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October 2, 2011 | by  | in Opinion |
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Failure To Communicate – The price of milk, the value of water

I’m gonna level with you—I don’t like John Key.

When he appeared on Hard Talk and, in front of an international audience, sweepingly dismissed research brought before him by scientists from his own country, I felt colossally insulted. So I wonder what his reaction will be, if any, to the recent findings of the OECD international report on water quality? The OECD report echoed what our scientists have been saying about our water quality for a long time now—it’s getting worse, and the main cause is intensification of agriculture—particularly dairy. This comes at the same time as we hear of record breaking sales, profit, and payout to farmers from Fonterra, and growing discontent about the price of milk in New Zealand. People are going to be demanding answers pretty soon.

Personally, I am not overly concerned with the price of milk products in New Zealand. I don’t think it is unreasonable to be charged the same amount as people in other countries, at least as long as there is not too much speculation in milk. More interesting (and worrying) to me is the issue of managing our water resources. This is a difficult subject, because it mostly involves pollution that has been grandfathered into the system. In the past everyone took our water resources for granted and farmers would dispose of effluent in their local rivers. This didn’t create a problem because the rivers had (and still do have) a capacity to absorb and neutralise pollutants at a certain rate, and the level of dumping was below this rate. Now, however, we find ourselves in the situation where we have exceeded the natural capacity to neutralise pollutants. More are building up in the waterways and the health of these systems is dropping. Now something has to be done to clean them up. But, of course, no-one is keen to put their hand up and volunteer their own money to do the job.

There will be a tipping point anyway if we don’t intervene at all—farms also need a certain amount of clean water to run, and when that starts running out they will need to buy it or pay for it to be cleaned, which will hit their profits. Fonterra’s scientists know this too. I have spoken with one, and I know that they are putting a substantial amount of research into clean water. The results are good. For example, their newest processing plant is able to capture some 99 per cent of the pollutants instead of dumping them. But all the research in the world won’t help if there is no cost for failing to maintain the water quality. We must phase in a system to ensure that the users pay. I have also spoken to government economists and learned that there is a trial of a ‘pollutants market’ in a region near Rotorua to create this cost to farmers.

All in all, I think Fonterra are doing just fine. But it is not their job to create a system in which they pay for cleaning their water­­—it is the Government’s job. If we don’t then it amounts to a substantial subsidy granted to farmers, and as their record profits indicate, they certainly are not in need of handouts to survive. The fact that Fonterra are already working on solving the water supply problem shows insight and good faith on their part.

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