Moving towards modern foods

The roadmap of NZ agri production for the next 10 years requires a huge huge pivot towards producing modern foods demanded by the world’s wealthy to support their wellness – are NZ farmers understanding of and up for the challenge? Phil Edmonds asks.

The middle of the year marks the thinking and planning season, where (some) tools are down and ideas percolate out of reports and conference presentations. This year it’s been particularly prevalent with primary sector thinking bolder and planning more pressing.

Most people are likely to have at least heard of the government’s Fit for a Better World ten-year roadmap, launched in July 2020 to accelerate the economic potential of New Zealand’s food and fibre sector. At a high level, the plan established three goals – that by 2030, the sector will deliver an additional $44 billion in export earnings, reduce biogenic methane emissions to 10 percent below 2017 levels, and employ 10 percent more New Zealanders.

Keen observers will have noted that the initial launch coincided with New Zealand having just eliminated Covid for the first time, and while other countries were still reeling, there was an (albeit false) sense that domestically at least, we were out of the rough and back into it. Progress updates on the Roadmap in 2021 and most recently in June this year have however necessitated some adjustments to initial assumptions. While the Roadmap remains intact, uncertainty about the future is explicitly documented with fresh relevance to Covid-inspired changes in consumer preferences and even more impetus for technology evolution.

The successive updates have noted that meeting the goals laid out in 2020 will require a change in thinking. Hence (although not directly attributed to the Covid nemesis), the establishment of an associate Think Tank, Te Puna Whakaaronui, designated to propel the Roadmap with direction and ideas that will more likely enable the initial goals to be met.

Now, a Think Tank might conjure up an image of an agenda-fuelled group of people with no immediate stake in, or responsibility for the implementation of its ideas. But it would be wrong to dismiss Te Puna Whakaaronui (a team of eight, including familiar sector leaders Andrew Ferrier, Rob Hewitt, Lain Jager, Spring Sheep Milk co-founder Nick Hammond, AgResearch chair Neil Richardson, and financial investor expert Murray Sherwin) as fitting that cliché. For a start it is funded by the government (MPI). While it has prescribed independence, its role is to specifically help lead, co-ordinate and implement transformation. So, in short, we should pay attention because ultimately, its recommended actions will be a pointer to where policy change will occur, and public investment will flow.

Te Puna Whakaaronui was formed last year but has only recently come to prominence with the release of its first Insight report, titled :WELL_NZ, which sets out New Zealand’s food sector opportunities.

Reassuringly, there’s plenty in the report that we know already – we need to invest to implement new methane mitigation technologies, develop natural fibre products, accelerate ocean farming, support the adaption of dairy sector systems and so on.

But it is very big on making two frequently referenced (but often not much more than referenced) assumptions the cornerstone of what we need to focus on – that fundamental change (starting yesterday) will be compulsory if our agriculture sector wants to remain viable; and that those populating the highest-value consumer segments will determine what and how New Zealand farmers produce, rather than what and how farmers want to provide.

In summary, the :WELL_NZ report says that keeping our eyes on how high value consumers are spending will be the surest way to enable New Zealand to leverage its existing reputation for producing quality food. To support this, the report cites a prediction that over the next decade, 80% of consumption growth in Asia will come from the top two income tiers, contrasting the last twenty years, where consumption growth lay firmly in the middle-income tiers.

What do those in these wealthiest segments want from their food? Wellness, predictably enough. And the demand (and more importantly, the value) of products associated with wellness in a broad sense (well people, well environment etc) have grown fastest since the Covid pandemic set in.

Presenting at the BOMA Summit in Christchurch in June, AERU director Caroline Saunders indicated the findings from its most recent consumer insight work support this. For example, UK consumers of NZ lamb surveyed during the pandemic showed they were increasingly likely to pay more for natural food, that was good for the environment. Meanwhile, US consumers of NZ wine (especially millennials) were less interested in paying for country-of-origin but more for credence attributes like water quality, biodiversity management and social responsibility. (It’s important to remember that by 2030, millennials will have the biggest wallets).

