Agri- business Agenda 2019

Acknowledge Evaluate Accelerate

June 2019 Introducing the 2019 KPMG Agribusiness Agenda

This year’s KPMG Agribusiness Agenda marks an important milestone. It is the 10th year we have published the Agenda (and the 16th report we have released). To celebrate this landmark, this year’s report is a little different.

Acknowledge Evaluate Accelerate Page 7 Page 33 Page 55

As we approach the end of the While the sector has set a More analysis is becoming decade, we reflect on how the course to a more ambitious available to suggest that agri-food sector has evolved future, we recognise that in change today is faster and and acknowledge the progress a global environment where more profound than at any made. Through highlights from rapid and disruptive change has previous point in history. The each of the previous reports, become the norm, there remains challenge is that change is only we celebrate the progress made much to do. We have again taken going to get faster. The agri- in transitioning from volume to the pulse of the industry through food sector has been slow to value, in recognising the license our annual Priorities Survey, embrace digital disruption, but to operate is a privilege, and in coupled with conversations with the fusion of technologies of establishing greater trust across industry leaders, to understand the fourth industrial revolution the industry. We revisit some the current state of the nation. has enabled the first Global of the case studies we have The overriding theme from our Agrarian Revolution. Against this featured over the last 10 years, conversations is that attitudes background, the sector has no to update on the progress these and expectations on the industry choice but to lean into disruption organisations have made in are lifting continually; whether and work out how it is going to creating a prosperous future that relates to how land is used, play the infinite game. A game for themselves, and all greenhouse gases mitigated, where there are no finish-line New Zealanders. customers engaged or debt winners; only those that keep facilities gained, the message playing and those that was clear: what was acceptable drop away. even last year will not be enough to maintain relevance in the future. KPMG Agri-Food: Ten years of helping fuel New Zealand’s prosperity

KPMG New Zealand has always In April 2010, we released the first We have supported the Te Hono worked alongside many of New Agribusiness Agenda. The response Movement since its inception. Part of Zealand’s leading primary sector was immediate and confirmed to us this relationship included arranging for businesses, given the critical role they that there was demand for independent KPMG’s global leader on climate change play in our economy. We, like many thought leadership that looks beyond to attend the first Stanford bootcamp other businesses, assessed all aspects movements in commodity prices in 2012, and we have supported each of our operations in the midst of the towards global trends and opportunities bootcamp since. Global Financial Crisis, and recognised for food and fibre producers. We have been a partner in the project to that there were some systematically We recognised that for our thought create an Agri-Food Experience Centre at important sectors of our economy leadership to be valuable it had to be the ASB Farm at Mount Albert Grammar that would be key to recovery and easily accessible to everybody. We have School in Auckland since it was initiated. long term growth. always made the Agenda available for Our ambition is to provide an experience free on our website, and spent time of the sector to 25,000 Auckland Of these sectors agribusiness stood out. traveling the country to explain our students a year. It was a sector inherently connected work to various audiences, be they to our land and water, central to our It has become apparent that innovation school groups, industry or company ability to earn export revenues, linked and technology will play a significant conferences, producer days or board to growing global demand for food role in the industry’s future, and we meetings, to help people to recognise and fibre products and one where key have developed relationships with industry trends and how they can decisions makers were largely based organisations that are supporting our respond. We have travelled from the Far here, and not in Sydney, Melbourne, innovation ecosystem. Our partnerships North to Invercargill talking to thousands Hong Kong or London. It was also with SPROUT and Agritech New Zealand of people over the last decade. a sector we identified as ignored by enable us to explore ways to bring our analysts, because it was largely owned We recognised the important role that knowledge to organisations, developing through co-operatives and trusts rather Fieldays plays in connecting people in technology that will enhance than listed entities. the primary sector and we worked with industry success. them to create the KPMG Agribusiness As we started to talking to industry As part of highlighting the impact Leaders Breakfast in association with leaders to enhance our understanding of that change is having on the global Fieldays, held on the first morning of the key issues facing the sector it became food system, we were delighted to National Fieldays. This event has become apparent that organisations were facing partner with Plant and Food Research, an important part of the Fieldays similar issues and challenges. These AGMARDT, Food Valley and Waginengen experience and we have been proud were areas where we could draw on UR to enable a group of sector leaders to be a sponsor of Fieldays since 2011. KPMG’s global knowledge base to bring to tour the Netherlands in February 2019 relevant insight. Following the success of our annual and be exposed to the speed and extent breakfast at Fieldays, we have been of change shaping the industry in As a consequence we invested in delighted to partner with the Canterbury that country. providing knowledge and thought A&P Show to create a similar annual leadership to the agri-food sector to Ultimately our purpose is to fuel New breakfast event with a strong South assist it in realising its full potential, Zealand’s prosperity for the benefit of Island focus. for the benefit of all New Zealanders. all New Zealanders. Given the significant As part of our strategy to share insights impact the primary sector has on our First off the rank was making our and support the development of people economy and its potential to capture weekly internal news summary, Field across the primary sector, we have more value from rapidly changing Notes, available to clients and contacts. developed relationships with the Rural global markets, we are committed to This newsletter is now sent to more Leadership Trust (which runs the Kellogg continuing to play our part in enabling than 5,000 contacts each week and is and Nuffield programmes) and the Agri the industry to understand and respond supported by its own web portal (that Women’s Development Trust. to the opportunities in front of it. is soon to be upgraded) and an app that is available on the Apple AppStore and Google Play. ‘10 ‘ 11 ‘12

Agribusiness

KPMG Agribusiness Agenda AGRIBUSINESS The big opportunities and challenges facing New Zealand agriculture Reflections on the views of industry leaders KPMG Agribusiness Agenda 2012

People unlocking the future

kpmg.com/nz/aa2012

‘13 ‘13 ‘13

CANTERBURY A&P SHOW

‘13 ‘14 KPMG AGRIBUSINESS AGENDA 2014 Vol.2 A ‘14

Agribusiness Agribusiness Agenda 2014 Agenda 2014

VOLUME 1 VOLUME 2 Facilitating growth in an uncertain world Exploring our global future

Leading New Zealand’s Leading New Zealand’s primary industry into primary industry into a prosperous future. a prosperous future.

kpmg.com/nz kpmg.com/nz

‘15 ‘15 ‘16

Volume 2 Emerging Leaders Edition: The future is in their hands Agribusiness Agenda 2016

Volume 1: Thriving in exhilarating times

KPMG New Zealand

kpmg.com/nz

‘16 ‘17 ‘18

Agribusiness Agribusiness Agenda Agenda 2018

2017 We need to tell you our stories Layering our products with verifiable attributes The recipe for action

June 2018 KPMG New Zealand

kpmg.com/nz kpmg.com/nz

Agribusiness Agenda 2019 6

Ministerial foreword Hon. Damien O'Connor Minister of Agriculture, Biosecurity, Food Safety and Rural Communities. Damien is also Minister of State for Trade and Export Growth, New Zealand.

The food and fibre sector is For this reason I remain committed Each sector has its own challenges in a very strong economic to the ‘Ko Tātou This Is Us’ campaign and opportunities. What we need position. Forecasted growth which is working to engage New is a shared vision and I set up the Zealanders in the biosecurity system. Primary Sector Council in 2018 to for the sector is 7 percent for We need all New Zealanders playing do just that. It is not an easy task to 2019, stemming from continued their part to keep unwanted pests and bring together traditionally fragmented innovations, developments and diseases out of New Zealand. industries to support common outcomes and objectives. The Council exporting of high-value products Part of the campaign is the recently is engaging industry on its draft vision to our overseas markets. released in-flight biosecurity video, and I anticipate a final version being which reminds all visitors to the presented later this year. KPMG’s Agribusiness Agenda country, and Kiwis returning home, acknowledges progress achieved over about the importance of protecting The KPMG Agribusiness Agenda is a the last 10 years. This shows huge Aotearoa New Zealand from unwanted valuable contribution to the industry’s increases in tradeable export dollars pests and diseases. discussion of disruption, innovation with both China and the rest of the and adaptation. The Agenda discusses The targets of the Zero Carbon Bill world. New Zealand has increased both the acceleration of both global farming will require significant investment the value and volume of our products. systems and trends, such as vertical and changes in how some of our I want to encourage further growth in farming, and heightened awareness food and fibre sectors operate. It will value-add strategies to grow our export and knowledge of consumers and mean boosting innovation to produce value more. what they are demanding from their technologies that will help us get products. Understanding these Biosecurity is front of mind for there. The Government is committed trends will give our food and fibre agribusinesses, it was again ranked as to making this a just transition and will sectors a strong base from which to the top issue in the KPMG Agribusiness support the food and fibre sectors to encourage further innovation and value Agenda. A robust and well-funded meet these targets. biosecurity system is essential for creation, and ensure a prosperous and our food and fibre sectors, and for the Farmers and growers are calling sustainable food and fibre sector well wellbeing of New Zealand. for certainty over what is coming, into the future. which is highlighted by KPMG’s Biosecurity remains a priority for Agribusiness Agenda. me. We continue to face significant challenges, including the threat of Simply providing an environmental Brown Marmorated Stink Bug, the target they need to meet is not enough recent fruit fly discoveries in Auckland, – we need to work with our food and and – especially - the ongoing work fibre sectors to get there by providing to eradicate the cattle disease the necessary tools, information and Mycoplasma bovis. advice in practical ways that work for them. It’s important we give farmers and growers the confidence and assurance that there is a future in the food and fibre sectors.

7 Agribusiness Agenda 2019

Agribusiness Agenda 2019 8

Acknowledge acknowledge evaluate accelerate

9 Agribusiness Agenda 2019 Celebrating a decade of progress

One of the pleasures of preparing for this year’s 10th anniversary KPMG Agribusiness Agenda is the excuse to revisit each of the 15 Agenda publications we have released and reflect on the conversations that they have been based on over the last decade.

Being given an excuse to reflect on One of our contributors this year an obligation to ensure that our natural the highs and lows of New Zealand’s suggested that too often the Agenda capital is handed onto the next generation agri-food sector (or agribusiness has focused on the challenges facing in a better state than it was received from sector as it was a decade ago) has the sector while underplaying the the previous generation. We believe that been a rare privilege and has brought successes that have been achieved, and most in the industry now recognise that back memories of vigorous debate this has, unintentionally, contributed to land is borrowed from our children rather and exceptional moments of insight. the pressure that many in the sector than inherited from our parents. The enthusiastic and open way that feel they are currently operating under. From our perspective, one of the biggest contributors have engaged with the They added that foreign visitors regularly changes across the industry has been the Agenda and have been willing to share observe how hard we are on ourselves progress in building strong connections their personal perspectives on the over relatively minor weaknesses and the between leaders and influencers across strengths and weaknesses of their lack of credit we take for the world class the industry which are starting to foster own organisations, as well as the activities undertaken around the country a wide range of innovative collaboration. industry, has made these reports a every day. When we started running our Roundtable unique record of the sector’s evolution Having had the opportunity to review discussions it was not unusual for many over the last decade. the Agenda’s back catalogue, it became people in the room to be meeting for the In the blur of everyday life it is often apparent that real and measurable first time. That is not the case today; it is easy to forget the progress that the progress has been made in transforming more likely that attendees are connected sector has made. Ten years ago there the industry in many ways over the with each other and doing business was no question the principal metric last decade. together. There are many initiatives that across the sector was volume and there have helped to deepen relationships There is no question that we add more was no question that more was better. and trust, but there is no question that value to our products today than we The industry’s performance in respect they are enabling the industry to take did 10 years ago through the increased of the environment, animal welfare, advantage of more of the opportunities in sophistication of processing systems, the water, labour and other similar matters front of it today than would have been the formats that our products are delivered were not things to discuss publicly as case 10 years ago. to customers in, the brand stories told being open on challenges would, it was and the people we surround the product The connections built between perceived, be used against producers in with. We are much clearer on our place Māori organisations and traditional their quest to secure more volume. We in the world. We recognise, that given agribusinesses are starting to deliver were not sure the industry was ready cost structures and the expectations benefits across the sector. A key learning for an independent assessment of its of the community over the use of the is improved understanding of the long opportunities and challenges but decided natural environment, that our place in term perspectives that Māori take when to give it a go and the rest, as they say, the global food system is supplying making decisions. The agri-food sector is history. premium products to the most discerning has historically struggled to think much New Zealand is a very different country consumers around the world. beyond the end of the current season, today and the agri-food sector has played So, recognising that there is a fifty or Huge strides have been taken in a significant part in shaping the new one hundred year time horizon that is understanding that the use of the land Aotearoa New Zealand. While it is fair to relevant to decision making if you aspire and water in New Zealand is a privilege say that commodity prices remain closely to be a good steward of your land and that the wider community grants to correlated with export returns, this broad your community brings a new focus to producers, rather than an irrefutable generalisation fails to acknowledge decision making. It has also become right to farm that is passed from father the significant effort, innovation and apparent that this long term focus to son. Our contributors today recognise investment that has been made in resonates with customers, particular that the privilege is one that needs to be shifting the industry from a volume in Asia. treasured rather than taken for granted basis to a value lens. and, more importantly, that it comes with

Agribusiness Agenda 2019 10

The industry has also made progress and use it to explain to customers why in lifting the perspective of some their products are better choice than participants beyond the farm or orchard those produced elsewhere. The State gate to help them understand that they Government in Tasmania has backed are an integral part of a value chain this initiative, ensuring it is properly that ultimately provides a food or fibre funded, and as a consequence it is product to a consumer somewhere in building confidence and creating value. the world. While much remains to be In a world were change is unrelenting done in fully connecting every producer there is always more to be done. to their consumers, encouraging However, it should never be overlooked them to think of themselves as food that much has already been done. producers is an important first step. Everybody connected with the industry This forces farmers and growers to should be incredibly proud of the think more carefully about what they progress that has been made over are producing and why and the care that the last decade. Recognising publicly needs to be taken. While we would like and proudly the contribution that our to see everybody across the industry food and fibre producers make to having the opportunity to be immersed the economy, in the same way that into the markets their products go Tasmania celebrates its differences, to and to meet the consumers that will offer a strong message of support ultimately appreciate what they to those that have found themselves produce, the efforts made in the last farming in a fishbowl in recent years. decade to provide clearer market signals Their efforts are valued and appreciated will help to accelerate value capture. by the wider community. Despite the progress the industry has made over the last year, confidence is currently low. Efforts to encourage farmers and growers to celebrate their Ian Proudfoot role as food producers have not fallen National Industry Leader, on deaf ears but the positive messages KPMG Agri-Food New Zealand have on occasion been drowned out by a chorus of criticism, much of which has Global Head of Agribusiness, been unbalanced. If you have been told KPMG International for years that you are the past, that you are bad for the environment, that you underpay your labour, even if you know these claims to be inherently wrong many end up believing them. It is this long term erosion of confidence that needs to be reversed. A number of contributors referred to a recent conference they had attended in Tasmania. Tasmania as a state has been told for decades by the rest of Australia that it is different. Rather than continuing to stew on the put downs, they have decided to celebrate their differences and taken pride in the competitive advantages they deliver. acknowledge The food production sector in Tasmania has built a highly engaging provenance story on the back of these differences evaluate accelerate

11 Agribusiness Agenda 2019 New Zealand – A different country 10 years on

Aotearoa New Zealand is a very different country to 10 years ago. We have grown in presence, and become more diverse. This infographic shows a country that has been economically successful - growing exports, tourism and wealth. This same growth, however, has stretched our infrastructure and challenged our environment; and has not been shared equitably across the whole population.

59,995 REST OF WORLD $42.979 45,932 6.9% 6.1% $38.196 ND 80.9 79.23 [2]

NZ$ % OF EMPLOYED POPULATION SCORE [RANK] GDP per % NZ working Legatum capita population Index of Most with jobs in Prosperous primary sector Countries

CHINA 42.68 $13.928 $4.825 27.74 2.4 TH -0.3 23rd18 NZ$BN NZ$BN % RANK Exports Annual WEF Global New Zealand of Food and productivity Competitiveness tradeable Fibre Products improvement Ranking exports Agriculture, Fishing and Forestry

Data 2010 Economic 2018 Environmental 2018 Social 2018

Agribusiness Agenda 2019 12

9,864 32,563 10,151 27,584 37,729 38,881 184,211 108,932

KILOTONNE CO2 EQUIVALENT HECTARES ANIMALS 000’S ANIMALS 000’S Annual Land covenanted Total cattle Total sheep Greenhouse to the nation in New Zealand in New Zealand Gas Emissions through QE2 Trust from Agriculture 720,000 245 794,440 ,000 TH 173 4,888 75.96 ,000 4,353 72.12 [24]

NUMBERS SCORE [RANK] NZ$M HECTARES New Zealand Yale University Government Irrigated land population Environmental investment in New Zealand Performance on biosecurity Index in budget 3,863,217 1,361,000 152,000 2,525,044 87 93 [1] ND 183,000 1,095,000

PEOPLE SCORE [RANK] PEOPLE NUMBERS Incidence Corruption Children living Overseas of obesity in Perception in low income visitor arrivals

New Zealand Index households acknowledge

Aotearoa TH New Zealand is a young country. We th 78.5% are a country with growing 5 78.4% pains, but one that is becoming clearer on the values that are evaluate RANK % LIVING IN URBAN AREAS WITH most important to our society. The The Good POPULATION OVER 10K evolution of the primary sector over Percentage of the last decade positions our agri-food Country New Zealand industries to play a significant role Rankings in a maturing country; one that population living aspires to both care for its in urban areas citizens and contribute accelerate to the world.

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Agribusiness KPMG Agribusiness Agenda The big opportunities and challenges facing New Zealand agriculture Reflections on the views of industry leaders The big opportunities and challenges 2010 facing New Zealand Agribusiness

Released on 19 April 2010, the He also supported the report’s first KPMG Agribusiness Agenda description of water resources as On co-operative structures… hit a quiet news day. It got an NZ’s liquid gold. We consider that co-operatives immediate response. Federated The report provided commentary have the ability to deliver around 12 themes grouped under: the future for New Zealand Farmers suggested the report agriculture; however they need overlooked micro on-farm production methods, market realities, sustainability, and rural infrastructure. to be flexible in how and where issues by delivering a strategic It argued that New Zealand’s future they source capital, and non- helicopter view which pushed was tied to securing better prices supplier structures may need to the ‘clean green’ issue. However for the products we grow rather become a more common source they did concur with our views than trying to compete with low-cost of capital. on the importance of profitable producers on volume. On volatility… farm businesses, investing in We highlighted that the intangible Volatility has been a fact of life broadband, and water storage. connection between New Zealand and for the agribusiness sector and its clean-green-pure experiences and we expect that as demand and The report was tabled in Parliament products; which had developed through supply positions in global markets as part of a question to the Minister the country’s nuclear free positioning, become tighter, further price for Communications and Information, 100% Pure tourism campaign, and shocks will become an increasingly Stephen Joyce, on the Government’s the Lord of the Rings. While this common phenomenon. investment into rural broadband. David was benefiting the industry, it was On sustainable business… Carter, then Minister of Agriculture, at risk. Noting claims of ‘commercial Industry leaders must be referred to the report in an address greenwash’, the report suggested prepared to put their personal to DairyNZ’s Farmers Forum, agreeing the industry must urgently ensure it views on climate change to one that New Zealand can no longer was using practices consistent with side, and think about sustainability compete as a food exporter on the the golden goose, New Zealand’s as a business opportunity rather basis of low prices. global image. than purely a cost.

Commodity prices have remained volatile across the decade -

but have trended up 1 JAN 2010 – 31 DEC 2018

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75

50

JAN 10 JAN 11 JAN 12 JAN 13 JAN 14 JAN 15 JAN 16 JAN 17 JAN 18 DEC 19

New Zealand Meat, skins Dairy Horticultural Forestry Seafood Dollar Index and wool products products products

Agribusiness Agenda 2019 14

2 011 Realising global potential

The second Agenda was most in the industry have recognised prepared against a backdrop these realities, and now spend far more On R&D spending... of high commodity prices, of their time and effort targeting the Equalling or exceeding the attributes they can control. biosecurity issues, extensive OECD R&D benchmark must be achieved in the fullness of time. free trade negotiations and the The Agenda suggested that successful Christchurch earthquakes. Leaders countries, like successful companies, On water... develop a vision of what they wish to recognised the significant growth Without the necessary achieve and build plans to deliver their investment in storage and opportunities available to the vision. We suggested that the industry infrastructure, our water will sector but also highlighted that was ready for a national conversation remain a great natural asset rather most of their time was spent on its 50-year aspirations; so that policy than a great economic asset. choices and strategies on priority talking about issues they had On foreign investment... little ability to influence (including issues like biosecurity, market access, sustainability and governance could As a small country with a limited exchange rates, commodity be made within an aspirational growth amount of equity available, we prices, and the weather). framework. It is pleasing that the Primary will always need foreign capital Sector Council is finally leading this to take advantage of good ideas. Drawing on Jim Collins’ book, Good to conversation and will deliver a consensus Great, we suggested that the primary vision for the industry later this year. sector needed to face up to some brutal facts if it was to move forward and The Agenda also saw the debut of the realise its potential. Specifically, that industry leaders’ Priority Survey, to customers have significant power; that identify and rank the most pressing New Zealand is a small producer on issues facing the sector. We saw a global scale and the world does not biosecurity assume top slot, which was owe us a living; and that markets are not surprising, given that the kiwifruit consistently volatile. It is fair to say that sector was starting to recognise the full impact of the PSA incursion.

Timber leads the way in volume growth over the decade -

Seafood, Pulp and Wool have declined 2010 - 2018 acknowledge 180

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2010 2011 2012 2013 2014 2015 2016 2017 2018 accelerate

Timber Wine Dairy Horticulture Meat Meat Byproducts Seafood Pulp and Paper Wool

15 Agribusiness Agenda 2019

AGRIBUSINESS KPMG Agribusiness Agenda 2012

People unlocking the future

2012 People unlocking the future kpmg.com/nz/aa2012

Underpinning the 2012 Agenda The Agenda also explored the The need to amplify limited R&D was the recognition that traditional effectiveness of ‘industry good’ budgets by collaborating with volume-based, production-push activities and the innovation system. domestic and international partners was highlighted; as was the need The sector’s historic success has been models were not going to create to develop an ecosystem to support built on intergenerational investments the future that the industry innovative start-up businesses. aspired to. The report argued made in the 1960s and 70s. There was concern that levy arrangements did not that success would come from enable similar investment to be made connecting passionate people into the platform for future success. On broadband... with the tools they need to build Our work highlighted strong support for There is concern that the strong customer relationships; levy investments targeted at areas of Government’s focus is on thus creating sustained prosperity market failure. delivering more entertainment options to urban voters, rather for all New Zealanders. Since 2012, the industry good sector than leveraging their investment has transformed. New levies have been to create economic value. We challenged industry leaders on introduced and the organisations have the need for an industry strategy. become clearer on how they contribute On trade... More than 80% considered there was to supporting their funders to prosper. Industry leaders express concern a benefit in articulating a vision to that the Government was The Agenda also highlighted that accelerate attempts to lift the value of focused on volume over value New Zealand business relies heavily New Zealand food and fibre products, in respect of the wide range of on government funding for innovation. and to attract talented people into the trade negotiations in progress. sector. The vehicle to create such a With government’s reticence to take strategy was far from clear; although big R&D risks (as failure doesn’t play On Halal food… we highlighted that the most important well in the newspapers), the message The attributes of New Zealand component to success would be the was clear: companies need to take the production align superbly with mix of people selected to lead the lead on bold innovation strategies. We Halal, and we should aim to be exercise, something demonstrated need to rely on more than the ‘eureka the world leader in this market. when Minister O’Connor appointed moment’ and No. 8 wire for success. the Primary Sector Council last year.

PASSIONATE PEOPLE TALENT + MOTIVATION + EDUCATION + COMMITMENT

CLEAR VISION COLLABORATION FOCUSED & STRATEGY INNOVATION

GROWTH IN INDIVIDUAL, INDUSTRY AND NATIONAL WEALTH

Agribusiness Agenda 2019 16

The State of the Nation 2013 Maintaining people- Vol 1 & 2 powered performance

Volume 1: The State Volume 2: Maintaining people- of the Nation powered performance On collaborating with the wider the community... The 2013 Agenda was published New Zealand’s agricultural If we can have broad agreement in four instalments across success has been driven by around how New Zealand’s the year, each covering a talented and passionate people natural assets will be managed and utilised for our collective different theme. We introduced since commercial farming started in this country. social and economic benefit, case studies to celebrate that is something worth getting organisations striving for step In this volume, we suggested the out of bed for. change in their organisations. industry’s X-factor was the capability, On a Capital Gains Tax... know-how, passion and drive of our There is a relatively widely-held Volume 1 sought to understand people – which competitors cannot view [that this tax] has the what motivates those who work easily replicate. The challenge was potential to level the playing across the primary sector; and securing enough people with the field in respect of investment more fundamentally, why do we necessary skills to not only replace options behind and in front of do agriculture in New Zealand? retirees, but to enable long-term the farm gate. Our attempt to articulate this purpose growth. The report also noted that On the role of women... was captured as “enhancing the lives the skills needed are changing, as The under-representation of of New Zealanders and international new technology is adopted and the women in leadership roles in consumers through utilising our regulatory environment evolves. business in New Zealand and in world-class natural resources The Agenda highlighted there is the global agri-food sector more sustainably to provide prosperity to no single solution to securing the generally, does not justify the our society and a commercial return necessary talent to maintain and industry continuing to ignore the to those investing capital.” accelerate our people-powered transformational contribution that The report highlighted that the performance. One suggestion was that 50% of the population can bring contribution the primary sector makes industry organisations need to position to it. to New Zealand is not well understood roles as opportunities that should be On attracting urban youth... by wider society, and that the onus sought-after by the next generation. Attracting young and unemployed was on the industry to make the We highlighted the development of the people in our cities to jobs in the effort to engage more substantively St Paul’s Collegiate School’s Centre of rural sector would alleviate this with the public. The industry stood to Excellence for Agribusiness, and the wasted economic potential. benefit from better regulation, reduced associated NCEA programme that is inconsistency and lower costs; while a now being used in 56 schools. better-performing industry would pay (See the case study on page 17). more tax to enhance social investment The report also highlighted the in assets such as schools, roads and importance of investing in people acknowledge hospitals. The report suggested that (both employment conditions and open conversations exploring the development), which has started to factors that are most important to become a fundamental measure of stakeholder groups is critical, as well whether a business is truly sustainable. as ensuring the facts are presented in It discussed the need to provide clearer an engaging way (something that has pathways into the industry and farm become more critical with the rise of ownership. As Professor Jacqueline social media). Rowarth noted in her Foreword, getting this right will ensure primary production

professionals will choose to stay in evaluate New Zealand and thus realise the vision of a dynamic, vibrant industry. accelerate

17 Agribusiness Agenda 2019

2013 Evolving a truly customer-centric industry Vol 3

This was the first Agenda to We argued that the ability to capture focus exclusively on a theme a greater share of our products’ value On the realities of adding value... that has become central too relies on us actively promoting relevant A winning strategy is easy to attributes of the product. We suggested much of our thinking over the last write, but realising it in practice it was critical organisations invest in is far more difficult. Challenges at decade – namely, the key role getting ‘boots on the ground’ in their every step of the journey include that consumers play in shaping markets; to better understand their changing customer expectations, markets. The report suggested it customers, and identify the most working with regulators, is not New Zealand’s place to be effective way to articulate their story. responding to competitors and ‘all things to all people’, but that This Agenda featured case studies on taking producers with you. organisations need to be very Zespri, Comvita and NZ Winegrowers On immersing in markets... selective about the opportunities to showcase the investments Having people on the ground they pursue. Success should be organisations were making, both in offshore markets, with daily individually and as industries, to measured by how effectively an exposure to a country’s culture, build sustainable relationships with enables early detection of organisation services their key customers. As John Brackenridge noted emerging trends which can markets, rather than the total in his Foreword, New Zealand has be fed into product and number of countries they sell to. woken up to both our vulnerability and marketing strategies. the amazing opportunities in front of us. What has got us here, however, will not get us to where we want to be.

