Owen McShane, Director of the Centre for Resource Management Studies asks "Can we afford to close down so many of our most productive agricultural enterprises?"

"Agriculture is the most important sector in our economy" he said today, "and the productivity of our pastoral sector is second to none. But we seem to be prepared to allow highly productive agricultural industries to be closed down because of poor management of the conflict between the adverse effects on near neighbours of the pig farms, chicken factories, and mushroom farms and composting plants and the like. We will have difficulty establishing bio-generators and bio-fuel fermentation plants in future unless we face up to the need to acknowledge that these intensive biological industries do not make good neighbours for those seeking a rural lifestyle or even carrying out regular pastoral and horticultural enterprise. They certainly will not sit well alongside vineyards and their associated restaurants and tours.

"We have a strange situation" he said "where councils set their cannons against rural residential subdivisions on the grounds that they remove farmland from productive use, but then support those same rural residential landowners when they move to close down some of the most productive agricultural activities in the country.

"We can hardly expect investors to put their funds into new high productivity agricultural and biological ventures if they perceive they are at risk of being closed down because they are expected to meet the environmental standards of an 'arcadia' rather than of an agricultural industrial zone.

"Hopefully, the two short papers below will both demonstrate that a serious problem exists, and point the way towards a solution."

The High Risks of Producing Food

Whenever a rural landowner applies to develop their property to provide some lots for rural-residential development, the planning reports, from both the District and Regional Councils, will express concern about the "loss of productive farmland".

One could be forgiven for believing that New Zealand was highly urbanised and that farmland of any kind was in short supply, even though we are in fact less than 1% urbanised.

However, the plan-writers and the decision makers are clearly ambivalent about the importance of productive ventures to our economy.

For one thing the transfer of high country grazing land into the DoC estate is usually treated as a praiseworthy event – especially by the metropolitan dailies, even though these transfers will eventually take over 2 million hectares out of production, and are putting the whole merino wool industry at risk.

Some readers will remember the Johnson piggery case where the Johnson family who had been operating a pig farm on their Waikato property for decades suddenly found their operation under attack by near neighbours complaining about the smell, and by Environment Waikato who supported the complainants. Finally, the Environment Court ordered the Johnsons to close the pig farm and Waikato lost one of the largest and most productive factory farms in the region.

The only way the Johnsons could hope to recover some of their losses was to subdivide the land into several rural residential lots, but a combination of objectives, policies and rules in the plans blocked their proposals because "the subdivision would have a negative impact on the productive capabilities of the land" or words to that effect. These convolutions make Kafka's world look reasonable.

Anyhow, Environment Waikato is not satisfied with closing down a pig farm. With the support of neighbouring residents, Environment Waikato persuaded the Environment Court, and subsequently the High Court, to effectively force NZ Mushrooms, a subsidiary of Christchurch based Meadow Mushrooms, to close down. The company has been operating for about 54 years, and about 160 workers will lose their jobs.

The problem actually lay with discharges of odours from the company's composting plant which is 3 km from the farm itself. On 12th November, Judge Harland in the Hamilton District Court fined NZ Mushrooms $32,000 and costs for "discharging oudourous compounds to air in breach of its resource consent and section 15(1)(c) RMA. In the August 22nd decision the Environment Court found that "the cumulative effect of unpleasant odours can be considered objectionable, even if individual odour events are not bad enough to be considered objectionable on their own.” The court said operational improvements at the site that had been largely put in place designed to eliminate odour nuisance had “not succeeded in eliminating significant adverse chronic odour effects, or offensive and objectionable effects”. “Neighbours of the site should not be subject to objectionable and offensive odours from it,” the court said. “Even taking into account the substantial beneficial effects of New Zealand Mushrooms’ operations and weighting those benefits as high as we can in our consideration we are of the view that the neighbours should not have to pay the environmental price in the form of offensive and objectionable odours which they presently do.”

An unfortunate pattern is now developing.

In September this year, another Waikato piggery farmer was fined $35,000 for failing to contain odours. The owner, Ken McIntyre, was sentenced "for discharging a contaminate, a strong odour, into the air", the second time he had been prosecuted on similar charges. Judge Melanie Harland, the same judge who fined NZ Mushrooms for a similar offense, said the odour from the farm was "very intense" and the effect "severe."

