Rural Leaders Newsletter

Bryan Gibson – Managing Editor, Farmers Weekly.

Welcome to the Ideas that Grow podcast. I’m Bryan Gibson, Managing Editor of Farmers Weekly. With me today, I have the recent Keynote Speaker from the Rural Leaders Agribusiness Summit, Devry Boughner Vorwerk. G’day, Devry. How’s it going?

Devry: Oh, it’s going great, thank you. I wish I was still with you all in New Zealand. Hopefully you’ll invite me back.

Bryan:  From what I can gather, I think we will. Now, obviously, you were one of the star attractions at the Summit. And it’s interesting because I was thinking anyone involved in New Zealand farming would perhaps think of it as being a bit of a challenging environment at the moment, but you really brought a sense of optimism to the Summit. Can you just outline what you spoke about?

Getting Grounded in the Humanverse^TM.

Devry:  Sure. I’m glad that you mentioned the optimism, because that was my goal Bryan. I was trying not to ruffle feathers on any side, but really to put front and centre the opportunity, that is not unique just to New Zealand agriculture, but broadly what rural communities and farmers and industry worldwide are dealing with.

So the title of my speech was ‘Getting Grounded in the Humanverse. In terms of Ideas that Grow, I’m hoping that idea grows. I presented the audience with the opportunity to think about the pressures they’re facing as it relates to the constraints that industry has in terms of the need to reduce emissions, harmful emissions like CO2 or methane, or deal with the issues in the soil like nitrous oxide.

I presented an opportunity for the audience to think about that problem, or that challenge, by putting the people that are impacted, and the planet, at the centre of the conversation. Because a lot of the stressors I picked up on while I was there, have to deal with ‘how do we run a profitable industry’? We’re constantly being constrained by regulations and now we’ve got the emissions trading scheme at hand and we’re getting all these pressures from our customers, the government, and consumers.

Taking the longer term view.

So how do we maintain our profitability? The optimism was to take the longer term view, to put yourself in the middle of the Humanverse, which I just described as putting people and planet first. Think through the opportunities that come from that, and the profit will come as an outcome.

That sounds a bit sort of Pollyanna’ish, but it does allow those who are in the middle of it, farmers especially, who are facing the pressures, to start to think through the longer term strategy as opposed to the immediate pain that they’re feeling, or the immediate constraints.

Bryan:  That is one of the challenges working in any business. You face those challenges. But in farming especially, it’s quite often difficult to see outside the fences of your farm. You’re just focused on paying the bills, getting the crop out, milking the cows and ticking all these other boxes – all the paperwork.

Making changes to your farming system that you can’t quite see the rationale for [can be difficult]. It is good to extend your horizon a little bit, isn’t it?

Moving farmers from price-takers to price-makers.

Devry:  It certainly is. One thing we always talk about is, does the consumer want this? Because the consumer is expecting this. Then it goes all the way back down the chain to say, okay, well, fine. Then the branded products company turns to the processors, then the  processors turn to the farmers at the end. It’s this pressure that’s on the farmers.

My message and my desire is for farmers to acknowledge that, yes, they’re a huge part of the solution here, but farmers are price-takers all the time. The optimism I’m trying to introduce into the conversation is, how do we collectively turn farmers into price-makers? Meaning you’re already facing these pressures. What is it that you can do standing in the middle of this moment, to start thinking through sort of the long term adaptation strategy that you need to put yourself on better footing?

I used a story, an example of a farmer that I had come across recently here in the United States, in Colorado, who was beginning to take over his farm – a third generation farmer. He stood in front of his dad and said, listen, I want to do this. But Dad, you’ve been working so hard for your whole career and you’re just breaking even. If I’m going to do this, I’m going to have to do this differently.

A farmer named Roy.

So, I told this story of this farmer, his name is Roy, and how Roy started to realise, well, gee, I need to be thinking differently. Diversification was a big thing, and quality of the soil too. So he started pulling in the data that his father had and started to look at his farm more holistically. How do I maximise the value of this land, by doing things differently?