When we first spoke to Peter In 2018, more than 1,000 students across “We wanted to develop material along the Hampton, St Paul’s Collegiate’s Deputy 56 schools studied Agribusiness at NCEA entire value chain, and improve the public Headmaster back in 2013, the school Levels Two and Three. As a shining example perception of primary careers and what was preparing to open the doors to of successful collaboration between they can offer our tyouth,” says Peter. its ground-breaking new Centre of education and business, the initiative had And the effect of the new curriculum Excellence for Agricultural Science industry support from the start. Drawing has rippled even wider. St Paul’s Collegiate and Business. together both rural and urban educators through the financial support was another key to success. Fast-forward six years and the Hamilton- of its business partners is also providing based school has created a new NZQA “From early on, we had support from free resources for all New Zealand approved curriculum - Agribusiness - the likes of DairyNZ, Beef + Lamb, and teachers, free teacher training, and is designed to attract some of our best and Gallagher,” says Peter Hampton. “We creating links with agri-related programmes brightest into the primary sector – that’s also engaged with other schools from in New Zealand universities. gaining traction throughout New Zealand. throughout New Zealand; both rural and Their ambition is to increase participation urban, ranging from big public schools The University Entrance (UE) approved to 200+ schools and 5,000+ students by to smaller private schools.” achievement standard based courses were 2021; feeding the primary industry with gazetted in 2018, following five years of The curriculum covers a wide range a talent pipeline of motivated and career- planning with NZQA and the Ministry of of topics relevant to the next-generation focused students. Education. In its first year, the programme of agri-producers – including supply won a Prime Minister’s Education chain innovation, value-add products, Excellence Award; as well as being short- future proofing and trends such as listed for an International Schools Award. alternative proteins.

Agribusiness Agenda 2019 18

2013 Balancing the needs of the environment, Vol 4 communities and businesses

The industry relies on everybody This understanding would enable doing the right thing every organisations to paint a more On the full environmental costs... day. It only takes one person, compelling picture of how they are An estimate of the direct and contributing to making the country a accidentally or intentionally, to indirect environmental costs better place for all New Zealanders. of food and fibre production abuse an animal, contaminate amounted to 224% of global a stream or underpay their In addition, we noted that customers are becoming increasingly interested in EBITDA in 2010, or USD199 billion, workers and the reputation of how sustainability issues are managed. the highest of any sector of the the whole industry is put at risk. Open, honest engagement around economy. The final volume of the 2013 these issues builds trust and can assist On biotechnology... Agenda addressed the increasing in securing a premium in market. The industry is currently stuck in focus being placed on the In 2013, many industry leaders still a no-man’s land between a GM industry’s license to operate. saw community and consumer interest and a non-GM future; which as a threat. Over the past five years, provides neither the production The report argued sustainable however, we have observed more benefits nor the market benefits businesses are not grown from rules contributors welcoming scrutiny; given that could be derived from having and regulations; but from individuals that it sharpens an organisation’s focus a clear strategy either way. and organisations standing up and on how it can benefit all stakeholders. making practical contributions to We also sensed in 2013 an emerging restore the environment, strengthen perspective that is now commonly their community, or enhance being articulated by many in the the economy. The need to better industry. Namely, that economic value understand the urban mind-set in alone is not a compelling enough relation to issues like water, land use, purpose to guide strategy – the industry animal welfare and biotechnology was needs to articulate a bigger ‘why’. highlighted during the Roundtables.

Director Diversity in Boardrooms acknowledge

The diversity of thought in boardrooms across the agri-food sector has featured in many rountable 82% 88% conversations over the years. In 2013, 93% of co-op

Directors were male and evaluate 2% lived overseas. Progress has been made on both 18% 12% measures but there is more to be done. accelerate MALE VS FEMALE NEW ZEALAND VS OVERSEAS

19 Agribusiness Agenda 2019

KPMG AGRIBUSINESS AGENDA 20 14 Vol.2 A

Agribusiness Agribusiness

Facilitating growth in Agenda 2014 Agenda 2014 VOLUME 1 VOLUME 2 Facilitating growth in an uncertain world Exploring our global future

Leading New Zealand’s Leading New Zealand’s an uncertain world primary industry into primary industry into

2014 a prosperous future. a prosperous future. Vol 1 & 2 Exploring our global future kpmg.com/nz kpmg.com/nz

We began work on the 2014 After the WPC80 scare which had Agenda against a background occurred during the year, there was On vibrant rural communities... of growing global uncertainty. also discussion on whether the Policymakers need to recognise industry had invested appropriately Much of this connected to that one-size-fits-all legislation in food safety, or had treated it as will not always work, and rural the lingering impacts of the a cost to be minimised. communities often require Global Financial Crisis, but This scare – together with a perception different solutions to deliver also concerns about climate that the wider community had lost equitable outcomes. change, terrorism, digitalisation, confidence in the ability of farmers On utilising collectively-owned and the impact of emerging and growers to appropriately manage Māori land... disruption in food value chains. the environment – led one contributor Given the country has finite land to suggest that it felt like they were available, Māori organisations We therefore decided to produce two ‘farming in a fish bowl’. In 2014, this are well-positioned to make Agendas in 2014; one which had a New was viewed as impediment to progress. a significant contribution to Zealand focus (Facilitating growth Today, the industry is now much more industry growth by providing in an uncertain world), and another open to scrutiny; it is acknowledged owners with options to bring which explored global megaforces and that such engagement can increase underutilised collectively owned their potential implications for agri-food the prices our products command in land into full production. systems (Exploring our global future). premium markets. In Part 3 of this 2019 Agenda, we On trading with Asia... update our global agri-food outlook and We also celebrated the export Adopting a vision to become consider how organisations should be successes the industry had enjoyed Asia’s delicatessen could guide responding to these issues. in the previous year, highlighting the industry towards products that many sectors had achieved that have attributes that are not Uncertainty about New Zealand’s record returns; while also noting that easily replicated, and are tailored political future dominated the 2014 continued success requires long-term to Asian consumers. Roundtables. With an election ahead, investment in nurturing markets. there was some concern about how a The recently-launched New Zealand potential change of government might Avocado Go Global Primary Growth impact the industry’s ability to sustain Partnership (PGP) was featured in growth. That said, it was recognised a case study, as an exemplar of that a new government might also a collaborative long-term market bring greater investment to address transformation plan. Their PGP goals sustainability challenges, support included opening new export markets growth of the forestry sector, and and increasing industry value four-fold develop an industry strategy. to $280 million. We get an update on the growth of the avocado industry as a result of this PGP collaboration on the following page.

Agribusiness Agenda 2019 20

When we talked to CEO Jen says there’s been another global Jen Scoular back in 2014, “tailwind” that’s helped to drive their success. the New Zealand avocado industry had set an “The demand for avocados has really sky-rocketed in both developed and audacious goal to triple less developed countries, and without productivity and quadruple a doubt, social media is helping that. returns by 2023. She’s Avocados are one of the most pinned happy to report they’re foods on Pinterest.” on-track to achieve this – To capitalise on this, NZ Avocado has helped along by the global invested heavily in digital platforms – with websites in New Zealand, consumer love affair with Australia, Japan, South Korea, the Insta-worthy fruit. Singapore, China and Thailand.

“We’ve doubled our yields and our They are noting some subtle cultural industry value in five years; so we’re differences among users. Thai tracking to reach $280m by 2023. It’s a consumers post beautifully-styled value story more than a volume story photos, for instance, while Kiwis tend – we’re still challenged by very irregular to post more comments. The Chinese volumes of fruit, but we are creating prefer to visit the New Zealand website, more value for every tray we produce.” because they want to authenticate the product.

Other milestones include gaining access acknowledge to China in 2018, boosting domestic “Previously, as a producer of just 1% of sales to $50m this year, and launching a the world’s avocados, we would struggle New Zealand marketer’s group that sees to hear what our consumers thought competitors working collaboratively to of New Zealand avocados. But with improve the local consumer experience. 125,000k followers on Facebook, we now get their feedback straight away. “Back in 2014, we didn’t yet have clearly- defined ambitious goals and a path to “We used WeChat recently to ask our Chinese social media followers which meet them,” recalls Jen. evaluate images they associated with avocados “We were fortunate to get Primary from New Zealand, so we could test- Growth Partnership (PGP) investment market some hero shots. Conversations from the Crown to undertake the activity like that are incredibly valuable to us.” required. Since then, we’ve worked really hard collectively as an industry – and we have absolutely made a step-change.” accelerate

21 Agribusiness Agenda 2019

Volume 2 Emerging Leaders Edition: The future is in their hands 2015 Growing value Vol 1 & 2 The future is in their hands

Volume 1: Growing value intimacy, an emphasis on recruiting They identified four areas where the With the 2015 Agenda, we mixed things capable people and, importantly, a most urgent action was needed. up again. Growing value, the annual state ruthless focus. Many organisations are Firstly, we must be focused on deep of the nation analysis, was released at recognising the commitment needed to consumer insights rather than relying Fieldays. We then asked agribusiness become a high-value enterprise and are on traditional market research data – CEOs to nominate the person in their working to enhance their DNA to lift the to find smarter strategies targeted at team most likely to have their seat in value they capture from their products. the best opportunities. Secondly, they 20 years. We led this group of future Sanford had started this transformation suggested it was time to stop talking leaders through a day-long design- journey and was profiled in 2015 Agenda. about collaboration and get on with thinking workshop, to envisage what We provide an update on progress actually doing it in a meaningful way. They the industry could look like in 2035. from Sanford’s CEO, Volker Kuntzsch, strongly believed that we need to lift R&D These findings formed the basis for on page 22 of this edition. investment at both company and industry Volume 2, The future is in their hands. level. Their final priority was attracting Volume 2: The future more top talent to the industry. Despite During our Roundtables, the steep is in their hands the room being filled with more than decline in dairy prices was top of mind The first Volume talked about the need 50 very impressive future leaders, they for many. While there have always to paint a picture of the industry’s still wanted to see a greater diversity of been contributors that do not support future, in order to inspire disruption and people in the industry across all levels. co-operatives (or the dairy industry provoke action. That is exactly what we model), the discussion in 2015 was more did when we joined with Chrysallis to extensive, and explored whether the dairy run the Fork to Farm Summit with over On leadership… industry has a fit-for-purpose structure to 50 future industry leaders. Volume 2 CEOs are appointed to lead. Directors, maximise the value of milk produced in of this Agenda was produced by two management and the wider team are New Zealand. of KPMG’s own future leaders, Justine looking to the CEO to set strategy, Fitzmaurice and Julia Jones, who make the necessary decisions that Recently, Minister O’Connor has initiated worked with the group to develop a lead the business into the future. a comprehensive review of the Dairy picture of New Zealand’s thriving agri- On brands… Industry Restructuring Act to ensure this food sector in 2035. The group came It is still hard for many in the industry question can be confidently answered from diverse backgrounds – including to comprehend that value is not always in the affirmative. We see the review students, farmers, scientists, marketers, linked to hard assets, but can come as a positive step for the dairy industry; accountants, engineers, government from investing in brands; intangible not least for demonstrating to the wider officials and more – bringing a wide value is created by articulating what our community the critical role the industry range of perspectives to the table. plays in securing New Zealand’s products are and what they stand for. economic future. The future leaders were very clear on On food safety… In the context of the milk price decline, key matters. Firstly, the industry will only When it comes to food safety, New the 2015 Agenda highlighted that New achieve its potential if it has a collective Zealand cannot afford to be average; Zealand has no inherent right to sell vision of its future. Secondly, success our economic prosperity relies on the products in global markets at a premium. will depend on organisations learning to trust we earn from being ahead of To maximise value, each step in the collaborate. They were clear that those our competitors. value chain needs to be understood and leading the industry today need to learn On positioning our products… worked on proactively to maximise the to trust others; and let go of history. They Our food and fibre products should benefits secured. The report suggested highlighted that change is a conscious be as aspirational as a Louis Vuitton a comprehensive conversation about choice – requiring willingness, energy handbag, as must-have as an Apple the industry’s future can no longer be and commitment from individuals and iPhone, and as sought-after as a table deferred, despite the majority of the organisations across the sector. at Copenhagen’s Noma Restaurant. industry being in a comfortable position. Another key insight was that On redefining export… The Agenda explained the KPMG organisations need to listen to voices Stop defining your market around your Enterprise DNA model that we developed of young people and leverage their product and start defining your markets through work with Te Hono member enthusiasm. They see a disrupted future around what your product makes companies. We identified a series of as packed with opportunity. They believe possible; its experiential value. common nodes in the organisational DNA we have the potential to succeed by of companies consistently successful in thinking big and engaging with disruption On learning from champagne… capturing higher value for their products. head-on. There are 32 Champagne houses that These nodes include: existence of a We challenged the future leaders to compete actively in the marketplace, pivotal leader, a strong ambition, a clear think about what has to happen at four under the umbrella of Champagne; this strategic anchor, an understanding points in value chain (fork, distribution, is orderly free enterprise and is what that success relies on resources and processing and farm) to deliver long-term we want to replicate. investment, a commitment to customer industry success.

Agribusiness Agenda 2019 22

FORK TO FARM

Our future leaders had many ideas about how the agri-food sector would operate in 2035. These are some of the big ideas they suggested.

Zero processing because products are grown market-ready

Global version When the KPMG Agribusiness This retails online via www.seatome.co.nz, of My Food Bag Agenda last profiled Volker with the product’s point-of-difference being the company’s end-to-end delivering New Zealand meals Kuntzsch back in 2015, the product stewardship. to the world population energetic and passionate Kuntzsch has always been passionate CEO had been in the job just about “showcasing who we are and what 100% 18 months. He’d begun the we can produce here in New Zealand.” EDIBLE important work of instilling Cue the opening of the Auckland Fish a culture change throughout Market in December 2018 – a stylish 8-restaurant, two-bar operation which is Edible packaging Sanford, and had set a bold attracting tourists and locals. Located on to reduce waste and make new vision: “to be the best the ground floor of Sanford’s 94-year-old it easier to eat on-the-go seafood company in building, it also features a Sanford & Sons the world.” fishmonger in the centre of the market. Despite the progress, the past few years Moving from volume to value-add and haven’t been all plain sailing for New customer-driven, while striving to utilise Zealand’s oldest and largest fish operator. every aspect of the fish resource, was The effect of climate change is being felt, Running a pipeline another key goal for Kuntzsch – and he’s with abnormally high water temperatures to China been busy implementing this in a variety during the 2018 summer resulting in supply of ways. to deliver liquid milk

challenges across the aquaculture and acknowledge Firstly, the company underwent an fishing divisions. “If you had asked me five improvement programme introducing years ago what our biggest risk would be, capabilities that would enable Sanford climate change would not have been it. to cope with its strategic shift as an Now, it is our main risk across every part of organisation. In addition to these significant the business.” changes, the Board then approved a However he says this further reinforces $120m investment programme over two 3D printing that’s Sanford’s strategy is on the right years starting with FY19; covering both to create food at home

track. Making the pivot from volume to evaluate operational upgrades, and an emphasis value-add, while diversifying the company’s on innovation and brand development portfolio, will help mitigate those external programmes. One such programme has and future unknowns. seen Sanford enter the nutraceuticals market, producing Greenshell mussel capsules from its farms in Marlborough. Super – freighters equipped with full on-board accelerate processing facilities

23 Agribusiness Agenda 2019

Agribusiness Agenda Thriving in exhilarating times 2016

2016 Volume 1: Thriving in exhilarating times Vol 1 & 2 Foresight to the future

KPMG New Zealand

kpmg.com/nz

The World Economic Forum capture a bigger piece of this pie in New Our discussions led us to question declared that 2016 marked the Zealand. The ability to evolve our business whether the industry has fit-for-purpose start of the Fourth Industrial models will determine how much more of governance. We questioned how many this value can be realised for the benefit Boards were seeking to reimagine their Revolution, also known as the of all New Zealanders. agendas, or possessed the necessary fusion revolution. Fittingly enough, knowledge to support management The Agenda recognised many our Agendas focused on the speed in unleashing the potential of their organisations had maintained their growth organisations. Leadership capability of change facing society and how ambitions over the preceding 12 months, across the sector is critical to long term organisations need to respond. despite a background of volatile market success and it has again been a key prices in many sectors. We were pleased theme of our discussions this year. The first volume, Thriving in exhilarating to find an industry largely in good heart, times, explored how effectively despite the challenges that consecutive New Zealand’s agri-food businesses years of depressed milk prices had placed On brand New Zealand... were handling transformation-related on the financial and emotional wellbeing There is a need to take proactive challenges. The second volume, of many. Case studies on Plant and Food steps to preserve and enhance the Foresight to the future, extended our Research, Villa Maria, Rockit Apples perception of New Zealand being a analysis of global trends shaping the agri- and Landcorp showcased organisations ‘good country’ for the world rather food system, and explored three future- challenging themselves to do things than just good for itself. state scenarios for New Zealand agri-food. differently to secure their long-term The fusion technologies of the future. We are pleased to revisit the Pāmu On customer intimacy... Fourth Industrial Revolution unleash story in this Agenda, to reflect on the We don’t just need to walk in our unprecedented change for agri-food more recent steps in their transformation customers shoes, we need to live sector. Heralding the arrival of the first from volume to value. in their houses and understand the challenges in their day to day Global Agrarian Revolution, we are Among the wider sector, though, we lives, our executives need to be in observing unprecedented investment into identified something of a disconnect. market as often as possible rather farm system innovation, genetics, novel While many leaders recognised that than trying to make decisions from food, processing solutions, distribution rapid change was the new normal – Auckland or Christchurch. channels and circular waste applications. with technology and business models We estimated that primary sector quickly evolving – they were doing little On taking calculated risks... exports of around $37 billion (at the to interpret and embed these new The desire to replicate past success time) were ultimately generating around opportunities within their organisation. makes organisations vulnerable $250 billion in revenue at the point of There was an over-riding belief that their to the future; and breaking the final consumption. As we looked at the business models were robust enough gravitational pull of the status quo is numbers, the realisation was that we to thrive, despite the change going on one of the most pressing leadership grow plenty of value, the challenge is to around them. issues the industry faces.

When we last interviewed Steve In recent years, we’ve seen the “We’ve transitioned from being Carden in 2016, he succinctly State-owned business shrug off a conservative into a nimble and explained why Landcorp needed complete focus on the traditional vertically-integrated foods company,” a new purpose – and brand name volume based, risk-adverse approach says the Pāmu CEO. – for its future: “We can no longer of the past – and work to be a more “Driving innovation on farm and post intensify farming and push more nimble and successful innovator. farm gate has been our focus.” animals on farms. The animals and Underpinning this transformation the environment cannot handle any is a diversified land-use model Developing cow-alternative milk more stress. The model previously that’s capable of producing a products is just one example. used is no longer viable.” range of specialty animal and Within the past two years, Pāmu plant-based products.

Agribusiness Agenda 2019 24

We concluded the first volume of the 2016 Agenda with JFK’s famous line: “We choose to go to the moon in this decade and do these other things, not because they are easy, but because they are hard.”

President Kennedy recognised that the biggest benefits come from things that can appear almost impossible. The rewards come from doing the hard stuff, the stuff that seems a bit crazy, the stuff that makes you uncomfortable (even scared), the stuff that makes you stand out. That was our message to our agribusiness audience: the rewards of articulating your moon shot is the incredible focus and direction you will gain and it could make the seemingly impossible possible. acknowledge has launched the Spring Sheep Carden says the business has New Zealand brand; and inked a continued to expand its forestry deal with South Korea’s largest operations, as part of its income pharmaceutical company to supply diversification strategy. There’s deer milk for its range of cosmetics. also been a focus on boosting (Pāmu is into its third year of technology on-farm – with Farm milking 80 red deer hinds, which IQ software being used to “keep evaluate produce 5000 to 6000 litres of milk a really accurate eye on everything each season). that is happening across our farms.” Sustainability is now one of the And on the people side, the Pāmu key platforms of the modern brand. Academy was launched in 2017 Pāmu’ translates as ‘to farm’ to improve health and safety on in te reo, and also reflects farms. The business reported a 25%

Kaitiakitanga, the Māori concept of reduction in significant harm-related accelerate guardianship of the environment. incidents in FY2018.

25 Agribusiness Agenda 2019

Agribusiness Agenda 2017 2017 The recipe for action The recipe for action

KPMG New Zealand

kpmg.com/nz

Designed around the theme of a One theme that stood out was the lack of cookbook, the Recipe for Action a compelling New Zealand food story. We On creating value... set out 110 ideas from industry produce food of exceptional quality and It is not the processing asset that have world-class chefs, yet most tourists leaders aimed at helping enabling makes a product exceptional; but leave without having a singularly New the brand, innovation, people and New Zealand’s primary sector Zealand food experience. The Agenda tailoring we put into it. to capture more of the value it offered a range of ideas that would help grows. It was another election to build a stronger food culture; such On effective storytelling... as making indigenous ingredients and The goal for the sector must year, but in stark contrast from be creating content that people three years earlier, there was cooking methods more accessible, and designing unique experiences for tourists. want to share; viral content that very little focus from leaders on We profiled Monique Fiso of Haikia, who educates, entertains and engages the potential outcome of the we caught up with again this year to see the community. election. Their focus had pivoted how her journey has progressed. We On water quality... from matters of domestic concern also case study EAT New Zealand in this The industry has appealed to towards how they could best Agenda; a national organisation that has the head, but it is the heart that launched Feast Matariki this year, with the is shaping policy; bold action is operate within consistently- goal of creating a uniquely New Zealand changing global markets. needed to preserve the license food festival. to operate. Instead, leaders indicated they were The 2017 Agenda explored the focused on developing strategies advantages of accessing more diverse based on doing what is right for the thinking - whether listening to youth, environment, their communities and investing in the Māori agribusiness sector, their consumers. This approach would or creating pathways for people with require them to reach beyond regulatory diverse backgrounds into the industry. requirements, regardless of the colour of We also canvassed ideas for changes to a future government. This expanded focus our education system to promote easier meant our Roundtable conversations access to lifelong learning; as well as touched on a wider range of issues than ideas to foster collaboration, accelerate ever before, and the Agenda explored the pace of technology adoption, and some themes in-depth for the first time. deepen connections with customers.

Some of the bolder ideas in the Recipe for Action

Utilising food Professionalising Providing public Creating a green to engage with the industry within support only for bank that funds New Zealand’s the farm gate collaborative environmental global whanau projects enhancement Growing compliance Ireland are masters of obligations make it harder The government is too Meeting regulatory and leveraging the power of for professional farmers to often seen as a solution to community expectations in their diaspora to keep them draw on past experience to a problem in New Zealand. respect of the environment connected with the homeland ensure that they are complying It was suggested that the is going to place costs on the and acting as promoters of with all relevant legislation. government should limit industry with limited potential the country and its products. A continuing professional support and co-investment of short term return. Creating New Zealand food offers an development programme to projects involving multiple a green bank collaboration, opportunity to reconnect would make it easy for them organisations collaborating involving existing banks that kiwis with home, reignite their to access the knowledge they to create a more prosperous can lend only for sustainability passion for our products and need and recognise farming future for the country. investment on preferential encourage them to act as the professional career terms could accelerate as promoters. choice it is. the necessary investment.

Agribusiness Agenda 2019 26

Plenty has transpired since They also forage locally for ingredients. we last caught up with Adding to the richness of the provenance story, they have had to Monique Fiso. In less than work closely with Wellington City two years, she’s transformed Council to ensure transparency and a pop-up restaurant into a overcome regulatory barriers. bricks-and-mortar restaurant, “The Council quickly understood that featured on a Netflix series New Zealand would be missing a huge with some of the world’s part of the food culture if we didn’t have access to these ingredients we have to top chefs, and shone the forage for.” global spotlight on New Seasonality is another factor. With very Zealand’s food culture. fleeting seasons for some ingredients, Hiakai has had to get creative around Her Wellington restaurant Hiakai, which perseveration – which Fiso views as uses Māori and Polynesian ingredients a positive. to create excitingly authentic dishes, has firmly established itself as a flag- “The menu has consequently become bearer for New Zealand cuisine. But more complex, dynamic and interesting growing demand means increased with the different preservation amounts of ingredients – and some methods,” she says. Dark chocolate smoked harakeke seed unique challenges in sourcing them. “For example, the Kiekie blossom is truffles - a filling of smoked chocolate terrine, with a coating of toasted harakeke seeds, Fiso has been connecting with iwi only available for a month in August; smoked with manuka in the cloche. acknowledge and others across the country to so we have to do a massive haul and ensure a steady supply of little-known preserve, dehydrate and ferment as ingredients; from dozens of indigenous much as we can.” plants, to tītī (muttonbird) and weka.

“It can still be a struggle at times, but now with popularity increasing we can get some ingredients in commercial quantities – we work very closely with evaluate our suppliers we can give them a heads up when we know we’ll need more.” accelerate

27 Agribusiness Agenda 2019

Agribusiness Agenda 2018

We need to tell you our stories Layering our products with 2018 We need to tell you our stories verifiable attributes

June 2018

kpmg.com/nz

For the 2018 Agenda, we talked This means data-backed, verifiable stories with both industry leaders and that support product provenance but also On forestry… groups of ambitious farmers, to connect a product to the real people that Policy settings offer opportunities grow them. gain an alternative perspective for the forestry sector to provide Technology is transforming supply chains environmental mitigations to other on the issues facing the industry. agri-food producers, as well as These conversations clearly and putting an informed consumer at the centre of a value web. This lifting its economic contribution highlighted the pressures consumer-centric value web means to the economy. farmers are under on a daily every organisation involved in producing On rural energy supplies… basis – as they seek to balance a product has the opportunity to connect The ability of our ageing the environment, weather, with consumers and tell their story. We rural power network to reliably animal welfare, employees and suggested that using verifiable attributes deliver power to remote their families; while also trying – product features that are valuable to a businesses at an economic consumer and proven by data – offered to run a profitable business. costs is making the decision many opportunities to tell effective, truthful to invest in transformational stories to consumers. They also highlighted the ‘reality gap’ technologies harder. between their working lives and the Given that water and land use played On social media… perceptions held by the wider population. a central role in the 2017 election, and While social media strategy Our contributors were proud to be food has a prominent position in the Coalition remains a dark art to many industry producers, but were questioning the lack Government’s policy programme, it was leaders at a personal level, they of understanding around what they do and not surprising that industry’s use of natural recognise these tools are critical the contribution they make. capital featured highly in Roundtable to engaging with consumers and conversations. Leaders recognised the To this end, the Agenda argued the need potential business partners. sector needs to be more transparent in for the sector to gain more ownership of explaining its impact on the environment; its own narrative. Now is the time for the and as a case study, we highlighted industry to actively tell its stories – as an Ravensdown’s launch of its integrated unbalanced narrative is threatening both reporting initiative. We recently followed the social license to operate, and the up with Greg Campbell, Ravendsdown’s provenance stories that support product CEO, to get an update. premiums. In a world of fake news and unreliable facts, the sector needs to focus on telling the truth.

Envisaging the future: a consumer-centric value web

Food Government Research institutions manufacturers

Processors and Retailers and Consumers exporters distributors

Farmers and Input providers Community growers

Agribusiness Agenda 2019 28

Last time we spoke with Campbell says the company is there can be consequences if it is under Greg Campbell, CEO of not afraid to “put its feet to the or over-used. We educate our farmers on fire” by publically reporting on its how to use it smartly, and that’s why our Ravensdown, the farm sustainability performance. “Among farm consultancy practice is a crucial tool nutrients and environmental other measures, the dedicated website for us.” at integratedreporting.ravensdown. experts were preparing to Investing time and resources into co.nz reports on the company’s carbon release their first integrated reducing environmental impact has footprint (154,407 tCO2e in 2017). been an exciting area of growth for report. Now they are about Ravensdown is soon to publish its the company; with both staff and to release their third – as 2018 footprint and announce its 2030 shareholders appreciating their honest reduction target” they continue to position reporting. The company is building on its themselves as part of the “The low-carbon economy is a reality that 19 Net Promoter Score and is proud of its environment’s solution, we all need to get our heads around,” top-quartile employee engagement score. says Campbell. not the problem. “Being transparent about our values has “While we’re helping farmers reduce also improved our employment brand their environmental impact, we’ve got out of sight. Generations coming into the to walk the talk ourselves. This starts workforce want to work for a company with publically reporting on our CO2 that’s part of the solution.” emissions; and then continuously looking at the technology, training and processes that will help reduce that.”

