Managing farm businesses in a changing climate – the opportunities for rural professionals & their clients

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Outline• BACKGROUND

• OPPORTUNITIES FOR R/PS

• YOUR QUESTIONS• BASIC ISSUES• REGIONAL IMPACTS• MARKET DRIVERS• TOOLS TO USE• ANSWERS TO QUESTIONS• CASE STUDIES AND OTHER RESOURCES • WHAT NEXT?

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BACKGROUNDOPPORTUNITIES FOR R/PS

YOUR QUESTIONS

BASIC ISSUES

REGIONAL IMPACTS

TOOLS TO USE

MARKET DRIVERS

RESOURCES

WHAT NEXT?

• Strategic climate change response more important than ETS response

• What tools are there?

• MAF let 3 contracts under the Climate Change Technology Transfer Programme– Development of resources

– Delivery to farmers through by industry

– Up-skill rural professionals (R/Ps) • 8 specialist trainers throughout NZ

• Your feedback counts –survey (hard data, 9am)

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Change

• The world is changing – but that’s not new

• Govt policy is likely to constrain farming e.g. Taupo

• Be aware, understand when planning. This requires scientific and farming expertise

• Research that looks irrelevant today could be your lifeline in five years

• Change will create opportunities for farmers to grow and redesign their businesses

Borrowed from Bruce Thorrold and Graham Law, 20015

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BACKGROUND

OPPORTUNITIES FOR R/PSYOUR QUESTIONS

BASIC ISSUES

REGIONAL IMPACTS

TOOLS TO USE

MARKET DRIVERS

ANSWERS TO QUESTIONS

CASE STUDIES AND OTHER RESOURCES

WHAT NEXT?

Opportunities for R/Ps• Be involved in leading change

• Investors and banks seek confidence around current and future prospects for farm business – How may a farm business be impacted by projected changes in

climate? – How vulnerable is this proposal?– How well do they understand the risks and possible

consequences– Is there a plan for coping with expected variability?– How would this business cope with a combination of events?

• How objective are you in considering risk with your clients?

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BACKGROUND

OPPORTUNITIES FOR R/PS

YOUR QUESTIONSBASIC ISSUES

REGIONAL IMPACTS

TOOLS TO USE

MARKET DRIVERS

ANSWERS TO QUESTIONS

CASE STUDIES AND RESOURCES

WHAT NEXT?

What questions do you have?

• Groups of 3 or 4

• Write questions on post-its

• We will collect and organise these by type see if we answer them during the workshop

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Stuff is happening

NZ herald, 24 Feb, 2012

• Hawkes Bay Storm May 2011,

– 50% pasture lost from Haupouri Station

• Golden Bay storm Dec 2011, worst in 169 years

• Opotiki Jan 2012 The farm had flooded 10 times last season, six of them as bad as this episode. Grant Clark said when he was growing up big floods happened about once every five years. "They seem to be getting more frequent," he said. - NZ Herald Jan3, 2012

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International Surprises

• Drought and widespread fires in Russia while record breaking floods in Pakistan, and near record flooding across much of China

• Disastrous floods in France, Italy, Thailand and Australia

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It’s not business as usual – ask the insurance industry

From Munich Re Natural Catastrophe Service 2011

Top Three are climate related

Heatwaves, Droughts, cold waves

Floods, landslides

Storms, hail, tornado

Volcanoes, Earthquakes

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The core proposition is that greenhouse gases are being released by human activities and are accumulating in the atmosphere. Given their chemistry, this mix of gasses reflects energy towards the earth surface and across the atmosphere, meaning that less energy escapes into space. This energy heats the earth causing water vapour to evaporate into the atmosphere which reflects more energy back to the surface. The net effect is an accelerating warming of the earth

Current concentrations and their rates of change are unprecedented

Current Methane1785 ppb

Current Carbon Dioxide390 ppm

Past climates and greenhouse gas levels (data from ice cores) 14

Surface temperatures not the full story

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Leading Partners in Science

Uneven Challenge: Climate Resilience

Source: Cline 2007, Graphics: UNEP/Grid Arendal

Slides courtesy of Dr Andy Reisinger, Dep. Dir. NZAGRC 16

More biomass at lower quality with sharper seasons

Take Home Messages

• The earth is warming

• This is not part of a natural cycle but is influenced by what we do

• There are consequences which we are already experiencing – change in occurrence of extreme weather events

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BACKGROUND

OPPORTUNITIES FOR R/PS

YOUR QUESTIONS

BASIC ISSUES

MARKET DRIVERSREGIONAL IMPACTS

TOOLS TO USE

ANSWERS TO QUESTIONS

CASE STUDIES AND RESOURCES

WHAT NEXT?

