13 minute read
Opinion
Reforms must heal country’s wounds
Alternative View
Alan Emerson
I’VE been interested in the recent health reform announcements and the reaction to them.
Simply, the Government intends to abolish our 20 District Health Boards (DHBs) and replace them with a single health authority.
I’ve differing views on the issue. The first is that in the Wairarapa we have a good DHB. My experience has been that it functions well with the resources it has.
The news stories that regularly come out suggest many other health boards don’t share that commitment to their local communities.
Further, we can elect local people to DHBs. That gives me some assurance that the organisation is locally-focused.
The broader issue is, however, that the current system isn’t working, as shown by the regular horror stories coming out of the health sector. DHBs have been around in their current form for 20 years, but essentially for much longer.
They were first mooted in the 1970s. The Muldoon government introduced Regional Health Boards and then Labour morphed them into DHBs.
Logically that tells me that the DHBs time has come. They were designed for another world and they’re not working in this one. In addition, the total population of New Zealand is similar to many medium-sized international cities. Would an international city of five million people have 20 health authorities? I think not.
I have two major issues. The first is that the devil is in the detail. There’s a lot we just don’t know. Health Minister Andrew Little told us that the new system will “do away with duplication and unnecessary bureaucracy”, and I support that.
He added that “we need more health professionals and a bigger health spend”. That’s reassuring.
However, what we don’t know is what the new system will achieve that the existing system doesn’t.
The second is that while I can accept axing DHBs having a central authority, casting pearls to the provincial swine fills me with horror.
There are many examples of central authorities showing a complete lack of knowledge and understanding of rural communities, and essential water would have to be one.
We had worthy bureaucrats in Wellington deciding what they think is best for you and me, with blissful ignorance of the issues and practicalities.
The shambles of gun licencing is another.
Farmers need firearms to control the many pests occurring in NZ in addition to sporting needs. The police, by their gun licencing protocol, don’t have a clue.
Getting back to health.
While I accept there will be four regional hubs with further offices, I remain unconvinced they will understand rural needs.
In an excellent article in last week’s Farmers Weekly, Gerald Piddock talked to Rural GP Network chief executive Grant Davidson. He made some extremely valid points.
The first is that rural GPs need to be included at the design stage of any new system. I agree. It will be interesting to see if the Government picks it up.
He also suggested that a rural lens needed to be put over the new systems implementation. That needs to happen.
He told us that the current system is not working in rural areas, and that tells me there needs to be change.
We’re told that the 700,000 rural people deserve a good system. I accept it costs more to service rural people than those in the city, but we’re told that rural people are reluctant to seek medical health unless they absolutely need it.
The Davidson king-hit is his statement that “if we want equitable (rural) health outcomes, we need inequitable inputs to get there”.
So, what we’re going to have is a central system as against a regionally-based one. We’re told our present system is “fragmented and convoluted”. The review of the system, led by Helen Clark’s former chief of staff Heather Simpson, states that it had led to “inequitable outcomes in health for Māori and Pacific communities, as well as disabled people”.
I’d add rural.
Ubiquitously, in my view, we’re going to have one central agency plus one for Māori, yet the Simpson report tells us that it is Māori, Pacifica and the disabled that are failed by the current system.
The Rural GPs tell me that the present system disadvantages “the 700,000 rural people”.
Why then have a separate system for Māori, when the Government’s own research says that it is not just Māori but Pacifica and the disabled that are missing out? And I’ve just added rural.
There’s a further question I have. Is it because of racial or socio-economic issues and, in both cases, why? I’d suggest we just don’t know.
While I’ll support the thrust of the reforms, doing away with the DHBs and their duplication, I remain unconvinced that a single, centrally-based organisation will provide better outcomes.
I also remain unconvinced that concentrating on Māori while ignoring Pacifica, the disabled and rural is fair and equitable.
YES, BUT: Alan Emerson believes that while District Health Boards are no longer fit for purpose, he questions whether the Government’s reforms are going to benefit those who need it most.