Campbell was also one of 60 CEOs from

a cross-section of New Zealand industries acknowledge – including the likes of Air New Zealand and Z Energy – who signed up to the Climate Leaders Coalition in July last year.

As well as setting the big goals, reducing the environmental impact of agriculture comes down to the work Ravensdown is doing with farmers – day in, day out – The ClearTech collaboration with Lincoln evaluate behind the gate. “Fertiliser is a valuable University strips farm dairy effluent of e-coli tool in the tool-box. But like anything, accelerate

29 Agribusiness Agenda 2019 Updating the views of the latte drinkers

When it comes to the democratic process in New Zealand – whose voice really matters? One of the themes of the 2013 Roundtables was that the views of the industry or the rural sector were increasingly irrelevant; because it is the Auckland latte drinkers who ultimately determine who the government will be. This inspired us to ask our Auckland team their views on a range of issues that directly impact on the agri-food sector’s license to operate. For this latest Agenda, we again asked our largely millennial, culturally diverse, mostly urban teams across the country for their views on the same issues.

This year we also asked our team if they are proud of New Zealand’s primary industries. Despite their concerns about the environment, 86% suggested that they were proud of industry, and 76% felt some degree of connection to food produced in New Zealand. This is an encouraging sign; and suggests there is a platform for the industry to develop deeper, trust- based relationships with our urban communities.

Agribusiness Agenda 2019 30

Net support / (opposition) (Supportive – opposed) 2013 2019

Limiting the use of animal housing 41% 11% to intensify farming practices

Limiting construction of irrigation and water storage schemes designed - 41% 2% to increase agricultural output

Strengthening legislation to protect 86% 93% our waterways and landscape

Requiring farmers to obtain resources -15% 3% consents to continue farming activities

Continuing to limit use of GM technologies in 61% 7% day-to-day food production in New Zealand

Allowing Councils freedom to develop -24% - 31% water and environmental policies

Including agriculture in the ETS so that 42% 30% sector pays the cost of its GHG emissions

Using taxpayer funds to develop a NZ integrity 53% 34% brand backed by accreditation standards

While we claim no scientific rigour, some of the movements in net support levels for the issues (those supportive or strongly supportive of the statement less those opposed or strongly opposed) are notable.

While still not In contrast, our team It is interesting that our 1 2 3 acknowledge supporting the use of has become stauncher team are even less animal housing or genetic in their belief we need to convinced that leaving the technologies, the net level of protect the environment and regulatory function to Councils support for limiting the use of water resources. Support is the correct course of action. animal housing has reduced for strengthening legislative This could mean a lot of work 30% and by 54% for the use protections for the environment at a national level, as net of GM technologies. Given has increased to net 93% opposition to requiring farmers these technologies could positive. From a majority in to obtain resource constraints provide part of the solution to 2013 opposed to constraints has become another small net reducing the greenhouse gas on irrigation development, majority in support. evaluate footprint, the warming in there is now a small majority attitudes towards them supportive of such limits is interesting. being introduced. accelerate

31 Agribusiness Agenda 2019 Taking the industry’s pulse – shifts in priority over time

We introduced the industry leader’s Priority Survey in the second Agenda in 2011, and have used it to track their views for each Agenda since. The survey has evolved over the years, as new priorities have been added and others removed or edited. However one thing has remained constant: the top ranking given to maintaining a world class biosecurity system. YEAR / AVERAGE PRIORITY SCORE

2011 / 7.10 2012 / 7.34 2013 / 6.90 2014 / 7.23

World class 8.90 World class 9.17 World class 9.28 World class 9.55 biosecurity biosecurity biosecurity biosecurity Understand 8.29 Deliver market 8.31 Deliver market 8.28 Food safety 8.64 global product/ signals to signals to strategic eating trends producers producers importance Ensure 8.24 Codify 8.31 Invest in 8.22 Sign high 8.58 practices environmental irrigation/ quality trade support clean/ expectations water storage agreements green image Invest in 8.19 Developing 7.90 Invest in 8.52 Effective 8.08 irrigation/ future leaders irrigation/ mechanisms water storage water storage for extension Deliver 7.88 Deliver 8.12 high speed Deliver market 8.41 Innovate with 8.02 high speed broadband signals to customers broadband producers

Deliver high speed Increasing rural/ urban Restricting foreign broadband understanding land investment Sign high quality trade Evolving capital Sourcing and utilising agreements structures global innovation Invest in irrigation/ Incentivising students Developing light water storage into agri careers export models 3 UPS

3 DOWNS Restricting foreign Codify environmental Evolving capital land investment expectations structures Effective mechanisms Creating global Exploring scale for extension sourcing chains organics Understand global Implement water Embed resources product/ eating trends costing mechanism in export markets

Agribusiness Agenda 2019 32

Analysing the results over the has been ranked second or ranked priority, but it is the score are more of a mixed first eight years of the survey third in each year since it was only one that has featured bag. They are often issues (to avoid a spoiler of 2019’s introduced to the survey in in the ‘largest increase in that have dropped from focus Taking the industry’s pulse – results), no other priority has 2014. The remaining two top priority score’ list on three as the world has moved on, featured in the top five in every five aggregate priority scores occasions. Other priorities being superseded by newly- year. Delivering high-speed over the period include: to make this list on two emerging priorities driven broadband connectivity has delivering clear market signals occasions include: increasing by regulatory, consumer appeared on six occasions, to producers (8.23 out of 10), rural/urban understanding, or investor pressure. shifts in priority over time but its aggregate score (8.19 and signing high quality trade incentivising students into out of 10) only makes it the agreements (8.13 out of 10). agri careers, developing light fourth-highest ranked priority export models, establishing across the period. The second It is also interesting to look an umbrella body to unify the highest aggregate score (8.59 at the movers and shakers industry’s voice and, more out of 10) goes to treating each year. Restricting recently, tracking synthetic food safety as strategically foreign investment in land and alternative proteins. The important, a priority which has always been a low- largest decreases in priority

2015 / 7.17 2016 / 6.97 2017 / 7.25 2018 / 7.41

World class 9.58 World class 9.38 World class 9.23 World class 9.62 biosecurity biosecurity biosecurity biosecurity Deliver 8.60 Food safety 8.55 Create NZ 8.60 Deliver 8.73 high speed strategic provenance high speed broadband importance brands broadband Food safety 8.60 Deliver market 8.25 Food safety 8.54 Food safety 8.63 strategic signals to strategic strategic importance producers importance importance Deliver market 8.38 Deliver 8.20 Deliver 8.51 Create NZ 8.52 signals to high speed high speed provenance producers broadband broadband brands Sign high 8.30 Create NZ 8.18 Innovate with 8.50 Innovate with 8.50 quality trade provenance customers customers agreements brands

Restricting foreign Umbrella body to Engaging with Umbrella body to land investment unify industry voice communities unify industry voice

Exploring scale Tracking synthetic Tracking synthetic and Restricting foreign acknowledge organics and alternative protein alternative protein land investment Changing policy Developing light Increasing rural/ urban Incentivising students to influence FX rate export models understanding into agri careers

Increasing rural/ urban Reforming levies Mandating minimum Engaging with

understanding for long term projects H&S practices communities evaluate GIA collaboration/ Creating single open Food solutions Delivering R&D cost sharing access data platform for dominant incentives demographics Articulating a collective Mandating minimum Licensing industry vision H&S practices Incentivising students to accelerate into agri careers market access accelerate

We reveal the results of the 2019 industry leader’s priority survey on page 38.

33 Agribusiness Agenda 2019

Agribusiness Agenda 2019 34

Evaluate evaluate accelerate

35 Agribusiness Agenda 2019 The year in review

June 2018 July 2018 August 2018 —— MPI and Plant & Food Research —— Synlait launches an environmental —— New Zealand wool producers land issue a report assessing consumer sustainability programme with contract to supply a US company response to protein, recognising impact reduction ambitions such with fibre for home insulation as a the meat industry are aware of the as increased premium pay-outs healthier alternative to fibreglass. potential threat but highlighting to suppliers for best practice —— PGG Wrightson sell seeds division the opportunity for New Zealand’s dairy farming. traditional animal based agriculture. to DFL for $421 million. —— New laws in Australia are introduced —— Fonterra appoint Miles Hurrell as —— Woolworths and Coles announce to stop modern slavery, meaning interim CEO. environmental commitments in line around 3,000 Australian businesses with consumer expectations; with would need to identify modern day —— Lincoln and Canterbury Coles pledging to half foodwaste slavery in their supply chain. Universities explore partnership in two years, and divert 90% of options under a new memorandum —— Federated Farmers elect Karen waste from landfill from 2022, and of understanding. Woolworths stopping the sales of Williams as arable chairperson, plastic straws and reducing plastic being the first women to lead packaging of fruit and vegetables. the Federation’s arable sector. —— Organic Wine Growers New —— Danone, Mars, Nestle and Zealand entered European markets Unilever launch a sustainable food on behalf of its 180 members. policy alliance to focus on driving progress in public policies that effect —— Germany’s, Bayer closes USD63 health, communities and the planet. billion Monsanto takeover.

December 2018 January 2019 February 2019 —— Coalition Government announce —— New Zealand Yarn and Hemp NZ —— The cost of the response to farmers will have access to grants to form strategic partnership to be Mycoplasma bovis to dairy farmers plant trees on their properties as part catalyst for market leading hemp has been released with DairyNZ of a new fund. fibre processing. asking farmers to approve a levy of 3.9cents/kg milksolids over the next —— Pāmu sign deal with South Korean —— Fish & Game survey reports Kiwis two years. Pharmaceutical Company Yuhan are more worried about levels of to supply deer milk for cosmetic pollution in lakes than they are about —— Broccoli prices double, with lettuce products. the high cost of living. also increasing by 80%. —— Taranaki’s first farm with —— Government sets to roll out new —— Government declare a Hawkes Bay Mycoplasma bovis is confirmed organic standards as the organic seasonal worker shortage, one by MPI. industry continues to grow by 30% of the countries primary apple over the last few years, being worth growing regions. —— The revamped Auckland Fish NZD600 million. Market is opened in Auckland —— Walmart announce their subsidiary, with owners, Sanford, using the —— A record USD3.1 million for a 278kg Jet, has launched same-day delivery market to showcase the wide variety Bluefin tuna was paid at the first of fresh seafood to customers. of quality New Zealand produce. auction of the year at Tokyo’s new —— French insect farming startup fish market. —— CPTPPA came into effect on 31 of Ynsect raises USD125 million, December, with the trade agreement —— Signing of a veterinary agreement breaking European agtech record. enhancing access to between the UK and New Zealand new markets. should provide reassurance to farmers and exports about trade after Brexit.

Agribusiness Agenda 2019 36

September 2018 October 2018 November 2018 —— NZ AgriTech officially recognised —— Lewis Road launch Gold Top jersey —— Greenlea claim blockchain first by globally connected Farm2050, milk containing a2 B-Casein protein. with their ‘single trade window’ service, a collective of major global venture providing service to process an export —— Tegel plans to build farm in firms and agribusinesses dedicated deal with Korean Customer. Northland are denied by overseas to supporting employment office. —— Cannabis start-up Helius has approval for AgTech innovations. Auckland’s first cultivation license, after —— Silver Fern Farms commit to —— The UK government introduces a NZD15 million investment from a small investing in future red meat sector new agriculture legislation to replace group of investors. leaders through its Plate to Pasture the EU subsidies for farmers after Youth Scholarships. —— As honey counterfeiters pose a major Brexit, placing more emphasis on threat to New Zealand, Midlands Apiaries environmental standards. —— Massey University are developing introduce high tech solutions of complex a state of the art consumer and —— Potato virus, PMTV is found for the packaging materials and manufacturing sensory science facility to determine first time in New Zealand, affecting processes to make it difficult for others what drives people in their food potatoes used to make chips. to counterfeit their products. choice behaviour. —— Food safety crisis in Queensland —— Tauranga agtech startup Robotics Plus, —— Marks & Spencer puts New in which numerous punnets of received USD8 million from Yamaha. Zealand wool at the centre of strawberries were found to be a new menswear range. —— The European Commission release contaminated with needles. report setting new policies to boost —— Countdown pledge to sell only —— MPI confirm no strawberries as part supply of plant based protein products New Zealand grown free farmed of the Australian contamination scare by European farmers in response to fresh pork. were on New Zealand shelves. demand of plant based products.

March 2019 April 2019 May 2019 —— Fonterra invest in minority stake in —— Recycling programme Agrecovery —— Zespri reports gross earnings Motif Ingredients, a US based food provides an easier way for farmers exceed $3 billion, a first for the ingredients company developing plant to sustainably dispose of waste kiwifruit marketer. based and cell-grown animal products. offering a one stop shop approach. —— PepsiCo patent a process to ferment —— Westland Co-operative signed —— Wairarapa company Breadcraft oat flour and dairy milk together conditional agreement to sell the West launches hemp seed, cricket signalling that drinkable or spoonable Coast dairy co-operative to Chinese- flour wraps. clean-label products such as yogurt owned Mongolia Yili Industrial Group could be coming from the well- —— Coca Cola plans to establish a dairy in a deal worth NZD588 million. known brand processing plant in Ireland. —— A full size merino sheep is used —— Meat alternative company Beyond —— Beef + Lamb launch “Taste Pure in a scoping study into robotic Meat topped year’s best first day for Nature” campaign in California, with sheep shearing. a US initial public offering after rising positive feedback and demand. —— AngusPure New Zealand announce 163% from its IPO price of USD25. —— MPI, Dairy NZ and Beef + Lamb they are partnering with 63 Angus beef —— Fonterra sells Tip Top to global release a 2019 Mycoplasma bovis farmers in a programme to improve the dairy company Froneri for $380 national plan to support farmers. quality and taste of their meat. million as part of its review of their —— Meadow Mushrooms create investment portfolio targeting on —— General Mills commit to regenerative evaluate agriculture across one million acres of world first green packaging for their reducing debt by $800 million. land by 2030. products made of out mushrooms. —— Zero Carbon bill goes to parliament —— Dutch company DSM develop a feed with targets for greenhouse additive to limit methane burped out gas reduction including specific by cattle, sheep and goats by up provisions for methane. to 30%. —— Avocado–wrecking beetle is detected by Biosecurity NZ in five Auckland areas. accelerate

37 Agribusiness Agenda 2019 Leading in a world of unprecedented change

A central element of the annual fair to say, however, that our perspective change in markets, in communities and Agenda is our ‘State of the on how change will impact the industry in organisations is inevitable rather than a Nation’ assessment of New has not been something all contributors controllable variable. have agreed with. The top-of-mind issues The underlying driver of this new Zealand’s agri-food sector. Each raised during our Roundtables have often clarity was apparent. Industry leaders year, we provide an analysis of been focused on immediate, tactical are concerned about the long-term the top-of-mind opportunities and challenges; rather than actions needed to viability of the industry; in light shape a business fuelled by disruption. challenges from conversations of the environmental, social and with industry leaders and We had no reason to expect anything financial pressures they are facing. influencers, as well as publishing different this year, particularly as the They recognise that attitudes and the annual Priorities Survey. sector has generally experienced a good expectations have shifted across year. Pricing has been strong, exports society, and will continue to shift. Some In the first section of the report, we are at record levels, and the weather practices that were once acceptable, acknowledged the progress the agri- has largely been normal. We have had because the end justified the means, are food sector has made over the last no major new biosecurity incursions, no longer acceptable. Other practices decade. In this section, we evaluate and labour shortages have not got any that are still in common use today will where it is today. worse. We expected that water would become harder to justify in coming still be a key theme, as supply reliability years, particularly in relation to the With the start of a new decade just over issues continue due to inadequate stewardship of living creatures. Change six months away, we asked leaders investment in storage. We also expected consequently becomes a matter of to think about how the industry is the impacts of the US/China trade war survival rather than choice. Concerns positioned to unlock its potential on to be a talking point, along with a range about the demands this change will issues that are critical to them. Given of views on the review of the Dairy place on the operational and financial that many organisations have had a Industry Restructuring Act (DIRA); and, capabilities of organisations were ‘2020 vision’ for years, it seemed an of course, biosecurity, particularly in light discussed in every session. Contributors opportune time to ask our contributors of the Mycoplasma bovis eradication also highlighted concerns about the to what extent their organisations investment. Finally, we expected impact such dramatic change will have have delivered on these aspirations. discussion on the environment and the on the mental wellbeing of producers. Or perhaps more importantly, how future of the tertiary education sector. prepared they felt for the decade ahead. Having analysed the Roundtable Our expectations, however, were turned conversations, we have distilled them Te Hono recently invited a globally- on their head. The industry leaders into five core themes which are outlined recognised innovation expert, Larry who joined us at our eight Roundtables on the following pages. All of these Keeley, to talk at an industry forum. across the country raised the broadest themes recognise that doing things Keeley is the founder of Doblin, a spectrum of topics we have ever had as differently is becoming increasingly Chicago-based innovation consultancy, our source material for an Agenda. While urgent and requires strong leadership. and the author of Ten Types of they raised all of the expected topics Innovation, the Discipline of Building (with the exception of DIRA, which never Breakthroughs. During his talk, Kelley got a substantive mention), they were Analysing leaders’ confirmed that the unprecedented pace certainly not the focus of our discussions. priorities of change society is experiencing is Instead, the conversations all took their likely to continue to accelerate. He also own direction and focused on distinctly Reviewing the results of the annual explained that the rising levels of societal different themes – but all underpinned Priorities Survey served to reinforce our angst and uncertainty is driven by fear, by a perspective that revolved around conclusions. In 2019, leaders are very the natural reaction to change. the central question: what do we need conscious of the multiple challenges the We have been writing about the impact to do to get closer to consumers, in industry faces – along with their own that transformational change will have order to secure benefits for industry organisations – with regard to the social on the agri-food sector for many years – stakeholders and the wider community. license to operate. Accordingly, they are and have always argued this should be Notably, for the first time, there was more focused on priorities that will help primarily viewed as an opportunity. It is widespread acceptance that significant address these.

Agribusiness Agenda 2019 38

Biosecurity – still #1 We were not surprised to see world- class biosecurity retain the number one ranking for the ninth consecutive year (although its priority score dropped 5.6% on 2018, reflecting the lack of a high-profile incursion during the year). It was interesting to note that leaders want to see higher priority placed on ‘collaboration and cost-sharing to proactively manage biosecurity risk through the Government Industry HERE ARE THE 2019 TOP 10 PRIORITIES… Agreement (GIA) structure’. This gained seven places, to finish in the Top 10 priorities for the first time. This supported RANK RANK PRIORITY SCORE ACTION the conclusion we had drawn from our 2019 2018 2019 / 2018 conversations; that leaders are willing to invest their time in enhancing collaborative models that are working effectively. World-class 1 1 biosecurity 9.08 / 9.62 Also moving into the Top 10 The Top 10 sees two other new entrants in 2019. ‘Imposing penalties on Create New those farmers who fail to protect their Zealand livestock’ raised six places to rank sixth. 2 4 provenance 8.38 / 8.52 This had previously sat just outside brands the Top 10 in the last two years, and with the increased focus on the ethical framework underlying food production, Sign high quality it was no surprise. 3 6 trade agreements 8.27 / 8.35 ‘Delivering R&D incentives to support innovation’ also raised six places to equal seventh. The need to accelerate Deliver high speed investment in innovation was a recurring broadband theme during the Roundtables. Changes 4 2 8.08 / 8.73 the Government has made to supporting R&D activities, via the introduction of a tax credit mechanism are designed to Food safety assist in accelerating investment. strategic 5 3 importance 7.95 / 8.63 Moving out the Top 10 Three priorities dropped out of the Penalties for Top 10 this year. ‘Developing future leaders’ fell from eight to 13. This likely those that don’t 6 12 protect animals 7.91 / 8.04 reflects the sector’s broader focus on securing the full spectrum of skills and capabilities needed, versus leadership talent specifically. Innovate with ‘Schemes to regenerate native =7 5 customers 7.89 / 8.50 ecosystems’ dropped from ninth to 15th equal. We suggest this reflects the current uncertainty around what the Zero Carbon framework will mean Delivering in practice, and the unwillingness to =7 13 R&D incentives 7.89 / 8.02 commit to significant system change until these rules are clarified. ‘Investment in irrigation and water Deliver market storage infrastructure’ fell from ten to signals to

9 7 producers 7.72 / 8.31 evaluate 19. This no doubt reflects the increased challenge of getting a project off the ground as Government seed money has been withdrawn; and, potentially, GIA collaboration/ the lack of significant drought events = cost sharing compared to recent years. 10 17 7.67 / 7.71

Arriving at 11 and 12

The two priorities ranked 11 and 12 both accelerate recorded significant lifts in their rankings – and further support the conclusion that leaders are intent on preparing their

39 Agribusiness Agenda 2019

organisations for disruptive change the radar in New Zealand. As leaders would appear to contradict the boost ahead. ‘The need to lift commercial turn their attention to the impact in priority being given to developing collaborations with partners across the their organisations are having on the national provenance brands). There industry’, which rose from priority 22 environment, and the community, has previously been a view that a to rank eleventh this year, reflects our addressing issues associated with national integrity standard might add Roundtable discussions that focused waste may well provide the low-hanging some value to our products; but this on where collaboration needs to evolve fruit for immediate impact. is becoming harder to envisage. It in the future. ‘The need to embed is likely that emerging technologies, resources into export markets’ ranked at Declining average priority score such as blockchain, will supersede the 12 (up from 17th equal last year). Having seen the average priority score one-size-fits-all model of a national This reflects the growing recognition increase year-on-year over the last two standard. Other significant declines that having people on the ground is a years, we noted that the average priority included ‘investment in irrigation and highly-effective way of getting closer score fell from 7.41 to 7.00 this year. water storage’, as previously noted; to consumers in off-shore markets. This reflects a drop in the priority scores and ‘effective extension of innovation given to all of the priorities, bar four. In to farmers’ (which fell 10 places to All-time high scores a world where leaders must juggle an 24th equal). The scale of this latter Only two priorities recorded their all- ever-growing range of pressing issues, fall surprised us, given the amount of time high score this year (compared one potential explanation for this is change producers will be expected with 16 last year). ‘Mandating minimum that leaders are adopting a ‘watch and to incorporate into their production health and safety practices’ (which wait’ approach. In other words, they are systems over the coming decade. ranked 23 with a score of 7.08) reflects seeking clarity on which priorities will recognition that there are consequences have the most immediate impact on to not taking health and safety seriously; their organisation. It could also explain including constraints on the ability to sell why more collaborative priorities, such products to premium markets. creating New Zealand provenance brands and signing high-quality trade ‘Taking practical steps to minimise agreements, have moved up the food waste’ (which increased 13 rankings to sit at two and three. places to 26 with a score of 6.81) was also the priority recording the highest The largest declines in score score increase. We were interested to note this – given that food waste The largest decline in ranking this is a significant focus globally, but year was ‘developing New Zealand- one that has largely existed under wide integrity mark systems’, which fell 12 places to be ranked 35. (This

MOST SIGNIFICANT INCREASES IN PRIORITY RANKING METHODOLOGY Practical steps to minimise food waste 6.81 Up 13 places OF THE SURVEY Lift commercial collaboration 7.64 Up 11 places We once again used an online survey Food solutions for dominant demographics 7.33 Up 8 places tool to obtain industry leaders’ views GIA collaboration/ cost sharing 7.67 Up 7 places on the most pressing priorities for New Zealand’s primary sector. We Penalties for those that don't protect animals 7.91 Up 6 places asked contributors to rank a range of Delivering R&D incentives 7.89 Up 6 places priority items on a scale of 1 to 10; with 1 being an item they consider to Incentivising students into agri careers 7.47 Up 6 places be of no priority for the industry, and Mandating minimum H&S practices 7.08 Up 6 places 10 requiring immediate attention and action. We used exactly the same set of priorities in 2019 as in the last two MOST SIGNIFICANT DECREASES IN PRIORITY RANKING years. We received responses from around 70 industry leaders. As in previous years, the full survey results Developing NZ wide integrity mark system 6.25 Down 12 places will be made available on the KPMG Invest in irrigation/ water storage 7.28 Down 10 places Agribusiness Agenda 2019 page on our website (kpmg.co.nz). Effective extension 7.05 Down 10 places

Engaging with communities 5.75 Down 8 places

Schemes to regenerate native ecosystems 7.44 Down 6 places

Tracking synthetic and alternative protein 7. 1 9 Down 6 places

Agribusiness Agenda 2019 40

THEME 1 Clarity supports ROUNDTABLES confidence

A recurring theme through our this will have or the timeframes for producers into market and exposing conversations was attempts implementation. Combined with the them to consumers helps build to explain the inconsistency challenges of securing labour, new understanding of how markets are reporting requirements, biosecurity evolving; and provides confidence about between the prices producers concerns, weather vagaries and other making investments that will assist are receiving for their products daily pressures; leaders are concerned in growing and capturing value. The – which are generally at good that many producers are feeling like their industry is slowly recognising that social levels – and the low confidence problems are mounting and they have media is apt to hijack communication, levels that industry leaders are less ability to control their own futures. prioritising emotion over science and facts. Taking more control of the narrative observing among farmers. When shifts in confidence occur, there around agri-food is critical, but it needs is often a tendency to write them off as to be done in a way that engages the Recent Agendas have reported on cyclical. However in this case, many of emotions and intellect of both industry the pressures producers are feeling the issues impacting confidence relate participants and the wider community. from regulatory change, and a growing to structural changes that are reshaping perception that the public no longer the future of the agri-food sector globally. Another point was raised around the trusts them to look after the land. During These pressures are not going to be importance of clear communication. It is our Roundtables this year, industry relieved by the rain finally arriving, or more important than ever that leaders – leaders pointed to a broader range of prices recovering, as has been the case whether in national or local government, issues that they believe are making in the past. The point was made that the or within the industry – are consistent producers feel uncomfortable. This decline in confidence could become a in their messaging about key issues would explain the breakdown in the mental health epidemic in rural areas, like regulatory change. Giving tailored traditional correlation between returns if action is not taken to provide clarity messages to different stakeholder and confidence levels. where possible (and support when clarity groups has always been part of life, Firstly, leaders suggested that many is not possible). but in a connected world where these messages are shared instantly, and often producers were concerned about There are practical things that can without the nuance, such an approach the value of their land. This was in be done to provide clarity across the contributes to uncertainty. the context of banks restricting the industry. Firstly, it is important the availability of debt (which is addressed Government delivers on its commitment There are big challenges ahead. We specifically on page 51 of this Agenda); to consider the impact each piece have always believed a big challenge is the removal of foreign buyers from the of new legislation will have on rural a big opportunity, when it is approached market as a result of changes in the communities. Such reviews can resolve with the right lens. As we move into a overseas investment regime; and the friction points before they become period of rapid change, delivering clarity impact that a comprehensive capital problems or add to a narrative of when possible and helping the wider gains tax could have on land values unreasonable regulation or cost. community understand the big picture (although this risk has since receded, underwrites confidence. We believe an It was also suggested that supercharging with the Government taking the proposal industry vision is critical to achieving this, the central role that women play in rural off the table). and we are hopeful the Primary Sector communities will enhance the resilience Council will deliver a compelling vision Producers are recognising the industry of these communities. Providing later this year. This must provide the is undergoing unprecedented change. sufficient funding and resource for foundation stone on which we can build They are constantly hearing about the programmes focused on developing the clarity and lift confidence for all in emergence of novel foods; which some skills and capability of women – run by the industry. commentators have been too quick to organisations like Rural Women New claim will render irrelevant our traditional Zealand, the Agri Women’s Development The UN Sustainable Development Goals evaluate competitive advantages in the production Trust and the Dairy Women’s Network – provide a framework for considering of animal proteins. At the same time, will assist in creating a stronger platform issues such as policy impact on rural the calls to regulate how farmers, to enable the industry to handle change communities and female empowerment. growers and fisherman look after the into the future. Raising the level of understanding and environment are growing ever-louder; use of SDG’s and their associated tools Processors and marketers also have a driven by social media movements would enable us to refine and amplify role to play. They can provide real-world and organised action such as the the impact of our policy settings. School Strike 4 Climate movement. insights to producers on the future of accelerate They also recognise new regulation the agri-food system, and changes in is coming, particularly in relation to markets, to ensure narrative on these carbon, but are unclear on what costs issues is balanced. For instance, taking