How market drivers are working

• Fonterra aim to reduce emissions by 30% by 2030 – Why?

– Global emissions targets

– Public pressure for emissions regulation

– Competitor release of emissions targets

– Customer request for demonstration of commitment

– Fonterra sustainability commitment

• Have entered into a pact with DANONE committing to carbon emissions reduction action plan

• Have spearheaded a common footprinting methodology

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Sheep and Beef

• Alliance – 40% of lamb trade ex NZ to 65 countries

• Their clients/customers are asking……

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Are you with us?

• “We are committed to reducing our impact on the environment and aim to be leaders in the UK for environmental innovation.” Sainsbury; Corporate Responsibility.

• “We are working with our customers & our suppliers to combat climate change, reduce waste, use sustainable raw materials, trade ethically, and help our customers to lead healthier lifestyles.” M&S; Doing the Right Thing.

• “You won’t get your product put on their shelves unless you conform to their standards.” Tim Groser, Trade Minister, referring to premium

markets; Farmers Weekly February 2011.

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Alliance Response

• Developed a system which uses existing slaughter record data plus some on-farm input to provide a carbon footprint by client by farm

• Why?

• Measure, understand differences, help to manage and reduce the footprint with a whole farming perspective.

• Testing “Hoofprint”

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Beyond Compliance Carbon Footprinting

Andrew Barber

Agricultural Engineering Consultant

Life Cycle Management – Carbon – Energy – Water – Soil24

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Engagement with shoppersEngagement with shoppersEngagement with shoppers

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Take Home Messages

• Our customers are asking questions

• Life Cycle Analysis or carbon footprinting

– Puts us on the front foot when it comes to combating sperious arguments such as food miles

• Recognition and action on carbon efficiency and other measures of sustainability is required for continued market access.

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BACKGROUND

OPPORTUNITIES FOR R/PS

YOUR QUESTIONS

BASIC ISSUES

MARKET DRIVERS

REGIONAL IMPACTSTOOLS TO USE

ANSWERS TO QUESTIONS

CASE STUDIES AND OTHER RESOURCES

WHAT NEXT?

What is projected for your region?

You should have a regional “Effects and Impacts” sheet

If not got to: http://www.mpi.govt.nz/environment-natural-

resources/climate-change/resources-and-tools/climate-change-resource-by-topic/climate-change-science-and-regional-

impacts.aspx

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Current Drought Probability(% time in drought)

29From: “Scenarios of drought under climate change”, NIWA report June 2011

2030-2050 2070-2090

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Change in drought probability (% time in drought) from 1970-2000. A1B emissions scenario

Your turn

• Take 2 mins to read the regional summary

– Especially “Impacts and Opportunities”

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Risk

• Frequency – determined by climate change

– cannot do anything about that

– less time to recover between events - resilience

• Intensity– cannot do anything about that

– makes us more vulnerable

• Impact– but we can do something about that

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Take Home Messages

• The impacts of climate change have been highlighted for your region

• Help your clients reduce their vulnerability to the impacts of extremes of climate.

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BACKGROUND

OPPORTUNITIES FOR R/PS

YOUR QUESTIONS

BASIC ISSUES

MARKET DRIVERS

REGIONAL IMPACTS

TOOLS TO USEANSWERS TO QUESTIONS

CASE STUDIES AND OTHER RESOURCES

WHAT NEXT?

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Developing risk management strategies

This is an opportunity for R/Ps

What’s involved in developing a Risk Management Strategy?

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Farm Business & Climate

Variability

Tony Rhodes

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• Risk Analysis & Planning

• Increasing Resilience

• Adaptation

• Behaviour Change

Farm Business & Climate

Variability

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Soils &

Land Use

Livestock

Capital &

Financial

Structure

Forage

Supply

Water

Infrastructure

Risk

Management &

Mitigation

Farm Business & Climate

Variability

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Soils &

Land Use

• Identifying strengths & limitations

• Pastoral c.f. non-pastoral land use

• Stocking rate

• Wintering practice, stand-off – repeat events

• Effluent management & storage

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Livestock

• Productivity ≠ production

• Productivity per unit of resource consumed

• Wastage

• Disease resistance/tolerance – facial eczema

• Management practice – animal health and welfare

• Spring 3-months – “make or break”

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385

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320

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390

Northland Waikato Canterbury Otago

kg

ms

/ c

ow

Average production per cow

365

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Water

• Too much

• Pugging, compaction, seasonal pasture growth &

pasture persistence

• Effluent application rate & storage

• Too little

• Irrigation, water harvesting, use efficiency

• Quality

• Nutrient wastage, water temperature, stream flow

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Infrastructure

• Frequency & severity of events

• Intense rainfall

• Wind

• Snow

• Fire

• Mitigation of impact

• Design

• Insurance

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Forage

Supply

• Feed demand & forage supply fit

• Supplement availability & “just in time” access

• Routine c.f. major incident supply

• Forage type & persistence

• Co-benefits – feed quality & nutritional balance, N+,

water efficiency

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Capital &

Financial

Structure$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

Agricultural Debt ($M)