Your View
Alan Emerson is a semi-retired Wairarapa farmer and businessman: dath.emerson@gmail.com
The world as we now know it
From the Ridge
Steve Wyn-Harris
WATCHING the second wave of covid-19 sweep devastation through India is a good lesson in guarding against complacency for our own country.
Just a few weeks ago, India’s government was insisting that it was in the endgame in its fight against the virus.
It relaxed restrictions against scientific advice and is now seeing more than 300,000 new cases each day, daily deaths above 3000 people and total deaths of 200,000. There is speculation that all these figures are lower than reality and that it is far worse.
It would seem that a new variant has arisen there being dubbed “the double mutant”, but is not yet known if its more infectious or that the vaccines will have less potency over it.
India with its population of 1.4 billion people, in quite dense clusters, is not just a problem for India but for the whole world.
With more infections and faster spread, it gives the virus more opportunities to mutate and the chances increase of a new strain appearing that is not affected by the vaccines that are currently being rolled out. Then we are back to square one if that should happen. Then the hubris of nations well into their vaccination programmes will come home to roost.
Likewise, our own pride, comfort and gratefulness for having kept the virus offshore and mostly locked up in isolation centres will be all very well, but the realisation that we may need to remain an island nation bubble for some time to come will dawn on us.
With other countries like Brazil, Pakistan, Papua New Guinea and the like struggling to contain this virus, it’s becoming increasingly likely that this pandemic will be with us for a few more years yet. vaccinated, thus preventing herd immunity.
What surprised me a while back when I was reading up on the history of the Bubonic Plague (Yersinia pestis) bacterial infection, is that it is still here in pockets around the world, including the US.
It’s the same disease that devastated Europe by killing half the population in the mid-1300s and was known then as the Black Death.
Over subsequent centuries it caused several more pandemics.
In the southern US, wild rodents carry the bacteria but there is only an average of seven human cases a year as folk know
Dairy poses big challenges
Meaty Matters
Allan Barber
FOR most of the past 30 years, dairy farming has replaced sheep and beef farming as a more profitable use of productive land, except where grapes and forestry have taken over pastoral country in regions like Marlborough and the East Cape.
Irrigation has contributed enormously to dairy’s economic success in Canterbury, while large swathes of Southland sheep country has also been converted. This trend has been accelerated by the removal of subsidies in the mid-1980s, which resulted in the national flock falling by well over half and a much smaller reduction of the beef cattle herd.
The meat processors have had to undertake substantial restructuring to adapt to lower throughputs, more demanding consumers and more complex overseas markets’ food safety and workplace health and safety requirements. At the same time, farmers have faced all these challenges and more. But after several decades of rationalisation, automation and generational change, sheep and beef farming has largely restructured and is being rewarded with returns which were unheard of in the last years of the 20th century.
The dairy sector has also undergone huge change with small dairy factories closing in the North Island through the 80s and 90s, co-operatives being taken over until only New Zealand Dairy Group, Kiwi, Tatua and Westland remained before the formation of Fonterra following government intervention. At the same time, the size of the average dairy farm increased threefold and the South Island’s dairy production exploded. An inevitable outcome of this expansion has been an increase in debt levels and consequently the average farm’s breakeven point.
Although co-operatives Fonterra and Tatua still control over 80% of dairy processing, there has been a trend towards corporate ownership since the turn of the century.
Open Country, now 100% Talley’s-owned, has grown to 1000 suppliers, controlling 10% of milk production, while the record of other start-ups has been more chequered: a2 is buying 75% of loss-making Mataura Valley from its Chinese owner; Synlait’s share price has suffered from its interdependence with a2, which has been hit by the fall in the ‘daigou’ trade for infant formula; Guardians infant formula factory was bought by Danone seven years ago; China’s largest dairy company Yili bought Oceania Dairy from the receivers in 2013; while Westland’s farmer shareholders voted to sell to Yili in 2019 because of their cooperative’s underperformance.
