16 minute read
Opinion
Why wouldn’t you use wool?
Alternative View
Alan Emerson
THE Vision and Action for New Zealand’s Wool Sector document was released mid-2020. It is a good document. Sadly, since then we’ve had a lot of talk and little action.
We recently had the Strong Wool Action Group (SWAG) formed amongst great fanfare but I’ve yet to see much come out of it.
I’ve spoken to farmers about the issue and they’re grumpy.
I’ve heard them say:
“They have no runs on the board, the current price of strong wool is witness to that.”
“It’s ridiculous when we must earn money from other parts of the farm to pay for our shearing.”
“They’re disappointing from a farmer’s point of view. We don’t have time to muck about. If we don’t get major improvement in the next few years the entire industry is at risk.”
“Compulsory acquisition should be revisited”
“The future seems to be with Wiltshires and Dorpers.”
And, there are many more comments of a similar ilk.
Speaking to the industry was also interesting.
They said:
“We put money into it. We weren’t given much information.”
“We’ve asked for a strategic document. It hasn’t happened.”
“We’ve put money into every farmer wool outfit over the years and got nothing out of it.”
I googled Strong Wool Action Group and there was much heat and little light.
They came out of the 2018 Wool Summit that bred the Wool Action Group (WAG) that morphed into SWAG. They’ve raised $500,000, appointed a chief executive and plan to “lift strong wool out of the doldrums”.
There’s been an American design thinking research company appointed to undertake research there and they’re recruiting a business analyst.
The chief executive says “they’re getting tremendous support”, that “outside thinking is critical” and that “SWAG is off to a promising start”.
His words not mine.
I became a tad grumpy after reading how synthetics produce microplastics that pollute the oceans. There was an average of 40 plastic particles for every cubic metre of sea water and that is massive.
Reading further, I found out that polyester fibres also pollute the air creating a danger to human health.
Polyester also encourages fashion overproduction and waste. It is made from fossil fuels and can’t be recycled. It isn’t biodegradable and sheds toxic microfibres.
It’s said eight million tonnes of microplastics enter the ocean each year.
Microplastics have entered the food chain and on average, people ingest five grams a week, equal to the weight of a credit card.
According to the World Wildlife Fund microplastics “harm marine and human health, litter beaches and landscapes and clog streams and landfills”. Microplastics are also silently choking our planet.
Seventy million barrels of oil are used annually to create polyester.
What that tells me is that with nylon carpets and polyester clothing you have a huge use of fossil fuels, massive pollution and threats to human health.
Conversely with wool you have a natural fibre that doesn’t pollute but breaks down in the environment. It is fire resistant, durable and repels moisture. It is comfortable to wear, wrinkle resistant and insulates the wearer.
Why wouldn’t you use wool? Simply because synthetics are and always will be cheaper and that’s the challenge and that’s where I have a problem.
Everyone wants to save the planet. The Government is encouraging electric vehicles and subsidising them. They still cost a lot more than a conventional car. The aim is to reduce greenhouse gas emissions, reduce our reliance on fossil fuel and make the world a better place.
You can achieve all of those aims with the use of wool.
People rave about farmers polluting while hypocritically encouraging far more pollution with their clothing and carpets.
While wool is versatile and can be used in insulation and niche market products, it is carpets that will be the salvation of our strong wool industry.
So, to get wool carpets back in fashion.
Dispel the myth promoted by SAFE that sheep have to be killed for their wool.
Explain how wool is a natural fibre grown on grass-fed sheep. They produce a new fleece each year making wool the most sustainable product ever. Discarded wool composts, it doesn’t pollute.
Ask the Government to save the planet by encouraging wool carpet in all government facilities.
Mount an international online campaign showing the environmental advantages of wool over synthetics.
Those are my views only but were created without the assistance of an American consultancy or hot shot business analyst.