In April, Environment Waikato and the Matamata-Piako District Council had declined the McKintyre's application to expand the piggery and develop a 300 tonne per day organic waste digestor producing biogas at Keeone near Morrinsville. The McIntyre family wanted to expand their existing 1100 pig operation to the equivalent of 22,000 fifty-kilogram pigs, with the whole new operation having a combined floor area of 42,000 square metres. The piggery would have been the second largest in the country.

It was proposed that the generator would produce electricity from biogas produced by a biogas generator which used piggery waste and industrial waste, such as expired supermarket food and waste from meat and food processing industries. Up to 300 tonnes per day of industry waste would be trucked to the site.

The total investment proposed was $30 million to $60 million.

That is a substantial investment and would have provided a few hundred jobs.

These rulings against the Johnson and McIntyre piggeries, and NZ Mushrooms, may encourage people to buy bargain priced properties next to pig farms, mushroom farms – and Speedways – and then use the RMA to close them down and enjoy the windfall rise in their property values. No compensation was offered the operators of the pig farms or the mushroom farm – or their workers.

We are not attempting to relitigate these cases or to take sides but it seems to the Centre that all these parties are now suffering because of bad management of their rural area in the past. Surely it should not have been beyond the wit of the planners who are so determined to control other land uses, to maintain a decent separation between genuine rural industrial operations and rural-residential settlements – and even regular pastoral and horticultural activity. There is plenty of room out there.

In the meantime, why would anyone invest in high productivity agricultural industries in New Zealand when their future viability is so uncertain? And why would anyone develop a splendid rural estate for raising thoroughbred horses if an offensive bio-digester can set up down the road?

How can we increase the Security of Rural Industry?

The sorry stories of the Johnson's Piggery and NZ Mushrooms indicate something is wrong with the current legislative framework, and with people's expectations of the rural countryside.

Existing use rights have provided no protection to these operations. The common law doctrine that "if one moves to the nuisance one puts up with the nuisance" now carries no weight. The owners have suffered major financial losses but there seem to be no grounds for compensation from any party. The old bogey of "cumulative effects" have gained a new meaning. And demands that we protect productive farming from lifestylers made on Monday can turn into demands to protect the interest of lifestylers from productive rural industry on Tuesday!

Given that these productive enterprises were subject to forced closure from many directions the Centre believes a bundle of changes will be necessary if private investors are ever going to invest in such operations again in future.

2.1 Words Matter.

From time to time someone moves into a regular industrial zone and then complains about the noise and traffic or whatever. The Environment Court responds by pointing out that if you move into an industrial zone you have to expect some noise and so on. Rural zones are home to all manner of rural industries including forests, sawmills, quarries, transport depots, dairy factories, abattoirs, and so on. However, most RMA documents now treat the rural zone as a place of sanctuary featuring rural character, rural amenity, biodiversity, open space, tranquility, outstanding natural landscapes, and ecological units.

Those rural zone economic activities are recognised only if some landowner wants to subdivide and make a profit out of trading in "the natural land resource". In parallel with this "regulatory shift" the English language has changed so that "rural" now means "arcadian" or "pastoral", as in "pastoral idyll".

Hence, I persuaded the Northland District Council to rename their rural zones as "rural industry zones". I would have preferred "rural industrial zones" but that was a bridge too far. The larger the "industrial zone" the safer are the industrial enterprises. A newcomer who has moved into a predominantly pastoral area and then complains about a single activity, is more likely to succeed than one who has moved into the middle of a large rural industrial area and then complains about the ambient noise.

In many, if not most American States, the rural zone is not actually a zone but is treated as an "open zone" in which any use can be proposed with suitable standards and mitigation.

Many of our Regional Councils, and especially those committed to Smart Growth (or other forms of Dense Thinking), now insist that urban activities (whatever they are) must be kept behind the Metropolitan Urban Limit so that the "rural arcadia" can maintain its purity of character. The Portland region, in Oregon, allows forestry in the rural zone but timber mills must be located in the urban area.

In the meantime it would be useful to see District and Regional Plans identify rural zones as rural industrial zones so as to discourage newcomers from moving into such industrial areas in the first place – or at least to carry out full "due diligence".

2.2. Cumulative Effects

The present doctrine of cumulative effects would probably have stopped the village of Auckland from ever growing into a city.