41 Agribusiness Agenda 2019

THEME 2 Consumer-centric ROUNDTABLES futures

Export success has historically the development of the Indian pipfruit cost to branding a product properly, it been measured in terms of industry, well in advance of any market was suggested that the real cost of ‘half volumes sold or the number of access agreement, is a great example branding’ our products (such as putting a of the message we want to be sending logo on the pack but not delivering a true stores a product is listed in, rather about trade with New Zealand. experience) was significantly greater. than the value returned to New Zealand. As one contributor pointed Our competitors are evolving too Engaging with new value channels out, this would be like the All While New Zealand has a long- Digital platforms such as Amazon, Ebay Blacks assessing their performance established reputation for premium and Alibaba offer the ability for New based on the number of games quality, this should be no cause for Zealand brands to connect directly with they start, rather than their results. complacency. During our discussions, global customers. While technology it was noted that we cannot afford to overcomes the tyranny of distance, As new channels to market open and continue underestimate the quality of it also challenges companies to think market expectations develop, there is competitor product. Other countries strategically about how they invest to a need to rethink every aspect of the have observed the same market reach their target consumer. In the retail consumer experience to optimise it signals as us; and responded by space, these platforms offer a plethora of for the target niche. Our Roundtables investing in their product quality and choice to consumers, making it difficult covered a wide range of issues in relation value chains to secure a share of the to stand out. The opportunity inherent to how our agri-food organisations are premium space. Our competitors are in foodservice – which now accounts engaging with markets and consumers. not static – they are telling their story for over 50% of the market in some These have been summarised as: effectively and collaborating when it countries – was highlighted by a number creates value. For example, Chile’s of contributors. By marketing to chefs Trade beyond transactional investment in horticulture is very and restaurant owners, this channel obvious when they present a single provides an alternative way to reach the Contributors acknowledged the Coalition face to global customers at the global right consumers. Government for assessing the benefits fruit shows. Consistently monitoring of the Comprehensive and Progressive what is happening around the world Delivering insight at point-of-sale Trans-Pacific Partnership Agreement is important, but it’s not enough. We (CPTPPA) and ratifying the deal, despite Historically, consumers have trusted the need to do more than simply respond being staunchly against it while in retailer to ensure their food is safe, or reactively to competitors; we need opposition. While contributors suggested to provide information on the product’s to anticipate their actions in order to that CPTPPA is a high-quality deal that provenance. As more organisations are move faster and further in bringing our offers a template for future negotiations, choosing other pathways to market, such premium products to the world. they noted that the complexity of each as selling direct, it is now up to them to deal is increasing. As more people view fulfil this role. They need to provide the Becoming brand-centric trade as a driver of inequality rather than necessary insight consumers need to an enabler of inclusiveness, New Zealand Brands are used by agri-food companies make their purchasing decisions. Utilising Inc must be prepared to invest in market around the world to secure shelf space digital tools that enable consumers access in the same way that we invest and consumer loyalty. Many global food to understand product attributes and in other assets of national significance, companies are essentially portfolio provenance at the point-of-sale is like infrastructure or intellectual property. businesses that are consistently fine- becoming critical to securing a fair Our view of trade needs to extend tuning how they deploy their brands to return for a product. The risk of leaving beyond the transactional; recognising maximise return. With a few exceptions, consumers unsure about what they are that each market access arrangement we have been largely weak brand owners buying, and where it comes from, will is a strategic partnership between two in New Zealand; with our brand stories see many reverting solely to price to countries. The agri-food sector needs to often representing a confused mixture make their purchasing decision. work with government to demonstrate of national and product attributes. that we want these partnerships to be Whether an organisation is focused mutually beneficial, particularly as many on e-commerce, retail or foodservice governments appear to be favouring channels; a well-told brand story can protectionism. The work the apple assisting through the many choices in sector is doing collaboratively to support front of consumers. While there is a

Agribusiness Agenda 2019 42 Consumer-centric futures

“These consumers are motivated such as tasting notes, product “Trust in the process” to do their research on the spot… matches, gate-to-plate tracking, or they want real-time intelligence they information about the primary producer. know they can trust. This includes As Paul Ryan explains, the Blockchain With food frauds being everything from verifying the product capability of Matrex® combined with regularly reported in the is what it says it is, through to the Trust Codes® provides additional way it is produced. For example, the media, it’s little wonder that assurance when working within use of plastics in the food industry “informal supply chains” – or consumers are growing has become a hot topic and there’s a in countries where consumers strong focus on regeneration of food more suspicious of what’s are justifiably wary of non- production practices.” on their supermarket authentic products. As well as food safety and provenance, shelves. The Centre “The current state of Blockchain the strong correlation between food is much like the early days of the of Food Integrity (CFI) and health is driving the call for internet… it is still an emerging tech, greater transparency. reports that the “trust but it is going to be BAU soon. It will gap” between consumers “We’ve become highly-attuned to the be woven into all processes – not health effects of food, and consumers are as a standalone product as some are and food/beverage using this lens to look more closely at the marketing it – but as an integrated companies has grown brands they choose to align with.” part of brand transparency solutions.” wider in recent years. While Trust Codes does not publicly list its customers, the technology is being used by brand owners throughout As consumers start to actively the dairy, infant milk formula, honey, challenge the information they’re given, beverage and meat sectors. In 2016, brand owners are being motivated to Australian infant formula producer verify their supply chains, one data Camperdown announced they were point at a time. implementing codes on their tins Kiwi-grown company Trust Codes is as a means to reassure their helping brand-owners to do just that. Chinese customers. The Auckland-based company has The Cloud-based platform works developed Matrex®, a blockchain with any modern smartphone camera solution that was born out of its original or WeChat – there’s no dedicated anti-counterfeit technology. By placing app to download. It provides a a Trust Codes® cryptographically unique digital fingerprint for each and every QR code on product packaging, it gives product; using proprietary algorithmic

consumers in global markets real-time technology to validate the contents evaluate intelligence on their shopping choices. of each packet, tin or box. “Consumers are starting to ask In addition, it gives manufacturers questions around their food – and the chance to interact with their all aspects of it,” says Paul Ryan, consumers. They can also use Trust Codes CEO. the platform to share key product information with consumers; accelerate

43 Agribusiness Agenda 2019

THEME 3 New environmental ROUNDTABLES expectations

While few leaders we talked to and take action, whether it was in their acknowledging that achieving foresee an animal-free future for interests or not. Now is the time for the targets will likely require land the New Zealand agri-food sector, the next generation of titans to step use change. It was pleasing to note forward and identify themselves, new funding in Budget 2019 directed there was little disagreement and begin leading the challenge. towards delivering tools to producers that the sector must respond to to assist in this transition. the environmental expectations The Zero Carbon challenge of Government and the wider The Prime Minister announced the Enhanced management of land use community. There is simply Government’s plans for climate A feature of this year’s Roundtable no choice in the matter, if change action on 8 May, after we conversations was an increased the sector wants to preserve had completed our Roundtable willingness among industry leaders its license to operate. conversations. While the intention of to think differently about how land is the package is broadly supported, a used, in order to ensure it delivers We had numerous conversations specific proposal to require a reduction better environmental and economic around: how land use should be in biological methane of between outcomes. Over the last decade, determined; the priority that should be 24% and 47% by 2050 has been the debate around land use has given to regenerating the environment negatively received by the industry; become polarised around dairy, as the back towards its natural state; the particularly as the thresholds are availability of irrigation water saw many impact the Zero Carbon Bill will have greater than targets suggested by farmers convert their farms. This has on the industry; and whether the the Parliamentary Commissioner on led to a flawed conventional wisdom shift towards these new expectations the Environment. Before the details that making water available somehow should be incentivised or enforced. The were known, industry leaders were causes land use intensification and role that water plays in the industry’s signalling that adapting to the new adverse environmental outcomes. future featured in some conversations, climate regime is going to be both Water does not cause pollution, of but was not raised to the same extent challenging and confronting for many course. It is poor farming practices or as it had been in previous years. around the country. It will change land the use of the wrong system that have use, and force farmers to sacrifice part damaged the environment and polluted It is clear that no individual or of the commercial value of their land the waterways; and leaders suggested single organisation will solve these to enhance its environmental value, this should be the focus of land-use environmental challenges on their without any prospect of short-term change conversations. own – the only way forward is through financial return. co-ordinated action. A number of The reality is that our devolved system contributors suggested the pending The key concern around a mandated for managing land use is not delivering transformation is the most significant carbon reduction strategy focused on optimal outcomes for anyone. The change to the industry since subsidies the costs associated with transition. system is inconsistent, slow and were dropped in 1984. It should not Little consideration was given to the has limited teeth to address non- be overlooked that every person starts opportunities that it could unlock. Many performance. It is not resourced to this journey from a different place, both believe that while net carbon zero keep pace with changes in scientific in respect of their personal beliefs and is a realistic target for the industry, knowledge, technical innovation and the measures that they have already planting more trees is not the pathway social expectations. To date, processing taken in their business. to achieve this. While the One Billion companies have been light-handed Trees Programme has created new in prescribing how their suppliers One contributor suggested that economic opportunities in the forestry operate, and rarely provide premiums New Zealand is lagging behind many sector, there is no desire for this for higher care production systems. countries on community recognition, to become the Three Billion Trees A range of options for managing land understanding and openness to Programme to deliver carbon neutrality, use were suggested – from introducing change. Strong leadership will be given the significant adverse impact a national management system, needed to guide the industry through this would have our rural communities. and providing more comprehensive what will be a challenging decade or It was clear that the industry is looking guidelines to councils, through to more. Past transformation has been to the government and international placing obligations on banks and steered by industry titans; leaders that partners for technology that reduces processing businesses to influence were prepared to publicly stand up agricultural emissions, while

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the behaviour of their customers Regenerative agriculture is not about Industry leaders recognise that paying and suppliers. It was agreed that any planting billions of trees or taking for greenhouse gas emissions and solution needs to be powered by the productive land out of production. the use of other elements of natural best available analytical tools, so the Rather it is about farming in a way capital will become a reality for the decisions made are fully informed. that enhances biodiversity, enriches industry. The design of the charging The bottom line is that we must seek soils, improves the cleanliness and mechanisms should be focused on to move towards optimal land use for quality of waterways and streams, and lowering emissions rather than raising the environment, the community and strengthens ecosystems. It also helps revenue. Placing agriculture in the individual land owners; and provide to capture more carbon within the Emissions Trading Scheme (ETS), even farmers with the time and tools they farming system. Providing land owners an enhanced ETS, will not achieve need to transition when change and producers with tools to help them this. However a system that baselines makes sense. explore opportunities – and enhance emissions on each farm, and rewards their systems in sustainable ways that farmers that reduce their emissions One contributor talked about his reduce environmental impact – can at a faster pace than national targets, experience of land use decisions only benefit both our agri-food and would drive change. It has taken within Māori organisations. Groups tourism sectors. This will be of great decades to make progress on water, of land owners are actively pooling value in selling the Aotearoa due to the confrontational approaches land holdings as they make conscious New Zealand story to the world. that have been adopted to the issue. decisions about how their land is used We simply do not have the luxury of in the future. The owners recognise Incentivising change time to make progress on climate that collaborating with other owners change. Learning from the mistakes provides the scale necessary to If we are serious about securing of the past, and designing a system support investment in higher-value our environment in New Zealand, that delivers progress rather than product opportunities. Many Māori it is critical that we use the right retribution, is critical to securing our organisations are leading the way in mechanisms used to guide change. environment for future generations. proactive land use management, as they There is no doubt that many in the seek to balance their commercial returns agri-food sector will be asked to face As New Zealand embarks on its against their community purpose. confronting choices; and they need transition towards a low-carbon appropriate pathways to facilitate future, it is critical that we ensure Regenerating Aotearoa these difficult decisions. While there all the costs and externalities are are many calls from activists to use A number of conversations pointed to reflected in the prices we seek to penalties and taxes to enforce change, the critical role our natural environment charge customers for our products. industry leaders would prefer to see plays in New Zealand’s two largest a mixed framework, which includes In our view, it is critical for New industries, agri-food and tourism. While carrots to incentivise people towards Zealand to become the first agri- there has been significant change the right decisions. There is no doubt food sector to achieve an attribute in many farming systems over the that more will be achieved, and the premium for producing net carbon last five years, these have enhanced pace of change accelerated, with the zero food products. This also makes existing systems rather than driving right incentives and rewards. This it imperative for the industry to seek a fundamental shift in the systems means helping people to understand a fast transition, rather than targeting being used. A number of conversations how investing in the environment can 2050. It will also require other sectors highlighted that the sector may need deliver economic return; supporting to appropriately price the products and to face up to a reality that existing them with the costs of making these services they deliver. In particular, this systems will never be able to deliver investments (potentially through a applies to tourism. Our rural economy evaluate the environmental benefit being Green Bank, referred to the 2017 cannot be expected to continue sought. Some contributors noted that, Agenda); and rewarding trail-blazers to subsidise the economic and in future, land owners will likely be for their positive leadership. environmental cost of the deluge of required to use regenerative practices low-value tourists we have attracted on their land to generate better to the country in the push to grow environmental outcomes. visitor numbers. accelerate

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THEME 4 Collaboration, ROUNDTABLES leadership, trust

The 2015 Future Leaders Agenda While the need for an umbrella are prepared to take – even when the showed the importance that cohort organisation still ranks lowly in our rewards may be huge. As one contributor placed on collaboration, leadership Priorities Survey, it appears that a top noted, the role of an outstanding sector body looks increasingly necessary. governor is to recognise when current and trust. It was interesting to This would provide a single, strong strategies are no longer fit-for-purpose, hear those three words come and viable partner to the Government; critically assess proposals put in front up time and again during our rather than having to stitch together of them, challenge ‘group think’ around Roundtable conversations. collaborations with 20 to 30 different the board table, and take some sector bodies, each with their calculated risks. Within our contributor group this year, we own agenda. We all instinctively assess ideas through had a number of people that had joined or It was suggested that capital availability the lens of our own social and economic returned to industry in the last year, which will accelerate collaborative activity. It is background. This makes it critical to bring made their observations highly relevant. expensive to be consistently successful diversity of thought to conversations at To an outsider, silo-like behaviours appear in international food and fibre markets, leadership level. At times, it will mean to be more enshrined in the agri-food and few New Zealand companies have discussions take longer; but the quality industry than in other sectors (partly due the scale to make a transformational of those discussions will be higher and to funding structures such as commodity investment using their own resources. By the outcomes richer. These deeper levies and competitive research funding). way of comparison, Zespri spends more conversations can also lead to Boards They also noted the sector’s tendency than $150 million each year promoting making the brave decisions that will have to keep government ‘outside the tent’ its story in key global markets. For the biggest impact. Our contributors as long as possible, despite its ability many organisations, the ability to share believe we have a right to expect more to enable actions and align investment costs on elements that are generic or leadership from our boards and their for impact. non-competitive will enable them to executive teams. As we noted in the Acknowledge section, accelerate market growth strategies We could do worse than learning significant progress has been made until such time they can make the from Singapore, a country with over the last decade in building bridges investment themselves. massive aspirations in agri-food. When and trust between leaders across the One of the constraints on collaborative the Singaporeans look to achieve industry. This is driven by initiatives behaviour is historic. Our future leaders a strategically important economic such as Te Hono, which has created had a clear message on this (i.e. “get transformation, the Government and relationships between leaders via the over it”), but for many leaders, the industry collaborate closely. They work to Stanford Bootcamps. Our companies are frustrations of failed collaborations identify and resolve skill shortages, jointly also seeking to work together in offshore remain raw. Past initiatives have often underwrite the investment necessary markets. A good example is Primary under-delivered because they have been to share the risk, and direct the best Collaboration New Zealand in Shanghai, inflexible, over-governed, and ultimately available capabilities at solving the key featured in the 2017 Agenda, which has unworkable constructs. Too often, they problems. This shows the kind of big- companies joining to benefit from an have been designed by committee in an picture, collaborative perspective that established market entry point. The EAT attempt to get buy-in. In a fast-moving New Zealand would benefit greatly from. New Zealand initiative, showcased on world, the aim should be to partner with page 46, is another example of positive a coalition of the willing, rather than collaborative activity. waiting for everybody to get on the bus. While we have made a good start, It was suggested that organisations will the challenge now is to scale-up the be more successful if they take risks and collaborative activity so that it has a experiment together with a common transformational impact. Both commercial purpose and passion. and industry good organisations have The willingness of governors to take risks effectively collaborated with government is a theme that featured prominently this at an individual sector level, but there year. In a small market like New Zealand, is little happening at an industry level. where personal brands are tended Critically, there is no representative carefully, the fear of career-limiting failure organisation for the Government to remains. This limits the risks that leaders partner with on the macro challenges.

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As two of the biggest “Our country is ripe for this type of gastronationalism. It’s a wonderful “Throughout the country, contributors to the New lens through which to understand New we’re encouraging people to Zealand economy – it Zealanders. Our home-grown food is reconnect with where our food makes perfect sense to absolutely world class, and we have incredible ingredients being enjoyed comes from, and to recognise create a global marketing around the world. But we’ve not always tool at the intersection been strong at connecting those with the truly incredible ingredients people’s experiences when they visit we grow, catch and make here. of food and tourism. the country… and that is precisely what Eat New Zealand is designed to do.” It’s also a time to acknowledge More than two thousand food the manaakitanga or hospitality businesses, searchable by region, Eat New Zealand, launched in March are listed on eatnewzealand.nz. that is an intrinsic part of who 2018, is a collaborative platform that’s They include a wide range of eating designed to put New Zealand cuisine we are as Kiwis.” establishments, farmers markets, on the international traveller’s map. events, food tourism venues, operators The not-for-profit food movement has and producers throughout the country. attracted a passionate cohort of chefs, It also includes an ‘itinerary’ function, restaurateurs, producers, media, which allows visitors to keep a wish- tourism and event operators – all keen list of places they’d like to visit or to champion the unique gastro-tourism remember. New Zealand has to offer. Social media plays a large role in their CEO Angela Clifford explains the value storytelling; particularly from those keen of this pan-industry approach: to educate people about how our food “One of the biggest problems we is grown, and how we can move New face as a nation is that food is siloed Zealand toward a sustainable future. across different industries – tourism, “Seeding an idea through social media agriculture, manufacturing and so on. brings everybody into the conversation, But once you knock the tops off the and creates an open forum for silos and work together, the alignment discussion,” says Angela. becomes very clear… and there’s an organic opportunity to collaborate. Eat New Zealand promotes events Instead of creating a hierarchy of held around the country which aim information, you create a web.” to highlight our best food makers and growers. The collective has just Angela says the vision is people evaluate announced New Zealand’s first national connected to New Zealand through food celebration, Feast Matariki, which our food and the ultimate goal of the comprises more than 100 events and movement is to place New Zealand regional activations during June - July. cuisine firmly on the world map – in a similar way that ‘New Nordic cuisine’ has re-energised Scandinavia’s food and tourism sectors. accelerate

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THEME 5 No one solution to ROUNDTABLES labour shortages

Some contributors believe labour job, drug and alcohol-free. The bottom line —— Leaders in the kiwifruit sector and skills shortages are the biggest is drawn by simple market economics. reported that recruiting key skills into challenges facing the industry. If While New Zealand-grown product can their sector has been less difficult in potentially secure a premium, in the light recent years. They suggested it had the agri-food sector was the only of labour cost increases, this premium become a more attractive sector for sector of the economy grappling is not always sufficient to justify the young people to join; with the industry with this issue, it would probably be additional cost of labour. demonstrating innovation, growth and financial profitability. While not a solvable problem. However with Having heard about these challenges at every sector enjoys the success other sectors also facing severe many Roundtables, it appeared labour that the kiwifruit sector is currently labour shortages – construction, issues have become a millstone around experiencing, there may be other the industry’s neck; and a constraint on hospitality, healthcare, and means to the same end. To assist in the contribution it makes to the country’s education, among others – the attracting key talent, the public face economic prosperity. Thankfully, there are competition for talent has become a of the industry could be focused also examples of organisations seeking to on technological innovation and the war. There is no single easy solution utilise a range of innovative solutions to impact the industry has on local and to ensure the sector has the people the problem. The case study on page 48 global communities. it needs to support its growth. highlights the cadetships that Parininihi ki Waitotara have introduced, creating —— It was suggested that the RSE Contributors also highlighted an additional a relevant pathway to introduce young scheme should be recognised for risk: that labour issues could impact the people to opportunities in the sector. what it achieves. It could be described ability of the industry to secure a premium as New Zealand’s largest non- —— We heard about the partnership for its products. If the labour resource governmental aid programme, and between T&G Global and the Ministry is not available to undertake the extra one that transfers significant value for Social Development (MSD). handling required for the processing of to communities across the Pacific Together they have implemented premium products, the easiest option for each year. Changing how the scheme an innovative buddy-based support producers is to put more of their product is perceived will increase political structure around MSD clients that through commodity channels. understanding, and hopefully enable have struggled to hold down a job. the scheme to grow sustainably. We heard comments from a number of The buddy ensures that the client leaders that the Government is doing little gets up on time, arrives at work —— When it comes to robotics and to mitigate the sector’s labour challenges. with everything they need, and are automation, and how they will reshape A number of policy decisions – such as supported through the working day. future labour requirements, the impact winding back inbound migration, limiting The programme effectively teaches on agri-food will be no different to the Recognised Seasonal Employer (RSE) people how to work; and ensures any other industry. While this may schemes, and allowing critical industry workers who would previously have provide a long-term solution to some training establishments to fail – have all been overlooked can be productively labour challenges the sector faces, it made the challenge of finding skilled employed in the sector. is important that investment is made employees more difficult. into these technologies today – so —— As we have highlighted in previous the solutions are available tomorrow When industry raises these issues, the Agendas, it is important that the to protect competitiveness. Solutions standard response given is that labour sector delivers employees the jobs are often going to be bespoke to challenges would be solved by paying as promised. Good employers are New Zealand’s environment meaning people more. This is simplifying the issue. taking steps to ensure that this is the we can’t rely on the world solving Labour is a significant cost element case, by investing in all aspects of our problems. for many agri-food businesses; and the workplace experience. We heard particularly after rises in the minimum examples of upgrading working and wage, margin pressures mean employers living conditions, offering flexible cannot both pay more and remain work scheduling, supporting team sustainable. Furthermore, evidence members to take active roles in the suggests that even when more is paid, it community, and investment in training can be a struggle to find workers who will and development. commit to regularly attending a physical

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With a long and complex This also means keeping a continuous Two farming cadetships – which are close eye on emerging commercial 12-month full-time paid positions – history as a Māori opportunities including the likes of expose the cadets to different options Incorporation, Parininihi Industrial Hemp, honey and sheep’s within farming, as they rotate through ki Waitotara (PKW) is milk – but always through the lens PKW’s diverse business operations. of kaitiakitanga (guardianship of They will also earn nationally- re-defining what it means the environment). recognised qualifications in dairy farming. to be a truly modern “We’re not only looking at different farming business. farming systems, but also ensuring A further two cadetships, for students our activities are environmentally of agribusiness and finance support, Their wide portfolio now includes a sustainable, creating wealth for are based within PKW’s New Plymouth comprehensive agribusiness company, our shareholders and for the future head office. forestry interests, horticulture, generations,” says Warwick. And while the emphasis is on offering aquaculture (including live crayfish This social imperative is also being valuable career experience, it’s also exports to China), commercial properties, driven by PKW’s 10,000+ shareholders. an opportunity for PKW to develop its and a Māori co-investment fund. The Board and executive maintain an future leaders – by immersing them in Underpinning their diversification ongoing dialogue with shareholders, the business and its kaupapa. strategy is an unwavering focus on which helps inform their strategic “Younger generations have a clear sustainability, and creating value for mandate for the future. sense of purpose, and we need to future generations. “We kicked off the process by ensure they’re attracted to the industry According to PKW’s Chief Executive, talking to all of our stakeholders – if we want to retain and revitalise the Warwick Tauwhare-George, embracing shareholders, staff and user groups industry’s licence to operate,” opportunities outside of dairy is a – to put the question to them: ‘what says Warwick. natural progression for the organisation, should kaitiakitanga look like, and how “By allowing them to live and breathe which was first incorporated in 1976. should we be operating as kaitiaki’?” our kaupapa, we can positively “We have been entrusted with over “We now have a strong set of pillars to influence those who will sit in our 20,000 hectares of some of the most operate by, so we really walk the talk, chair one day.” productive land in New Zealand. and deliver to our word.” Historically, we have been dairy Building a pipeline of talent is another farmers because dairy farms have been key pillar of success for PKW. The located on our whenua… but we are organisation has developed a Cadetship continuing to diversify, thinning our programme, which it believes is a risk, and attracting new investment.” + proven and successful pathway for 20,000

In 2019, seeking out alternatives to the Māori career development. HECTARES evaluate traditional dairy farming reflects PKW’s “As a significant Māori-owned business core mission “to be a successfully that’s active across a range of industries, diversified and sustainable Taranaki Some of the we have a wealth of experience and Māori-owned and operated business opportunities we can provide our cadets,” most productive providing meaningful opportunity says Warwick. to our people.” land in New Zealand accelerate

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OTHER THEMES Also on the agenda During the Roundtable conversations, a number of other issues were raised ROUNDTABLES that demonstrate what else is currently on the minds of industry leaders.

Biosecurity Biotechnology China Risk growing annually Future-proofing the industry Continuing to the ride the Dragon

Despite again securing the top slot In this year’s conversations, industry China has boosted New Zealand’s in the Priority Survey, there was less leaders talked about the opportunities economic prosperity over the last talk about biosecurity this year. It was inherent in emerging biotechnologies; decade. While some remain concerned suggested that while the likelihood as well as the potential future impact of about over-exposure to China, we of the Brown Marmorated Stink Bug choosing not to use these technologies. cannot overlook the stability of the establishing in New Zealand appears Some contributors believed that market and its ability to pay good to increase each year, investment in unless we are open to using existing prices. It is unlikely the 2020s will minimising this risk has been cursory and emerging technologies, New see exports triple again, as Chinese in comparison to the costs of the Zealand cannot be a low carbon leader, growth slows; but that certainly does destruction it would cause (which a sustainable food producer, and a not mean the opportunities for New would be to horticulture equivalent contributor to feeding the world. The Zealand companies have been exhausted. of foot-and-mouth). The incursion risk ability to grow plants has always been One contributor noted that the food and grows with more ports of entry into our competitive advantage, however hospitality sector is not slowing anywhere New Zealand. It is therefore critical that technology is transforming how plants near as quickly as the wider economy. we have co-investment by government are grown; and we stand to lose both The government in China is focused on and industry into proactive risk expertise in plant science and our growing domestic production to provide reduction and response strategies. competitive advantage if we are not food security to the wider population, open to this discussion. leaving valuable opportunities for It was suggested that one simple exporters to develop and extend markets strategy would be to require It was highlighted that we have political targeting affluent consumers. the national airline to relay video leaders from all parties that are listening information to inbound passengers; and acting on the advice of scientists The key to success is being selective ensuring that visitors and New in relation to climate change – but are about the pathways used to access the Zealanders understand the risks facing unwilling to trust the same scientists on Chinese market. The advice we have our country from a major incursion. biotechnology. The world continuously given in previous Agendas still applies: moves forward on biotechnology be selective about your partners, do Mycoplasma bovis has again (our unscientific KPMG team survey due diligence into alignment of values, highlighted how an incursion can suggests opinions have shifted), but and do not consummate a deal with quickly shift from being a national, New Zealand’s capability remains the first partner to come along. Market governmental issue into a localised and stalled. Investing in research in these positions in China need to be constantly personal one – for those who have the areas ensures we have the capability invested in. In particular, the extensive misfortune to be impacted. Biosecurity if and when a decision is made to use of social media and e-commerce is an issue that should be a priority on permit their use. In the meantime, allows a challenger brand to become their risk register of every organisation; learnings from research will accelerate market leader incredibly quickly; so yet most are prepared to discount the traditional plant breeding programmes. being on the right platforms and active risk until they find themselves at the The message from industry leaders in social conversation is critical. It was centre of an incursion. was clear: now is the time for a also noted that as the Chinese market comprehensive conversation on this matures, the failings they have forgiven issue. We cannot afford to keep kicking in the past will not be so easily forgiven it for touch. in the future. Getting it right every time is more critical than ever.

