Release of the Agribusiness Agenda 2018; We need to tell you our stories.

To view the agenda click here 

Biosecurity incursions, environmental challenges, water quality, labour availability, trade wars and inadequate rural infrastructure all feature prominently in the ninth KPMG Agribusiness Agenda.

The last year has not played out how industry leaders expected.  Whereas the 2017 Agenda was outward looking and focused on the opportunities in global markets, this year the Agenda is directed towards a range of domestic issues that dominated our conversations with industry leaders”.

It has been a challenging year for the industry, where the mainstream narrative has been predominately negative despite agri-food continuing to dominate New Zealand’s export revenues. The negativity presents risks to the industry’s social license to operate and its ability to command a premium price in global markets.

This year’s Agribusiness Agenda, ‘We need to tell you our stories’, calls on the sector to tell honest stories relating to how products are grown, processed and distributed, to highlight the many positive attributes inherent in the products we grow and deliver to the world.  Articulating the attributes inherent in New Zealand products will provide verifiable stories to counter those based on perceptions that have dominated the conversation for far too long.

Biosecurity

Given the discovery of Mycoplasma bovis and Myrtle Rust in the last year, as well as the ever present threat from the Brown Marmorated Stink Bug, it is unsurprising that maintaining world class biosecurity was again rated the highest ranked priority for industry leaders, recording its highest ever priority score in the survey.  There was a clear message that the speed of response to Mycoplasma bovis has been compromised by farmers not fulfilling their obligations under NAIT. This highlights that managing biosecurity risks must become enshrined as part of the day to day responsibility of everybody that works in the agri-food sector.

Environment and water

The central role that environmental degradation and water quality played in last year’s election featured strongly in many of our conversations, with concern over the way the issue is constantly presented as the primary sector’s problem. Whether we like it or not, every New Zealander has contributed to the degradation of our environment, waterways and beaches. Addressing these issues needs whole of community responses.  Agri-food sector leaders recognise they have a major role to play, demonstrated by the significant rise in priority attached to restoring native ecosystems in the survey [largest rising priority, up 8 places to be ranked 9th]. But, they also recognise that they can’t solve the problems alone.  The Agenda also highlights the need to ensure land use plans are optimised in response to community requirements and market expectations.

Labour resources

The challenges faced securing labour to support growth was another common theme in our conversations with industry leaders.  Uncertainties around being able to recruit and retain migrant labour and the Recognised Seasonal Employer scheme have left many organisations facing labour shortages. Leaders are very supportive of ensuring New Zealanders have the skills to access the wide variety of employment opportunities available across the industry but we need to recognise that this takes time. Current policy settings are putting at risk the ability of organisations across the primary sector to complete the work that needs to be done today.

Trade

The Coalition Government’s decision to sign the CPTTPA agreement was welcomed, however concern was expressed about the stability of the global trade system, particularly with the Trump Administration appearing to take the view that a good deal can only be one where America is the winner.  Leaders were concerned that should trade wars eventuate between the US and China or Europe it will be increasingly difficult for New Zealand to maintain a neutral position, which could put market access at risk to one or more of our major markets.

Rural infrastructure

The infrastructure challenges in rural areas also featured predominantly in our conversations this year.  In relation to connectivity the call was clear, it is no longer acceptable for rural people to be treated as second class digital citizens; they have the right to expect the same levels of connectivity all other New Zealanders expect, especially given the critical role technology should be playing in maintaining quality of life and supporting businesses to prosper.

It was notable that the reliability and cost of electricity networks in rural areas featured in a number of discussions for the first time. Energy is always a topic of conversation internationally but has never been raised in our Agenda Roundtables before.

Contributors highlighted the increases they have been experiencing in energy costs, something they expect to continue, and challenged whether ageing distribution networks are sufficiently safe and reliable.

Other notable highlights of the 2018 Agribusiness Agenda

  • The overall priority score recorded in the Industry Leaders survey reached a new high of 7.41, reflecting the continual increase of the number of high priority issues that industry leaders are having to manage.
  • The priority score for establishing an umbrella body for the industry and restricting foreign ownership of land reported the greatest increases on last year of any priorities.
  • In preparing this year’s Agenda two grassroots Roundtables were held involving good farmers; while they were very proud of their roles as food producers they are looking for regulatory certainty, relevant technology and a little bit of support every now and then.

The Agenda also analyses key learnings from recent agri-food innovation events in San Francisco, which highlighted the need to be constantly alert to change through the development of networks, partnerships and collaborations.

