Growth from high-value exports
Farmers and the primary industry should not shy away from new opportunities because of a history of exporting commodities, say primary industry leaders.
Speaking at the recent E-Tipu agri summit in Christchurch, professor Caroline Saunders, from the agribusiness and economics research unit at Lincoln University, said to capture more value, the primary industry needed to move away from a transactional commodity supply chain and become a chain that focused on value creation.
Food should be exported as high-value products not as a commodity, Saunders said.
In the past, selling fresh produce and animal proteins provided the sector with massive returns but for real growth this needed to change, Saunders said.
The sector should investigate what consumers valued and leverage that to create premiums for farmers.
Zespri was a prime example of being a champion in its sector, as it created high value for kiwifruit in export markets through its marketing efforts. This value syphoned back to growers.
Research showed that the credence attributes of Kiwi goods was valuable to consumers in export markets, and that they were willing to pay for it. Credence attributes were things that could be verified through assurance schemes. This included sustainability, animal welfare and the health benefits of a product, Saunders said.
Different consumer groups in export markets often valued different aspects of a product and their specific needs could be marketed to.
Previous research on kiwifruit consumers in Japan, for example, showed that, depending on age group, some valued carbonneutral food, while others might place the highest value on taste or biodiversity enhancements on farms, Saunders said.
In the United Kingdom, some consumers were willing to pay more for lamb that originated on farms owned by Mā ori.
Wine buyers across different age groups in the United States valued different things. Older consumers wanted wines produced in the US, and younger consumers placed higher value on organic products or ones that could demonstrate social responsibility on the farms they were produced, Saunders said.
Also speaking at the event, Arama Kukutai, chief of agritech company Finistere Ventures, said
New Zealand’s farming legacy was dependent on a business model from the 1920s, when the industry grew food and exported it. The legacy was founded on the idea of the free global movement of capital and people.
A stable geopolitical environment enabled the industry, but current tensions in the world could change this.
New Zealand had the opportunity to build new consumer markets if the future included a vision for indoor food production, Kukutai said.
Indoor farming provided new opportunities for growth in the primary industries because it used fewer resources than traditional farming.
Indoor farming did not only 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 move to food production indoors, capital investment in infrastructure would be needed, on a scale not previously seen.
Globally more than US$12 billion (NZ$19.17b) had been raised for indoor vertical growing, precision fermentation and meat cultivation.
The scale of capital investment, the number of companies involved, and the progress made in a relatively short time suggested that the future was coming faster than previously thought, Kukutai said.
Jenny Cameron, chief transformation officer at the Ministry for Primary Industries, said many farmers and growers felt under threat from climate activism and movements such as alternative proteins, but there was an unprecedented amount of investment in primary industry and there were opportunities everywhere. Risk came from avoiding change, Cameron said.
‘‘When McDonald’s advertises regenerative meat and milk to its customers you know that change is coming,’’ Cameron said.
‘‘When McDonald’s advertises regenerative meat and milk to its customers you know that change is coming.’’
Jenny Cameron
Chief transformation officer at the Ministry for Primary Industries