Allan Barber says the answer to the faster pace of market change signals is to keep things simple, while keeping an open mind. Consumers may be 'king' but they are fickle and what they do is often different to what they say

By Allan Barber

Perhaps it’s my advancing age, but it seems as though the changes facing agriculture demand ever faster reactions and responses to stay ahead or even just to keep pace with a whole series of challenges: public expectation, government regulation, consumer tastes, changing climate patterns, and new technologies as well as the usual ones like finances, human resources and health pressures, both physical and mental.

In this age of apparently unlimited opportunity to access advice and assistance, whether from consultants, bankers, accountants, lawyers, IT experts, processors or industry bodies, there’s almost too much choice. The main challenge is choosing between products, services and advice which cover the range from the merely desirable or useful to the downright essential.

For the individual farmer it is very important to keep it as simple as possible, taking care not to be distracted and diverted by all the outside noise, but remaining open to ideas and information that offer a genuine advance on current practice. Businesses must keep up to date with trends to ensure their strategic planning is informed by the future, not just by history, but the problem here is deciding which trends will be short lived, therefore able to be discounted, and which will become future reality.

It doesn’t take too much foresight to predict environmental practice, healthier and higher quality food, adapting to climate change and retaining a social licence to operate as four major challenges that every agriculture related business must address in the near future. But the big question is how to meet the wishes of an increasingly strident public whose expectations appear to be more demanding from one year to the next. Trends which used to be measured in decades are now almost annual events which puts huge pressure on planning.

For several years KPMG’s head of global agribusiness, Ian Proudfoot, has been spearheading the Agribusiness Agenda which interviews industry leaders to canvas their opinion of the overriding issues affecting agriculture based on a particular theme. Whereas the 2017 Agenda was outward looking with a focus on world trade opportunities, the 2018 edition called on the sector to tell honest stories about how New Zealand’s food products are grown, processed and distributed, highlighting the many positive attributes in the products we grow and sell to the world.

This theme ties in with Beef + Lamb New Zealand’s Taste Pure Nature origin brand programme which tells the story of New Zealand grass fed beef initially in two key markets, California and Shanghai. While this programme is a great example of communicating the sustainability of our growing practices and high product quality to the world, there will also be concern it may be too little too late. B+LNZ deserves great credit for its tenacity which has resulted in a solution to the perennial problem of convincing farmers and processors to commit to a programme, but it runs the risk of being overtaken by other trends and events.

Wool provides a cautionary tale – a natural product with relevant properties for the modern world has lost all promotional support and, consequently, awareness to the detriment of farmers, processors and the New Zealand economy. If wool had maintained a 20% share of sheep farming income, it is quite possible dairy production wouldn’t have taken over the amount of land it has, there wouldn’t have been the degree of milk price volatility in recent years and dairy wouldn’t have received so much bad press over water pollution.

Talking to RNZ National before Christmas, Proudfoot identified three major agribusiness challenges: if we want to target the 40 million most sophisticated consumers worldwide, we must learn to feed our own population with high quality food instead of gaining a reputation for obesity; change is continuous, so there will not be a transition to a new state of stability; and we have already used up a large proportion of the time advantage to own the grass fed market position which may only have five years maximum left – our next challenge is to identify new opportunities to get ahead of the rest of the world in areas such as carbon zero or environmental restoration.

Others may not agree with this short list and I have a problem with agriculture being asked to assume a public health and social welfare responsibility for people’s eating habits, but it’s difficult to argue with the speed of change and the need to identify new points of difference.

The biggest battle for agricultural production, especially dairy and meat in the next five years, will be maintaining share of expenditure against alternative and plant based protein options. The sector has to find a way to counteract the claimed health and environmental benefits and probably comparable, if not cheaper, price of the competition. There is no doubt a growing proportion of first world consumers are reducing their animal protein consumption or becoming vegetarian, while the third world is less financially able to eat meat and dairy or buy premium products.

Therefore the only viable option is to sell as much of our production as possible to the world’s highest paying consumers and, to do this successfully, we first have to convince them of its quality, sustainability, environmental credentials and animal welfare standards. But we must also recognise they may not want the same things in five years.

Current schedule and saleyard prices are available in the right-hand menu of the Rural section of this website. This article was first published at Farmers Weekly and is here with permission.