New Zealand farmers and primary industry should not be shy about seizing new opportunities because of their track record of exporting commodities, primary industry leaders say.
Speaking at the recent E-Tipu Farm Summit in Christchurch, Professor Caroline Saunders of the University of Lincoln’s Agribusiness and Economics Research Unit said that to capture more value, the primary industry needed to move away from a transactional supply chain of raw materials and become a chain focused on creating value.
No food should leave New Zealand’s shores as a commodity but should be exported as a high-value product, Saunders said.
In the past, selling fresh produce and animal protein offered the sector massive returns, but for real growth that had to change, Saunders said.
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The sector should investigate what consumers value and leverage this to create premiums for farmers.
A champion for a specific industry was often needed to enable such growth, Saunders said.
Zespri was a prime example of such a champion, as it created great value for kiwifruit in export markets through its marketing efforts. This value went back to the producers.
Research has shown that the trust attributes of kiwifruit products are valuable to consumers in export markets and that they are willing to pay for it. Trust attributes were things that a person couldn’t necessarily touch, but could be verified by assurance systems. This included attributes such as a product’s sustainability, animal welfare and health benefits, Saunders said.
Different groups of consumers in export markets often valued different aspects of a product. Their specific needs could be marketed, she said.
Previous research on kiwifruit consumers in Japan, for example, has shown that, depending on age group, some enjoy carbon-neutral foods, while others may place the greatest value on improvements in taste or biodiversity on farms, Saunders said.
Similarly, research in the UK has shown that some consumers are willing to pay more for lamb from Maori-owned farms. Such information was valuable and Maori farms could be used in supply chains and this attribute used as a marketing tool.
Wine buyers of different age groups in the United States appreciate different things. Older consumers wanted wines produced in the United States, while younger consumers placed higher value on organic products or those who could demonstrate social responsibility on the farms where they were produced, Saunders said.
Also speaking at the event, Arama Kukutai, head of agritech company Finistere Ventures, said New Zealand’s agricultural heritage hinged on a business model from the 1920s, when the industry grew and exported food. The legacy was founded on the idea of the global free movement of capital and people. A stable geopolitical environment has helped the industry, but current tensions around the world could change that.
New Zealand had the opportunity to create new consumer markets if the future included a vision for indoor food production, Kukutai said.
Indoor farming offered new opportunities for growth in primary industries because it used fewer resources than traditional farming. Indoor farming didn’t just mean vertical farms where crops like tomatoes and lettuce were grown, but included new technologies like precision fermentation technologies or lab-grown meats, Kukutai said.
To shift to indoor food production, capital investments in infrastructure on a scale never seen before would be required. This would create opportunities for the primary sector, Kukitai said.
Globally, over US$12 billion (NZ$19.17 billion) has been raised for indoor vertical growing, precision fermentation and meat farming. The scale of capital investment, the number of companies involved and the progress made in a relatively short time suggest the future is coming faster than previously thought, Kukutai said.
Jenny Cameron, head of processing at the Department for Primary Industries, said many farmers and growers felt threatened by climate activism and movements such as alternative proteins, but there was currently an unprecedented amount of investment in primary industry and there were opportunities everywhere. The risk came from avoiding change, Cameron said.
“When McDonald’s announces rejuvenating meat and milk to its customers, you know change is coming,” Cameron said.
Janette Barnard, founder of US-based Prime Future, said that as pressures on agricultural margins increased, there would be either an aggressive push to scale up operations and more attempts at cut-throat competition in the produce market. base, or farmers would focus on decommodification and value creation. This has been particularly seen in the beef industry where some producers have turned to direct-to-consumer sales.
Within the industry, there were often specific groups of farmers who innovated first. They were often classified as crazy by their peers, Barnard said.
These farmers were often not recognized by their peers for their efforts and were considered too unconventional and classified as such.
“The normal reaction to success by unconventional means is that it wouldn’t work here. Most farmers would rather fail conventionally than succeed unconventionally,” Barnard said.
Unconventional farmers have often been early adopters of the technology. They often operated outside their bubbles, read what their competitors were doing, listened to people others weren’t listening to, tried to learn from other industries and applied that learning to their own operations, Barnard said.
These farmers created time and financial headroom to experiment with new ideas and believed that every additional financial or production gain could be built into their system. They looked at their business as a whole which could be improved.
There has been an increase in such farmers as markets have become more volatile and pressures on the agricultural industry have increased, Barnard said.