A ‘fourth industrial revolution’ is seeing the convergence of biological and technological solutions.
It is estimated that New Zealand’s agricultural sector can feed 40 million people. At a time where we are seeing an ever-increasing number of alternative meat products — such as the plant-based Impossible Burger that claims to “bleed, sear, and taste like meat” (and recently landed Air New Zealand in controversy) — there is an opportunity for New Zealand to export high-quality, high-value food with a focus on provenance to the world.
But as demand for high quality protein increases, the amount and variety of novel foods from culture, insects and plants will grow.
A recent Trans-Tasman Business Circle panel discussed the opportunities and implications emanating from the rapid transformation within the sector. The panel included KPMG’s Global Head of Agribusiness Ian Proudfoot, Fonterra’s Farmer Services Director Matt Bolger, and agribusiness start-up chief executives: Regen’s Bridgit Hawkins and Halter’s Craig Piggott.
Future of food
“We assume that people will eat like us in 20 years’ time,” says Proudfoot. “I can see a world where the only thing we can be certain about is that we will all need sustenance. It is not hard to imagine that sustenance may look incredibly different in terms of how we receive it during the week to how we receive it at the weekend.”
However, he doesn’t believe New Zealand should be setting out to be a commodity supplier to the likes of Impossible Foods.
“Everything we do and how we use our land has got to be focused on us being premium — the deli to the world — the place where people turn to when they want great food.
“There are plenty of people in the world who can afford to pay us for our 40 million people’s worth of food.”
In order to provide premium agricultural products to global consumers, farming systems in New Zealand will need to adapt.
“Regen’s science and insights are future-proofing the agricultural industry; we care about the future of food,” says Hawkins. “It’s going to require new ways of doing things and you need information to support those creating new farming production systems.”
It wasn’t that long ago that sheep were the backbone of the country. No one believed the day would come when jerseys wouldn’t be made from wool — and that day came quickly.
Wool struggled to compete with cotton and synthetics, leading to a decline in sheep numbers and wool prices. Export returns fell 36 per cent between 1985 and 2003, and the sheep industry struggled to recover from that.
Hawkins says this history has helped influence farmers’ psyche. “There is a real sense of ‘there is change, we’ve got to step forward and embrace it,’ as opposed to wait to have it happen to us,” she says.
Technology to boost production
This movement towards new farming systems and demand for new technologies and solutions provides New Zealand with an opportunity to use our deep agricultural knowledge to export more than just our food.
Proudfoot says this “fourth industrial revolution” is seeing the combination of biological and technological solutions for the first time — unlocking the biggest change ever in how we produce food.
It is this revolution that is seeing record levels of investment in the sector — total investment in 2017 reached US$1.5 billion.
Despite increased development in the sector, a major challenge is making those innovations attractive enough for farmers to adopt.
One of the major hurdles in implementing new technologies is that they can be capital intensive. Despite the solutions they provide — and the impact they may have on productivity, financial returns and the environment — the time to adopt them can be notoriously slow.
But this isn’t unique to agriculture. Hawkins uses electric cars to explain this hurdle in adoption: “How many of us have an electric car? Now that’s a technology we all know has some benefit for the environment, but it is expensive — and there are still some questions that remain around the batteries.
“It is a matter of waiting for someone to sort it out for us. One day, the person in our social group who is right into cars will get one. Then we’ll know any issues have been sorted out and we’ll get one. For us, we’re here to support farmers in what is a complex and uncertain time, there’s a greater focus on environmental sustainability now than at any other time in New Zealand’s history.”
For agriculture, ease of use is a further — and considerable — barrier. In today’s age of big data, it is easy to be consumed by noise. The convergence of multiple different technologies and the demands they put on farmers can lead to paralysis. Piggott says that in order to make technology adoption attractive to farmers, it must provide value in a very tangible way.
“We now have the technologies to make a dashboard that contains granular details on every aspect of the farm … but what does a farmer do with that information?,” he asks.
His start-up Halter — backed by a series of Silicon Valley VC’s, including Peter Thiel’s Founders Fund — uses cow collars that allow farmers to guide their herds around the farm, receive alerts when cows are showing signs of poor health or distress, and set virtual fences to keep cows from entering rivers and drains.
Hawkins’ Regen equips farmers with leading-edge technology to support their critical role in New Zealand’s economy. Their technology uses on-farm sensors and other data to provide farmers with daily recommendations around nitrogen application as well as water and effluent irrigation.
She says for Regen, they are at the start of the process and their work will continue to evolve, but the focus from the start has been on what the data means for the farmer, and what decisions they can make better because of it — not what the actual numbers are.
Although Regen collects millions of data points each day, its algorithms use that data to send the farmer a simple alert to say ‘this is what you should do today’.