One bright spot was talking to Cavalier Bremworth who had pledged to just make wool carpets. Their marketing communications manager Padgett Johnson told me the company had “received overwhelmingly positive feedback from staff, customers, the general public and our rural farming communities. Wool carpet and rugs are the optimum offer for consumers. Not only is wool the best fibre for design, innovation and performance on the floor, it’s also 100% natural, biodegradable and renewable.”
It’s great to have someone with runs on the board.
EDUCATION: Alan Emerson says the public needs to be educated about the origin and uses of wool to help them make informed purchasing decisions.
Your View
Alan Emerson is a semi-retired Wairarapa farmer and businessman: dath.emerson@gmail.com
Win or lose, at least try it
From the Ridge
Steve Wyn-Harris
I WRITE this on the evening we are all basking in the reflected glory of Kiwis once again batting outside their league and winning the America’s Cup. Not that the great majority of us had anything to do with it other than involuntarily having contributed some tax money to the project, it reminded me of my own inglorious sailing career.
Our family bought a Laser when I was a teenager, which is a good boat to learn to sail in.
We didn’t have it very long when we heard about the inaugural Laser sailing championships at Taupo. I think it might have been 1976. My mate Quinny, who had also bought one, and I thought it would be fun to compete, despite still being uncertain on how to rig them, let alone how to sail properly.
That long ago, morning on the southern shores of Taupo was very still and peaceful. Most of the other competitors on the beach looked like they knew what they were about, so Quinny and I decided to go out early to get some practice.
It was terribly slow going because of the complete lack of wind as we headed out to the course, but we chatted away from our respective craft and compared sailing skills.
We still hadn’t got to the course when we saw a flurry of activity from the shore as the other sailors launched their boats.
We and they realised at the same time that they weren’t going to make the start line in time.
When the starting gun went off, even Quinny and I hadn’t quite got there, but when we went over the line we whooped with delight as we were leading the fleet by a considerable margin and at the very least, one of us might be runner up and even better, one of us would be a national champion before the morning was over.
The pace was glacial, and we watched the fleet cross the starting line as we were already on the second leg.
A little later, I had the edge on Quinny although the better sailors were making ground. One of them was coming towards me heading to the marker I’d already rounded.
He kept yelling “starboard, starboard” but I had no idea what he meant.
I was soon to find out as just after our boats gently banged into each other, he told me that it was to tell me that he had the right of way and I had to give way. My penalty was to now go completely around twice apparently.
This is not an easy manoeuvre when there is no wind and after wallowing around for quite some time, I found myself in the middle of the fleet and crossed the line towards the back of the field.
Thus, the pinnacle of my yachting career was in my first and only race when for a time, I was the leader of a yacht class at the national championships. No Peter Burling, but we take what we can.
I can’t remember Quinny’s placing, and while it was better than me, there was no podium finish for him either.
It must have been winter because my other memory of that weekend was that we drove up to Ruapehu for a day of skiing now that we were over sailing.
Two Commodore station wagons with a boat each on the roof rack looked somewhat incongruous in the car park of a ski field.
What looked even worse when we returned was Quinny’s boat had collapsed in on itself, much like your cheeks do when you suck them in.
The bung was still in and turned out his boat lacked a small breather hole that it should have had, so the difference in pressures and temperatures had produced this startling result. Quinny, a panicker at the best of times, freaked out.
When the bung was removed, the air rushed in and the boat popped back into its usual shape with a satisfying clunk.
These are the sort of sailing stories that sadly didn’t make America’s Cup coverage.
MEMORY LANE: Commentator Steve Wyn-Harris recalls his own run at a sailing championship title. Photo: Wikimedia Commons
Non-bank lending makes a comeback
Cameron Bagrie
LENDING from non-bank sources is on the comeback trail.
The sector includes credit unions, non-bank deposit takers, building societies and finance companies.
