NZ missing out on "added value" bonanza

This report suggests we should expand our economy by further processing our food products, like other countries do.

The challenge for agriculture is to do so more profitably, than can be done overseas. We need to add more than just costs to further processing, and sometimes the cost of labour and compliance in NZ outweighs the return.

Economic pressure breeds innovation, and there are signs that with clever thinking and innovative ideas, value can be added. Other small countries are achieving this, why can't we? The Starbucks wool/jute upholstery idea, was one such example that will help add value to our products.

The meat processing industry needs to invest strongly in added value, if it is to grow farmers returns and keep supply from falling. Silver Fern Farms are showing this leadrership in winning the Product Innovation Award for Food Packaging with their retail Lamb Rump pack recently, using a heavy weight lamb cut. The Feds T150 lamb campaign which was scoffed at by members of the meat industry when launched, is a target that could be achieved with more new product innovation such as this.

New Zealand is underperforming when it comes to high-value, processed food exports, according to Government-commissioned research. According to the report - Moving to the centre: the future of the New Zealand food industry - such products made up only around 14 per cent of this country's total food and beverage export value, per capita, in 2009. By comparison, processed edibles made up about 30 per cent of Denmark's total food and beverage export value during the same year and almost 40 per cent of Ireland's.

According to the research,NZ's export mix to Australia is more weighted towards processed foods, with $877 million (excluding wine) worth of those products shipped across the Tasman in 2009. "Conceptually, if we could get our global food export mix to resemble our Australian food export mix, our food industry would be more value-added and profitable," the report states.

Minister of Economic Development Gerry Brownlee said the research suggested NZ could double the value of food and beverage exports, which were worth $17.6 billion in 2009. "We know that NZ needs to sell more added value food products ... exports to Australia show it can be done," he said.

Tim Morris, director of Coriolis Research, which conducted the report, said one way New Zealand could add value to the sector would be through increasing its exports of infant formula, rather than milk powder. Milk powder undergoes a 10-fold increase in value when turned into baby formula, the research found. One example of success across the Tasman is Kiwi juice maker Charlie's, which secured a deal to stock its products in the 750 stores of Australian supermarket giant Coles last month.

But Morris said going beyond Australia to much larger markets, such as China, required a level of scale many Kiwi food manufacturers would find difficult to reach in a single step. New Zealand was fundamentally good at producing food, he said, and much economic benefit could be gained through more focus on the edibles sector - rather than trying to create new industries.