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Why the industry outlook is good for agribusinesses

The agricultural sector is the strongest it has been in several decades, according to a University of Waikato expert.

With commodity prices up and interest rates down—the kiwifruit PSA debacle excepted, of course—Stuart Locke, the director of the Institute of Business Research, says it's a great time to be a farmer.

He says there are no indications for a drop in commodities, and with low farm prices offering good value for succession planning, the outlook over the next couple of years is favourable.

The ongoing situation in Christchurch is helping to keep interest rates down, and the high dollar is only a problem in the US market.

For farmers, Locke says the big issues are around recruiting and training good labour across the board. Many farms need to introduce a better management model, something banks and other institutions will be placing importance on in the future.

He says issues the industry should be concerned about are around farm run-off, and ongoing concerns about foreign ownership of farms will continue to rear their head. 

But farmers need to take ownership of environmental issues. Rather than waiting for government to take the lead and enforce environmental standards, industry should "de-politicise the issues”, says Locke.

According to Locke, many of the environmental problems occurred over long periods and farmers thought about things differently 20 years ago than they do today.

“We have moved on in our understanding of how to care for the land and water and air," he says.

“We have too much government with policy about how to control things ... than the grass roots making it work.”

Locke also believes innovation is key to making better use of our land and capital.

Although the next few decades will see a movement toward barn-raised cows as farmers look for ways to increase productivity, this “has to be done in a way to not effect our clean green image”.

While farmers have a lot on their plate, Locke says they are generally well educated and well equipped to improve their business.

There's a “thirst for knowledge", a desire to do things better that spreads through osmosis. 

"And when lead farmers demonstrate there is a better way to do it, others follow.”