The Govt Stranglehold on our Food Industry and Future

by | Oct 22, 2021 | Opinion

The bubble was always going to burst. It began as we were squeezed into big-box grocery stores to fill our pantries and fridges during the first lockdown. It continued as questions were raised about the security of our food supply chain. It escalated in this longest lockdown yet, when small hospitality businesses and suppliers are running out of steam, energy and capital to keep investing in takeaway services that barely keep the lights on.

Sales data from Countdown shows just how impactful the lockdowns have been on small food businesses. Last year’s lockdowns funnelled enough demand into Countdown stores that their results for H2 in 2020 showed 13.8% growth while New Zealand was in lockdown Level 4 and 3 from March to April. Without that funnelled demand, their 2021 sales shrank by 6% while New Zealanders were relatively free of restrictions. The pragmatist can acknowledge that the larger distribution networks of major grocery chains provided a certain security and compliance benefit.

It’s the same principle as trickle-down economics, but instead of tax cuts to entice those larger businesses to spend cash and generate economic outcomes for their employees – the Government guaranteed them increased revenue, by making them our only option. The cynic in me can’t help but think that in the decisions of March 2020 til now, the Government had to be thinking about how to best protect large sources of tax revenue. Keep the big employers with their doors open. In fact, it’s clear that the Government was happy to do almost anything to keep cash flow rolling through big businesses that were guaranteed to profit, keep people employed and pay tax (in one form or another).

But that 13.8% growth for Countdown came out of the pockets of smaller food businesses, that employ fewer people and potentially pay tax at the lower rates, that were locked out of trading for long periods of time. It’s happening again as we dawdle into Week 10 of restrictions in Auckland and the Waikato. It was robbing Peter to pay Paul while reducing the choices and options for everyday New Zealanders in how they feed themselves and their families. We’re talking about the same local growers, producers, fishers and farmers that proponents of a National Food Strategy would see all New Zealanders more proud of and buying from. We’re talking about the suppliers who are uniquely linked with hospitality supply chains and outside the current grocery duopoly. The same growers who were digging produce back into soil while our supermarket chains were importing frozen produce from Chile, Spain, Europe and Australia.

Don’t mistake me: I’m a fan of Countdown and Foodstuffs. They worked hard and compassionately and are still at the frontlines of an endless outbreak. They created tech solutions on a dime and they kept us safe. They didn’t knock on the door of the Government and demand unfettered access to the New Zealanders’ shopping lists. It’s Government policies that have continued to strangle the life out of the diverse and unique food businesses that are essential for the health of our food system moving forward. There is no long-term recovery for New Zealand without our food and hospitality industry because their slow death is our slow loss of culture, story, history and future.

Anthony Bourdain once said luck is not a business model. It’s something every member of the food community in New Zealand knows. You can’t bet on the rain, you have to plan for the drought. So it cuts deep when people talk about how lucky we were for so long here, how lucky we were to have our economy bounce back.

The rest of us were supported with wage subsidies and encouraging ideas about getting out to support local hospitality when we were released into Level 2. And it worked! Well, sort of. The cash injection kept the cashflow moving and so technically, the economy looks okay. We’re bouncing back! The restaurants are full… as they can be. Except Queenstown. But hey – eventually they’ll come back. Won’t they?

Reader, the economy didn’t bounce back, not in the real timeline of economies that have to be measured in years, not months. It self-inflated on a sugar-high of cash injections and optimism from those who were able to spend. Inflation has begun a meteoric rise, cutting discretionary spending in half. Discretionary spending that looks like takeaway meals from your favourite restaurant, your daily takeaway coffee and even the beloved KFC. 9 weeks in lockdown of various levels has spun venues 20 weeks’ backwards in income that cannot be recovered, let alone the millions lost in the snap lockdown.

That’s where the rubber hits the road in a K-shaped recovery – it’s the axis of the K, the middle class where so much of that discretionary spending happens. It’s the owner-operators, not the big boys, who have already invested their savings into staying afloat this long 9 weeks. The big bubble of bouncy ‘luck’ has burst. This time when we eventually emerge as a country an Orange level framework, it will be right as many of our most precious food businesses are nearly choking.

Bourdain also said meals make the society, they hold the fabric together in lots of ways. He captures a unique intersection of what’s held New Zealand together through more than a few storms – manaakitanga and more specifically, the food and hospitality industries that help us express that manaakitanga. We welcome guests around our tables, we feed the hungry. We build our livelihoods. The roadside orchard stops, the morning markets or local fish truck at the beach. The local grocer. The McDonald’s franchisee that sponsors the local rugby club every season for the last fifteen. These might sound like nostalgic, glossy dreams of a New Zealand without skyrocketing inflation, property prices and child poverty – but they are still us.

We’re a nation of small and medium sized businesses, with large inequities in areas of accessibility, technology and digital transactions. Every time we are pushed into big box spending, the poorest among us end up with fewer and fewer choices.

In Lockdown 2020, we were funnelled into big box businesses for toilet paper, essential track pants and groceries. We speculated that it would change our shopping habits for good and according to Foodstuffs North Island, it has. Shopping data compiled over the last two years resulted in range deletions over the last month that made headlines – from some of our strongest local food producers.