Innovate for the world, not for Waikato
A recent report by Callaghan Innovation claims New Zealand is seen as one of four locations to watch for agritech solutions, alongside Silicon Valley, Boston, and Amsterdam.
Technologies including the Internet of Things, machine learning, robotics, and drones will help farmers predict pest resurgences, test soil samples, and improve efficiencies in livestock management — reducing and optimising the use of pesticides, fertilisers, animal feed and medication.
The government agency says New Zealand has a unique opportunity to capitalise on its reputation as one of the world’s four key agritech locations.
However, a major challenge for New Zealand agricultural innovation is that most of the world doesn’t farm like we do. Bolger says it is easy to get caught up in the farming systems used in our own backyard, innovating with them in mind — at the expense of capturing the global market.
“If we only seek to serve New Zealand customers, then we innovate for a system that is fairly unique and our potential is limited,” he says.
“If we spend 10 years developing something that works in the Waikato and then take it to Canterbury, it’s going to be really hard for virtually anywhere else in the world that isn’t like those two places. We need to ensure we think with our global customer base in mind.
“That doesn’t mean we can’t dismember our systems to find bits that can be taken offshore. The challenge is being smart so we take the right bits.”
In order to reach our potential as a breeding ground for agricultural innovation, New Zealand needs to attract the right talent to the industry.
“This is a much bigger issue for the primary sector than just the technology space,” says Proudfoot.
“New Zealand needs to encourage data scientists to come and work with our great biologists — we need to bring data and algorithms together with the agricultural sector that will really enable us to make a difference.”
Piggott — who grew up on a dairy farm, has an engineering degree with first-class honours, and a year’s experience working at Rocket Lab — agrees: “There’s definitely an assumption that if you’re a world leading data scientist or an analytics engineer, you’re straight to Amazon, Google or Facebook. Going to work in a dairy shed is not necessarily top of the list.”
But Bolger says New Zealand’s history of agriculture gives us an advantage over other countries. We already associate science with the primary sector, which allows us to more easily attract top people into great careers in the industry.
“A lot of countries have moved away from agriculture,” he says.
“We have a large and successful agriculture sector that spans everything from the consumer back to the farm in lots of different forms and food products. It’s a sector where you can have a real impact: that’s exciting for millennials and centennials.”
Among the uncertainty of what the evolution of the sector will look like, one certainty is that the world will continue to need food.
If New Zealand can be a provider of premium food — along with innovative technologies to produce more of it — the security in that demand should provide us with a comfortable economic platform into the future.
https://www.timmccready.nz/wp-content/uploads/2018/07/2018-07-AgribusinessInnovation-Tim-McCready.jpg755480tim.mccreadyhttps://www.timmccready.nz/wp-content/uploads/2017/10/TimMcCreadylogo.pngtim.mccready2018-07-19 10:43:172018-07-19 10:41:32Agribusiness: Innovation to feed the world (NZ Herald)
Kiwifruit marketer is building a stronger foundation in China, writes Tim McCready.
Global marketer Zespri is focused on returning sustainable wealth to kiwifruit growers — not only in regional areas of New Zealand but also in rural China.
It is planning to nearly double its global sales revenue to $4.5 billion by 2025, and this strong growth will directly benefit the kiwifruit growing areas.
David Courtney, Zespri’s Chief Grower and Alliances Officer, says “the objective of our business is to return sustainable wealth to kiwifruit growers and the communities they live in — firstly in New Zealand, but ultimately communities around the world as well”.
Last year Zespri’s global sales increased 6 per cent to $2.39b. Courtney says the sales directly brought in about $620 million for Te Puke, $160m for Katikati, $135m for Ōpōtiki and almost $50m for Northland — a total of $965m to the key kiwifruit growing areas in New Zealand.
Courtney says as the number grows to $4.5b, and kiwifruit expands outside the Bay of Plenty, “we hope that those (new) regions will really start to generate strong value back into their communities.
“Should our growing trials in China be successful, we also look forward to being able to return money back into rural communities in China where we partner with growers to grow kiwifruit — as is the case in Italy, France, Korea and Japan today.”
The mainland China region has just headed Japan as Zespri’s No 1 market, with sales having grown 10 times from $50m in 2007 — just under 5 per cent of global sales — to $505m, representing more than 20 per cent of global sales. Zespri believes sales revenue in the mainland China region will grow to $1b by 2025 — accounting for 25 per cent of global sales. With this in mind, Zespri is looking to source its own kiwifruit grown in China and is into year three of a proof-of-concept trial.
Zespri signed a memorandum of understanding with The People’s Government of Shaanxi Province in 2015, outlining the shared intention to develop the kiwifruit industry in the province, and also to establish trial production.