In terms of the need to adjust to this smartly, :WELL_NZ is littered with language prompts that indicate we’re already falling behind moves made by other countries, and we’re in danger of missing out – not just on getting to choose markets before they’re colonised by others, but simply staying in the game. The report concludes that “we have a short window to invest and make progress”, and “making haste is critical.”

Stepping back for a moment and reflecting on the emotive pleas, you might say all positioning reports of this nature are bound to demand ‘we must act now’. And why, for example, are these pleas more significant than those that have gone before in reports that are now gathering dust? Based on the collective authors being government-backed, as mentioned earlier, and given the esteemed heads behind the report, it’s reasonable to acknowledge there is some urgency.

All well and good, but how urgent are farmers – those who will still be doing the heavy lifting – to adapt with haste and capitalise on the opportunities, as prescribed?

Chair of the Te Puna Whakaaronui leaders group Lain Jager, also speaking at the BOMA Summit, accepts getting all participants in the food producing sector to recognise the opportunities that sit in front of New Zealand is a challenge, not least because its value as a future growth industry is still heavily contested. He noted there are three competing views on this – one that sees the primary sector as a sunset (rather than a growth) industry with an ageing workforce; one that sees food producing industries unavoidably associated with poor environmental outcomes and therefore farmers are not ideal stewards of our land; the third sees the sector as still booming, delivering 80 percent of the country’s mechanise exports based on use of the world’s leading farm systems. But rather than change, farmers need to be left alone to get on with doing what they do well.

Jager says part of the problem is there are justifiable arguments within all. The first two have been alive for some time, but regularly dismissed by those within the sector. The last one however might be the most difficult proposition to overcome. Around the same time that the :WELL_NZ report was released the 2022 edition of KPMG’s annual Agribusiness Agenda 2022 was published. The authors noted this year it was ‘hard to know where to start’ when trying to distil the array of concerns that were expressed by the sector leaders. For some, the focus was the exceptional export returns (up 9% on 2021) and New Zealand continuing to win on the commodity cycle.

The authors (as does the :WELL_NZ report) indicate the impact of this could delay the motivation to take control of the things we can change to assist in creating a sustainable competitive advantage. Possibly the most challenging, and related finding in the KPMG survey was that respondents were more inclined to look inward than in recent years, and trained on domestic issues than outwards, at what markets were saying. It noted that “The one key element of any plausible future scenario that we might seek to explore does not feature in the Agenda because it did not feature in conversations – That is our current relationship with consumers and markets and things that are disrupting them as we move into a Covid adapted world.”

If the KPMG survey findings hold weight, the chance of a quick call to attention and ‘off we go’ advocated by Te Puna Whakaaronui seems doubtful.

It’s not putting Lain Jager off the task however, particularly the conviction that we must commit to environmental excellence involving a reciprocal relationship between people and the land because the opportunities this will open are huge. “Globally we’re failing to hit milestones and the outcomes of global warming are at the severe end of what was predicted. They’re very pronounced on food and fibre systems. So, there will be strong demand for our supply of natural foods if we take a leadership position on environmental stewardship.” Jager told the audience at the BOMA Summit it is a huge commitment, but Te Puna Whakaaronui is confident about its analysis that backs this up.

He didn’t hold back from emphasising the required rate of change towards producing what wealthy consumers want. Having set the ‘opportunities scene’, Te Puna Whakaaronui will deliver two follow up reports this year New Zealand on how we can orientate towards a producer of ‘modern foods’. This will include positioning on the emerging ‘personalised nutrition’ market as well as alternative proteins, where New Zealand is already falling behind other nations.

At the most basic level, having to contemplate, let alone implement change is a nuisance. Doing so in aid of concepts that we don’t know what they mean (modern foods) requires a huge leap of faith. But maybe not too huge.