In this series, the team each offer a big-picture strategy for food & fibre.
This series started with a late-night thought experiment over Zoom. As Kiwis, we can be quick to criticise those at the top – at least if talkback radio on a Monday morning after an All Blacks loss is anything is to go by. Readers of this column will know that we’re not short of hopes and ideas for New Zealand’s food & fibre sector. What would we do, then, if we were handed the keys to the Ministry for Primary Industries’ offices and safe, or asked to take responsibility for a strategy to take this sector to the next level?
In the next few weeks, you’ll hear from Phil, Daniel and guest writer for the month Kate Scott on their approach to big food & fibre strategy. For now, you’ll have to make do with me.
Here’s a strategy to double New Zealand’s primary sector over the next decade – none of which relies on telling our story better. I call it “40-30-10 & 20 to pump”. Terrible name aside, it’s a series of food & fibre investment portfolios ranging from safe to smart to risky, with a reserve fund to quickly reinforce winning bets. Let’s go through it.
The first 40% would be safe investments in the commodity sectors that keep the lights on. The expected gains from these investments would be small, but achievable, and will make a difference to many food & fibre people.
As an example, this would come in the form of continued investment in dairy and meat production efficiency – like pasture research, animal health science or market-led certification systems.
The next 30% would be smart investments. These would also focus on significantly increasing production, productivity and operating margins, by experimenting with more novel technology or market approaches.
This could include initiatives that capture additional value, like a programme to accelerate the development of Plant Variety Rights or protein equivalents like Lumina lamb. Another example would be High Density Growing Systems, like those emerging in our horticulture sector, which have the potential to double fruit yield per hectare whilst keeping operational costs low.
These investments wouldn’t be as safe or immediately achievable as the commodity plays, but offer the promise of significantly more value.
A large part of the “30% smart” play would focus on de-risking the adoption of technology like robotics or remote collars to improve productivity. For example, many primary sector businesses struggle to find people for manual tasks – so an incentive scheme would be trialled whereby New Zealand agri-tech companies would be paid minimum wage for every human hour they replace (to a point).
This would enable producers to invest more time in developing their people to upskill from doers to decision makers. For the “30% smart” portfolio to work, we’ll need fewer people mowing orchard lawns and more people experimenting with High Density Growing Systems. Fewer people getting the cows in and more people using precision data services to apply fertiliser, monitor biodiversity or certify their produce. A return would be expected from these investments within five years.
The final 10% would back a series of risky bets that, should they come through, would place New Zealand at the forefront of global agriculture. Given the relatively small investment, these areas must be chosen carefully and should leverage our strengths – like our deep knowledge of pastoral systems or our potential to produce an abundance of affordable, renewable energy.
The government’s role would be to invest in chunky capital projects that unlock innovation, a good example being the Ruakura milk dryer in Hamilton – a big-ticket investment in dryer capacity that unlocked the ability for many innovative exports derived from sheep and goat milk.
The goal of the “10% risky” portfolio is to transition from bulky, low-value exports to high-value products that don’t require much (if any) shipping. Success would be measured by the weight of exports per dollar earned. We could be world leaders in the IP behind precision fermentation, reducing ruminant methane emissions or gene editing.
Investment in these areas acts as a natural hedge. If they succeed, we ride a new wave of innovation. If they don’t, we can continue to rely on our pastoral systems to prop up our exports. Better to disrupt ourselves than wait for someone else to do it to us.
Finally, the “20% to pump” fund would act as a reserve – ready to reinforce any success across the safe, smart and risky portfolios through rapid, global commercialisation of new breakthroughs.
As we gear up to double our exports over the next 10 years, we’ll need a strategy that covers all angles and keeps us at the front of market and technology changes. “40-30-10 & 20 to pump” might do the trick – but its first investment should be in finding a better name.