Zespri reached a high-level agreement with the Shaanxi provincial government to establish a centre of excellence to support research, expert exchanges and grower information.
Courtney says to date Zespri has found no insurmountable barriers to producing quality fruit in China, and work is underway to test Chinese-grown kiwifruit with local consumers.
“Of course, the greatest test for us is that we have to protect the (Zespri) brand. New Zealand kiwifruit growers — rightly so — are deeply passionate and protective of their brand, and we cannot put the brand on any fruit that would put at risk their investment over time.
“To support our efforts, it’s that level of investment behind the border in terms of building our brand, taking control of our supply chain, and potentially sourcing fruit under the Zespri brand that has allowed us to place really strong confidence in our future in China — and feed that back into our 10-year growth ambitions,” says Courtney.
Zespri’s distribution to China has changed dramatically since it first sent shipments of kiwifruit in 2000. There were no staff based in China and Zespri sold its kiwifruit to a distributor and left its business with them. “We now know that to succeed (in China), we have to take control of our business and invest heavily in people to be able to drive the business forward,” says Courtney.
Today Zespri has 57 people running targeted sales and marketing programmes in China.
“We invest about $30 million each year into our brand, and that money is invested into consumers and trade, and working with distributors and retailers around the country to make sure they understand the Zespri brand, the values we stand for, and the quality proposition we’re trying to get across to our consumers.
“Because of that marketing, Zespri is now the number one or number two fruit brand in all the tier one and tier two cities in China. That beats out big brands like Dole and Sunkist — which is quite remarkable when you think kiwifruit is only a tiny amount of the fruit bowl. We’re really holding our own against those big categories such as bananas and citrus,” says Courtney.
Zespri is now holding some kiwifruit inventory in China and selling directly to customers through e-commerce channels.
One of them is Fruit Day, which aims to sell 1.5 to 2 million trays of kiwifruit this year online and through its 10 retail stores.
Courtney says holding inventory in-market has given Zespri “a much better view of the supply chain end-to-end and making sure the product that gets to consumers is in the best quality possible.”
https://www.timmccready.nz/wp-content/uploads/2018/07/2018-07-Zespri-Tim-McCready.jpg384479tim.mccreadyhttps://www.timmccready.nz/wp-content/uploads/2017/10/TimMcCreadylogo.pngtim.mccready2018-07-19 10:00:292018-07-19 10:42:52Agribusiness: Zespri's moves are bearing fruit (NZ Herald)
Tim McCready spoke with visiting Southeast Asian agribusiness leaders to understand what our regions can learn from each other.
Seven Southeast Asian agribusiness entrepreneurs visited New Zealand for a week as part of the Asean Young Business Leaders Initiative. The leaders from across the sector — including producers of cricket protein, strawberries, and mushrooms — visited agribusinesses, met with New Zealand business leaders, and attended Fieldays.
The initiative is run by the Asia New Zealand Foundation on behalf of the Ministry of Foreign Affairs and Trade, with the aim of building business connections and facilitating trade links between the regions.
Herald: What could Southeast Asian agribusiness learn from New Zealand’s agricultural sector?
Sarasit: Farmers here are highly educated and use technology to achieve high productivity and food safety. At the same time, the environment and sustainability are taken into account — even if this increases the cost of production. We need to introduce more sustainable practices in Asean, though we need to be cautious of the cost of those practices. There is an opportunity for New Zealand to develop technologies that are affordable for Asean countries.
Nguyen: The most fascinating thing I will take home from my visit is that although New Zealand agriculture is doing well, the industry continues to look for better efficiency, new value-added products and sustainable measures — you’re always thinking of the next step despite being ahead of the world in many areas. That said, I believe there are further opportunities available to develop products that will ensure New Zealand agricultural products become even higher value.
Ou: The attitude Kiwis have towards agriculture is positive and a good example for Asean countries to learn from — farming is a very respected industry here, which is often not the case in Southeast Asia. We can also learn a lot from Kiwi agribusinesses, particularly how they are not afraid to develop and adopt new technologies. Private businesses and government agencies are working hard to advance the industry as well as protect it.
Phumirat: Asean agribusinesses should be more creative and innovative in their farming practices and encourage farmers to be entrepreneurial. It’s great that in New Zealand entrepreneurs with diverse backgrounds are learning about the farming industry so that they can develop technologies to help — innovation doesn’t always have to originate from the farm.
Herald: What do you think New Zealand could learn from the Asean region?
Sarasit: New Zealand could learn from the diversity of products we have. Asia has so many varieties of finished products that have different flavours, functional ingredients, and health claims. People living in the crowded cities of Asia don’t have a lot of time and are always looking for convenience — such as ready-to-eat and drink products — but they also want good nutrition and a great taste. New Zealand should look to Asean for inspiration to develop more products for local consumers, as well as those offshore.
