New Zealand agriculture is going through a huge transition as farmers morph into "food producers" and embrace drones, apps and robots to stay internationally competitive.

In this year's Herald Agribusiness Report we canvas some of the leading innovation shifts, talking to farmers whose cows effectively "milk themselves" with the help of robots and those who use drones for "precision farming".

The revolution is now being led from the front by New Zealand's largest company dairy co-operative Fonterra. As chief executive Theo Spierings and leading executive Judith Swales report the co-op has enthusiastically embraced the "disrupt or be disrupted" approach, established in-house innovation groups, launched radically different products and formed co-ventures with outside parties as it seeks to move to new frontiers demanded by consumers who value authenticity and product traceability.

The agriculture revolution is not confined to new technologies.

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Women are also taking their place among industry leaders. From Federated Farmers' new president Katie Milne through to entrepreneur Mavis Mullins and Landcorp chair Traci Houpapa, and those leading female rural networks, the shift is profound.

There has been plenty of controversy in recent months - with issues dear to New Zealanders' hearts like water quality - and the impact of effluent from our major export earner, dairy, on our rivers and lakes.

With the September 23 election fast approaching, the question of whether dairy's licence to operate is under threat has been topical. Thankfully - for the country's major export earner - there is recognition from leading politicians that the sector should be assisted to improve its environmental performance.

From DairyNZ chief executive Tim Mackle - whose organisation will shortly launch an app for farmers to measure their environmental performance - there is recognition that dairy has to be part of the solution to the water quality issue, as it seeks to retain profitability and remain internationally competitive.

Will that be enough? Industry expert Keith Woodford suggests the industry needs to recognise the need for fundamental change. He says dairy is where New Zealand has a competitive advantage compared to the rest of the world. But environmental and related social licence issues mean farmers will have to move increasingly to getting cows off paddock during late autumn and winter to solve the nitrogen leaching issue.

What is also notable in Agribusiness 2017 is the resurgence of the red meat sector. ANZ's Mark Hiddleston shares the secrets of that sector's top farming performers and we profile Invercargill's Alliance group and check in on Silver Fern Farms.

Sheep milking, vertical farming and non-animal proteins are just some of the areas NZ agribusiness players are investigating.

Innovation is not confined to agricultural technologies. ASB's Kevin Cooney explains why NZ's agri industry must pay close attention to blockchain development and ensure it is well-positioned to capture our share of the new value the technology could unlock.

Beyond this there is the challenge of access to prime export markets.

As Tim McCready explains, the election of Trump has overturned some trade "certainties". Nigel Stirling adds that free trade negotiations between New Zealand and Europe pose challenges.

Agribusiness 2017 reports on a sector that is grappling with major challenges. But with Kiwi innovation to the fore there are good reasons for a confident future.

Fran O'Sullivan