There's knowledge down on the farm, too

They're frequently put down as symbolic of the 'old' economy, but New Zealand's primary producers aren't ready to exit the stage. As Anna Wallis reports, the country's agricultural industries are keen to take their place in the knowledge economy as they forge new ways of extracting profits from existing resources.

They're frequently put down as symbolic of the "old" economy, but New Zealand's primary producers aren't ready to exit the stage. As Anna Wallis reports, the country's agricultural industries are keen to take their place in the knowledge economy as they forge new ways of extracting profits from existing resources.

New Zealand Dairy Board chairman Graham Fraser, while welcoming government emphasis on the knowledge economy, says the dairy industry long ago put its hand up to be part of the evolution but was often overlooked because it is based around agriculture.

"It was fashionable for a time to consider [commodity]-based industry as pass‚ and believe the future lay with new enterprises based on intangible assets such as knowledge."

Fraser says while the industry acknowledges the value of intangible assets, and to say the industry is not commodity-based is "to say night doesn't follow day", that's not the complete picture. "While it's true the industry exploits a favourable climate, reasonable soils and the work ethic of its farmers, it also exploits a large body of knowledge we've built." Intellectual property has given the business a "unique selling proposition", says Fraser. "It is when exclusivity exists that one is able to obtain good margins."

There has also been a recent surge in the use of animals for more than just meat, milk and wool. The dairy board has said that without producing another extra drop of milk, it can grow from an $8 billion a year industry to one worth over $30 billion. The reason: the inherent wealth of material, knowledge and intellectual property contained within primary industries. Industries such as health, beauty and pharmaceuticals are beating down the barnyard door to get at the riches.

New Zealand's totemic, ubiquitous sheep was cloned as a species - remember Dolly - not because it's a nice, woolly compliant animal but because its genetic material is so useful to research for the benefit of human beings. A Dunedin-based company, Global Technologies New Zealand, says the biotechnology industry has the ability to turn a sheep worth $50 into something worth over $500. Sheep and cattle can provide collagen and keratin from bone and horn, moisturisers and arthritis treatment from the trachea, baby food supplements and cell culture for cancer research from blood, anti-jetlag and anti-seasonal depression treatments from the pineal (brain), allergy-treating steroids from the adrenal gland and anti-coagulant and anti-thrombotic treatments from the intestine lining.

Biotechnology is not the only area where the primary sector has got off to a flyer in the knowledge economy stakes. Another is use of the internet. But this is also where the rural community has its biggest hurdle in implementing further developments of the knowledge economy.

Federated Farmers national president Alistair Poulson says Telecom has publicly admitted that 45,000 of its 50,000 rural phone lines are below standard. For many farmers, including Poulson himself, this means an inferior telecommunications service. And just who will update these services is up for debate given Telecom's desire to opt out of the rural market.

Poulson believes it's not just a case of Telecom being responsible for improving communications to rural people, but that other providers should also invest in the rural infrastructure. "Agriculture is still our biggest exporter and investment in the primary sector will benefit everyone. So it's not just Telecom's responsibility.'

Poulson himself lives in the backblocks near Wanganui and the microwave link that services about 30 households in the area is prone to crashing internet services.

"You're constantly falling off . it takes three hours to download six email sometimes. I'm currently trialling Ihug's satellite service that is excellent at downloading and has solved about half the issues I have. But you can't send a lot of data effectively."

He says while there is a lot of talk about WAP technology and satellites solving the problems of rural infrastructure, he's a little sceptical.

"I think it will be another three or four years before we get there."

Poulson says farmers haven't been daunted by technology but have always worked to see how they could take advantage of it.

"In the last 15 years, agriculture has grown on average by 6% a year. It's been the standout performer of the economy. We don't see ourselves as old economy - our investment in agriculture has always been knowledge-based."

Another who agrees is McKinsey & Co consultant Isaac Barchas. McKinsey has been responsible for major reports on the Australasian wool and diary industries. Barchas says farming is a tough business that has been able to lift its productivity year after year by being in the knowledge business.

"What is happening now is a formalisation of what agriculture has been doing for years."

Barchas, an American from an Arizona cattle ranching family, says the Internet will make farming even more cost-effective, enabling farmers to comparison-shop for both best practice information as well as reduce the cost of inputs.

"The Internet will be a boon to farmers everywhere from the Manawatu to Milwaukee."

He says it will also enable farming communities, that "in some ways have had the guts ripped out of them in recent decades", to form new communities around the world with other farmers.

In terms of capital investment, Barchas says that Internet-based agricultural listings have been "some of the hottest around. It's a no-brainer. You have hundreds of people living in rural and isolated communities who hunger for information. To quote an American venture capitalist, the Net is the Sears catalogue of the new century." (Sears is a mail-order company that has provided a retail lifeline for American farmers for years).

"There's a tonne of capital going into the infrastructure for agriculture knowledge. Sites to look for include Farms.com, Rooster.com and Australia's farmshed.com." Add to this New Zealand's Fencepost.com and RD1.com.

Barchas believes the telecommunications issue has to be helped by some New Zealand government investment.

"It mystifies me why this government and the last don't see the necessity of good connections to the rural community. It's an absolute must for the future. There has to be some significant public investment here."

He also takes issue with the "them and us" attitude some sectors have taken to the place of the primary sector in the knowledge economy.

"The current thinking is that we have to move away from agriculture to the knowledge economy - be independent from agriculture.

"But the knowledge economy is why New Zealand is rich in agriculture."

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