ASB and Lincoln University Report: Smarter Land Use Could Unlock Billions for NZ Farmers
A new report from ASB and Lincoln University shows how smarter, more diverse land use could unlock billions in value for farmers and the wider economy.
This is despite the fact it accounts for as much as 16% of the country's entire agriculture industry.
Not that Smith's worried; he's now three-quarters of his way through a PhD on rural contracting's contribution and plans to make it the focus for the rest of his career.
Smith will attend Rural Contractors NZ's annual conference at Invercargill in June so he can line up interviews with more contractors and develop further understanding of the industry.
"Hopefully it's an ongoing relationship. I want to be know as the link between the industry and our university."
Smith grew up immersed in rural contracting in Methven. His father Ron ran R + R Haulage, now R+R Spreading operated by his brother Ben. An uncle owned a tree topper, another a ditch digging company and family friends were shearers.
He worked for the family trucking company after leaving school, then spent three years field testing crops in the UK before doing his Dip Ag/Dip Farm Management and a B Comm majoring in agriculture at Lincoln. This was followed by a Masters in Applied Science.
Four years at Ravensdown and four years as a commercial banker followed before Smith returned to Lincoln to teach at age 40. In 2019, he started his PhD, looking at the key factors for survival and resilience in small rural contracting businesses.
One challenge was coming up with a definition for a rural contractor.
In the United States, a rural contractor is someone growing crops on contract; in the UK, it's someone who offers his labour to different farms. Smith's definition refers to rural contractors as small, rural, farm-support agribusiness.
From the international and NZ literature, he was able to develop a model of what New Zealand rural contracting looked like. This was followed by interviews with a dozen Canterbury contracting businesses specialising across a range of contracting - baleage, fertiliser spreading, spraying, fencing, and crutching.
Smith's learning, to date, is that successful contractors do a number of things but the one stand-out is the focus on operational excellence.
"They strive to be the best they can be."
He adds that the market does dictate what sort of contracting business can succeed.
"You can't start a grape harvesting business in Invercargill."
Smith says there are a host of other factors at play for a rural contractor's business to work.
"They identify successful people and talk to them," he explains. "They develop relationships with customers; suppliers and their staff; they have good equipment; they are accurate about their pricing and costs - and many more things."
Smith will now survey hundreds more contractors so he can rank the factors that makes a rural contracting business successful.
He looked at IRD statistics from 2018, which show more than 143,00 people working in agriculture and 22,700 (16%) working for rural contracting companies.
Another measure he found is a 2019 NZIER study done for RCNZ, which said there were nearly 7,000 rural contracting companies - each with an average 3.3 staff - contributing to a $1.5b+ industry, equating to just over 12% of agriculture's contribution to GDP.
"That's almost as big as the forestry sector."
Smith now wants to make his career out of addressing that lack of interest in the rural contracting sector by becoming the linchpin between academics and those who make up a little acknowledged but critical part of NZ's productive base.