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Two years into their “The pace, growth and value of China “The way we see it, alternative makes it an obvious market,” he says. proteins are serving to amplify the partnership with Shanghai whole protein market. The debate has “It is part of the company’s DNA to sparked the urgency to tell our story, Maling, Silver Fern Farms become intimate with the market and so it’s also very exciting.” are on a journey to navigate our consumers…and this partnership the complexity of China, helps us to find a way to understand With a rebalancing of protein in the the Chinese market more deeply.” global food system, new choices are their priority market. flooding the market, and understanding In-market partners also have the ability the red meat brand in a competitive to amplify the New Zealand provenance Having a partner on the ground is landscape has become critical story, he says, in a way that resonates proving particularly valuable as the to success. company continues to apply its Plate with local Chinese consumers. to Pasture strategy – and placing “New Zealand has – in abundance The key to navigating such a fast- the consumer front-and-centre of – those attributes that consumer’s changing and intricate market has all strategic decisions. desire. These include qualities such been for both partners to align their as sustainability, health, taste, and respective objectives and vision. As The game-changing partnership with food safety.” Shanghai Maling was completed in 50/50 shareholders, both interests late 2016. Aside from the financial need to be respected and understood. resources provided by the $261m “It’s an iterative process, and we cash injection, the deal was noted have a continuing dialogue to make for delivering the co-operative a sure both sides are represented,” “connected partner in the fastest- says Limmer. growing red meat market in the world.” “This makes for a challenging debate, “Strategic alignment is so much but it’s more valuable at the end of more powerful than pure financial the day.” objectives,” says Chief Executive, Simon Limmer. Meanwhile staying competitive in the global market is also taking place set “We’re working on a long-term against another backdrop – namely the approach to develop the market – exponential global rise of alternative with our consumers as the focus.” animal proteins. But Limmer says Silver Limmer already had intimate Fern Farms is more than up for the knowledge of the Chinese market challenge. In fact, it simply reinforces

from his previous tenure with Zespri, their strategy, which had long made evaluate which included a stint as GM of China. the shift from being supply-driven to Since taking over the helm at Silver market-led. Fern Farms in March 2018, he has continued to visit China every two to three months. accelerate

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Debt availability A one-stop shop for academia Future organics Significant risk of deep disruption and research? Hope from a legal definition

While this is an issue that was touched With a number of contributors having The role of the organics sector in on by some contributors, it is not in the recently visited Wageningen University New Zealand has been a subject that mainstream consciousness across the and Research in the Netherlands, we have touched on a number of sector. Some are concerned about the there was discussion around Agendas over the decade. The sector impact that proposed changes by the whether a similar institution could be has consistently bemoaned the lack Reserve Bank of New Zealand (RBNZ) explored here. This is best described of a regulated definition of ‘organic’ will have on the availability of debt to as a one-stop-shop model that in New Zealand, and the damage this farming businesses and the cost of that consolidates capability in primary sector has done to true organic producers, at debt. The RBNZ proposes to require postgraduate education, along with home and internationally. Their products large banks to hold more capital to back pure and applied research, into a single have been forced to compete with certain lending that is systematically institution. The barriers inherent in New conventional products that have been important to New Zealand’s banking Zealand’s current system – which is misleadingly labelled organic, because system. Our analysis suggests that this spread across at least six universities there was nothing to stop more could see banks motivated to reduce and four crown research institutes – are unscrupulous growers doing this. The rural lending books by between 10 and significant. Collaboration is constrained good news for the sector is that work 15 billion, as well as increasing the cost by physical and funding barriers; is progressing towards establishing a of remaining debt. institutes compete for funding rather legal definition for organic products; than projects being prioritised based on No surprisingly, this is a big issue in which should assist the industry to impact; and much of the investment in the banking sector; and it should be an enhance its reputation and access the system is consumed in overhead. issue that farmers are discussing with new opportunities to export products their bank to understand how it may When compared to the Wageningen into international markets. The biggest impact on their facilities at renewal model, contributors noted that our challenge to organics remains the low time. We have three prime concerns system appears to lack the co- cost of conventional food in comparison about these changes. Firstly, they have ordination and critical mass observed to the higher-priced organic alternative. the potential to drive banks to terminate in the Netherlands. The integration of Until all food prices reflect the true facilities, which may require farms to commercial entities into the ecosystem costs of producing food, including fully be sold quickly with the risk that these around Wageningen is also missing in reflecting the environmental impacts a sales collapse land prices. Secondly, New Zealand, meaning activity is not product has in the price, the differential the proposal comes at a time when always directed the opportunities that will continue to make organics a more farming businesses need to invest in will create most value. Many in the volatile, higher risk part of the food reducing their environmental footprint sector are emotionally attached to our system for commercial producers. and technology to meet the growing current system, despite the fact they demands of consumers. Without recognise it spreads resource too thin. access to debt, this investment will As the Primary Sector Council develops not be made; which will impact on the its vision for the industry, it is critical economy. Thirdly, restricting credit will that government and industry resources further restrict the number of buyers are directed towards a fit-for-purpose for farms at a time when tightening model. It may be that a more cohesive of international investment rules has Wageningen-style model is right for largely excluded foreign buyers from enabling the future we aspire to. the land market, and many farmers are seeking to exit their business at retirement. We believe there has been insufficient detailed cost/benefit information provided so far by the RBNZ to support their proposals.

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Technology uptake The crunch comes in the spring

Every aspect of the value web is being reshaped by technology… whether it’s an AI-driven support system that augments the intuition of farmers and growers, a data-driven sales and operations planning system that matches products to markets for maximum value, or a social media platform that connects a business to its consumers. We have been consistent in our calls that there can be only one standard of broadband connectivity across New Zealand; and anything else would be an injustice to the most productive sector of our economy. New Zealand is currently ranked 18th globally for use of technology in business, and a contributor suggested that infrastructure issues continue to plague the adoption of digital solutions in the agri-food sector. It was also noted that despite the Government committing $150 million to RBI2, the rollout has been slow to date. The 2019 Rugby World Cup looms as a make-or-break event for technology adoption in rural areas. If the streaming platform works and delivers a great experience, it could be the tipping point for the uptake of digital technology in many aspects of rural life. If it is beset by buffering, it will demonstrate the failure of over a decade of policy and investment to connect our rural communities. evaluate accelerate

53 Agribusiness Agenda 2019 What needs to be done to supercharge the 2020s?

At the end of each Roundtable conversation, we asked our contributors their view on the single most important action that could set the agri-food industry on a course to amplify its success in the coming decade. Here are some of the highlights:

“Aggregate academic and infrastructure to secure critical mass, eliminate duplication and provide a platform for the industry to lead in innovation globally.” “Develop education and training programmes for farmers so they “Activate underused Māori land by understand the reasons they are being making the necessary changes to the advised to invest in evolving their farming Māori Land Act rather than undertaking systems, and can better understand the further rounds of consultation.” consumers they are producing food for.”

“Carefully capitalise on the alignment that traditional Māori values have with the values of many premium consumers around the world, while preserving the cultural and spiritual significance of these values.”

“Change the conversation for ‘me or I’ to ‘us’ “Focus on our competitive to drive a focus on scaling game-changing advantage – growing natural initiatives to make them globally relevant grass – and sell the benefits of our through business-to-business collaboration.” farming systems to the world.”

“Get more scientific about the value of our “Be prepared to make long-term products from a psychological perspective, investments in young people so we better understand how consumers to build the capability that the value products and ensure pricing is aligned industry will need in the future.” to the perceived high value attributes.”

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“Everything done in the industry [should have] an ethical sourcing overlay so that we are able to demonstrate everything in our “We need to be clear about value chains is being done as ethically as where we want Aotearoa NZ possible. It may cost in the short term but to go in the future so that as an will ultimately deliver better outcomes.” industry and community we move in a consistent direction, while retaining and celebrating that “Co-ordinate research efforts to deliver solutions unique sense of kiwi individualism that enable producers to regenerate their everybody brings to the table.” land in an meaningful way, while ensuring that they retain a sustainable business.”

“Ensure high quality food is available “Be transparent on the Sustainable to all New Zealanders, so we become Development Goals that you want to a global exemplar of a healthy society have impact on, tell the world, and then powered by world class nutrition.” keep telling them how you are doing.” “Shift the dial on leadership to maintain “Provide certainty to the community the vibrancy of the industry by focusing and the industry – take clear on people, skills, confidence and positions on issues like greenhouse belief. Leaders can’t contract out of gases and commit to taking action responsibility, and need to be visible.” over a longer term horizon.”

“Don’t leave land use to chance, deploy advanced data and analytical tools to make better and more rational decisions on how land is used and support farmers when farms make sense.” “Restore pride in what we do – profile the “Welcome government into the tent as fact the industry is complex, data-driven a partner and engage them in design in and good for the world and New Zealand – key programmes so they are comfortable focus on telling the stories of the industry’s to commit secure long-term funding rockstars so they recognised as being the to key transformation initiatives.” Teslas of the global food system.”

“When possible, adopt a circular mentality to processes and value chains to ensure we focus ruthlessly on eliminating waste, to minimise environmental impact

and maximise economic value.” evaluate accelerate

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Accelerate accelerate

57 Agribusiness Agenda 2019

Playing an infinite Gunn © Shutterstock Mitch game...and thriving through wellness

Change is constant and it always for decades. Significant money is now a material impact on the markets will be. We instinctively search flowing into the technologies that producers ultimately sell their products for new knowledge and use this have the potential to reshape every into around the world. We often hear aspect of the agri-food value chain, people talk about the market as if it is information to look for better, from what a farm is and how things are a single, uniform construction. Maybe more efficient ways to do things. grown, through to new products, and in the past this was a reasonable As already discussed in this to the way products are processed, approximation of reality, when channels Agenda, the agri-food industry distributed and ultimately consumed. to the consumer and the range of product options available were limited. in New Zealand has changed In our view, the world has not only significantly over the last decade; entered the fourth industrial revolution, However, the technologies of the fourth in what it produces, how it it has also entered the first global industrial revolution are fragmenting interacts with consumers and agrarian revolution. The basic premise markets into an infinite number of how it uses natural resources. of both revolutions is the same; the niches, aligned to the specific wants fusion of biological, digital and physical and needs of consumers around the Industry leaders recognise that the technologies to create exponential world. As we note later in this report, pressure to change is unrelenting and solutions that have the potential to the one size fits all solution has gone, likely to accelerate for the foreseeable transform industries and the way that to be replaced by a model that is future. As a consequence, the need we live our lives. trending towards mass personalisation and, eventually, solutions that deliver to continue the transformation of We see the agri-food sector as being one size fits one products. organisations to become more at the centre of the fourth industrial collaborative, agile and resilient is an revolution as combining the biological The global market in the next decade ongoing and significant focus for many (a plant or animal), with the physical (a will be comprised of millions of niches. of the leaders we talked to. tractor or a hoe) and digital (knowledge We expect that each of these niches and insight) has been what the industry will align with one of a number of key Recognising the extent of disruption has always done to grow food and fibre food system streams that reflect the It is hard to comprehend the extent products. We do, however, distinguish ability of an individual consumer to of disruption the agri-food system is the revolution in the agri-food sector make choices in respect of the food facing globally. The reality is that much from the wider revolution because they eat and the way it is integrated of what is considered usual agricultural the sector effectively missed the first into their daily lives. Given that markets practice today would not be that alien three industrial revolutions, and is are evolving rapidly it is hard to predict to the Vikings or the Romans. While consequently facing more significant with accuracy what these food system we have introduced new equipment, disruption over the next decade or streams will ultimately end up being, in some parts of the world, and so than any other sector of the but we foresee seven primary streams improved the genetic qualities of the global economy. which are likely to encompass the plants grown or animals raised, the bulk of consumers around the world; fundamentals remain largely the same The agri-food market of the future subsistence, sustenance, first choice, - tend the land, feed the animals, add While food and fibre producers are flexible, integrated, ethical sun and water and wait for a product facing dramatic change within their and premium. to grow. As a consequence, the own farming operations, the wider industry has been ripe for disruption transformation of society will have

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Recognising that the expectations on following exponential adoption curves come and go and no endpoint. The producers are different for consumers that start slowly. However, as adoption organisational objective is to build the in each of these streams is critical to accelerates it can’t be overlooked that capacity and resilience to stay in the determining where the products an each doubling adds 100% more users. game, and thrive in an ever-changing organisation grows are targeted. It is It is difficult to move beyond models world while competitors fail or exit important for producers to recognise that are built on historic data and trends, the market. The problem for many that they are very unlikely to be able to but it is critical that organisations do traditional businesses, is that if you try feed the world, by developing markets take this step to stand a better chance to play an infinite game with a finite across each of these seven streams, but of capturing the opportunities in front mind set you will struggle to match in most cases maximising the value of of their organisation. your competitors for innovation, effort, their product will require them to target morale and performance. Recognising that you are playing consumers in niches in more than one an infinite game Surviving in an infinite game requires stream, recognising that each requires organisations to enhance existing, and a tailored strategy and approach. In an environment of dramatic and develop new, capabilities to enable continuous disruption, the biggest risk The challenge for organisations is them to retain a sustainable position in facing organisations is maintaining that they are being required to make the markets that they choose to play in. relevance. In the past, organisations decisions on the niches they should developed strategies which used Internationally, we observe many target based on their expectations language like winning, beating the companies using the UN Sustainable about how the system may evolve, competition or leaving nothing on the Development Goals to define the and the assumptions they have table. The focus today is on long term impact they seek to have and reporting formed about which of the 45 trends sustainability and earning the right to their progress. shaping the food system, discussed serve customers and partners. This on the following pages, will have the Our conversations during the year change in language is reflective of a most dominant impact on consumer have assisted us in identifying a range change in the ground rules surrounding behaviour and demand. of organisational capabilities that markets that the pace of innovation and have not always been a priority in While we make predictions about disruption is imposing. agri-food companies, but which need the future of the food system, the Well known business commentator, to be developed in response to the speed and extent of disruption the Simon Sinek, suggests that what we substantive changes that are occurring sector is facing mean that the past are observing is a fundamental shift in how markets are function. We have does not provide a reliable predictor in how business works, from a finite summarised the attributes we believe of what will happen in the future. The game (with rules, a start, a finish and will help organisations to thrive in their adoption of technology over the last result) to an infinite game; a game infinite game on page 60. decade has illustrated that the world with changeable rules, where players is not linear, with many technologies The seven primary food system streams

SUBSISTENCE: INTEGRATED: Food availability is not assured and consequently these Food is fully integrated into lifestyle, the consumer can consumers will eat whatever food is available when afford foods that provide functional and nutraceutical it becomes available, often as a result of their own properties when necessary and regularly invest in premium farming activities, with little concern about the nutritional food products and eating at ‘experience’ restaurants when composition or safety of the product. they are spending time with family and friends.

SUSTENANCE: ETHICAL: This consumer has sufficient economic capability to buy Consumers which put the provenance of the product the food they need for them and their family. Their focus is central to their buying decisions. They generally do not have on sourcing enough nutrients to enable them to function in financial constraints on their purchasing decisions, likely to daily life and continue to generate income to buy more food be open to purchasing organic products, novel foods and in future. experimenting with vegan and flexitarian diets.

FIRST CHOICE: PREMIUM: Greater economic capacity provides some ability to make Consumers where the cost of food presents no choices about the food eaten which sees consumers start financial constraint and their focus is entirely on the to seek out animal proteins (or equivalents) as an alternative experience that a product delivers. They wish to to plant based foods. Priority is given to providing safe, engage in novel food trends quickly. They focus on nutritious food to children. the attributes of a product and how expensive it is in making purchasing decisions. FLEXIBLE: Consumer has the financial capability to choose from a wider range of food options and the attributes of the product start to inform the choices that are made. There is the capability accelerate to eat out on occasion and to invest in more expensive foods for special events.

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The bottom lines in a fragmented, Food is central to future of the Volume to…value, values or wellness? disrupted agri-food sector health system: The connection The mantra over the last five years or between what people eat and health Having explained why we believe so in the New Zealand agri-food sector outcomes is irrefutable. As the social the agri-food sector is now experiencing in response to markets becoming impact and costs of curative healthcare the first global agrarian revolution, our more complex and disrupted, has systems place an increasing burden view that markets are fragmenting been that we need to accelerate the on government and society, there is into millions of niches, highlighted shift of our products from ‘volume to no doubt that policy settings will shift that there are 45 identifiable global value’. While this is easy to say it is not towards preventative care models. This disruption trends, and explained that nearly as easy to deliver on, as many places food at the centre of the health the fundamental rules underpinning organisations have found. The Coalition system of the future and increases markets have shifted. We only see Government has recently been talking focus on a food’s nutritional density, opportunity in the agri-food sector about making a shift from ‘volume to functionality and impacts on health if you are prepared to approach values’ which makes a lot of sense. outcomes (both positive and negative). your future with the right mind-set. While activities adding value to a Recognising this shift presents a myriad product can be replicated or superseded The speed and extent of change new opportunities for food producers by a competitor, underpinning a product can be viewed as a challenge or an able to verify the therapeutic outcomes with a set of values, that reflect the opportunity. The only person that is their products contribute to, but also ethics and morals of New Zealand and able to determine the lens you choose flags risk for products that contain the producer is significantly harder for a to use is you. We have argued for ingredients that are perceived to be bad competitor to replicate or displace. years that the only practical choice is for health. It also suggests the space to view disruption as an opportunity, that has traditionally existed between From the journey we have taken in to understand the key bottom-lines the food and pharmaceutical sectors preparing this Agenda, we think that shaping the industry and then to buckle will become increasingly blurred, there is an opportunity to take this in for what will be an exhilarating ride as businesses from both sectors position one further step. We suggest - one with the opportunity to double explore opportunities in functional and that we should aspire to transition or treble the contribution the industry nutraceutical foods. from ‘volume to wellness’. makes to New Zealand’s prosperity. Diets will transition as consumers We believe ‘volume to wellness’ We believe there are three bottom-lines personalise experiences: The last encapsulates growing products that shaping the future of the agri-food sector: decade has seen the protein wave have attributes consumers aspire to wash through the food system, with inherent within them, and that are Sustainability is a non-negotiable: consumers placing significant focus unpinned by a clearly articulated set To maintain social license the reality is on the protein they eat. However, we of ethics and morals. However it that it is no longer appropriate to just believe this central focus will evolve goes further, and says our focus is do enough; there is a need to listen in the coming decade. We expect a on producing products that promote to all relevant voices, including those second wave to come through the wellness; wellness for the consumer from minority communities, and do sector, shifting the focus of consumers that eats the product and also wellness the right things for the organisation, from purely protein towards the for our communities and environment stakeholders and the wider community. complete nutritional density of their in New Zealand. While conversations often focus on food as recognition grows that there climate, land and water, achieving true are many other nutrients, oils, fats and Thriving in the infinite games sustainability requires an organisation minerals that are important to health. requires organisations to make bold to think far more holistically about the Secondly, consumers are thinking far commitments to secure a sustainable systems they interact with. This requires more about the foods they eat and place in the game and derive fair value thinking beyond financial metrics and where they come from; we have heard from what they create. We believe as environmental consequences to include many times in recent months that there we move into the 2020s, a decade analysis of human, social, intellectual is place for ‘good food’, whether it is that will be dominated by health and and technological dimensions in produced from plants or animals, but no wellness themes, now is the time to decision frameworks. It is becoming place for ‘bad food’, any food produced place wellness front and centre in our apparent, that as more organisations without awareness of the impact it agri-food story if we really want to think about the wider impact they have has on health or the environment. We secure our share of the value we grow. on a value chain, circular thinking is also believe consumers are taking being designed into business models, more control of their diet. In seeking with greater effort being made to personalised experiences, they are find partners to extend the life of transitioning from conventional food to non-renewable resources. nutrition arrangements that align with their lifestyle, world view and ethics.

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Organisational capabilities to thrive in the infinite game

Long term focus Address points of friction first A goal for any organisation playing an Too often organisations seek to build infinite game is to earn the right to consensus around the points of continue to play. Looking to extract agreement and in doing so overlook the the last dollar at the expense of a (often critical) matter over which there is relationship does not make sense if no agreement. While it is uncomfortable you are wanting to continue playing. to focus on the points of friction, Balancing an immediate return with the ultimately addressing these issues will need to leave something on the table drive better outcomes and enhance to build trust requires continuous and the likelihood of building long term, careful focus. sustainable relationships.

Own your own problems Report on the right metrics When faced with challenges, too many Historically the only metrics that organisations look to a third party, often mattered were those calculated from the government, to provide solutions the profit and loss account. If you to their problems. The reality is nobody are looking to make a sustainable else has an incentive to solve a problem contribution to an industry this will as quickly the organisation itself. require an organisation to report on a Owning your own problems and actively wider range of metrics which reflect seeking to find solutions is critical if the impact that the organisation has you want to secure your position in an on its customers, business partners, infinite game. community and environment. Using the UN SDG’s as a framework to achieve Hire ahead of the curve this is an option for every organisation. The quality of people that an organisation employs shapes its culture. Keep an eye on the extremities People are critical to creating successful A business looking to survive in the businesses that can thrive and grow in infinite game should not ignore what disruptive environments. Organisations is happening on the extremities of should make every effort to over-hire their organisation. If a small fraction in advance of growth to provide the of customers are unhappy and the capacity to innovate faster and respond organisation is not listening, there are to unexpected disruption. now channels for the marginalised to be heard and this can quickly undermine an Seek good advice organisation. There can be no tolerance In a sector that is experiencing for non-performance. significant change, such as agri-food, there will be a wide spectrum of Innovation comes from anywhere opinions about how any market is We have learnt over recent decades likely to evolve. Being open to a range that innovation does not come from of opinions by encouraging internal boardrooms or brainstorming sessions. discourse and seeking external advice It comes from somebody saying “what will build a better understanding of the if we did this?” Organisations need opportunities in front of an organisation mechanisms that encourage their teams and provide it with the courage to do to bring forward innovative ideas. They the right thing. also need to sense global business model innovation to identify seeds of Ensure financial resilience ideas that could deliver a step forward if Playing an infinite game requires applied to the agri-food sector. ongoing investment in innovation to respond to threats as they arise. Organisations need to have the capability to make investments when required. This means they have to balance a desire for growth with prudent financial management to guarantee their balance sheet has the resilience to withstand an unexpected shock or support an opportunity to be grasped. accelerate

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Stocktaking The ‘mega’ mega-forces Transitioning to a low carbon future is unstoppable Higher incidences of extreme the global weather events together with increasing scientific consensus that human activity is contributing to an increase in global temperatures has resulted in governments, companies and civil socity all making mega-forces commitments to take actions to transition to a lower carbon future in an attempt to restrict the increase in temperatures to as close to 1.5 degrees celsusius as possible. The mega-forces shaping the world’s future are evolving Fusion technologies accelerate as scientific discovery and exponential change in daily lives knowledge become available. The increasing ability to fuse biological, digital and physical technologies reshapes all aspects of day to day life, creates opportunities for new business models that redefine how businesses work across many sectors of the economy and delivers the ability to transform agriculture The Agenda in 2014 highlighted 14 trends given that fusing a biological product across economics, politics, demographics, social infrastructure, technology and the with knowledge and physical tools is the environment that our research suggested were fundamental core of the sector’s activities. shaping the multipolar world in which we live; a world where a disruptive externality can come from anywhere at anytime. The report highlighted the rapid impact that the Ebola outbreak in West Africa had on people all over the world during 2014. We reviewed the mega-forces in 2016 and unsurprisingly concluded there was little change. We did highlight that given the breadth of applications being developed using fusion technologies, that it had become clear these products are going to have a more fundamental and transformational impact on society than we had previously envisaged. Rolling forward to 2019, we have identified the fusion revolution as one of two mega mega- forces, the other being the transition to a net zero carbon position given the consequences of doing nothing. In addition to identifying these two overarching themes, we concluded three new mega- forces need to be incorporated into the analysis based on our research. Awareness of the fundamental impacts these new forces (Generation Voice will fight for its future, inequality can no longer be overlooked and we must be able to do that with plants) are having has become apparent recently in response to concerns over climate change and the political consequences of large groups in communities feeling excluded or left behind by economic growth. Some of the other forces have been renamed to sharpen their focus but the overall conclusion is that our world has only become more complex, or more multipolaral, in the last five years.

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17 GLOBAL MEGATRENDS Challenging the global status quo LOW CARBON Geopolitical instability is a fact of life The increased ability to consume and FUSION TECH share information using digital channels creates an environment that can rapidly accelerate groundswell political movements. This is seeing unexpected political leaders coming into power, often GEOPOLITICS based on the positions that they take on a single critical issue for disenfranchised groups with the community. ECONOMIC BALANCE Economic influence will continue to shift as wealth grows in emerging economies For most of recorded time, the world’s largest economies were Asian. The shift of NEW GOVERNMENT the balance of wealth to Europe and, ultimately, North America is a relatively recent phenomenon driven by the rapid industrialisation of these countries from the INEQUALITY late 1700s. The first three industrial revolutions largely bypassed other economies and their influence declined. The growth emerging economies delivered as the west struggled to recover from the GFC demonstrated MILLENNIALS the wealth pendulum is swinging towards emerging economies and returning east towards Asia, disrupting the perspectives we have held for centuries on economic influence. AGEING POPULATION

Leading in a integrated and instantly informed world requires new capabilities URBAN DWELLERS While physical distances remain the same and national borders rarely move, technology has eliminated the time delays that were inherent in VOICE FIGHTS most cross border transactions 25 years ago. A faster, technology enabled world is highlighting the constraints of government, legacy international institutions and treaties and the challenges of regulating in a connected world. A FUTURE HEALTH new approach to government is required based on greater responsiveness and more collaborative approaches to regulation. EDUCATION

Inequality can no longer be overlooked

The gap between the haves and have nots DATA PLATFORMS has grown around the world, largely out of sight of those with influence and power in our communities. The benefits of economic growth have not been shared evenly, with many in the community ENERGY SECURITY believing they have received no benefits. Technology gives marginalised communities a voice. There is a need to listen to concerns being expressed and take action to ensure the benefits of growth are shared more evenly, to MORE WITH LESS ensure the long term stability of society.

