Innovation key to future of farming in Southland
The future of agriculture in Southland will be driven by innovation, not scale, according to a visiting industry expert.
KPMG's global head of agribusiness Ian Proudfoot said: "I believe we're on the cusp of a new global agrarian revolution."
The Auckland-based Proudfoot spoke on the changing nature of the agriculture and horticulture industries, with global attitudes to food production and consumption evolving rapidly, on Tuesday at the Primary Industry Sector Update 2017 conference, hosted by Chartered Accountants Australia and New Zealand.
The key focus for producers in New Zealand should not be about ramping up production, but rather engaging with consumers to get the most value out of products already being produced, he said.
While primary industry exports were worth $37 billion, they had a final retail value of $0.25 trillion.
"For every dollar we collect here in New Zealand, there are six or seven dollars added to that by the time the product reaches the customer.
"The closer we are to the consumer, the more value there is available to be collected.
"It's not about more volume."
The primary sector should focus more on high-end products to target for export, and to "protect and preserve" New Zealand's position as a leading natural protein producer, he said.
"We have a good reputation and strong platform to build on – we already produce the world's best grass-fed protein products.
"We're not trying to feed the world, we should plan to contribute 5 per cent of the diet to 700 million people worldwide.
"We have the opportunity to become the farmer's market to the world."
The move away from models of increased production would require a change of thinking in the industry, Proudfoot said.
While from an economic standpoint it was "really easy to build more", focusing on developing brands and innovation made it much harder to calculate potential returns, he said.
"That has to change. It's a really significant challenge from being a production-focused to a value-focused industry."
Proudfoot said the millennial generation in particular were more demanding when it came to choosing products.
He cited one overseas example where some farmers were growing animals specifically to cater to individual customers.
The the other focus for primary industry producers was to not be complacent about adapting to changing international food trends.
"We have to ask are we growing the right product for the right market?"
The alternative protein market is gaining traction, with producers developing new ways of getting protein to their customers – from sources such as plants and insects.
"We can be very complacent about these products because they're very niche at the moment, but they will in the long run be aimed at a wider market.
"Forty years ago wool was our biggest market – at the time no-one thought people would be buying synthetic carpets."
Political developments were also having an effect, Proudfoot said.
In the USA, with newly-elected president Donald Trump moving towards producing cheap fossil fuels, there would be in turn a "significant impact" in reducing US dairy costs.
"From everything I'm seeing, dairy prices are going to be down next year.
"We need to enjoy the current prices while they last."