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NZ emerging agri-business leaders see value in NZ Inc brand

NZ's primary sector leaders of tomorrow still bank on brand Kiwi, want deeper debate on GMOs

By Jonathan Underhill

Nov. 12 (BusinessDesk) - New Zealand's emerging agri-business leaders say affluent consumers in 2035 will pay a premium for products sold with a strong provenance story and that are more tailored to their needs, according to KPMG's Agribusiness Agenda 2015.

The accounting firm asked a range of primary sector organisations to nominate emerging leaders and more than 50 of them - scientists, company executives, farmers, government officials and marketers - met for a summit in Auckland in September and were asked to share their vision for the sector in 2035. They were also surveyed on their priorities and the results compared to a separate poll of current leaders.

Both groups said maintaining a world-class biosecurity system was their top priority, and both ranked high-quality trade agreements and delivering clear market signals throughout the supply chain in their top 5. But the leaders of tomorrow overall put a higher priority on the needs of the customer and had a stronger focus on people and communities. Both groups ranked commercial scale organic and biological production systems among their bottom five priorities.

The emerging leaders also put a higher priority on telling the "provenance stories" of New Zealand, rating it in their top 5 and saying it would ensure they attracted a premium price from consumers. The success of New Zealand's future food products "lies in a single, clear and cohesive primary sector brand, supported by the New Zealand story" and extending beyond dairy and meat, they said, according to the KPMG report. Packaging would include some type of accredited symbol linked to a New Zealand primary sector brand.

Proof of authenticity would also protect New Zealand from what is seen as a growing threat from inferior, counterfeit products overseas that attempt to cash in on the country's reputation as a producer of quality foods, they said. By 2035, customers will demand "verification of environmental standards, product quality, animal welfare, and sustainable business practices" and there will "no longer any room for lowest common denominator farming."

The KPMG survey showed strong support for a "transparent and meaningful debate on the use of genetic modification". New Zealand's primary sector didn't have a clear strategy on genetically modified organisms and the country needed to quickly decide where it stood so agri-businesses could position themselves for the future.

Opinion was divided the nation's primary sector should adopt a GMO-free strategy as part of building a clean, green image, or use the science to increase yields, stay competitive and produce products with traits consumers found desirable. There was some consensus that GM foods will be more widely produced in future and that consumers will be more informed about the advantages and disadvantages, they said.

"If the New Zealand primary sector had a clear strategy on genetic modification, we could segment consumers and target those that will be more aligned to our products, genetically modified or not," they said.

Ian Proudfoot, KPMG New Zealand's global head of agribusiness, said that to prosper, the nation's primary sector should target the world's most affluent consumers, "delivering products that are differentiated, that markets are prepared to pay a premium for", and that complement their lifestyle and aspirations. And New Zealand should accept that it probably won't convince more than a billion Chinese people to become regular dairy consumers.

"These consumers will select components of our diet that reflect their new-found wealth and lifestyle aspirations. – perhaps an occasional premium grass-fed hormone-free steak or a glass of fresh, grass-fed milk," Proudfoot said. "But on a day to day basis they will continue to eat a diet that is an evolution of their traditional diet."

The emerging leaders came up with more recommendations for taking the primary sector into the future, including the creation of NZ Inc-owned distribution hubs in market that can be used by all primary sector businesses. They also favoured a collaborative approach to distribution channels; flexible, modular processing plants to replace the big; under-used plants of today; use of emerging technologies for storage; 3D printing; drones; augmented reality; DNA sequencing; IP protection for processing technologies; and innovative use of waste.

They predicted that the concept of foods as health products would be "the key food trend" in 2035, given the growth already of demand for so-called functional foods perceived to have health benefits.

They also showed strong support for overseas investment in New Zealand's primary sector, with appropriate controls, and called for greater investment in research & development, noting that the local R&D spend in 2015 amounted to 1.26 percent of gross domestic product, compared to more than 2 percent in Australia, and more than 3 percent in Denmark, Finland and Sweden.

(BusinessDesk)

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