• Profitability

• Cash Flow

• Equity

• Liquidity of Reserves

• Risk-weighted investment

• Occasional & acute risk

0%

5%

10%

15%

20%

25%

Northland Waikato Lower NI Canterbury Southland

Avg. Debt Servicing + Rent as % of NCI

2000

2011

-2,000

-1,500

-1,000

-500

0

500

1,000

Jul 1998

Jul 1999

Jul 2000

Jul 2001

Jul 2002

Jul 2003

Jul 2004

Jul 2005

Jul 2006

Jul 2007

Jul 2008

Jul 2009

Jul 2010

Jul 2011

Mo

nth

ly C

han

ge i

n C

red

it (

$m

)

Net Change in Credit

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Soils &

Land Use

Livestock/

Trees/Crops

Capital &

Financial

Structure

Forage

Supply

Water

Infrastructure

Risk

Management &

Mitigation

Risk Management & Mitigation

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Take home message

• Climate variability is just one dimension of risk businesses face

• Every aspect of the business needs to be considered in pursuing a more resilient strategy

• There are a number of tools available

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Question review

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Smoko

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Soils & Land Use

Livestock

Capital & Financial Structure

Forage Supply

Water

Infrastructure

Risk Management & Mitigation

So how do we develop a risk management strategy?

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A RISK MANAGEMENT PLANNER

for Farmers and Agribusiness (consultants , bankers, accountants

and regional counci ls)

Resilient Farm Systems &

Climate Variability

Purpose

• Identifying possible risks to your business?

• What can I do to reduce risk?

• How do I maintain farm business viability regardless of the climate variability?

To encourage a structured approach to risk assessment and management of that risk

How can this resource be used by individuals or groups

• Supporting information includes an A3 resource sheet – this provides further detail on both climate change and other factors that may impact on the farm system in the future

• Evaluate which of the factors maybe triggers for action on farm

• Develop key actions and timelines as part of long term planning

Risks of a changing climate

More rain and snow

Climate Change factors

A1

More dry spells A2

Increasing oCand CO2

A3

Livestockgenetics

Other factors

B1

Animal welfareB2

Changing land useB3

Government regulationB4

Customer perceptionsB5

Climate Change factors

A1 More frequently occurrence of intense precipitation

events (rain and snow)

A2 More frequent occurrence of dry spells and longer duration of dry spells

A3 Increase in average temperature and

Increase in CO2 concentration of atmosphere

Other factors impacting on the farm system

B1 Livestock genetics (high performance stock)

B2 Animal welfare and farm management

B3 Changing land use (eg. rural to urban, sheep to dairy)

B4 Changing Central and Local government regulation

B5 Changing customer perceptions

Risk Management Plan

Evaluate

• Understand the factors that will impact on the farm system including climate change, genetics, increased regulation, and changing customer perceptions.

Relevance

• Focus and be prepared for the things that you think will impact the most on your farm

Prioritise

• Determine the tasks and completion dates- develop the Risk Management Plan

Group Work Report Back at 10:55am

• Each group assigned one of the 8 factors listed – pick a farm system

Dairy, Sheep & Beef, or Horticulture

• Work through the 5 columns Likely Effects Things that can make a difference What might it mean for a farm What is relevant Top Actions Set priorities

• Each Group report (2 mins/group) on Top 3 priorities

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BACKGROUND

OPPORTUNITIES FOR R/PS

YOUR QUESTIONS

BASIC ISSUES

REGIONAL IMPACTS

TOOLS TO USE

ANSWERS TO QUESTIONSCASE STUDIES AND OTHER RESOURCES

WHAT NEXT?

Some slides and discussion to be prepared on the day

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BACKGROUND

OPPORTUNITIES FOR R/PS

YOUR QUESTIONS

BASIC ISSUES

REGIONAL IMPACTS

TOOLS TO USE

ANSWERS TO QUESTIONS

CASE STUDIES AND OTHER RESOURCES WHAT NEXT?

Case studies

For examples go to:

http://www.mpi.govt.nz/environment-natural-resources/climate-change/resources-and-

tools/adaptation-toolbox.aspxClick on “Step 1 getting started”

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Other free resources

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Sheep and Beef

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Dairy

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Dairy example

• We have kg GHG in CO2eq/ ha from Overseer– 12218 kg/ha

• Determine the total production per hectare• Milk solids only (from “dairy animals report”)

– Milk Solids 172,220 kg / 153ha = 1125 kg MS/ha

• Divide GHG/ha by production per ha– 12218/1125 = 10.86 kg CO2/kg product

• Make a note as whether or not rearing replacements is included (they should be and are for this example)

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Where is your client on the spectrum?