IMPACT WHY accelerate BIOECONOMY

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Future world citizens Empowering infrastructure

Millennials facilitate the connected, Preventative medical systems instant access economy enhance human health outcomes Millennial consumers are leading Innovation drives the discovery of the adoption of digital solutions new solutions to a growing range of that provide instant access to the products and healthcare challenges facing society, however the services that they require without the constraints cost of these solutions make it challenging to provide of long term asset ownership. New solutions that access to all but the most affluent members of our increase lifestyle flexibility are rapidly replicated and society. As a consequence, governments around the adopted, globally accelerating the development world focus attention on developing new primary and growth of increasingly innovative business care models that reshape lifestyle fundamentals, models. The use of digital solutions means that with the objective of preventing the illness and millennial consumers are no longer confined to creating a fundamentally more healthy soceity. the choices available in their physical location. Education delivered beyond Anything but ‘generation done’ the classroom multiplys impact exerts their economic muscle A high performing education system People aged over 65 represent the underpins aspirations for growth and fastest growing segment of the global development in any society. The impact of an education population, driven by increased life expectancy and system depends heavily on the quality of its teachers falling birth rates around the world. As the population and the effectiveness of the channels used to deliver ages, the proportion of the population available to knowledge and enhance learning. As technology evolves support the associated health and welfare costs of the constraints of traditional educational relationships declines putting presure on core social services. built in a classroom disolve, enabling the best educators However, the ageing population are also consumers to have an amplified impact on global society than has and in many parts of the world they have spent a not been possible in the past. lifetime generating wealth which they will use to secure products and experiences that enhance their lives. Democratising data unleashes its potential for all of society Urban survivors are empowered A world with billions of connected to become urban thrivers devices will see data lakes continuing The growth of cities and urban areas to grow expotentially. Data is only valuable if insights around the world continues to accelerate, can be extracted from the lake that create benefits driven by migration from rural areas and natural growth for organisations or for soceity in general. The more in the population. The evolution of smart technologies relevant data that can be targeted towards answering to integrate work, mobility, nutrition and lifestyle a question, the better the quality of the answer. This is elements into day to day life, changing the nature best achieved if organisations recognising the value of of urban living from one of battling the system to data is maximised, by sharing it with others to help find survive to one where life is enhanced by cities that are the solutions to the biggest questions facing society. designed to work with and for their residents.

Generation Voice fights for its future Generation Voice, those members of the community born after 2000, complete their schooling and enter into full productive economic and political life. This generation, and their children, will live with the consequences of climate change and they are not about to sit back and let their future be sacrificed without a fight. Generation Voice will be the most activist generation the world has seen, using the power of digital technology, to protect what is left of planetary resources for future generations.

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Seeking indefinite sustainable living

Energy security is now everybody’s responsibility Concern society is consuming finite energy resources too quickly, at the expense of the environment, has driven investment into renewable energy technologies but has also made it economic to recover fossil fuel reserves that were uneconomical “I don’t want you to utilise. The need to transition to a lower carbon to be hopeful. future while meeting increased energy needs, driven by economic growth, will require individuals to take I want you to ownership for their energy security in respect of both Alexandros Michailidis © Shutterstock Michailidis Alexandros generation and usage, through solutions scaled to be panic. I want embedded into day to day lifestyles. you to feel

Infinite search for ways to the fear I feel do substantially more with every day. And a declining resource base A larger population and the emerging wealth then I want of communities globaly is fuelling a growth in demand you to act.” for consumers products. These goods utilise natural resources in their production. The wave of demand is Greta Thunberg increasing stress on already limited resources, increasing prices and putting more focus on how products are used. Sustainable resource management becomes an increasing focus for governments and societies who will seek to influence how resources are utilised to generate more output from less input.

Impact rather than profit becomes the core of many organisations’ why Historically, the profit motive has been the primary driver undelying business. While some businesses, particularly co-operatives and mutual societies, have operated for the benefit of their members, the majority have measured their success based solely By Liv Oeian © Shutterstock By Liv Oeian on the profit they create. Driven by the challenges facing society, a new breed of businesses are emerging that have a primary focus on addressing a social failing that too many in society overlook rather than reporting a profit. Having a positive impact increasingly dominates the why in society.

We must be able to do that with plants

Modern lifestyles rely on access to a vast array of consumer products many of which are made from non-renewable resources. As their availability becomes tighter and costs increase the search for alternative, more sustainable alternatives accelerates. Utilising the properties inherent within plants through the application of modern bio-technologies will unlock sustainable solutions that will superseed products made from plastics, metals and other non-renewable sources. accelerate Liv Oeian © Shutterstock Liv Oeian

65 Agribusiness Agenda 2019 Social platform

Global population growth is predominately occurring in some of the poorest, most environmentally-challenged, water-stressed regions of the world; areas where sufficient nutritious food is often difficult to find. With over 800 million of the world’s population regularly malnourished, the food system is clearly not delivering effective for everybody. The UN has sought to highlight the scale of the challenge through the Sustainable Development Goals (SDG’s).

Yet the food system is expected to tough, unskilled physical work, often in preventative healthcare strategies deliver more every day. Food issues harsh weather conditions, with anti-social which have a strong focus on educating however are not confined to emerging hours and low pay; hardly a great story communities on dietary matters. The role economies, many developed countries to tell the world. The reality has generally that ‘food as medicine’ will play in the have significant levels of nutritional not been so bleak and in employment future of the healthcare system as well deficiency across their populations across the sector is increasingly as the agri-food system should not be which is creating significant social and demanding more skills to respond to new underestimated. The impact that health economic costs that governments are technology and consumer expectations. and wellness will have on the global having to deal with. These are big issues If producers fail to meet employment agri-food system in the coming decade that impact every member of society standards that are acceptable to is explored in more detail from page 69. and as a consequence they should consumers, they may find themselves Several countries are implementing not be left entirely to governments being considered modern slave masters legislation to combat food-related to resolve; as they require broad and having the market access of their illnesses; with the UK, Ireland and community responses. Sustainability, products restricted, as more countries Spain introducing sugar taxes. In in its widest sense, lies at the core of introduce Modern Slavery legislation. the US, the 2018 Farm Bill proposes the food system. Communities need The ability for stories to go viral through a Produce Prescription Program, to to produce sufficient food within the digital platforms shows the power of encourage the prescription of food confines of the productivity capacity of society setting standards, and amplifies as medicine. the environment. Technologies such as the impact for those that chose to ignore genetic modification need to be explored, the rules. There is a threat to the image Food production costs even though the long-term effects are of an organisation and its ability to recruit will increasingly reflect not fully understood. Governments need and retain top employees, as well as to the true costs of consuming to develop food systems that extend the sustainability of their supply chain, if natural capital beyond their borders to achieve food employees are reported to be mistreated Food spend as a percentage of income security, and ensure their communities in any form. Corporate responsibility has consistently fallen in recent decades are responsibly educated on what groups are calling on organisations to (the analysis on page 66 comparing constitutes healthy food. It is unlikely imbed transparent reporting into their the increase in median income in the we will ever have a truly sustainable strategy. In 2017 Nestle and Unilever US to movements in the prices of a food system unless we collectively take implemented best practice on slavery range of products and services over responsibility to implement substantive reporting, with Nestle reporting on the last 30 years, demonstrates this solutions. Leaving food issues 11 key human rights risks relating to clearly). At the same time production unaddressed increases the risk of its businesses as a way to increase costs have reduced, due to productivity social imbalances destabilising society. transparency. improvements and an increase in the In history, food inequality has resulted scale of many producers, however the in social unrest, economic migration Governments pivot towards reduction in cost has not been sufficient war and terrorism. preventative healthcare to enable producers to hold their margins. to address fundamental Some argue that the costs of producing Modern slavery becomes health issues food are currently materially understated a growing issue in the The World Health Organization has as farmers, growers and fisherman agri-food sector reported that non-communicable have historically not paid for the natural Society expects all employers to treat diseases (NCDs) cause more than 70% capital they have consumed in growing their employees fairly. This includes of deaths worldwide every year - with products; most producers do not pay for factors such as paying a fair wage, food being strongly connected to these the soil nutrients or ecosystem benefits providing safe and sanitary conditions illnesses as one of the top four behaviour that the plants they grow utilise, some for workers and families to live and work risks. NCDs include lifestyle illnesses are charged for water but for many this and providing them with opportunities to such as diabetes, metabolic syndromes remains an asset that they can access develop useful skills and experience. The and heart disease. The cost of treating freely. An analysis performed by KPMG agri-food sector globally has often been these diseases is unsustainable for many in 2010 suggested that charging the viewed as a poor employer, providing governments, resulting in them adopting food production sector for the natural

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GROWTH IN PRICES COMPARED WITH EARNINGS (USA) 1990-2018 +181% +182% +189% +130% +108% +117% +118% +66% +78% +82% +19%

NEW AIRLINE FOOD AT ELECTRICITY FOOD AWAY MEDIAN PETROL RENT OF CHILDCARE, PRESCRIPTION MEDICAL VEHICLE FARES HOME FROM HOME EARNINGS PRIMARY NURSERY, DRUGS CARE RESIDENCE SCHOOL Prices grew slower than earnings Prices grew faster than earnings accelerate

67 Agribusiness Agenda 2019

assets it consumes directly and indirectly would result in a charge that amount to 224% of the industry’s EBITDA. Given the focus from retailers to keep prices down, it is clear that food prices around the world currently do not reflect the true costs of production, in particular the costs of natural capital consumed. We expect there will be moves made by governments around the world, as part of the response of individual countries to climate change, to charge farmers for the natural capital they consume. This would overtime result in food prices increasing to better reflect the true costs of the inputs into the food production process.

Philanthropy and social impact-centred business models to proliferate With over 800 million people being failed by the global agri-food system, the industry offers huge scope for entrepreneurs and philanthropists to have life-changing impacts on the global community. Many start-up businesses are being formed with either a dual purpose (profit and impact) or a purpose beyond profit, particularly to reduce the number of people suffering from under-nutrition. We have observed that many of these start-up enterprises are receiving funding from a range of high net wealth individuals as they direct their philanthropic activities towards some of the biggest challenges facing the global community. For example the Bill and Melinda Gates Foundation is collaborating with private sector enterprises, NGOs and governments with the goal of preventing 1.8 million malnourishment related deaths by 2020. Corporate social responsibility (CSR) is also evolving.It no longer being sufficient to sponsor the local football team, organisations are investing in impact projects that align with the an articulated purpose that the organisation has adopted (be that empowering women in rural communities, investing in skills for young people or promoting nutritional improvement). Consumers are expecting companies to be taking an active role in supporting the vulnerable in the global community. Demonstrating a strong commitment to purpose is a also key platform for attracting the best talent to an organisation. The social enterprise One Acre Fund supports over 135,000 farmers in East Africa through a market bundle approach; providing local farmer groups with agricultural education, loans for planting materials, market training and crop insurance.

Environmental regulation crystallises a step change in agri- food technology and investment Governments have committed to address levels of greenhouse gas emissions from

Agribusiness Agenda 2019 68

economic activities in their respective focus in an attempt to ensure that more to the cost of the capital to they are countries. The Paris Agreement saw most of the national food supply is eaten. The able to secure. To secure green funding countries commit to keeping the increase World Economic Forum initiated a arrangements there are expectations in global temperatures well below 2°C five action initiative bringing together being placed on organisations to report with an ambition to keep it close to 1.5°C. farmers, government, civil society on their ESG performance using a Delivering on the commitments that and the private sector, facilitating recognised framework, such as Integrated have been made is likely to result in most partnerships at regional and country Reporting, and provide an assessment of governments introducing regulations that levels, and encouraging the exchange the impact they are having on society. As target activities that generate emissions. of knowledge around food security. a consequence, there are opportunities Given that the farming of livestock is for organisations that have adopted clear a significant creator of methane gas, The challenge of feeding the strategies to manage and reduce their one of the key greenhouse gas, we world attracts talented young impact on the environment and to actively expect these regulations will ultimately people into the agri-food sector support their community, to translate their have impact across the agri-food value The young people that are now coming actions into cost reductions. Lenders are web. Responding to new regulatory into the workforce have grown up in a finding creative ways to reward those requirements will likely attract ethical technology-enabled world; they expect that are proactive in addressing critical investors to the industry, will spark instance access to knowledge and insight, issues. In addition, the growing power innovation that will benefit all farming they have a strong value system and a of the consumer voice on social and systems, and increases the amount of voice that they are willing to use when ethical issues is benefiting the financial technology being deployed across the they see activity that is not aligned to performance of organisations that have industry. Companies are already taking their values. It is predicted that Millennials taken steps to enhance the sustainability matters into their own hands in line with will comprise 75% of the workforce by of their business practices. The Financial consumer expectations, proactively 2025, and they will likely have the greatest Times reported an analysis of more than implementing systems to ensure carbon spending power of any generation in 300 of the world’s largest companies use is captured and actionable steps are history. Evidence indicates that the across a range of sectors found that taken to reduce emissions. We expect millennial generation reacts positively to those with more ethical operations make to see companies and regions pushing companies and organisations that can bigger profits. hard to achieve zero carbon status for clearly articulate their purpose and values their products as this is an attribute that and is prepared to take steps to bring Bringing activist campaigners ethical consumers are prepared to pay a these commitments to life. This means to the table to become part of premium for. Arla Foods, a Danish dairy that they are attracted to a workplace or the solution co-operative announced in March 2019 industry that is contributing to society, The agri-food sector has always been that it will target a 30% reduction of rather than operating solely for financial subject to challenge by activists; perhaps greenhouse gas emissions by 2030 and benefits. Roles that enable them to use more so than any other sector of the will work towards zero carbon by 2050, skills to improve society are of particular global economy (with the possible noting that setting the target focuses interest – and opportunities in the agri- exception of the energy sector at certain each of the co-op’s dairy farmers food sector to mitigate malnutrition points in history). However there is a on what they can do to improve and environmental degradation will be unique paradox involved in the nature of their businesses. appealing to many. We consequently the challenge that is placed on the sector. expect to see companies across the Organisations are coming under scrutiny Food security and affordability agri-food sector recruiting employees as one of the largest users of natural and remain a key priority for almost into a wide range of roles with a human resources (be that land, water, every government in the world commitment to let them use the skills the oceans or soil or as a major employer For many governments the availability and experience that they develop globally of people) which has a range of and affordability of food is a top priority, during a sabbatical period to make a positive and negative benefits on the as failures to deliver sufficient food to contribution to helping the world to community and society. It cannot be their population can lead to social unrest feed itself. overlooked that the collective purpose and ultimately could result in leaders in using these resources, to provide being changed (via the ballot box or other Finance arrangements people with sufficient food, is undeniably means). Governments are taking different increasingly take account positive. The very reason the sector exists approaches to setting up resilient and of how a borrower manages is to feed the world. This provides a solid secure national food systems. Some ESG in their organisation framework for working with those who countries lack the ability to produce all the may oppose various activities within food they need to feed their populations To date, the investment that organisations the sector. When setting policies and and as a consequence governments, have made into addressing environmental operating practices, more organisations either directly or through sovereign and social risks they face have are inviting a diverse range of perspectives wealth funds, are making international predominately been seen as a cost. to the table. This helps them to design investments designed to secure access However, this is changing rapidly as robust frameworks that enhance rather to sufficient supplies of product to meet investors and lenders around the world than detract from their social license to domestic demand. Other countries are start to place more focus on the activities operate. Companies need to ensure they making significant investments to develop of the companies they are providing listen to every voice so communities are domestic production, including securing capital to and the impact that these assured the sector is working with them, access to novel growing practices and activities have on the environment and not against them, to maintain their social new technologies. There are also initiatives the wider community. The consequence licence to operate. to diversify diets to reduce reliance on of this is a growing amount of green products that are more susceptible to financing arrangements being entered into supply issues. Enhancing food handling around the world, which is forcing those practices and encouraging agri-food raising capital to link their Environmental, companies to minimise waste are also a Social and Governance (ESG) performance accelerate

69 Agribusiness Agenda 2019 The Health and Wellness decade

Like all other industries, the agri-food sector is being disrupted through innovation and technological transformation, with consumer needs and demands underpinning the pace of change. Emma Wheeler Senior Manager, Agri-food Co-Author, KPMG

The growing focus on food-as-medicine We have all been told many times that One in five adults in OECD countries, is driving massive change within the prevention is better than cure. In and one in six children, are obese. agri-food industry. Traditional big food a traditionally reactive environment, The global paradox, however, is that companies, agricultural producers, or cure focused approach to health, one in five children under the age of pharmaceutical businesses and consumers are awakening to the power five exhibit stunted growth due start-ups are all being attracted of a proactive, preventative approach, with to malnourishment. to opportunities in food for health food as medicine as a core foundation. Many of the risk factors associated and wellness purposes. For agri- It is notable that it is not just with NCDs are modifiable with food companies, this means a shift consumers awakening to the power of behavioural change associated with away from commodity models a preventative system; governments diet. The cost of the global healthcare where producers decided what to across the world are constantly system is no longer attainable – 64% produce and what would be offered challenged to meet the spiralling of Americans want to lower their to consumers, towards the creation costs of curative care systems and healthcare costs, but don’t know how of highly specialised and enabled are prepared to explore preventative to. It is estimated that malnutrition food that is designed with specific care models with the expectation that in all its forms could cost society nutritional profiles. a healthier population will reduce the up to USD3.5 trillion per year, with As consumers become more educated long term costs of health. overweight and obesity alone costing about what they eat and attentive to USD500 billion per year. The global It is significant that millennials, who the impact that food and lifestyle has economic impact from obesity is have now taken on the role as the on health, this is resulting in a health roughly USD2 trillion, or 2.8% of largest consumer group, are the and wellness trend sweeping across global GDP. biggest supporters of the health and parts of the community. This trend is wellness ideal. It was reported that There is a direct correlation between shaping an evolution of not just food 53% of millennials place health and diet and health outcomes. The impact of products, but the way in which we wellness as the most valued area of people not having access to enough food, grow, consume and market our food. their life. the right nutrients or eating too much The health and wellness food market of the wrong types of food are massive was valued at USD769 billion for 2019. The problem on the health of the global community. Our view, however, is that consumer Health researchers have The direct financial costs of this trend are focus on the impact that food has on long been aware of the far-reaching significant but the social and emotional health is still nascent and we will see consequences of poor diet and toll that the impacts of inadequate the trend accelerate exponentially in lifestyle. The rapid expansion of non- nutrition have on our community should the coming decade. As a result we communicable diseases (NCDs) is due not be underestimated. consider it is likely that the 2020s largely to lifestyle-related illnesses; will be a decade where health and including obesity, cardiovascular The potential cure wellness dominates the food system. diseases and diabetes. Over time, Many consumers have become This will drive change across the entire the burden of these diseases is rising aware of the strong link between diet supply chain. From ensuring soil health disproportionately among lower-income and health and are now seeking out is optimal to focusing on the growth of countries and populations. The World options that support their personal nutrient dense produce, through to the Health Organisation reported that health requirements and provide how food is presented to consumers of the 56.9 million global deaths broad-spectrum nutritional density. To (such as composition of the packaging in 2016, 71% were due to non- date much of the education has come used) and the way food is cooked and communicable diseases (NCDs). through public health campaigns and waste products re-purposed. EQRoy © Shutterstock $769 market value Wellness food andHealth USD BILLION 2019 Billion USD500 billion/year alone costingobesity and overweight with USD3.5 trillion/year, up tocost society couldMalnutrition USD TRILLION ESTIMATE $3.5 trillion

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Agribusiness Agenda 2019 72

Health is no longer just the absence of disease, but the focus on wellness.

individual consumers doing their own The organic food segment alone is Convenience in terms of packaging such research to understand more about worth EUR85b and is growing at as edible packaging from water.io, or their diet. There is a need to amplify the 10.5% a year. single serving size ready-made salads availability of easily accessible, reliable from Whole Foods, and the ability Less is more, with free-from foods and unbiased information to enable to have personal vitamin delivery gaining popularity, with products that people to make the best dietary through Vitally. are as close to their natural state choices for their specific lifestyle as possible. Traditional big food companies are also and economic circumstances. alive to the potential of the health and Many of the risk factors associated with And the market impact wellness trend. It has been a key driver NCDs can be mitigated with dietary Agri-food organisations around of acquisitions and partnerships activity behavioural changes. At a broader level, the world are aligning themselves across the sector in recent years: recent consumers are increasingly turning to with health and wellness trends. They examples include PepsiCo acquiring food – rather than a pill – as a longer-term are looking for ways to leverage the HealthWarrior and KeVita; General health solution. They are actively seeking opportunities through product re- Mills investing in Purely Elizabeth, No out options that support their personal formulation, new product streams, or Cow, Farmhouse Culture and Kite Hill; health requirements, and this has partnering with smaller agile innovators. Mars investing in Kind, the list goes on. spawned a growing market for food-as- The food giants are not only bringing in medicine. We have noted that some food Agri-technology is helping facilitate smaller more agile start-ups under their companies are now viewing the Business the food-as-medicine movement in umbrella; they are also tweaking their to Doctor channel (B2D) as a key channel a number of ways. Technology is own ingredients to align with consumer for them to support doctors in learning assisting right from the seed, with the demands. Nestle has set out to cut about how food can be used as an ability to implement plant genetics, sugar in its confectionery by 40 per effective non-pharmaceutical prescription. and tools to assist with cultivars. It is facilitating the expression of certain cent; while Kraft is reducing artificial Health is no longer just the absence features of a product, over less desirable preservatives and colours in favour of disease, but the focus on wellness. attributes, such as specific nutrient of natural spices like turmeric. An eruption of products that have content, flavours or texture, colour and As health and wellness increasingly functional ingredients have reinforced shape or elements such as higher yield, becomes a driving factor for consumer the role of food as medicine, which has pest and disease resistance, seasonality purchasing choices, all those in the been around for centuries. Foods that and storage potential. For example the agri-food ecosystem must consider specifically address personal health use of CRISPR-cas-9 to edit the genome product attributes and adjust systems concerns have skyrocketed in popularity of a banana when a virus was discovered and formulations accordingly to position as have foods that contain specific that threatened food security in Africa. themselves for the decade of health functions; anti-inflammatory properties, Or to edit crops, inserting omega-3s to and wellness. or potent nutrient dense ingredients promote anti-inflammatory responses. that support immune function, or With a massive 75% reduction in improve gut health. Whole foods, in kitchen-prepared food between 1985 their most natural state with wide and 2015, convenience foods are being spectrum of nutrients, are recognised re-invented for the health-based era as premium products, and consumers meaning there is a need for convenient, are willing to pay more for them. on-the-go options. The next generation of modern convenience food is emerging as a response to the rise in health eating. accelerate

73 Agribusiness Agenda 2019 Nature of a farm

Many in the developed world still imagine ‘the farm’ as the stereotype they knew from childhood; a farmer driving his tractor with dogs in tow, and a plethora of different animals living happily in harmony. This has never reflected the reality of the majority of farms around the world; which largely exist to provide subsistence living for a family unit or small communities.

Yet even those with a more agriculture; and the lower impact on branched chain amino acids (BCAAs) sophisticated understanding of land, water and the atmosphere means that are comparable to whey, higher modern agriculture are needing to the products are being described than other plant proteins including review their definition of a farm. by their developers as ‘clean food’. soy and has a protein digestibility- Agriculture is undergoing massive Organisations such as Perfect Day, corrected amino acid score. transformation, driven by the need Memphis Meats and Finless Fish are to produce significantly more food high-profile alternative food brands Vertical farming and covered to supply a growing and increasingly leading the way in this space. Perfect cropping innovation redefines hungry global population. The challenge Day use microflora and fermentation economics for plant-based is not just in producing more, but doing to replicate the protein found in agriculture so in a sustainable and ethical way cow’s milk. With consumers being willing to that provides nutrient-dense foods pay a premium for fresh and local to support health for all populations. Optimising the contribution of produce, producers are incentivised to The sustainability of intensive the ‘blue larder’ to global food explore different systems to provide farming systems is increasingly and fibre resources this. Businesses are creating closed being challenged by consumers With greater volumes of food loop systems (sometimes referred and regulators from a variety of being required for both human to as ‘plant factories’) that utilise perspectives – environmental impact consumption and animal feed, access resources in a circular fashion through and water quality, through the welfare to prime agricultural land will become the application vertical farming and of animals and people to the quality increasingly competitive. The ocean covered cropping technologies around and nutritional density of the food represents a viable and productive the world. Core to these technologies being produced. To meet the demand option; not only in creating more is innovation in the use of lighting for food, the search is on for new aquaculture farmed seafood, but systems which enable plants to grow farming models, focused on meeting also in providing space for innovative quickly and with enhanced nutritional the nutritional needs of the population farming systems. While we may properties. Vertical farming is especially while better utilising natural resources eat more seafood protein in future valuable in urban areas where land is and embedding food production closer (much of which is likely to be grown scarce and expensive. The range of to the ultimate consumers. in aquaculture farming systems crops that can be economically grown rather than being wild caught), ocean in these systems is increasing, while Cellular farming sees more farming will be increasingly focused the costs associated with developing a food being grown from cells on plants that can grow in and facility are decreasing – making them rather than growing an animal around the ocean, and that can make increasingly commonplace in many a significant contribution to global cities around the world. In Shanghai, The ability to create food that replicates protein and nutrient supplies. Algae, the district of Sunqiao represents a meat, fish and dairy products – with seaweed, and water lentils are rich new urban approach to agriculture, a lower greenhouse gas footprint and in nutrients and provide plant-based showcasing what can be achieved without the need to slaughter animals marine food options that will enable with vertical food factories. VertiCrop - is likely to become a commercially- us to better utilise the ‘blue larder’ and Plantagon are space-saving viable option in the next decade. on a global basis. Organisations are vertical farming systems designed Products are now being grown in quick to understand the potent power to promote the farming of healthy controlled environments using cell of bioactive marine-derived sources, crops in controlled and closed-loop cultures, rather than growing the entire and pharmaceutical companies are environments. Emirates, the airline animal. Techniques will be developed creating supplements harnessing of Dubai, has recently announced and scaled so this becomes a cost- these. Parabel have created a protein an investment in covered cropping effective way of supplying ‘real’ animal rich plant protein from water lentils, systems to enhance the supply chain protein to consumers around the with the protein structure similar to for its flight catering business. world. Consumers are already being that of animal proteins; containing educated on the techniques of cellular levels of essential amino acids and

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Regenerative farming systems alternative uses for this land, however form part of the diet for many people support a drive to achieve zero- as cities, energy and resource demand around the world. We do expect to see carbon food has grown viable alternative uses for the more insect products finding their way The quest for increased agricultural land have emerged. Prime agricultural into the human food chain, particularly production, and the use of intensive land has often surrounded cities thus as as a replacement for commodity farming practices, has over time urban regions grow it is not surprising uses of some animal proteins, but depleted the natural capacity of land that farmers are being approached to do not envisage a time where they in many parts of the world and in sell their land to developers to allow will become a preferred alternative to some of the more extreme cases for further urban expansion. In mineral traditional animal based meat proteins has left the land unable to be farmed. rich regions, such as the east coast in the foreseeable future. Companies Regenerative agriculture recognises of Australia, there has always been a such as Ynsect and Enterra Feed are that agricultural land is part of a larger tension between farmers and mining emerging as processors of insects ecosystem, and that it is no longer companies over how competing land into protein-rich food for animals. acceptable for farming activities to uses can effectively co-exist. While simply make withdrawals from this the production of food is critical to the Circular production systems are system. They must also invest in the long term health and prosperity of our developed to utilise co-products soil management techniques they use, society the quest for low price food and by-products created by the approach to cropping the land and has meant the return farmers have agricultural production activities undertaken to support the generated on their investment has often As part of their social license to redevelopment of the natural ecosystem been significantly below other land use operate, producers will need to (including the setting aside of land from options. It is likely governments with demonstrate they are effectively production, the promotion of native a focus on food security will protect managing inputs – and utilising outputs flora and fauna and the protection of some high attribute agricultural – from their production systems. A wetlands). The ability to capture carbon land for continued food production, ‘circular production system’ is aimed in soil and aboveground biomass will however for farming to be able to at minimising waste and emissions, contribute to reversing current global continue to utilise all its current and making the most of any resources trends of atmospheric accumulation of space, farmers will need to place present in the system. Organisations carbon. As more producers aspire to much greater focus on the returns will increasingly look for creative ways grow zero carbon food, starting with their farming system is generating. to build circular production systems; a reduction in their carbon footprint, with the ultimate goal of using all regenerative agricultural practices Production of insects expands by-products and co-products in a will help to not only ensure no more exponentially to deliver productive or socially relevant manner. damage is done to the land but to sustainable animal feed For the agri-food system this includes restore its natural capacity. Institutes solutions looking at alternative packaging models are forming to educate farmers and Insects are a natural diet for many and specifically designing uses for help subsidise their shift to regenerative animals, offering high levels of protein waste streams that are generated practices. For example, the Rodale to promote growth. The United Nations from the production of food and fibre Institute offers research, education Food and Agriculture Organisation (FAO) products, including effluent, excess and outreach; and is home to the estimates that commercial animal feed bio-matter and under grade production. longest-running comparative study production will need to increase by The reliance placed on imports and of organic and chemical agriculture. 70% by 2050. At the same time, the exports across the global food system use of productive land to grow feed does challenge how effectively a Competition for prime for animals will come under increasing circular systems can be implemented agricultural land intensifies pressure, as more focus is placed on as exports, for example, represent an placing greater focus on returns the carbon footprint of food production. inherent leakage from a circular system. being generated The opportunity for insects to convert Research from Europe shows that Land is always in demand, however waste biomass into protein and other applying a circular solution could supply is largely fixed. Globally 40% of important nutrients is second to none reduce fertiliser, pesticide and water the usable land area is currently being – making them a viable and valuable use by 45–50% in 2050; while at farmed, with much of the land being future source of stock feed. As a the same time lowering land-use, used to grow commodity food products consequence, we expect to see the greenhouse gas emissions, fuel and and stock feed for animals. Historically, farming of insects at scale becoming electricity by 10–20%. accelerate food and fibre production has utilised increasingly common around the world prime land because there was no in the next decade. Insects already

77 Agribusiness Agenda 2019 How we farm

For centuries, the essence of farming has not changed substantively. Producers have always cultivated plants, raised animals, planted trees or harvested the oceans; in order to provide food, fibre or fuel. Being naturally innovative, they have always made enhancements that deliver year-on-year incremental improvements in yields. Recently, however, the level of investment made into new agri-food technologies has sky-rocketed.