Sector lending peaked at $26 billion in 2007. By 2013, it had shrunk to around $10b. Lending from non-bank sources is now up to about $17b. That pales against the balance sheets of the banking sector who have loans of $487b, including $215b owner-occupied property, $81b residential investor property, $8.6b consumer loans, $109b business loans and $62b of agriculture lending.
The non-bank sector is coming off a low base with small market share, apart from the consumer market where non-bank lending is $6.2b.
The past year has seen some strong growth in lending from non-bank sources.
Agriculture lending is up 86.7% in the past year and 152% in the past three years, though still small in overall size.
Business lending is up 36% in the past year ($1.8b) and 52% ($2.4b) in the past three years. The nominal numbers are still small relative to the bank balance sheets. Non-bank lending into agriculture was $689 million at the end of 2020 and non-banks provided $7b of business funding.
Non-bank lending is typically specialist lending, the type of lending bank cannot or will not offer.
The growth now also personifies a substitution away from more traditional bank sources of finance. Some of which has been the need to refinance if the bank plays tough.
Bank lending into the agriculture sector has fallen 1.4% in the past year, dominated by falling debt across the dairy sector. Business lending dropped 5.2% ($6.7b).
Non-banks have picked up part of the slack as banks tightened credit criteria forced people to look at alternate providers.
Low-risk housing lending has dominated growth across bank balance sheets in the past year, rising 8.2%.
However, even in the housing space, non-banks are showing stronger growth of 11.5%, as people seek alternate providers for deals that do not fit the automatic decision box of banks and need a bit of pragmatism.
Of course, we have seen this play book before when non-bank lending rises rapidly. Non-bank lending rose $7b from late 2004 to mid-2007, half of which was housing related. The endgame when interest rates moved up was not pretty.
The Reserve Bank will be alert to signs of excesses. Government regulators should too in relation to various deferred payment schemes.
The real story though is that the non-bank growth reflects a changing market. We are likely to see, and need, continued growth in alternative providers of finance. Access to capital is essential for growth.
Banks account for 94% of private sector borrowing and the large four account for 85% of that lending. That is a large concentration. Around twothirds of bank lending is to the household sector, the bulk of which is secured against housing assets. Of $109b lending by banks to businesses, 37% is property related.
Access to capital is an issue for businesses, but also a problem across the economy.
Alternate providers of capital are inevitable, and they will need to be appropriately regulated.
The big four bank dominance will fade. Open banking – a secure way to give providers access to your financial information, which will help customers, farmers and small-to-medium sized businesses get a better deal – needs accelerated to increase competition.
The Governor of the Reserve Bank has made some firm comments on housing and the importance of diversifying. Housing dominates investors’ mindset. One reason has been the ability to leverage and access debt. Changes look to be coming to remove some of that advantage. That is long overdue.
There is no shortage of capital in NZ looking for a place to invest. The challenge is how we channel it from A to B, and direct it into the productive sector including agriculture. Non-bank providers, appropriately regulated, are a growing part of that landscape, if they can get the pricing right. The onus is also on the borrowers to get their bankability in order so they can access good pricing.
CHANGING MARKET: Cameron Bagrie believes that based on demand, we are likely to see, and need, continued growth in alternative providers of finance.
* While Bagrie Economics uses all reasonable endeavours in producing reports to ensure the information is as accurate as practicable, Bagrie Economics shall not be liable for any loss or damage sustained by any person relying on such work whatever the cause of such loss or damage. The content does not constitute advice.
Methane reduction is possible
Meaty Matters
Allan Barber
RABOBANK’S Food and Agriculture Research unit has just put out a report by its US dairy analyst entitled A ReducedMethane Future for Dairy with the sub-title Meaningful Progress That’s Economically Sustainable. Right up front it makes the key point consumers increasingly value products that generate reduced greenhouse gas (GHG) emissions, but quantifying and monetising the additional costs of production and distribution is challenging. The report notes reducing GHG emissions in a meaningful and economically feasible way will require a transfer of that value to the farmers and other parts of the supply chain which bear those costs.
