Farm Finance: Weak Capital Markets Hindering Farming Sector
August 30th, 2010
FedFarmers CEO Conor English is warning NZ’s capital markets and economy are suffering from a lack of savings and capital depth. He says in the mid 1980s NZ had a Govt which pronounced agriculture a sunset industry, and Wellington would become a Zurich of the South Pacific but this never happened. “Wellington has been asleep at the wheel.” He says demand for protein world-wide is strong and this trend is NZ’s friend. However, NZ’s credit channel is weak. “We need capital to grow and develop but our capital markets here in NZ are shallow, thin and expensive. Players from other nations are right now looking at the convergence of these two issues and what opportunities it may present for them. But what about for NZ? Are we asleep at the wheel?”
English believes NZ must take a strategic view. “Our challenge is not just how we can capture more wealth for NZ from the physical products we produce and sell, but also from the Intellectual Property (IP) around our systems and the know-how involved.” English believes NZ needs to formulate an “agricultural intellectual capital strategy” to prevent the wealth from innovation being lost overseas. “We’ve already lost Nufarm to the Australians and John Nathan’s Glaxo in the 19th century to the British. Both started in Bunnythorpe out of physical primary production. Are we selling genetics IP without thought to how we get a long term return?” He adds overseas capital is now looking at assets here. This could be beneficial if it enhances NZ’s ability to implement an Ag IP strategy which captures benefit for NZ and its farmers. “Let’s find a solution so our future generations can benefit from our Kiwi ingenuity.”
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