The fundamentals of ‘how, where and to productivity, sustainability and in producing more while using less when’ we grow food are changing; and accountability that data augmented resource as they also enable precision waves of investment are sweeping farming can provide. Ultimately, the farming techniques to be applied in into innovative agri-food organisations. technologies will deliver improved respecting of pollinating, spraying and The sector is alive to the many financial and social outcomes for rural harvesting. Farmbot is being promoted opportunities available to disrupt communities. Leading the way in as the world’s first open-source CNC traditional industry practices. We’re data utilisation, the Netherlands was (computer numeric control) farming seeing integrated digital solutions that the first country in the world to have machine. Farmbot uses hardware augment the intuition of farmers and a national low-power, long-range, that can move with precision to do producers; precision agriculture tools wide-area network (LoRa Network). activities such as plant seeds, water that increase output while minimising Dutch telecommunications giant crops, measure the moisture content the environmental impact of farming; KPN implemented LoRa Network of the soil, and destroy weeds. and water capture technologies that ensuring the Internet of Things enable unproductive regions to contribute applications were available across Satellite-enabled systems more. Technology like robotics and animal the Netherlands. improve farming practice, and plant genetics are delivering solutions environmental management, that address issues facing farmers, Robots and drones reshape resource allocation growers and fishermen. labour requirements for many Precision agriculture utilising satellite aspects of farming enabled farming is becoming Communication technologies As the amount of food required to more availabile as the cost and enable data-augmented feed a growing and more prosperous capability to regularly collect large- activity across the agri-food population continues to increase, scale imagery of land areas from value web production systems are becoming orbits of small and relatively low The uptake of digital technologies and increasingly complex, with the breadth cost satellite systems increases. the IoT (Internet of Things) has been of skills needed to operate a farming This imagery is then analysed using constrained by inadequate access to business continuing to expand. The analytical tools, including biological connectivity, especially in rural areas. skills, experience, education and algorithms, to observe, measure, However with investment in many business acumen required to undertake understand and respond to inter and countries into rural communication jobs within the agricultural sector intra-field variability in crops. The networks and the transformational extends not only to on-farm workers, emergence of these big data lakes potential of 5G technologies but to rural support businesses, being sourced from satellite imaging and other low-powered network processors and the entire value web. has the potential to transform farm solutions, digitalisation of the sector With a shortfall of skilled labour in production and risk management, is becoming more feasible for many the industry already, and continued in turn assisting governments and producers in remote rural areas. migration of young and skilled people insurers to also understand farm Having access to multiple data sets from rural to urban regions accross the dynamics for the purpose of better enables aggregation of data; which world, the agri-food sector is facing regulating environmental management can enhance productivity, minimise a workforce crisis. The application practices and underwriting agricultural waste, and improve traceability and of technologies, such as drones and risks respectively. As the uptake product quality. New communication robots, provides the ability to monitor of technology increases, the cost networks unlock the ability to collect, farm production remotely, safely and of implementing satellite-based analyse and utilise data across the cheaply, and enables available people technologies will make it feasible for complete agri-food web. Adopting to be deployed to roles that enable smaller producers to utilise these tools data-based farming solutions will them to develop and utilise a wider on smaller parcels of land. Regular become the norm on farms, as range of skills and add more value. imaging will allow them to assess the farmers understand the technologies As the adoption of these technologies effectiveness of production systems available and experience the benefits grows, it supports agri-food businesses and enhance environmental decision-

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making. Aggregated images can contribution to alleviating water scarcity. the supply chain and alleviate food safety create contour maps that allow the The mechanisms used to allocate water issues. Virtual reality, social media, and user to see where water flows, create rights contribute significantly to land values digital market platforms provide any yield maps of productive land areas, and focus producers on farming systems producer with the opportunity to become or determine variable-rate seeding. that maximise the value extracted from all a local food producer to the world as the Use of this technology will also water available to a particular land holding. technology provides the opportunity to inform regulatory decision-making, However, reducing the footprint will interact in a deep and engaging manner including decisions around optimal need innovation in water forecasting and way with consumers around the world. land use for particular tracts of land. precision irrigation technologies as well Virtual reality can put a consumer in as serious consideration of using cultivars the centre of any farm, social media Digital agri-marketplaces evolve which have been modified to enhance provides the opportunity for conversation to facilitate transactions across their resistance to drought. Digital and a website can be used to tell the the value web solutions and innovative irrigation product’s story and provide all relevant Agri-food slowly morphs into a fully- technology on farm offer techniques data to confirm the products provenance. digitised industry, online marketplaces that can monitor water usage and Every producer now has the ability to are enabling the exchange of goods, encourage precision agriculture so no set up a ‘digital farmers market stand’ services and capital equipment. Digital drop of water goes wasted. and to be successful if they are able to exchange services are common across articulate their story in a compelling and the global economy but are only starting Bio-control technologies engaging way. FarmVR offer education to emerge in the agri-food sector (with become prevalent as focus through immersive technology as a way the exception of food delivery services placed on minimising food to enhance agricultural learning as a way which have grown significantly over the residues to bring together individuals, businesses last five years). The challenge historically The emergence of analytical tools that and communities so they can collaborate, for many producers has been finding enable laboratories to measure the share knowledge and build skills. FarmAR information on products and services constituent parts of a food product to is another solution, an augmented relevant to their specific needs in an the nearest part per billion means that reality app supported by an advanced environment where there is there is a it is now easier than ever to identify back-end of an artificial intelligence plethora of solutions from suppliers all unwanted chemical residues in food software implemented in fully claiming to deliver significant production products. Although the majority of automated cloud computing system. benefits, but no tools to enable an easy these trace elements present no risk to comparison of attributes being claimed.. human health they do create concern Public Private Partnership Digital marketplace platforms facilitate for consumers about the safety of deliver infrastructure to unlock the easy comparison of products and their food and as a consequence they the full potential of land around then make it simple for direct lines attract regulatory response. The impact the world of communication to be opened up. of these analytical technologies mean One of the significant constraints on the Connecting producers to the suppliers that on farm practices that have been productivity that is able to be obtained of technology and farm system inputs, widely adopted in the past, for instance from any piece of land is the access food companies to producers, and, in spray protocols, become commercially it has to necessary infrastructure, in some cases, consumers directly with unacceptable as they create the risk that particularly water, transport networks, the producers their food will assist in the resulting product could be rejected energy and communication. The ensuring value is spread across the by customers or fail a phytosanitary challenge for the agri-food sector is value web based on the attributes inspection at a border. The focus while this infrastructure is critical to an organisation brings to a product. has consequently moved to finding maximising the value that can be Indigo Marketplace is an example of alternatives to traditional chemical extracted from a piece of land, the an organisation that has built a more pesticides, animal health remedies and investment associated with building out transparent and efficient supply chain, crop protection products that have more these facilities in remote areas rarely by directly connecting buyers and natural composition and consequently makes economic sense. The cost of growers through their digital platform. do not give rise to trace residues that investing in rural infrastructure and the can be perceived as high risk. There is relatively small number of people that Water scarcity promotes farming much work being done by the large it benefits means that government systems that maximise the players in the crop protection space, is more likely to prioritise urban benefit of every last drop as well as many innovative start-ups, investment. Securing the necessary In the many agricultural regions facing to develop microbial based biological facilities to maximise the productive water scarcity, access to water and control agents that protect against capacity of land is critical to utilising land rights to draw water from bores or disease through the use of natural effectively, and will require the design of aquifers are often the most valuable enemies of plant diseases. creative funding models that could bring asset of a farming business. Currently the infrastructure to life. One option 70% of the world’s population Technology enables every for this investment is public private experience water scarcity for at least producer to become a local partnership structures, particularly given one month a year and it is forecast producer for the world the long term nature of the assets to get worse over the next decade. The local food movement has been involved. It is likely that producers, Agriculture is the largest user of water growing strongly over the past decade, processors and exporters may need worldwide, with the United Nations as more and more consumers embrace to be investors in these partnerships reporting it consumes nearly 70% of the farmer’s market model. For and, as the direct beneficiaries of the world’s fresh water. Water scarcity consumers, particularly those at the the assets, this could be facilitated affects social and economic stability as premium end of the market, seeking through a co-operative vehicle. well undermining the sustainability of to connect directly with the producers natural environments and ecosystems. of their food not only offers a sense of For the agri-food sector, enhancing understanding the provenance of the accelerate water productivity is critical, if the products and ethics of the person that industry is to make a significant has produced it, but it can also shorten

81 Agribusiness Agenda 2019 Products grown

As the world’s population grows in size and wealth, producers will be required to continuously re-imagine the products that they grow, catch or harvest. What we eat in 2019 is significantly different from the food that was eaten just a generation ago and will be different to what we eat in 20 years time.

The increased multiculturalism of meaning less chemical intervention, States containing at least one drug society, together with fast food, has reducing environmental impact. There originally derived from plants. Exploring fundamentally changed prevailing is still not a globally consistent view the potential inherent in native flora diets in many countries around the on the social and ethical acceptability also provides the opportunity to work world, and brought diversity to others. of these technologies. It does appear with indigenous communities, that Technological evolution has also had that they have the potential to assist often exist economical and socially on a major impact in shaping demand for in providing the food system with the fringe of society, and provide them products. Exponential change and new greater resilience and mitigating the with options to increase their economic technologies will see food products impact of extreme climate change empowerment. It is expected that continue to evolve in significant and on agricultural production around the medicinal marijuana will exceed dramatic ways. With powerful forces world. Tools such as CRISPR/Cas9 a global market worth of USD55 shaping global agri-food systems – systems have been researched and billion by 2024. including the practical implications proven as an efficient tool used of climate change, natural resource for genome editing in a variety of Reintroducing biological constraints, growing health concerns, organisms. Much research has been diversity returns interest and new technologies, and the evolution of done into the developments in de-risks the global food system fashion and lifestyle trends – producers agricultural biotechnology, proving Monoculture production has delivered will need strategies that allow them it is possible to generate food crops, lower-cost food for the wider population, to remain relevant. Understanding and such as Biofortified rice, which are but the downside is that it has predicting how a product will be used nutritionally enhanced to improve increased the risk of crop failure into the future is critical to making long- the content and bioavailability of through disease incursion or adverse term strategic planning and investment essential nutrients, such as iron climate events. Re-use of the same decisions today, about the technology and vitamin A. soil, rather than rotation of several deployed on farm and the highest crops, leads to higher incidences of priorities for innovation. Unleashing the potential of the plant pathogens and diseases and can world’s native flora for the ultimately deplete the soil to point Creation and optimisation of benefit of global society where it becomes uneconomic to plants for food and fibre The global food system is based on farm. Utilising multiple crop varieties purposes using genetic very few key plant cultivars, with the can reduce the risk of full crop failure, biotechnologies Food and Agriculture Organization of and introduce greater biodiversity into Biotechnologies, including the use of the United Nations (FAO) estimating a farming system. There is growing gene modification and editing, has the 75% of the world’s food is generated recognition that systems with greater potential to create new, or manipulate from only 12 plants and five animal biodiversity will deliver improved existing cultivars, that meet the species. There is huge potential to environmental outcomes; while community’s need for functional food discover and assess the full range of demand for more nutritionally-dense and fibre products. Biotechnologists plant species that exist globally; and and specialised food choices are also have the ability to optimise plants unleash more of the planet’s native expanding. Increasing the range of and create crops that have functional flora for the long-term benefit of products grown does increase the cost benefits, such as increasing certain society. Some of this has been used of production and there are challenges vitamins or minerals beneficial for by indigenous communities around the passing these costs through to health, such as omega 3 fatty acids. world for food and medical purposes consumers. As a consequence, new or Additional to functional capability, the since ancient times. Identifying the reintroduced heritage cultivars do need ability to alter the genomes of plants natural properties inherent in these to deliver attributes to consumer that to enhance the speed of growth, for products could contribute to feeding they perceive to be valuable so that example, will assist in diversification the world, improving health outcomes, they are willing to pay a premium for of land use and the management of and supporting the economy. There is the product. climate change. Technologies also have huge potential in medicinal purpose of the potential to manipulate resistance plants, for example, with an estimated to weather conditions and diseases 45% of prescriptions in the United

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Reimaging a future for animal Enhancing the nutritional being made to lessen food waste via health based on lower antibiotic density of human food supplies supply chain improvements, recovery intensity becomes a priority of out-of-date food, and investment Anti-microbial resistance (AMR) is a The drive to scale-up food production in new innovations. Solutions to serious challenge facing society, and has often come at the expense of food waste have attracted significant the use of antibiotics in food production nutritional quality. But as consumers investment in recent years as it is seen has come under increasing scrutiny. learn more about the therapeutic value as an area with many opportunities The use of antibiotic drugs and cleaning of food, they are demanding more to both mitigate malnutrition issues products has increased dramatically in terms of functionality and quality and enhance the sustainability of the in many societies. It is suggested that nutrition. Given that nutrient-dense food global food system. Australia was first these products have been misused can make a significant contribution to country to set a target to reduce the in a number of agri-food sectors: a population’s health, and thus reduce amount of food waste it generates by for the treatment and prevention of the cost of healthcare, communities are 50% by 2030. To help achieve this target, diseases in livestock, in aquaculture, actively seeking ways they can better the Australian Government invested to and in crop production. However, it produce foods that align with this. In support food rescue organisations such should be noted that around 80% of turn, producers are looking to ways they as Second Bite, FareShare, OzHarvest, antibiotic prescriptions are written for can evolve their production systems in and Food Bank Australia. the treatment of human health issues. order to supply products with proven The result of collective overuse is a and desired health benefits. Sustainable Molecular science is used to heightened risk of the emergence and land management that encompass a recreate exclusive food spread of antimicrobial resistant micro- holistic approach to natural resources experiences organisms. Anti-microbial resistance is promote soil health and have been Some novel food producers argue a concern for both animal and human shown to create more nutrient-dense that food and beverage products are health; if food has been inappropriately produce. Medical providers and nothing more in substance than a produced with antibiotics, there is education institutes, including the combination of acids, fats, proteins and a risk that this could contribute to likes of Harvard and Healthline.com, other chemicals. They are using this AMR and result in long term and are working to educate communities perspective to analyse the composition potentially significant health issues. on nutrient-dense foods that are easy of products, particularly products Future production systems will need to adopt. like wine and spirits, with the goal of to support efforts to maintain efficacy reproducing them through blending of antibiotics; with new and proactive Shrinking the number of people the composite chemicals. They argue ways of managing animal health. with nutritional deficits by that molecular designed food offers the There are also significant opportunities closing the food waste gap opportunity to recreate storied products for businesses to develop natural Despite the fact that more than 800 at scale for the benefit of all consumers, alternative remedies to maintain million people experience under-nutrition using the great wines of the world, aged animal health in a sustainable manner. and malnourishment every day, around whiskeys or classic ports as examples Supermarkets and retail outlets such 40% of the food produced globally is of the products they could supply. as Waitrose, Marks & Spencer, Tesco wasted. This misalignment of resources The question about this innovation is and Sainsbury’s in the UK, have has placed the spotlight on underlying whether consumers will accept the taken action to measure and limit the failings in the food system. In developed disconnection of the product from its use of antibiotics in farming systems. countries, consumers discard at least historical terroir, in favour of a more Waitrose has publicly stated it has 20-30% of the food they buy, largely affordable option that is being produced banned the use of the last-resort because they buy too much or the through a chemical engineering process antibiotic, colistin, and is the only product expires before consumption. (although they argue that the process supermarket that has committed to Retailers often overstock, or discard of distilling spirits or making wine publishing antibiotic-use data from food that is not aesthetically pleasing. is fundamentally an industrial scale, its suppliers. Additional problems such as harvesting chemical manufacturing process). practices, unnecessarily high quality The US company, Endless West, is standards, poor storage and handling an example of a start-up business practices, and shipping timeframes focused on producing molecular all create food waste, particularly spirits, it notes that it believes in in emerging economies. With a the creative capacity of science

combination of government regulation to develop products where others accelerate and societal pressure, greater effort is see boundaries.

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© Shutterstock Jose L Vilchez

© Shutterstock dcurzon

Agribusiness Agenda 2019 86 Processing and distribution

There is much discussion in this report about disruptive technologies and the impact they will have on how we grow, process, distribute and experience food in the future. More than ever before, purchasing decisions are driven by information. This ranges from technical information on product functionality and authenticity provided by the product manufacturer or a traceability solution, to reviews written by users and social media commentary on the product and its competitors.

Highly-informed consumers are sustained food shortages occur, the renewable resources. Many products steering innovation in agri-products, impact on the environment and roading that are used in day to day life to ensure the products they purchase networks from having food distributed including food packaging, toys, clothes, meet their expectations and fit within around the city each day and the health homewares and household cleaning their lifestyles. Many factors come consequences that are being observed products are created with the intention into play here. Some consumers want in cities from poor diet and lifestyle of being used once and disposed of. products with strong functionality at choices that residents are making. There are often no options available discount price points, while others are As a consequence, city governments for these products to be recycled. looking for unique and highly curated are looking to develop integrated Advances in materials science means experiences. strategies to ensure that sufficient, that new opportunities are becoming nutritious food is available to their available to utilise the properties When it comes to distribution, residents while also looking to gain inherent within plants, including digitisation has totally transformed the enhanced environmental outcomes by waste biomass, to unlock sustainable sector. Entirely new distribution models integrating food production areas into product solutions that could potentially have emerged that connect consumers the design of urban areas and tourism supersede products made from more directly to the producer – thus benefits from building the profile plastics, metals, fossil fuels and other shifting where margin is captured along of a city as delivering distinct food non-renewable sources. The obvious the value chain. Models are reflecting experiences. Strategies being used indicator of this trend is the emergence the time and convenience pressures include integrating food production into of takeaway food packaging made consumers are under, and allow them cities to grow crops closer to citizens from bamboo fibre and drink bottles to filter for specific attributes (be that (through the use of urban farms, made from bioplastics, which are price, nutrition, provenance, reviews vertical farming technologies and green replacing products that have historically or any other criteria). The challenge veins along arterial routes), creation been made from plastics. The more for retailers is remaining relevant in a of farmers markets so consumers can transformational opportunities emerge world of unlimited choice online, and engage with growers and investing when focus is placed on converting where delivery moves ever-closer in city food stories and promotions to renewable biological resources using to instantaneous. attract visitors to a city. Singapore, green chemistry techniques and an island state with a population biotransformation to create renewable Integrated urban food of around 6 milllion people, has plastics, adhesives, coatings, pulp and systems increase the food recently created the Singapore Food biofuels. Scion, the New Zealand resilience of cities Agency (SFA) to connect all aspects Crown Research Institute that works Historically food was grown in the of the city’s food strategy into a with forest products, is developing country and consumed in a largely single agency. The SFA is responsible new bio-products that have specific subsistence manner. As cities have for diversifying sources of food function properties than traditional expanded over the last century, the imports, promoting grow local products, including lighter weight, disconnect between people and the initiatives and ensuring the safety heat and water resistant, greater sources of their food has increased; and security of the city’s strength and higher levels of flame markets and supermarkets have food supply. retardancy. become the prime source of food for many people. City authorities have Plant derived technologies Personalising nutrition to the taken a relatively passive position in replace products sourced from individual disrupts traditional respect of the food security of their fossil fuels and other non- agri-food value chains cities however we have observed that renewable commodities Historically, food products have been more cities are looking to develop Modern lifestyles increasingly rely on produced at scale, with a single food resilience strategies. There are access to a wide range of consumer offering developed to meet the needs a number of reasons for this; the risk products which are made from non- of millions of customers. As health accelerate to social stability if significant and

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and wellness becomes top of mind for many consumers, and they seek products that fit their specific requirements, meaning traditional one-size-fits-all production methodologies are increasingly becoming less relevant. Consumers can now purchase kits to test their DNA and other genetic markers to gain insight to what they should eat to maximise health outcomes. This has enabled unique food prescriptions to be designed for an individual addressing their requirements. Traditional value chains will need to evolve so they have the ability to deliver dietary solutions in a world where the market for a particular product spec may not be a million people, but one person. This approach to personalisation will require investment to be meet the expectations of consumers. It is no longer good enough to define the pack size or flavour options for a particular product, these choices are ones the consumer wants to make and with a world of infinite flexibility they expect to be able to specify the format that fits their needs online. We are also observing retailers respond to this trend with their offerings, a good example being quick service restaurants (QSR) no longer defining the flavours of drinks you can buy but giving the consumer the option to personalise their unique flavour mix. 23andMe.com and DNAFit are solutions that tune individual diets, exercise regimes and lifestyle choices based on medical DNA test.

Printing technologies offer game- changing foodservice solutions Food printing offers a wide range of benefits including the ability to deliver tailored product options to consumers and the ability for restaurant operators to tailor their product experience in a way traditional foodservice products do not allow them to do. Alternative ingredients such as proteins from algae, beet leaves, or insects can be utilised in the ink and converted into nutritious products. Printing technology means that by-products and waste that would historically have been thrown away can be converted into food inks that can then be printed into edible food. Foodservice operators, who now account for over 50% of food sales in some markets, have been able to develop their business by supporting restaurant operators to deliver experiences by selling replicable products at low cost. The evolution of food printing technologies frees restaurant operators from standard specs and provides them with a chance to use printing technologies to create unique food offerings for their outlets, which could even be 4D in nature, so that the product could mature after printing. We expect to see foodservice operators evolve their business models in the coming decade to focus on supplying printers and food inks. These types of technologies can also boost the

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visual appeal of food products as they into direct agreements with each opportunities for both parties. It allows enable new shapes and combinations to other (or multilateral agreements large companies to create disruptive be introduced to the market. BeeHex, between groupings of countries such solutions outside of their traditional a company which specialises in as the Comprehensive and Progressive portfolios; while small organisations creating intricate bakery items, was Trans Pacific Partnership Agreement secure investment to scale their founded following a NASA project (CPTPPA). The importance of trade products faster. Big Food giants to automate personalised meals for and the impact that it has on the such as General Mills, Kellogg’s and astronauts on deep-space missions. economic fortunes of countries means Campbell Soup have Foodini is currently selling their governments are taking strong positions all been investing into start-ups, smart kitchen appliance online to protect their trading positions. or createdventure capital funds, to for USD400. Some commentators suggest rather gain access to innovative solutions than being mutually beneficial, trade in food. Incorporating ‘mobile meals’ is contributing to inequality with parts into busy lifestyles drives food of a community winning and some Concern about the innovation seeing no benefit and often being left environmental impacts of As cities continue to grow and in a worse position. It is becoming plastic waste accelerates expand, people are spending more increasingly apparent that future packaging innovation time travelling to and from work, trade arrangements will be about The increasing evidence that recycling school and other activities than significantly more than the movement systems for single-use plastics are ever before. Commute time has of goods between countries; they ineffective has come under the overridden time traditionally spent will signal the political relationship spotlight recently. For decades, on food preparation, with meal times the countries wish to have and will policymakers have focused on often spent in transit; thus driving the need to clearly demonstrate that increasing the collection of recyclables need for convenient and nutritious benefits are distributed widely across and raising the diversion rate, rather food options. Dietary habits are also the economy. As a consequence an than making a systemic change to evolving – with many consumers agreement, although notionally the nature of packaging materials adopting daytime fasting, multiple between governments, is actually an used. The weakness in the system small meals, or other alternatives to arrangement between economies has been highlighted globally when three meals a day to enable them and agri-food exporters need to be China closed its borders to importing to maximise their productivity or actively engaged in the negotiations recycled materials from around the achieve health and wellness goals. as the arrangements around food world. The need to divert the majority Increased understanding of the nutrition are usually sensitive, given the focus of used products from being sent to requirements of the human body will most governments place on ensuring landfill or ending up in the environment drive innovation in product formulation, food security. (particularly the oceans) accelerates the packaging, and distribution to supply need to develop sustainable alternatives sustenance solutions that fit seamlessly Big Food seeks to partner in the food system. Organisations are into modern lifestyles. These products with disruptive innovators to looking to natural products – such as will be designed to fit within a specific maintain consumer relevance bamboo, stone wool, or mushrooms lifestyle niche and distributed in such a Traditional food companies are finding – as a way to create packaging that is way that makes them easy to access it increasingly difficult to maintain not detrimental to the environment. by people wanting to use the products. organic sales growth in their traditional Bioplastics that are fully compostable Significant innovation will occur in brands and product categories, as and provide food safety protections are packaging so that food solutions are consumers seek out novel new foods evolving, along with reusable packaging able to consumed more effectively and experiences. Historically, the systems. It is also opens an opportunity and tidily on the go; for instance the food companies and supermarkets for plastic waste or byproducts to be processing of fresh fruit may extend have curated the product ranges recycled into new products. Algae- from chopped fruit in a pot to the that are being offered to the market based alternatives have been supply of gels or purees that contain however technology now enables developed as a biodegradable whole fruit but are cleaner and easier to consumers to seek out options that alternative to single-use plastic consume. A new era of ‘food shortcut’ they are interested in and curate packaging. Mushroom-based innovations will emerge; responding their own product ranges. By their packaging has also gained to how and when consumers find nature, traditional food companies popularity with the likes of Ikea. it more convenient or nutritionally are heavily invested in infrastructure, optimal to eat. which makes it challenging to pivot quickly in response to market signals. International trade thrives The companies tend to tie innovation when the benefits are shared activities to their existing brands amongst participating and manufacturing capabilities as a countries consequence they find it difficult to With consumers expecting that food respond to challenger brands that are will be available all year round rather often asset light and consumer led. Big than only being on the shelves when food companies are using a number of it is in season, international trade strategies to respond to this challenge, underpins food availability around including internal incubators, partnering the world. At the same time, the with accelerators, or investing in international trading environment is disruptive start-ups to access novel becoming more complex as World Trade products, innovators and their pipeline Organisation rules have increasingly of ideas. Partnering or investing with been superseded by countries entering nimble start-ups present win-win accelerate

89 Agribusiness Agenda 2019 Consumers and consumption

To cope with the increasing pace of life, consumers are seeking products and services that help them to manage the challenges of everyday life; from wearable technologies, artificial intelligence interfaces such as Alexia, self-driving vehicles and personalised operating systems, the list goes on.

