GMO-free could be a cash cow

Waikato Times - - Nz Farmer - Glen Herud founder of the Happy Cow Milk Com­pany

New Zealand heav­ily reg­u­lates any ge­netic mod­i­fi­ca­tion, but there are many groups giv­ing com­pelling rea­sons to utilise this tech­nol­ogy.

In the past, there were two clear sides to the de­bate. The or­ganic-lov­ing ‘‘nat­u­ral’’ types were against it and the pro­duc­tion-fo­cused, ‘‘con­ven­tional agri­cul­ture’’ types were in favour. The lines are blurred now as peo­ple can see the ben­e­fits of ge­netic mod­i­fi­ca­tion.

Plant-based meats such as the Im­pos­si­ble Burger are pro­moted as hav­ing a frac­tion of the en­vi­ron­men­tal im­pacts and none of the an­i­mal wel­fare is­sues as­so­ci­ated with an­i­mal agri­cul­ture. But one of the main in­gre­di­ents of the Im­pos­si­ble Burger is made with ge­net­i­cally mod­i­fied yeast.

Many peo­ple who are an­tiGMO are also at­tracted to the idea of plant-based meat. They find them­selves hav­ing a lit­tle in­ter­nal dis­cus­sion with them­selves.

The farm­ing sec­tor has al­ways been very en­thu­si­as­tic sup­port­ers of GMO. They point to more wa­ter ef­fi­cient grasses, or higher yield­ing crops. But ge­netic en­gi­neer­ing also opens many pos­si­bil­i­ties to re­duce meth­ane pro­duc­tion from cows, or the ni­tro­gen in their urine.

Sir Pe­ter Gluck­man, the for­mer chief science ad­viser, has said: ‘‘There are no sig­nif­i­cant eco­log­i­cal or health con­cerns as­so­ci­ated with the use of ad­vanced ge­netic tech­nolo­gies.’’

De­spite all the ap­par­ent ben­e­fits, I think New Zealand can gain more value by be­ing GE free than we can from us­ing GE.

Think of New Zealand as a com­pany. An in­no­va­tive com­pany will de­velop a won­der­ful prod­uct that sells well and makes big mar­gins. Quickly com­peti­tors find ways to copy the prod­uct, or work around patents, and the price of the prod­uct drops and so do the mar­gins.

To keep the high mar­gins com­ing, the com­pany needs to be con­stantly in­no­vat­ing new fea­tures or prod­ucts.

Com­pe­ti­tion is good for con­sumers, but it de­stroys prof­its. If you are a coun­try or com­pany try­ing to make a liv­ing in the world, you want to avoid com­pe­ti­tion. War­ren Buf­fett fa­mously talks about buy­ing cas­tles with a wide moat. A busi­ness with a wide moat means it’s harder for at­tack­ers to over­run them.

Wide moats can be things like:

❚ Net­work ef­fects – the more peo­ple on the plat­form the bet­ter the ser­vice gets. Face­book ben­e­fits from net­work ef­fects. You’re on there be­cause your friends are there. Trade Me is an­other ex­am­ple. Can you see some­one mov­ing in on Trade Me?

❚ Switch­ing costs – the cost of a cus­tomer switch­ing to a com­peti­tor is so great that they don’t bother. En­ter­prise soft­ware is a good ex­am­ple of this.

❚ Tech­ni­cal bar­ri­ers – the sheer tech­ni­cal IP re­quired to get into a mar­ket is a good bar­rier. Jet en­gines are a good ex­am­ple.

❚ Brand – a truly as­pi­ra­tional brand can be a moat. Out­door ap­parel com­pany Patag­o­nia has a core fol­low­ing be­cause of its com­mit­ment to sus­tain­abil­ity. It’s re­ally hard for a food com­pany, or a coun­try, to have a wide moat. And New Zealand is re­ally a food pro­ducer.

New Zealand farm­ers talk a lot about ‘‘pas­ture based’’ be­ing an ad­van­tage, but there are plenty of in­ter­na­tional com­pa­nies sell­ing ‘‘grass fed’’ prod­ucts with much bet­ter brands, mar­ket­ing and dis­tri­bu­tion than we do. Brazil and Ar­gentina have lots of pas­ture to pro­duce from.

So I don’t think our pas­ture-fed fea­ture is a sus­tain­able moat.

There are no tech­ni­cal bar­ri­ers around New Zealand food prod­ucts, cer­tainly no net­work ef­fects, and switch­ing to com­peti­tors is very easy for con­sumers. Just look at how in­ter­na­tional com­pa­nies have taken sig­nif­i­cant mar­ket share from New Zealand in­fant for­mula in China.

Ev­ery com­pany or coun­try should be fo­cused on in­creas­ing its com­pet­i­tive ad­van­tage, or build­ing a wider moat. That is not the same as in­creas­ing pro­duc­tiv­ity.

If New Zealand adopts GMO we will gain in­cre­men­tal in­creases in pro­duc­tiv­ity. That out­put will be sold in a com­pet­i­tive mar­ket where we have very lit­tle dif­fer­en­ti­a­tion.

GMO-free is a brand at­tribute that can com­mand a sig­nif­i­cant pre­mium, and al­most no other coun­try can move in and com­pete with us on that front. In 15 years, GMO- free will be even more at­trac­tive.

We need to fo­cus on get­ting more value for what we cur­rently pro­duce, and be­ing GE-free in a world filled with ge­net­i­cally en­gi­neered pro­duce is a very com­pelling brand at­tribute.

Newspapers in English

Newspapers from New Zealand

© PressReader. All rights reserved.