Section 3 of the Act should be amended to:

(d) Any cumulative effect on land, water or air, which arises over time or in combination with other effects – regardless of the scale, intensity, duration, or frequency of the effect, and also includes— [etc]

2.3 Moving to the Nuisance

A well known concept in common law holds that one cannot "move to a nuisance" and then complain about the nuisance. If you purchase a house next to an existing business establishment, it is up to you to make sure that you understand the kind of noise and odours produced by that establishment and to ensure that you will be able to live with that establishment as your neighbour.

It is considered to be unfair to the existing business for people to move next to it knowing full well that it is an operating establishment, and then complain afterwards that they cannot tolerate the noise, odor or other problems relating to the establishment. That is why they say that one cannot move to a nuisance and then complain about the nuisance.

Often, people do not conduct due diligence before they move next to these kinds of operations in the countryside. The concept of fundamental fairness is just as important here as in any competing legal doctrine. Fairness dictates that if you do not like the manner in which a business is conducted, don't move along side it.

Factories and industrial establishments after all have a right to exist. So do operating farms, churches (whose bells bother some people) and firehouses. It is unfair for the newest resident on the block to harass these institutions by complaining that he or she cannot tolerate the noise and other normal problems associated with regular operating establishments.

So the common law position is that where a person specifically purchases property knowing that a given operation is located nearby, the "moving to the nuisance" doctrine will usually prohibit injunctive relief. Consequently, if a person moves into a house located next to a cricket or rugby field, this doctrine may prohibit the person from seeking relief from the bright lights, traffic and noise.

However, the common law is simply Court made law, and the courts have made sufficient law under the RMA to make it clear that this doctrine no longer applies. This is especially true if a local authority has changed the rules in the planning documents in recent years so as to render the original "nuisance" no longer acceptable.

Probably the best that can be done under the present legal framework is include a new section or subsection in the RMA requiring decision makers on applications or submissions to have regard to whether the complainant has "moved to the nuisance" – in suitable legal language.

2.4 Encourage Negotiated Rights

Since the Second World War New Zealanders have been governed by Town and Country Planning and Resource Management law which embodies the notion of zoning as the normal restriction on land use in all environments, urban, suburban and rural.

Consequently, land owners and company managers have come to expect their rights to be both protected and restrained by administrative processes which are described and enforced through District and Regional Plans.

The Centre has found that most landowners and managers find it difficult to imagine any alternative. But even in those States of America where land use zoning is in place, rigid zoning is normally restricted to urban areas. The rural areas are in effect an open zone.

Consequently, American land owners have learned to protect their operations by negotiating rights with their neighbours. For example Factory Chicken farms are required to spread their waste on pasture at a permitted rate of application. Hence, the chicken farmer surrounded by beef farmers will negotiate a deal whereby the chicken farmer has guaranteed access to the beef pasture to spread the waste, and simultaneously purchases the development rights over the beef farm for a reasonable sum of money set by negotiations. The farmers want the chicken manure too.

This means both the beef farmer and the chicken farmer have security over their land rights and benefit because their rateable value is not suddenly increased by an assumed right to subdivide for rural residential development.

At some time in the future, either when both the chicken farmer and the beef farmers want to retire, or their properties are surrounded by rural residential development, both can cancel the contract by mutual agreement, and develop their land as they see fit or sell it to a developer.

This seems to be an admirable solution because the land owners are in control of their own destiny. Similar agreements are routinely struck between quarry operators and surrounding farmers.

But in New Zealand the factory farmers and quarry owners are reluctant to pay for their security of tenure and have a touching faith in their councillors to protect their interests. They do not seem to understand that many officials in councils are hostile to rural factory farming as an offense against animal rights, and are equally hostile to "the raping of the earth mother".

One of the objectors to NZ Mushrooms estimates that their legal defence including witnesses cost about $500,000. Several years ago an offer of half a million dollars for development rights over the adjoining land would almost certainly have been readily accepted and indeed security could probably have been secured for much less because of the rates relief to all parties.

One can encourage this approach by adding some suitable wording to the Act but these encouragements would need to be reinforced by policy statements and good practise notes requiring such negotiations to be examined as part of the section 32 analysis.

Old habits die hard and it may require a few more legitimate businesses to be closed down and a few more hundred people thrown out of work before landowners decide to take responsibility for their future security.

In the end, freely negotiated private contracts with the neighbours who share a common interest, offers far more security than any regulation of land use imposed and enforced by local or regional government. And purchasing limited rights is more cost effective than money spent on lawyers and witnesses without any certainty of outcome.