According to the UN’s Food and Agriculture Organisation, the global dairy industry’s emissions have increased by a lesser amount than the increase in milk production as a result of improved emissions per unit of milk produced. Between 2005 and 2015 the sector’s emissions increased by 18%, while milk production lifted by 30%, with better efficiencies being achieved unsurprisingly in the more developed dairy regions. In the US larger dairy farms and greater manure storage in liquid form have resulted in a disproportionate increase in GHG emissions, which presumably indicates a correspondingly better result from New Zealand’s grassfed farming regime.
In the US there are two main means of reducing dairy farming emissions – converting methane from solid or liquid manure pits into biogas and ultimately renewable natural gas (RNG) and mitigating the effects of enteric emissions or belching – but in NZ only the second is feasible because of the free range grazing nature of the industry. The first option is further advanced and currently the only one which can provide an economic incentive.
There is a growing trend in the US towards anaerobic digesters, which have become an economic proposition because of the technology that is able to clean the biogas captured by the digester and convert it to RNG. There are now more than 200 anaerobic digesters in the US catering for dairy farms with more than 500 cows, although, according to the US Environmental Protection Agency, there are potentially 2700 farms that could install the technology.
However, the economic viability of installing a digester depends on volatile electricity prices and the ability to sell back to the grid, methods of manure collection and whether the digester is managed by a dedicated third party. Without a reliable income stream, dairy farms are unlikely to be willing to install a digester and there is a fear smaller, more marginal farmers will exit the industry.
As methane belched during the digestion process cannot be captured, mitigation of emissions from the rumen is only possible through technological improvements arising from the addition of active ingredients to animal feedstuffs, ranging from naturally sourced seaweed, garlic and lemongrass to synthetic additives. Several start-ups are focusing on seaweed-based solutions, which have shown potential methane reductions of over 90%, and Fonterra is currently partnering with Australian company Sea Forest, which is conducting trials with seaweed-based supplements.
Another start-up, Symbrosia, is using aquaculture technology to grow seaweed and research into its effects at Penn State has shown an emissions reduction of 80% in short-term studies of lactating cows with no apparent adverse effect on feed intake or milk yield, although further research is needed into the long-term implications for animal health and reproduction. There is also a chance the digestive system may adapt to reduce the effectiveness of the additive. Another problem is scalability to production in commercial quantities for either seaweed-based option, whether seaweed harvested from the wild because of the damage to ecosystems or from aquaculture.
There is promise from synthetic solutions, which also have an advantage over natural supplements in their scalability, although trials indicate lower emissions reduction. Dutch company Royal DSM has developed a supplement marketed under the brand name Bovaer, which in initial trials around the world has shown a 25% reduction in digestive emissions and is expected to be approved for use in the EU this year. Fonterra recently announced a partnership with DSM to test Bovaer under grassfed conditions.
The Rabobank report also discusses the opportunities in sustainability marketing to appeal to consumer demand for greater transparency and measurable progress towards reducing the environmental impact of products. In the US, sustainably marketed products represented 50% of dollar growth between 2015 and 2019, while in the dairy category sustainably marketed milk sales grew by 20% as opposed to a decline for milk sales as a whole.
The report highlights the important role dairy cooperatives can play in reducing emissions by encouraging their suppliers to adopt sustainable on-farm practices and rewarding them appropriately. For instance, Fonterra is introducing a new payment system, the Co-operative Difference Payment, which will reward members by up to 10c a kilo of milksolids, based on the individual farm’s contribution to meeting the cooperative’s on-farm sustainability targets.
Sustainably produced and marketed products will undoubtedly continue to grow, especially in first world countries, and this trend will put pressure on companies to adopt sustainable practices, whether they want to or not. The challenge will be to develop ways of doing this economically and at the same time finding a way to incentivise producers for supplying products which meet the new breed of consumers’ demands.
