to keep NZ trading.

In 2016 assurance systems facilitated 60% of all NZ exports to the value of $27.6 billion. That will no doubt have increased considerably since. Whether we like reporting our performance on pesticide use and adherence to food safety practices or not, we have to do it or we don’t get paid.

So, how can the cynicism be nixed and farmers encouraged to start whistling to the tune of compliance? Doing a better job of communicating the benefits, say those with an interest in the industry.

“We need to do a better job at selling the story to avoid the ‘why are you doing this’ question,” Murray Pedley, general manager of New Zealand primary sector audit company QCONZ says. “This can only come from a better explanation of what is driving the standards we’re monitoring.”

Lincoln University AERU Associate Professor Peter Tait agrees, but offers a good reason why this is no easy task.

“Regulatory conformity on food safety and pesticide use is crucial for market access. But it’s something we don’t have control over. We just have to do it. It’s hard to justify in a positive sense. At the same time, we can do a much better job of sharing the effort that farmers are making.

“Domestically, the stock exclusion policy is a good example. It has generated outcomes that are valued by the public and consumers, but no one gets to hear about it other than those farmers who are paying the price of making the changes to meet the policy’s objectives.

“This is a lost opportunity to capture value. The assurance is in place, but consumers wouldn’t have a clue it’s happening.”

Jon Manhire also agrees more can be done to draw the public’s attention to the evidence being gathered to prove onfarm performance.

Part of the project involved talking to Synlait suppliers and participants of its ‘Lead with Pride’ programme. While there was a range of responses from farmers on how much value they placed in their reporting, Manhire says Synlait had an aggregated story to share with local communities, which at present is essentially just being used as a market access tool, invisible to consumers and the wider public.

As much as it sounds trivial, there is also an important shift in the language used to describe assurance that can have meaningful, positive outcomes. Murray Pedley says if farm assurance was treated as evidencing best practice rather than compliance, it would immediately elevate the significance of the work being done.

“Documenting a freshwater farm plan, for example, could be viewed as showing status of being a true guardian of the land.”

Peter Tait agrees, although he says this may come to be driven more by consumers. “Providing validation to end-consumers in the high-value sector will require more than farmers ticking off basic standards. Increasingly they’ll need to describe what they have achieved, as part of a story.”

Good, effective communication will always be helpful. But storytelling and wordplay will only go so far. To get farmers thinking of assurance as empowering rather than demoralising, they’ll need to see it become easier and less time consuming. This was acknowledged in the white paper recommendations, which said innovation in farm assurance is essential with technology offering opportunities to accuracy and timeliness.

Jon Manhire says there has to be potential for removing some of the compliance burden for farming. This may include more use of sensors for monitoring. With QCONZ’s experience, Murray Pedley is in no doubt the way assurance can be conducted can and will change.

“Technology is important. But so is the efficiency in the way audits are carried out. Freshwater farm plans, for example, involve triennial audits. Going forward it makes sense to combine these with processor audits. Other ways to reduce the burden could mean processors sharing data they are already collecting from farmers so when farm visits do occur, they become more verification rather than discovery.”

However, Pedley suggests caution is necessary about any promises that technology and innovation will eliminate the ardour of farmers having to comply with assurance requests.

“There’s not going to be less farm assurance in the future. Consumers know they can have it, and they will never stop asking for it.” As a result, the assurance industry is continuing to grow.

“When I first started, a dairy farm audit took less than an hour and was written up on an A4 piece of paper. These days, because the scope is so much wider, we are looking at up to four hours depending on the complexity of the operation.”

This is not lost on the authors of the white paper. Indeed, implicit throughout is the assumption more and more demands are going to be made on farmers to prove their performance. While there are good grounds for taking this for granted as has already been outlined, the official thinking is likely to have been substantiated by findings from another Our Land and Water project published this year, on how the European Union’s Green Deal will impact NZ’s primary production exports. Launch of the Green Deal (an umbrella of policies designed to decarbonise the EU’s economy with implications for a range of industries, including agriculture) is clearly focused on how Europe conducts its business. But the report found there is potential for the practices and regulations it implements to become de facto global standards for sustainable trade.

In short, if NZ is unable to show (via assurance systems) our level of environmental and social ambition lines up with the EU, it might result in significant reductions in the levels of market access – not only in the EU but also in other major markets such as China, the United States and United Kingdom, as these countries will themselves be compelled to increase their own ambition to protect the interests of their domestic producers.

The Farm to Fork Strategy, at the heart of the Green Deal, has policy initiatives that include prohibiting the import of products containing residues of pesticides and agricultural chemicals banned from use in the EU. The EU’s list includes 195 items, while NZ’s comparable list of banned substances comprises 27 items. There are also proposals to create a Sustainable Labelling Scheme that will apply to all products sold in the EU, irrespective of whether they are imported or domestically produced.

Think more monitoring, think more assurance.

Jon Manhire sees this as realistic, perhaps not in the immediate term, but certainly in future.

“I can see a day when they look at whether imported products are meeting the standards that their own farmers are meeting. This is a potential threat. The red flags for us include the use of glyphosate, and requirements to document carbon emissions. It’s definitely a risk.”

Meanwhile, back on the farm, it would be fair to say the fear factor has not yet set in. That’s despite the steady trickle of warnings that exporting food will get harder not easier. This latest prod in the form of a white paper is by no means the first notice that expectations of farmers will increase. Take the recent announcement by EU-headquartered Nestle, advising it would be introducing more transparent reporting requirements on carbon emissions from its supply chain partners (of which Fonterra is a significant one). It has said it will be concentrating on absolute reductions in its carbon output, rather than just trying to create efficiencies. The seriousness with which it is taking this is evidenced in a pilot programme it is running in NZ to look at ways to reduce greenhouse gas emissions onfarm.

Yet one dairy farmer spoken to by Dairy Exporter who is participating in the programme is so far unconvinced any realistic changes over and above minor adjustments that have been proposed would be worth the effort or viable.

“If there were practical things we could be doing aside from destocking, we’d already be doing them.” Not only that but doubts also remain that more-stringent compliance on carbon emission reporting is necessary to guarantee market access.

Sharing sentiments that have been expressed throughout the dairy sector, the farmer said: “The recently agreed free trade deal with the EU has created very limited opportunities for New Zealand to increase its dairy trade. If the EU was to move in a direction that forced imported product to comply with the same measures its own farmers are being compelled to adopt, it would basically have no impact on us anyway.”

This take is not surprising and reinforces the challenge ahead if indeed the thinking on assurance is to be transformed and embraced.

Peter Tait says the difficulty is that NZ is still for the most part trading in ingredient commodities. At this stage, consumer requirements for more transparent validation of product claims falls on brand owners rather than ingredient suppliers. The providers of source material aren’t the ones who have to differentiate the finished product in the marketplace in order for it to attract attention.

“At the moment New Zealand is getting by on using its reputation for food safety as a proxy for trust. But I don’t see that lasting. Hyper-connected consumers will demand more. This makes capturing and then sharing the value of farm assurance systems more important than ever.”