Ou: With a combined population approaching 650 million, no one can deny that Asean is a goldmine in terms of consumer numbers, but New Zealand seems to be behind when it comes to understanding the region. There is a great opportunity for New Zealand to tap into the Asean market by becoming more involved in the region, establishing collaborations with companies, and strengthening relationships between our respective governments.
Phumirat: New Zealand is very good at producing large quantities of product for exporting, but there is also an opportunity to create niche products for these markets too. There are consumers within the Asean region that are looking for new and exciting products that New Zealand could become competitive in.
Herald: What is the biggest challenge facing agriculture in Southeast Asia?
Nguyen: Vietnam’s population is about 95 million. We are facing a nutrition shortage and food crisis due to inefficient production and a lack of farmers. These two problems are challenging to solve as it requires involvement from both the government and the private sector. We need to make agriculture sexy — including through new technologies and precision agriculture — so that young people are encouraged to farm again.
Ou: The ethics used in farming are alarming. There are too many reported cases where harmful pesticides and chemicals are misused to maximise profit.
Phumirat: The biggest challenge in Southeast Asia is how to introduce more innovation into food production and raise awareness so consumers know what they are eating. We need to find ways to produce safe food that avoids the use of toxic chemicals.
Sarasit: The biggest challenge in Thailand is education. Most of our farmers have a poor understanding of the value chain for their products and have been influenced by politicians. They use single crop farming and a lot of chemicals and pesticides to increase productivity, which has an adverse impact on subsequent crops. Providing farmers with role models and encouraging them to learn will help us mitigate problems. New Zealand is a great role model to learn from.
Herald: How important is sustainability in Southeast Asia?
Sarasit: I have to admit that the sustainability has not been a big deal for many of the developing countries in the Asean region as our priority is on the shortage of food. We do some things for sustainability but these are generally because of regulation and not due to an awareness or demand from consumers.
Nguyen: We have a growing population, and there is a concern that the way we practice agriculture will affect not only our generation but subsequent generations too. We need to take action now, but there are limitations because we don’t have the same level of awareness as you do here and we have a shortage of technology that can provide solutions to the industry. Food safety is of greater concern than sustainability.
Ou: From a Malaysian perspective, sustainability is crucial. Malaysia has one of the oldest rainforests in the world as well as one of the most biodiverse, so maintaining a balance between the environment and using land and forests for agriculture is absolutely vital. Additionally, sustainable practice is important in order to ensure a continuous supply of food that is safe to eat. New Zealand has done a good job by implementing policies and having strict law enforcement that Malaysia can learn from.
Phumirat: In Thailand, most governments and organisations are now aware of the need for sustainability and have put in place policies to address it. There are increasing numbers of farms and businesses that care about climate change, and some consumers are now showing it is important to them by supporting fair-trade farming or local farmers that operate using good agricultural practice principles. Awareness will continue to increase, but we need increased knowledge and technologies that will allow us to produce food in a sustainable way.
Nguyen Hong Ngoc Bich, CricketOne, Vietnam:
Nguyen is co-founder of CricketOne, a company producing sustainable and affordable protein from crickets. CricketOne breeds crickets inside 40-foot containers, allowing them to farm all year. They feed the crickets with cassava leftovers, saving on feed costs and waste while shortening production time.
Kamolrat Sarasit, CP Meiji, Thailand:
Sarasit is the dairy science and technology general manager at CP Meiji, a joint venture between Thailand’s largest private company — CP, and Japan’s market leader in pasteurised milk products — Meiji. It is a leading manufacturer of dairy products in Southeast Asia producing a range of yoghurt and milk products.
Phumirat is founder and CEO of Backyard Strawberry, an organic strawberry producer in Northern Thailand. Using social media to tap in to dreams of rural life by city-dwellers — and educate them on the benefits of organic produce, Backyard Strawberry airfreights strawberries to Bangkok, where customers collect them hours after being picked.
Wei Wen Ou, Siong Hoong Agro, Malaysia:
Ou is the founder and manager of Siong Hoong Agro, a producer of organic mushrooms and organic mushroom-based products. A major focus of Siong Hoong Agro is secondary agriculture waste management and turning spent mushroom substrates into high value organic vermicompost fertiliser.
https://www.timmccready.nz/wp-content/uploads/2018/07/2018-07-AseanAgribusiness-Tim-McCready.jpg755480tim.mccreadyhttps://www.timmccready.nz/wp-content/uploads/2017/10/TimMcCreadylogo.pngtim.mccready2018-07-19 09:41:352018-07-19 10:45:36Agribusiness: Taking the initiative (NZ Herald)