The newest investment is ASX-listed Happy Valley Nutrition in Otorohanga, which is due to open a drying plant in 2022, for which it intends to build a Waikato supplier base, as well as obtaining milk from Fonterra under DIRA.
Meat and dairy processing share many of the same challenges, notably maintaining efficient capacity and an adequate margin between raw material buying price and market returns. Only successful management of margin and cashflow makes it possible to remain efficient. Dairy farmers in several regions now have a choice between processors and would be well advised to consider carefully the financial robustness and structure of their options before deciding where to send their milk.
In the 90s there were very few meat processors that could make sufficient profits to be able to reinvest in their plants and it has taken well over 20 years for this to happen. This process started with capacity reduction, but has been largely facilitated by ownership or shareholding changes, notably Affco’s transition over time from a co-operative to a wholly owned subsidiary of Talley’s, Itoham’s buyout of Anzco’s minority shareholders and Shanghai Maling’s investment in Silver Fern Farms.
In contrast Progressive Meats and Alliance have maintained their original ownership, while sharing in the industry’s higher degree of sanity and profitability.
In comparison, the dairy processing sector has had to undertake less rationalisation of old plants, while higher production volumes have allowed the construction of new capacity, in addition to attracting new entrants. A future challenge facing the industry is the fact peak production has been reached and, if the Climate Change Commission’s recommendations are adopted, less capacity will be needed in future.
Open Country Dairy chair Laurie Margrain sees little likelihood the dairy industry will suffer as traumatic a transition as the meat industry, because there is not the same amount of inefficient overcapacity. He believes capacity will adjust to find its appropriate level, but emphasises the importance of managing the balance sheet carefully as well as guaranteeing milk supply to match plant investment. He also points to the risks associated with making consumer branded products for markets thousands of kilometres away.
Open Country has based its business model on efficiency, productivity, high-quality dairy ingredients, well-tested routes to market and prudent use of capital. NZ only consumes 4% of its milk production, so it is critical to export the balance profitably in forms which don’t destroy shelf life. The company treats its farmer suppliers as key stakeholders in the business, but, unlike cooperative shareholders, they are not required to buy shares in their processor. Open Country aims to leave its suppliers free to farm as efficiently and for as long as possible into the autumn, paying for milk much earlier than a cooperative would.
NZ’s dairy sector appears to have successfully weathered a number of challenges, caused by the transition from the Dairy Board marketing model, overseas market access difficulties and tariffs, Fonterra’s loss of focus on where its strengths actually lie, and milk price volatility. An overreliance on the Chinese infant formula market may yet prove to pose another challenge for some of the players who have diversified insufficiently.
But, like the red meat sector, overseas markets will continue to offer opportunities to welldiversified dairy companies and, who knows, the UK and EU may even live up to their promises of wanting to conclude broad-based trade agreements with NZ.
RISK: An overreliance on the Chinese infant formula market may yet prove to pose another challenge for some of the players who have diversified insufficiently, Allan Barber says.
Your View
Allan Barber is a meat industry commentator: allan@barberstrategic. co.nz, http://allanbarber.wordpress. com
Continued from previous page
this and are cautious not to handle them and besides, they are sparsely populated areas. And there are about 2000 cases elsewhere in the world, mainly in Peru, India and Africa.
The bacteria, which are carried by fleas living on animals, can only exist outside its host for an hour, as it is killed by sunlight and can’t be passed from person to person. And, the infection in the modern era can be treated with antibiotics, so is not the deadly threat it once was.
But as we know, Covid-19 is a different kettle of virus.
All countries have tried to balance controlling a public health threat while maintaining a functioning economy. Many like the US, UK and Brazil tried to do both and failed on both measures.
To date, we have trod the line as well as any nation, but we have also been lucky and surrounded by a large moat.
If countries such as India struggle to get their national pandemic under control and we attempt to keep our borders open and open up travel bubbles as we have with Australia, it is possible that one day our luck might run out.
I’m glad I’m not the person required to determine how much risk to national health is acceptable in order to keep industries like tourism afloat and an economy turning over as best as is possible in this new world we live in.