 


Release of the Agribusiness Agenda 2017: The Recipe for Action

The success of the agri-food sector is dependent on individuals across the industry placing consumers at the centre of everything they do, according to the 2017 KPMG Agribusiness Agenda: The Recipe for Action.

Based on contributions from more than 100 industry leaders, the Agenda explores what needs to be done to capture more of the quarter of a trillion dollars New Zealand products realise in-market and make a greater contribution to our nation’s prosperity. This relies on the industry collectively shifting its focus towards the consumers of the food and beverage, fibre and timber products it produces.

There is a simple unavoidable truth: no customers means that there is no business.  However, historically, we have placed the majority of our focus on maximising production. When you are focused on the volume that you can produce, the government shapes your future as it sets the rules. However, as organisations pivot towards markets and consumers, the rules that shape the future are no longer determined by the domestic government but by much tougher masters, the consumers to whom they sell.

The government is not responsible for securing the value lift. Although it can be an enabler, creating and capturing value falls on every person and organisation involved in the industry, including farmers, processors and exporters, industry good organisations, councils, Maori trusts, iwi and service providers. Only by the whole industry seeking ways to work collaboratively will the pivot from a producer-focused, volume-based culture to a market-focused, value-based culture be achieved sufficiently quickly to capture the opportunities available to it.

The biggest risk to success is complacency. People don’t recognise the impact that structural changes in the Agri-Food sector globally, driven by innovation and consumer preferences, will have on our traditional markets. Some have the potential to literally vanish overnight, there is no place for any comfort or complacency.  New Zealand is the only developed nation that relies on growing biological products and selling them to the world to pay for schools, roads and hospitals.

The Agenda highlights a significant difference in outlook in the lead up to this year’s election compared to three years ago. Concerns about the impact regulatory changes would have on the sector’s productive capacity dominated conversations in 2014. This year, the election hardly rated a mentioned with conversation centring on the expectations of consumers and the community.

What action do industry leaders want to take?

The Agenda features 110 action items that have been curated from more than 250 ideas provided by industry leaders. The ideas cover the need for a values-led framework for the industry, recruiting and training the best talent, rapidly deploying leading edge technology, exploring new business models, getting closer to customers, leveraging the best ideas in the world and telling authentic stories to all.

To view the agenda, click here

—————————————————————————————————————————————————————

Release of KPMG Agribusiness Agenda 2016, Volume 2: Foresight to the future

The New Zealand agri-sector has a huge opportunity to reap billions in additional earnings each year – by capitalising on emerging trends disrupting global markets for food, fibre and timber.

The latest KPMG Agribusiness Agenda highlights the huge gap between our export earnings and the end-value of our products. New Zealand exported a total of $37 billion in agri-food products in 2015.  KPMG estimates those same products ultimately generate more than 0.25 trillion dollars in retail sales when sold to consumers around the world. The fundamental question is, how do we capture our fair share of that quarter of a trillion dollars.

The agri-sector is required to forge new pathways to market that close the gap between the producer and the end-consumer. The value is there, the only constraint is that of our history; we don’t currently occupy or control the parts of the value chain that create the most value.

The Agenda identifies a number of emerging, disruptive trends that are re-shaping the global agri-food sector. These include:

  • The emergence of cultured farming, where animal proteins can be grown without the environmental and ethical concerns of growing the whole animal;
  • Consumers seeking personally tailored nutrition to maximise their health and performance, which could be order by app direct from the producer or via food printing vending machine; and
  • The ability that technology provides for any producer, anywhere in the world to become a local food supplier to the world if they have a deeply authentic story underlying the food they produce, although it must be verifiable.

If the New Zealand primary sector can be first to capitalise on these and other emerging trends – and shape our industry in response – we can become the world’s leading agri-food sector within the next 20 years. It is completely achievable; but it will require a concerted, collaborative effort from everybody involved in the industry.  Sector leaders need to set bold targets for 2036. The industry must build a new, transparent partnership with all New Zealander’s starting today.

The improvement in dairy prices indicated as of late, should not be a reason for the industry to become complacent and rest on its laurels.  When the world is on the verge on an agrarian revolution, we cannot afford to believe that the markets we have supplied for decades will still be available to us next year.

In the greater scheme of things, a shift up or down in commodity price is not something we can control. It’s critical the NZ industry stays focused on the bigger picture…and the much, much bigger prize.

To explore these issues in greater depth, download the Agribusiness Agenda 2016, Volume 2: Foresight to the future here.

——————————————————————————————————————–

To view all previous editions of the KPMG Agribusiness Agenda please visit our page here. At the bottom of the page you will find links to all of our previous publications.