"It comes back to a clear need for vision and a strategy for the sector, and recognition among individual companies that they either innovate - think like start-ups continually - or they accept that they are going to have a future that is effectively less and less prosperous."
KPMG said its report aimed to challenge participants in the agri-food sector to think beyond the bounds of their immediate circumstances and to scan the global horizon for new opportunities and threats.
The geopolitical landscape was seeing the "wealth pendulum swinging back East" as many Western economies struggled in the post global financial crisis environment.
Another trend was the emergence of important new consumer groups - resulting from the growing middle classes in emerging economies, the world's ageing population, and the increasing number of adherents to major religions.
By 2050, 40 per cent of the world's population - about 3.6 billion people - were expected to be eating in accordance with religious practices.
According to the report, the types of foods people eat may also look radically different in 30 years' time.
Spiralling healthcare costs are increasing the focus on maintaining wellness rather than curing illness, driving demand for nutraceutical foods, a prime opportunity for New Zealand producers.
Companies should also be exploring opportunities to take leadership roles in the development of synthetic or laboratory-grown foods, to complement our natural food offerings.
The report notes insect-derived proteins as an example of products that, because of cost and production efficiency, are likely to break out from ethnic diets into the mainstream over the next 20 years.
As the world's population continues to grow - and resources become increasingly scarce - New Zealand producers can look to capitalise on the country's natural resources.
"In a water-constrained world, people may not have access to fresh water to constitute dried milk," Proudfoot said, "leaving the milk powder segment ripe for innovation and disruption".
"This should be focusing companies on developing new fresh and shelf-stable products, liquid products that are easy to transport with unique nutritional properties."
Food integrity is another hot topic for many governments, particularly those in emerging economies.
According to the report, the types of foods people eat may also look radically different in 30 years' time. Photo / NZME.
As KPMG noted in previous Agendas, New Zealand is in a sweet spot as the demand for food expands globally on the back of the growing wealth of consumers, particularly in Asia.
"It is critical that, as a country, we grow wider recognition of the strategic importance of our primary sector assets," it said.
Co-operatives may need partners, says KPMG
The co-operative model has served New Zealand's primary sector well, but an increasing demand for capital to fund growth is raising questions about their future, says KPMG.
Much of New Zealand's primary industry is locked up with co-operatives with the biggest dairy co-op, Fonterra, and the second-biggest, Westland Milk, responsible for the bulk of the sector.
Likewise, co-operatives dominate the meat sector, through Alliance Group and Silver Fern Farms.
In its Agribusiness Agenda, KPMG said while the co-operative ethos remained strong across the sector, increasing demand for capital was raising questions about their role.
"We have already seen a number of co-operatives adopt hybrid models to bring in investment capital unconnected to supply, albeit these models have an inherent tension," KPMG said.
There was debate over whether the value proposition for a new business area would provide a better return to shareholders than investing the funds through traditional investment structures, particularly if there was no direct business value to the shareholders.
"There are undoubtedly significant benefits to the co-operative model, the most important being the direct connection of the business and shareholders to a common set of goals and objectives.
"However, it is hard to tell what the ultimate model will look like for a 21st century co-operative in New Zealand's primary sector."
KMPG's global head of agribusiness, Ian Proudfoot, said the co-operative model had ensured that local producers could retain ownership. Across the Tasman, the co-operative model had largely broken down, which meant producers had lost control of their sectors. Nevertheless, New Zealand co-operatives would need to come up with new ways to grow.
"My guess is what we will see is more of a splitting for the co-operatives. Instead of doing non-core activities themselves, they will look to work with partners and become investors in those partnerships," he said.
Proudfoot said Fonterra's decision this year to take a stake in Chinese baby-formula maker Beingmate Baby & Child was an example of how a co-operative could create value for members at a lower capital cost than would be required if they were to do it alone.
KPMG
Agribusiness Agenda
*By 2050, 40 per cent of the world's population is expected to be eating in accordance with religious practices.
*Spiralling healthcare costs are increasing the focus on maintaining wellness rather than curing illness.
*NZ companies should be exploring opportunities to take leadership roles in the development of synthetic or laboratory-grown foods.
*As the global population grows and resources become more scarce producers here can look to capitalise on the country's natural resources.
*Food integrity will become an even hotter topic for many governments, particularly those in emerging economies.
