Ian Proudfoot: NZ can be local producer to world

Technology lets producers connect with consumers and explain how the product is produced. Photo / Dean Purcell

Opinion

By being bold, innovative and making the best use of technology Kiwi companies can shape future markets.

The rest of the world has woken up to the growth in demand for food, particularly for proteins, that will occur over the next 30 years.

The Australians are talking about the "dining boom rather than the mining boom". Silicon Valley venture capitalists are looking for opportunities to disrupt traditional farming systems.

The money men from the world's largest investment funds see the protein wave as one they can't afford not to be riding.

This is all good news for New Zealand - it places us, as world class producers of food, fibre and timber products, at the heart of an emerging global boom.

It reinforces the strategic importance of our primary sector assets. It creates countless opportunities for our businesses to add greater value to the products they produce by meeting the needs of new customer niches - be they the emerging Asian middle class, our increasingly aged population or the 3.8 billion people that adhere to religions that prescribe elements of their followers' diets.

However, the potential will not be realised by continuing to do the same things the same way into the future.

The innovation that has delivered our success to date will need to be built on to secure future success in a global market where producing more food from less available resource has become a high priority focus for many Governments around the world.

Meeting this expectation is not a "nice to have", our customers expect us to produce increasingly sustainable food and are defining the standards their suppliers need to meet, be that water use, maintenance of biodiversity or animal welfare.

As a small player in a massive market the focus for New Zealand primary sector companies for 2015 and beyond is maintaining relevance. Our producers need to stand out from other suppliers by exploring ways to exceed the standards customers are prescribing to underline the unique and irreplaceable quality of the products we produce.

We need to bring innovation to market niches where we have natural competitive advantages. We should not be focused on trying to feed 40 million people but on providing the fraction of the diet that is the lifestyle-enhancing, premium experience to the 400 million richest consumers.

To achieve this our focus must be to gain deep understanding of these customers and work to design solutions to meet their needs. We need to recognise that the food being eaten around the world is changing and be prepared to adapt to these changes (whether it is insect protein, sheep milk or buckwheat).

We also need to focus on how value can be added. This could be by identifying and clinically verifying properties that can contribute to the management of medical complaints or support general wellness, something many consumers are prepared to pay extra for.

Value can be added in the solutions presented to specific consumer groups, whether this is ready-to-eat products for urban dwellers with limited kitchen facilities or nutritionally balanced, portioned controlled foods that are easy for elderly people to eat and enjoy.

We need to use technology to make our products local to consumers around the world.

Premium consumers are more likely to use farmers' markets and seek to understand where their food has come from. Technology enables our producers to connect with these consumers, explain how the product is produced, how it can be used and enter into a two-way dialogue. With a smart supply chain, technology enables us to become the local food producer to the world.

We need to recognise the water stress many countries face and innovate how we export increasingly valuable liquids. With the export of milk powders to water-constrained countries presently being the backbone of our trade earnings we rely on consumers having sufficient fresh water to rehydrate our powder to consume it. There is a need to create products that do not require them to use their limited water resource to enjoy dairy, something they will consider to be valuable and be prepared to pay a premium for.

We also need to challenge our thinking on the ethical issues facing the agri-food sector. How should we respond to the growing use of genetically modified organisms globally to create sustainable value for New Zealand? How do we capitalise on the commercial potential of synthetic foods alongside our world-leading natural food production systems?

We must focus on how these technologies can complement our traditional agri-food activities.

Our companies need to be bold and be prepared to shape their future markets rather than adopting a market-led strategy, which in effect is a following strategy in a market being shaped by a competitor's innovation.

Ian Proudfoot is KPMG global head of agribusiness.