The benefits of improving emissions efficiency of milk production are many

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The Land Resource Information Systems Portal

http://lris.scinfo.org.nz/layer/76-nzlri-land-use-capability/

• Free access online to download over 300 datasets, including Landuse Capability.

• Landcare Research New Zealand Ltd.

S-map overview

A system to quantify soil variability

http://smap.landcareresearch.co.nz/home

Functional Horizon Descriptors

Stone content Texture of fines Structure size Consistence

Non-stony

Stony (S)Sandy (A)

Loamy (L)

Clayey (Y)

Coarse (C)

Fine (F)

Weak (w)

Slightly firm (s)

Firm (f)

Very stony (V)

Extremely stony (X)

Loose (l)

Compact (c)

Dense (d)

tLFs = topsoil (t), non-stony, loamy (L), fine structure (F), slightly firm (s)SYCf = subsoil, stony (S), clayey (Y), coarse structure (C), firm (f)VAc = subsoil, very stony (V), sandy (A), compact (c)

Base Properties

Example map units in S-map

Land use interpretations

• N leaching vulnerability

• P leaching vulnerability

• Runoff vulnerability

• Bypassflow vulnerability (microbial leaching)

• Pugging + compaction vulnerability

• Irrigibility

• Erodibility

• Land Use Capability

• Dairy shed effluent scheduling

• Hydrological Soil Group (Curve No)

S-map coverage

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NIWA’S VIRTUAL CLIMATE

STATION (VCS) DATA – AN

UPDATE

Andrew Tait

National Climate Centre

NIWA

Private Bag 14901

Wellington

a.tait@niwa.co.nz

• Interpolated daily values of 11

climate variables

• 0.05° lat/long grid (approx

5km)

• Sophisticated interpolation

methodology (ANUspline)

• Errors larger in complex

terrain and areas with low

density observations

• Automatically updated every

day

• Back-dated to 1960 (rain),

1972 (most other variables),

1997 (wind)

• Basis for many products,

including 15-day forecasts,

seasonal outlooks and

climate change projections

What is it?

• Available via

http://cliflo.niwa.co.nz

• Choose “Special

datasets”

• Search by lat/long

• Extracts all variables

for specified period

• Good for getting data

from a few sites at a

time

• For multiple site data

access, we can set up

an ftp transfer or curl

script

How can I get it?

Alt site http://climate-

smartfarmers.wikispaces.co

m/Virtual+Climate+Station+N

etwork

• Long-term average climate

maps

• Climate change projections

(statistical downscaling and

validation)

• 15-day forecasts

• Up-to-date climate maps and

plots

• Water allocation

• Pasture and forest production

modelling

• Drought indices, based on

water balance estimates

• Groundwater modelling

• Snow modelling

• Pest habitat modelling

• Crop suitability maps

• Streamflow modelling

Applications

Latest Research

• Focused through the NZ Ag Greenhouse gas Research Centre• Already seen some N2O and systems work• Methane

– 95-98% eructed from rumen– 3 areas

• Microbial (reduce activity of methanogens)• Nutrition (effect of forage and feed availability on CH4 production)• Animal (indentifying and breeding more efficient animals)

• Soil Carbon– Defining the upper limit of carbon storage in NZ Ag soils – Focusing on small changes or “fluxes” at soil surface– Effects of plant species, grazing intensity addition of earthworms

and different biochars on carbon exchange with atmosphere

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BACKGROUND

OPPORTUNITIES FOR R/PS

YOUR QUESTIONS

BASIC ISSUES

REGIONAL IMPACTS

TOOLS TO USE

ANSWERS TO QUESTIONS

CASE STUDIES AND OTHER RESOURCES

WHAT NEXT?

What other resources are required for R/Ps develop risk management

strategies for clients?

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Take home messages

• The climate has and will change, GW is real

• It’s important to our customers

• Assess what can be managed at a farm level to

– reduce vulnerability to extremes of climate

– monitor and improve efficiency

• Use existing tools and resources to help your clients become more resilient to extremes

• Test them and seek out new resources

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• If you always do what you always did, you will always get what you always got

• Not so sure about this now as the risks looking forward are different from the risks looking back.

• Response needs to be, “what new risks and/or opportunities will a changing climate bring my client and how should I help prepare them for that?”

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Ongoing

• We will send you a doc with internet links to resources discussed

• We are available to do workshops for your client groups as long as travel costs are covered

• Email us if you think of something you need

• Please fill out evaluation sheet

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Thanks

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