Here we are again in Lockdown 2021. Funnelled into limited shopping choices. I ordered a box of asparagus this week from a local grower. I paid an additional 25% more than I would in a supermarket but the asparagus is twice as fresh, flavourful and twice the size. I’m happy and privileged to know how and to have the technology and online purchasing capability to access that grower. But we’re a nation of small and medium sized businesses, with large inequities in areas of accessibility, technology and digital transactions. Every time we are pushed into big box spending, the poorest among us end up with fewer and fewer choices. The gap between the top and bottom of this K-shaped recovery keeps getting wider where there’s no trickle down at all.

Right now, square metres are the biggest liability after wage costs to any hospitality venue. So the ones that are unable to trade profitably on each square metre will have to consider closing the doors.

No more corporate parties keeping tables full. No more end of year Christmas parties to boost venues through their tourism losses this year. And what happens when inevitably, those Level 2, Orange Light bells toll? There’s no more cash injection to keep the wolves of payroll or landlords at bay. See? Even when you give the cash to the biggest of the players, cash doesn’t make it’s way through the whole eco-system.

Speaking with food and hospitality operators around the country paints a story that is anything but lucky. Whole seasons of tomatoes destined for premium hospitality venues in Auckland might never have the chance to make it to a plate save a box or two those friends and family in the know. Equations have changed for operators in Queenstown, Christchurch and Wellington. When the rest of the country went to Level 2, optimistic hopes were for a 30% year on year drop. That first weekend was 60% down according to ANZ. Four weeks later and speaking with Justin McKenzie of the Eau de Vie Group in Wellington, he’s 42% down across three venues, year on year. With more Wellington civil servants working from home, their weekday clientele are reduced to the TWaT crowd, meaning for the first time they are no longer trading on Mondays. Without those trading hours, hours are also cut or at risk for staff.

“As a group, trade is sitting around the 42-48% below pre-lockdown levels, however the year on year decrease in reality is climbing each week.” – Justin McKenzie, Eau de Vie.

If Wellington’s biggest business (Government) is no longer feeding the coffers of local business enough to keep the doors open 6 days a week, what does that mean for tourist-starved Wānaka or any other destination relying on 1.6 million hungry Aucklanders?

We’ve begun to see what will happen. Big hospitality groups like Nourish, who are more of an investor group with excellent taste, will continue to have to make decisions based on ROI. Right now, square metres are the biggest liability after wage costs to any hospitality venue. So the ones that are unable to trade profitably on each square metre will have to consider closing the doors.

Euro was large and not able to find a sustainable ROI in the new climate. So it’s the first from the Nourish stable to go. From a business perspective, it’s the right thing to do for the rest of the group. What are we grieving? The loss of an industry staple and the home turf of Gareth Stewart, whose reputation, skill and wage cost might be hard to find a home for here in New Zealand in the current circumstances. What’s more of a loss (and a question) is where Uelese Mua, the strikingly talented head chef will go. His simple but striking approach to Pasifika flavours and sharing his Samoan heritage was a hopeful beacon of local food here in Auckland.

The smaller operators will disappear with less acknowledgement. Newspapered windows and more FOR LEASE signs will appear where the family restaurant in your neighbourhood used to be. Our food culture will devolve into what most people will buy, similarly to how Countdown delete and update their core range products. The local butchers will close along with their apprenticeships and we’ll lose knowledge of how to prepare and enjoy those cuts that don’t sell well in supermarket aisles. Goodbye to sustainable ways of eating nose to tail or creating better priced protein options in our butcheries. In every choice and option that disappears, skill, knowledge, understanding, history and the future disappear right alongside. This is the economy of years, after all.

We’ve had 18 months to figure out better solutions and the benefit of watching what worked (and more often failed) in every international food culture and industry offshore. Yet we arrived here in August 2021 with nothing more in the toolbox than meagre subsistence wage subsidies. I’m not prepared to trust in funnelling yet more revenue to the top of the K, because I know it isn’t making its way to our kids missing out on breakfast because they can’t go to school right now. Removing choice, options and reducing the diversity of our food supply chain isn’t how we fix that.

This critical failure is perhaps the most compelling argument for why we need a Ministry of Food and a national imperative at Government level to ensure the safety and security of not just our food systems and supply chains, but our food culture as taonga. From overfishing the Hauraki Gulf to wasting our grain paddocks on non-regenerative dairy farming to ensuring that our Māori and Pasifika food stories are as engrained in the Aotearoa, New Zealand narrative as roast lamb and spuds – this is what we stand to lose and also to fight for.

And that’s the crux you see: it’s the stories, the culture and the heritage that we stand to lose unless we find ways of injecting life and restorative, rejuvenating economic thinking into how we will hold our fabric together. Where we will eat the meals make the society?

About the Author

Tash McGill

Tash McGill works as a strategy consultant in tourism, hospitality and digital transformation. She is co-founder of The Feed, President of Food Writers NZ, Chair of the New Zealand Whisky Association.

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