The distance that individuals travel level of product recalls, food fraud on protein (this is demonstrated in to work on a daily basis is a major and food sabotage events that are the analysis prepared by the World contributor to busier lifestyles. With occurring around the world. Ongoing Resource Institute on page 90, limited affordable options to live scares will intensify the efforts that which shows that most of the world closer to their place of work as urban organisations need to make to be eats more protein than they need areas grow, commute times are able to provide consumers with the and in many regions the balance increasing meaning traditional meal confidence over the integrity of the between animal and plant protein times are often spent in transit and products they are offered. This will see is close to 50:50). While protein is a not in a kitchen. In a time poor world, the adoption of digital, chemical and building block for cell growth, over- taking the time to stop for a meal is bio-technology solutions all designed to consumption can have negative health becoming a luxury few can afford, and provide irrefutable proof of the integrity effects – including links to cancer as consequence an ever increasing of the product. Other traceability and other serious illnesses, which percentage of the food consumed will solutions, such as blockchain, will offer consumers are becoming increasingly be eaten on the go. However, when streamlined data access to consumers conscious of. There is a growing we do stop for food it will be an event and provide all the information that movement, particularly in Europe, to be shared with family, friends or they could require in relation to the to educate consumers about the colleagues and, as a consequence, ingredients used in a product, how impacts of eating too much protein it will take on greater importance. it has been produced and shipped to and encouraging them to consider a Increased pace of life is also increasing the retailer. Proactive producers are transition in their diet to reduce animal pressure on our bodies, with less recognising that they will be asked to protein consumption and increase time to consciously eat and exercise, provide information into blockchain consumption of nutrient dense plant- recover and sleep. Emerging modern tools and are front-footing this issue, based foods. Earlier in 2019, the EAT health conditions are exploding and to ensure that they are able to use the Lancet Commission released a report the cost of our curative healthcare data collected to provide a competitive on the impact that the diet can have systems are out of control. Food is advantage. As these technologies on the environment. Based on an becoming medicine, and an integral become mainstream, all producers will analysis of scientific evidence the part of healthcare regimes as a key be held accountable for the integrity report concluded that there is a need tool used in managing the effects of of their part of a value chain. In 2018, for consumers to transition their diet existing health issues and the stresses an international scientific lab that from animal proteins to plant based associated with modern life. specialises in honey fraud detection proteins to help mitigate the increase found almost half the samples in greenhouse gases. It was reported Delivering clarity and selected from supermarket shelves that the global average protein confidence to consumers was fraudulently marketed as consumption was approximately on food provenance Manuka honey. Organisations such 68 grams per person per day— Increasingly, consumers want to as Midlands Apiaries, manufacturers which is one-third higher than the know where their food has come of Puriti manuka honey, have average daily adult requirement. and how it has been produced. This introduced jars that contain 11 is occuring for a range of reasons – consumer security and anti- Food is fashion – the desire from simply enjoying the provenance counterfeit features, such as invisible for new tastes and textures story behind the product, to ensuring ink and laser etching, to combat proliferates around the world it aligns with a consumers personal food fraud. As with any other category of values their personal values (such as consumer goods, food products animal welfare, social justice, or the Eating for the environment – evolve in response to changes in environment) to gaining confidence a rebalancing of protein market preferences. In developed about its safety, which is a dominant in the diet countries, it is an inescapable fact priority for consumers across Asia. The food system in many countries that food is fashion – and producers This is being driven by an increased has evolved with a heavy emphasis need to be continually innovating with

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Average protein consumption exceeds recommended levels globally Protein consumption exceeds average estimated daily requirements in all the world’s regions, and is highest in developed countries.

Brazil OECD Former (other) 100 US & Soviet Middle European Canada Union China East & Union Asia Latin America North India (ex. China & India) (ex. Brazil) 80 Africa

Sub-Saharan Africa

, 2009 60 Average daily protein requirement 40 g/capita/day

20

0 0 1 2 3 4 5 6 7 POPULATION (BILLIONS) Source World Resources Institute - Shifting Diets Plant Animal accelerate

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new tastes and textures to maintain intrigue around their products, and is a collaborative platform that’s their relevance to consumers. This build connections with consumers. designed to put Aotearoa cuisine offers an opportunity for producers to They may provide information on their on the international traveller’s map. front-foot the newest taste profiles farming practices, the story of care at and food experiences. When it comes every point along the production cycle, The primary focus on protein to café-sweeping fads such as chia and the ethics and quality that are is progressively superseded seeds, Kombucha or cold-brewed embedded into growing the product by a focus on broad nitrogen coffee, it certainly pays to be and bringing it to market. For around nutritional density a pioneer. Not only is taste important, USD9,000, you can order the Very Over the last decade, the food system but having an Insta-worthy aesthetic Expensive Pizza from renatoviola. has focused on the amount of protein is also critical. A current search on com. The seafood-topped pizza will being produced and consumed. Instagram for pictures tagged “food” be cooked by a master pizza chef at Whether it is Masterchef or social presents over 400 million searches. your residence (if you live in Italy), media, everybody has been focused Recognising that food is fashion means and is served with rare cognac on the sources of protein on the plate. a food producer can’t expect to cash and champagne. This has been compounded by many in on a successful product for decades diet and lifestyle plans, especially as they have in the past; a successful Reimaging food experiences those related to health and fitness, product is an indication that it is time as traditional culinary tours placing their primary focus on the to start innovating to find your next expand in food tourism protein sources and the amounts being market shifting experience. What may For many people, food provides a consumed each day. It is our view start out as food fashion can quickly voyage of discovery through the that the focus on protein has been become big business. Not too long diverse range of global cultures and overplayed, while it is undoubtedly an ago, plant-based meat products lifestyles. As well as exploring ethnic important attribute of food, it is only were viewed as a passing fad. foods in restaurants where they live, one element of food and we expect the In 2019, pioneering company more people are being encouraged next decade will see focus move onto Beyond Meat went public with to travel, with food tourism being a a wider range of attributes inherent a USD1.5 billion valuation. burgeoning sector of the travel market. in the product. This shift in focus will Culinary tourism is no longer just for emerge as individuals become more Premium consumers the elite – with a full range of local educated on wholefoods and balanced seek out storied, artisan, cuisine and indigenous experiences, diets and understand protein is only one ultra-fresh products including AirBnB Experiences that component of a food product. There As the number of affluent showcase local street foods. Research is a growing recognition that it is the consumers grows around the world, from the World Food Travel Association balance of nutrients, minerals, fats and there is an increasing number of reports that 81% of respondents say other elements that determine a food’s consumers with the financial capability they learn about food and drink when long term impact on health and vitality. and desire to seek out and experience they visit a destination; while 47% The focus on broad nutritional density highly-specialised choices around the shopped for food at local grocery or will result in a rebalancing of the protein foods they eat. The significant wealth gourmet stores. For most travellers, equation within diets. Consumers that has been accumulated by the baby food is not the only reason that they are becoming more educated and boomer generation who have reached travel but having the opportunity to doing their own research into or are approaching retirement and still try the local cuisine is an aspiration understanding the optimal level have their health and a strong desire to for over 90% of travellers. This gives of macro and micro nutrients to experience new products, means they food producers in host countries the be included in their unique diets are actively seeking out storied, artisan opportunity to provide visitors with through the use of apps and creating and ultra-fresh products. It should immersive food experiences while they tailored diet plans that have broad also be noted that some millennial are travelling and try to send them nutritional density. households are high-income with no home as ambassadors who will seek children and approach life with a “treat out the food they have experienced myself mentality”. Both of these groups and promote it to friends and family. have a willingness to pay a premium for Organisations are creating food products that are perceived as having tourism offerings at a range of health benefits and/or offer superior levels – from individual operators, to quality. Market-savvy producers are regional networks, and national level. accelerate using story-telling techniques to create Eat New Zealand, launched in 2018,

93 Agribusiness Agenda 2019 The call to action

Having acknowledged the significant progress that New Zealand’s agri-food sector has made over the last decade, evaluated the opportunities and challenges facing the sector today and explored the dynamics of disruption that necessitate organisations to accelerate into the future, the obvious question is what do we need to do now, to set the industry up for a prosperous future. We have concluded on nine actions that we believe have the potential to create a platform that positions New Zealand’s food and fibre producers, processors and marketers to play the infinite games ahead in a sustainable and successful way.

This call to action is an Agenda that has been a decade in the making. It is an Agenda to fuel the prosperity of New Zealand in 2020s. Whatever form the KPMG Agribusiness Agenda takes moving forward we commit to play our part in realising this Agenda. We also commit Feeding our to continue to hold the wider agri-food sector community before to account for the progress it is making in creating a better New Zealand, we feed the world for all New Zealanders.

New Zealand can’t afford to continue to be home to one of the world’s most unhealthy communities. As producers of the best natural food and fibre products in the world, every participant in the agri-food sector should recognise the benefits they will derive from working with the government, schools and community organisations to ensure that every Kiwi has access to the food they need to sustainably improve our health outcomes before the first tonne is exported. Inadequately feeding our five million is not an option if we want to tell the world about the natural, healthy, nutritionally dense food we grow in New Zealand.

Creating a vehicle to evolve and enable New Zealand’s primary sector vision The Primary Sector Council is consulting extensively across the agri-food sector on the fundamental elements that need to be captured in a compelling vision that the majority of the industry will commit to realising. Once the vision is launched, there will be much work to be done to align policy settings and investment to enable it to be realised. An adequately resourced organisation, with statutory influence, is required to enable realisation of the vision and to ensure it remains relevant.

Collective investment into a Green Bank to fund the climate transition The industry faces a massive investment programme into infrastructure, technology and science to transition to zero carbon as quickly as possible. At the same time debt is becoming scarcer and more expensive. Banks, processors, exporters, the Superfund and others should establish a Green Bank to provide sustainable financing, with preferential terms, to accelerate this transition. The Government must exempt the vehicle, which should operate as a not for profit entity, from the tight capital constraints the RBNZ is proposing to impose on banks.

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Articulating and amplifying our authentic food story on the global stage

Our goal should be to make a New Zealand meal the dining option people aspire to around the world. There is something unique about the food and fibre we produce, and this must be valued by Kiwis and visitors alike. A concerted effort is needed to position ourselves distinctively on the global food map; restauranteurs, iwi and food producers need to partner to ensure that every visitor to our country enjoys a New Zealand food experience, and similar experiences are delivered around the world.

Establishing a shared platform to unlock the value of data The desire to hold data close in the hope commercial value can be extracted from it costs the sector and the economy real money every day. The value of data is maximised by aggregating with unrelated information to find the insights that give us a 1 or 2% advantage. The time for hoarding data has passed; the industry and the country will benefit from a coalescing around a single open access data platform, that enables everybody to maximise the commercial value of their data.

Putting our food basket at the centre of a business model that delights global consumers Opening a new market always takes more time and money than expected. With infinite consumer niches, the cost of securing product recognition is spiralling. We sell our products to similar consumers around the world and they rarely eat only salmon, cheese or kiwifruit; they eat diverse diets. Establishing a go to market model built around our basket of food and fibre products and aligned with diets of consumers will make their purchasing decisions easier, deliver better experiences, spread promotional costs and secure premium market growth for all.

Implement a bold industry blueprint to attract and retain talent To most people the agri-food sector is not sexy; it never will be. It is not likely to be a top of mind career option for most people, but it does need a wide range of skills to capitalise on the growth opportunities available. In a highly competitive labour market, the industry needs to be more co-ordinated than its competitors for talent. Old recruitment strategies no longer work, it is time to blueprint a bold plan for a ‘Year of New Zealand Food and Fibre’ that engages and immerse every part of our community, showing them what the sector can offer them.

Listening, responding and reporting on the complete impact of the industry The industry receives its license to operate from the community. Organisations must respect this and work to strengthen it. This requires deep engagement to really listen to community expectations and then action to deliver on these expectations. Every company must be open about what it does well and where it has challenges. The sooner companies deliver comprehensive reporting on their environmental, social and economic impacts the sooner they demonstrate to the community how they value the license they are granted.

Accessing the disruptive technologies that deliver a point of difference in the market The scale of New Zealand innovation budgets mean we will never have all of the great ideas to transform the industry ourselves. We need to ensure there are many channels available to access disruptive innovation wherever it occurs globally. There is an opportunity for organisations to pool some of their investment in disruption in a collaborative venture fund. This would take positions in start-ups, that are developing technologies that will benefit producers, processors and marketers, to deliver first mover access to solutions that differentiate our products globally. accelerate

95 Agribusiness Agenda 2019 Directing actions – Articulating impact

Impact is a word used regularly throughout this Agribusiness Agenda. Consumers increasingly look to buy from businesses that are clear on purpose and articulate the contribution they are making to the wider community.

Maintaining social license to operate goals like eliminating global hunger and Not using the globally recognised requires companies to demonstrate that providing universal access to sanitation, SDG framework puts NZ organisations they are about more than just the bottom that while important are not practical at a competitive disadvantage. line. Young people want to work with goals for their organisation. They have When faced with 17 goals, all of which organisations that aspire to make the consequently not engaged with the make important contributions to the world a better place for everybody. agenda in a substantive manner. On functioning of society, the tendency is to a recent trip to the Netherlands, a key Globally, the United Nations Sustainable try and do something for every goal. The takeaways was that every organisation Development Goals (UN SDGs) are reality is that no organisation can address we visited used the SDG’s to direct being used by many organisations all the challenges the SDG’s seek to their social engagement strategy and to (governmental, civil society and make progress on themselves. Effective articulate their purpose and impact; commercial) as a framework to users of the goals recognise their impact we simply do not hear companies determine how they can maximise their is amplified by going deep rather than in New Zealand talking about their contribution to society and to articulate wide. Focusing actions on two or three purpose in this way. the impact their actions have on society. goals aligned to organisational capability KPMG analysis suggests 4 in 10 of the The SDG framework provides a blueprint and working with like-minded partners top 250 companies globally are already for strengthening any community and will deliver greater impact and benefits actively using the SDG’s for this purpose. they are as relevant to ensuring our for communities, for consumers and rural communities in New Zealand are for organisational stakeholders. The 17 SDGs, released in 2015, grew vibrant as they are to lifting communities out of the Millennium Development For the agri-food sector, the SDG’s in sub-Saharan Africa out of poverty. Goals (which lifted a billion people out of provide many opportunities to design The SDG framework provides agri-food poverty) but they have a wider purpose; programmes to deliver the impact organisations with a framework they can the development of a sustainable, that this Agenda has suggested use to help guide them in determining resilient and peaceful global society. As organisations need to have to ensure where they can have the greatest impact a consequence their relevance beyond they attract talent, maintain their on all the communities they are part government and development agencies license to operate and develop of; the towns and villages they source is significantly greater. sustainable positions in the infinite products from, the wider New Zealand games they are playing. Many organisations in New Zealand community and the global community to have associated the SDG’s with worthy which we sell our products.

Agribusiness Agenda 2019 96 Five impact opportunities for agri-food organisations

2.4: By 2030 ensure sustainable food production systems and implement resilient agricultural practices that increase productivity and production, that help maintain ecosystems, that strengthen capacity for adaption to climate change, extreme weather, drought, flooding and other disasters and that progressively improve land and soil quality. New Zealand can’t feed the world but we have a role to play in helping the world to feed itself. The Zero Carbon Bill will require producers to adapt their farming activities as the country transitions towards a zero carbon economy. What we learn during this transition can not only be deployed domestically but shared internationally to help emerging economies develop robust, climate resilient food production systems that help to eliminate hunger by 2030.

3.4: By 2030, reduce by one third premature mortality from non-communicable diseases (NCDs) through prevention and treatment and promote mental health and wellness. The health impacts of NCDs on the NZ community are significant and are clearly linked to the food that people eat. The need to focus on having a clear plan for ensuring that the five million New Zealanders are able to access and eat the right nutrition in the right way every day is critical to the long term stability of the country and the future prosperity of the agri-food sector. Proactive action to ensure the right food is available and people have the skills to prepare and cook the food in the correct ways must be a priority for every organisation in the sector.

5.5: Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision making in political, economic and public life. Women are 50% partners in most agri-food production businesses but their influence on the leadership of the sector is limited due in part to history. Organisations should ensure they are taking active steps to diversify the thinking and perspectives that shape their strategies and actions and this means that more women need to be given opportunities to take on leadership roles in organisations across the industry. Given the industry’s customers are very often women utilising the knowledge and insight already in the industry just makes sense.

12.3: By 2030, halve per capita food waste at the retail and consumer levels and reduce food losses along production and supply chains, including post-harvest losses. Taking practical steps to eliminate wastage across a supply chain presents organisations with a wide range of opportunities to have a material impact on the availability and quality of food supplied to different parts of the market. Taking steps to reduce wastage makes economic and environmental sense. It could be about taking steps to ensure no food is thrown away, that there are commercial opportunities to use recovered or wasted food, that consumers are given tools to only buy what they need and use up left overs or ensuring the quality of product is maintain in supply chains. Small interventions can make major contributions to halving food waste globally.

14.b: Provide access for small-scale artisanal fishers to marine resources and markets. Consumers are looking for products that have authentic stories attached to them. The opportunity to connect traditional fishers to markets presents opportunities for all in the industry, whether it is the fisherman themselves, indigenous communities that have access to fishing rights or the commercial fishers that have supply chain and marketing capabilities. Looking for new business models that create value for all in the industry through connecting authentic harvesting stories to customers presents opportunities for value to collected and shared across the industry. accelerate

97 Agribusiness Agenda 2019 KPMG New Zealand Agri-Food team

Ian Proudfoot Charles Ehrhart Lead Author Sustainable Value Global Head of Agribusiness M +64 22 395 1457 National Industry Leader Agri-Food E [email protected] M +64 21 656 815 T +64 9 367 5882 E [email protected] Andrew Watene linkedin.com/in/iproudfoot Māori Agribusiness M +64 27 576 0724 Emma Wheeler E [email protected] Co-Author Senior Manager, Agri-Food Auckland Andrew Simpson M +64 21 806 210 Risk Consulting E [email protected] M +64 21 569 864 E [email protected] Trevor Newland Hamilton M +64 21 586 560 Simon Hunter E [email protected] Prosperity M +64 27 489 9737 E [email protected] Glenn Keaney Tauranga M +64 27 288 7555 Tuhi Isaachsen E [email protected] Strategy M +64 21 734688 E [email protected] Justine Fitzmaurice Wellington M +64 21 294 3128 Olive Wallis E [email protected] Tax M +64 21 535791 E [email protected] Peter Taylor Christchurch M +64 21 247 2548 Roger Wilson E [email protected] Farm Enterprise, Hamilton M +64 27 281 9575 E [email protected] Brent Love Farm Enterprise, Timaru / Ashburton M +64 27 5281537 E [email protected]

Agribusiness Agenda 2019 98 Sources

Acknowledge Evaluate

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99 Agribusiness Agenda 2019 Our contributors over the last 10 years

The KPMG Agribusiness Agenda has reflected the opinions agri-food sector leaders have shared with us so freely over the last ten years. We’re grateful to all 457 of them. We would like to particularly thank the contributors to the 2019 Agenda who we have bolded below.

Abby Thompson Anne Munro Cathy Brown Darryn Pegram Fabian Yukich Hemi Rolleston Adrienne Wilcock Arthur Graves Champak Mehta Daryl Johnson Fatima Imran Herstall Ulrich Alan Pollard Barbara Charles Eason David Birkett Fiona Gower Hilton Collier Groundwater Alastair Hulbert Charlie Graham David Carter Gary Hooper Hinerangi Edwards Barbara Kuriger Alastair Macfarlane Charmaine O’Shea David Graham Geoff Copps Hinerangi Barry Brook Raumati-Tu’ua Alastair Nelson Chris Black David Handley Geoff Taylor Barry Foster Holger Detje Alex Ulrich Chris Clarke David Hemara George Gould Barry O’Neil Damien O’Connor Alexandra Allan Chris Kelly David Hughes Gerard Hickey Bart Zame David Carter Alison Carrington Chris Lewis David Jones Giles Hailwood Ben Dalton Howie Gardner Alison Patterson Christopher Bourke David Surveyor Graeme Harrison Ben Russell Ian Abercrombie Anders Crofoot Claire Massey Dawn Sangster Graeme Peters Bill Baylis Ian Boyd Andrew Clayton Colin Glass Dean Nikora Graham Smith Bill Falconer Ian Carter Andrew Coleman Colin Harvey Debbie Birch Graham Stuart Bill McLeod Ian Jackson Andrew Crutis Collier Isaacs Derek Broadmore Graham Turley Blair Hamill Ian Macintosh Andrew Ferrier Colm Hamrogue Derek Crombie Grant Abbott Bob Major Ian Palmer Andrew Hawkings Conor English Derek Fairweather Grant Absolum Brendan Hoare Jacqueline Rowarth Andrew Hill Craig Greenlees Dianne Kidd Grant Cuff Brian Cloughley James Allen Andrew Hoggard Craig Hickson Dieter Adam Grant Rosewarne Brian Patchett James Egan Andrew Morrison Craig Norgate Dion Tuuta Grant Rowan Brian Richards James Parsons Andrew Priest Craig Osborne Don Everitt Grant Watson Bridget Service James Ryan Andrew Warren Craig Young Don Mcfarlane Greg Campbell Bridgit Hawkins James Wallace Andy Elliot Cros Spooner Don Nicolson Greg Gent Bruce Murphy James Wallacee Andy McFarlane Dacey Balle Donald McFarlane Greg Muir Bruce Wills Jamie Falloon Andy Somerville Dale Kwok Donna Smit Hamish Gow Bryce Johnson Jamie Tuuta Angela Clifford Dallen Olson Donovan Wearing Hamish McFarlane Carl Carrington Jane Arnott Angela McLeod Dame Alison Doug Ducker Hamish Midgley Carly Robinson Paterson Jane Taylor Angus Haslett Doug Voss Hamish Orbell Caroline Robertson Damien O’Connor Jarred Mair Ann Harper Duncan Coull Hamish Simson Caroline Saunders Dan Mathieson Jason Dale Anna Campbell Eric Buenz Hayley Gourley Catherine Beard Dani Darke Jason Minkhorst Anna Orbell Eugenie Sage Haylon Smith Catherine Wilson Daniel Paul Jason Te Brake Anne Hindson Fabian Partigliani Helen Gear Agribusiness Agenda 2019 98

Jeanette Maxwell Kevin Bryant Michael Spaans Peter Ellis Sam Buckle Tim Brown Jeff Grant Kevin Parish Michael Visser Peter Hampton Sam Lewis Tim Mackle Jen Johnson Kevin Wilcox Michelle Thompson Peter Hendry Sam McIvor Tim Ritchie Jennifer Scoular Kimberly Crewther Michelle Wilson Peter Kemp Sam Robinson Todd Charteris Jenny MacDonald Kirsten Bryant Mike Burrell Peter Landon- Sarah Foote Todd Muller Lane Jeremy Flemming Lain Jager Mike Chapman Sarah Kennedy Tom Bruynel Peter McBride Jim Grennell Larry Bilodeau Mike Dunbier Sarah Risell Tom Lambie Peter Nation Jim Scotland Laurie Margrain Mike Manning Sarah Speight Tom Richardson Peter Reidie Jo Finer Lee-Ann Marsh Mike Petersen Scott Champion Tonde Kaitano Peter Schuyt Jo Goodhew Linda Sissons Miranda Burdon Scott Coulter Toni Laming Peter Silcock Jo Thompson Lindy Nelson Miriana Stephens Scott Hanson Tony De Farias Peter Wren-Hilton Joanne Todd Lisa Payne Monique Fiso Shamubeel Eaqub Tony Egan Phil Alison Joe Stanton Lloyd Downing Murray Gribben Simon Couper Tony Gibbs Phil Everest John Barnes Louise Beard Murray King Simon Hegarty Tony Howey Philip Gregan John Brakenridge Lynda Murray Taggart Simon Johnson Tony Leggett Coppersmith Philip Manson John Harrison Murray Willlocks Simon Limmer Tony McCormick Malcolm McMillan Prem Maan John Haywood Nadine Tunley Siomon Yarrow Tony Nowell Malcolm Nitschke Keith Woodford John Janssen Natasha King Sir Bill Gallagher Tony Wright Marie Daly Sir Peter Gluckman John Kippenberger Nathan Guy Sir Henry Van Traci Houpapa Marie Dawkins Rachel Brown der Heyden John Loughlin Neil Craig Vanessa Winning Mark Clarkson Ray Geor Sonya Matthews John Luxton Neil Trebilco Vicky Robertson Mark Darrow Raymond Sharp Sophie Stanley John McKay Nick Beeby Volker Kuntzsch Mark Dewdney Reon Verry Stacey Whitiora John Morgan Nick Pyke Warren Parker Mark Greenside Reuben Allan Steffan Browning John Rawcliffe Nicola Shadbolt Warwick Roberts Mark Harris Richard Bowman Stephen Allen John Waller Noel Josephson Warwick Mark Heer Richard Collin Stephen Tauwhare-George John Wilson Noeline Holt Macaulay Mark Houghton- Richard Fitzgerald Wayne Anderson Jon Calder Brown Olivia Egerton Steve Carden Richard Green Wayne McNee Jon Sandbrook Mark Jeffries Owen Poole Steve Maharey Richard Kidd Wayne Mulligan Jon Tanner Mark McHardy Owen Symmans Steve Merchant Richard Prosser Wendy McGowan Jonny Douglas Mark Ross Patrick Aldwell Steve Saunders Richard Wild Will Barker Joseph Scott-Jones Mark Sinclair Paul Burns Steve Stuart Richard Wyeth William Gallagher Jules Benton Mark Steed Paul Grave Steven Smith Rick Powdrell William McCook Julia Jones Mark Ward Paul Green Stu Hutchings Ricki Leahy William Rolleston Julian Bevis Mark Williamson Paul McGilvary Stuart Chapman Ricky Larsen Zahra Champion Julian Raine Mark Wynne Paul Morgan Stuart Gordon Riria Te Kanawa Zelda de Villiers Julie Hood Martyn Dunne Paul O’Brien Stuart Gray Robert Hewett Julie McDade Mary McTravis Paul O’Sullivan Stuart Wright Robert Sinclair Julie Ross Mat Cullen Paul Ryan Sue Higgins Robin Hapi Juliet MacLean Matt Bolger Paul Stocks Sue Visser Rod Quin Justine Gilliland Matt Ross Penelope England Susan Rodney Green Goodfellow Justine Kidd Matt Dolan Penny Mudford Roger Bourne Susan O’Regan Karen Fistonich Maury Leyland Penny Nelson Roger Harker Susan Robinson Karen Kenny Mavis Mullins Pete Frizzell Ross Townshend Derus Karen Kos Max Kennedy Peter Beaven Ross Verry Te Horipo Karaitiana Katy Bluett Melanie Brooks Peter Bodeker Rosstan Mazey Terry Copeland Keith Cooper Michael Ahie Peter Carr Rupert Holborow Terry Lee Kenneth Irons Michael Brooks Peter Chrisp Russell Ballard Thomas Chin Kerensa Johnston Peter Clark Michael Dunbier Tiaki Hunia Ryan Graves accelerate Kerry Maw Peter Cullinane Contact us

David Meagher Head of Agribusiness in Ireland T: +353 1 410 1847 E: [email protected]

Stuart Irwin Head of Agribusiness in Northern Ireland T: +44 28 9089 3733 E: [email protected]

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