He introduced some regenerative practices – which at the end of the day I used to work in a very large scale food and agriculture company, and the conversation was always, you can’t scale that, you can’t scale that. What Roy was proving is, look, by drawing down expensive inputs and starting to work on some new practices, he could do it. Now he’s building toolkits for others. So my message to the New Zealand industry was look beyond the boundaries of your farm.

Work with others. Figure out where New Zealand as a whole has an advantage and talk about how you can begin to adapt some of your practices so you can put yourself in the position of being a price-maker, not a price-taker over time. Some of that it’s complicated because it also involves engaging the government, and the government having realistic expectations on farmers as well.

Bryan:  That’s a great story. I mean, that’s quite often the pushback we get here when we talk about these things – that you can get added value through adopting some of these practices on a smaller scale. But how do you apply that to the whole of the industry? I mean, you worked for Cargill for a long time, one of the biggest red meat companies in the world. What would their strategy to this be and how would someone of that size move the dial in this direction?

Scaling up change faster by starting small.

Devry:  Yeah, I mean, it is interesting because I was one of the maybe top twelve or thirteen leaders of the company before I left. Some people say, you had such a large platform and you could scale it, so why go out on your own? I just thought, well, because over the 15 years I was there, I and the team that was part of this took the company on a very integrated external stakeholder strategy that did involve consumers, it did involve NGOs, it did involve the government.

We’re talking really big issues that have to be resolved in the supply chain, everything from deforestation to child labour issues in Cocoa, over the time I was there. Imagine taking that across 70 countries. You’re invested in multiple business units and say, how do you do this? How do you steer the ship in the right direction? So Cargill wasn’t the only one going through it. All of the companies were going through it. I could see the pressure coming on the medium and the small enterprises, like the small farmers or the medium sized farmers and other small manufacturers.

There’s a whole market in this. The business that I run is we don’t have time to waste with these very expensive consulting firms coming in with these very expensive and long plans that only get a portion of the problem, or don’t even get a portion of the problem. I decided, look, we can scale the change much more swiftly by coming up with a process to work with small and medium enterprises.

I also work with large companies, but there’s too much pressure at the beginning of the supply chain to expect everyone to adapt so swiftly without having the tools to do it. That’s why I stepped out of a large scale situation and said, we’ve got to move faster and we do have to provide tools to others in the supply chain. You can’t just turn to them and say, you pay all the cost. The farmers can’t pay the whole cost here.

Like I said, I knew once I got there what the national debate was, and there’s a very real fear about farmers saying, am I going to be able to stay in business? And Bryan, I was talking to my husband last night because he’s getting ready to inherit his father’s farm at some point in North Dakota, and I was thinking, all right, what are we going to do?

We’re like Roy. We’re like the New Zealand farmers. We’re standing there saying, how are we going to honour my father in law’s legacy, his father’s legacy, maintain the farm,  because he wants to keep it in the family and make sure that we don’t go bankrupt in the process.

So, there’s a real opportunity to do this grand pivot around, restoring the soil, getting more out of it, drawing down the inputs. The biologicals that are going to be on the market at some point will be, of course, more environmentally friendly. We have to walk both paths at the same time. Not just completely draw back on fertiliser and pesticides, but draw those down so that we can scale up the more environmentally friendly and restorative practices, for sure.

Real change requires leadership intent.

Bryan:  In a story we published, you had a chat with our reporter Craig Page. You mentioned that leadership was vital for this evolution and that you need strong leaders to lead this change and that sometimes the big companies were not actually set up to do this. Can you expand on that a little bit?

Devry:  I always say, companies are actually not set up to succeed on sustainability, you can call it ESG. [At the Summit] I also introduced the ESG framework, by the way, Bryan, and it seems like it’s a bad word out there, but I demystified it a bit.

Companies aren’t set up to succeed unless they have leadership intent. If you can check the box and say, yes, the leaders want to move in this direction, that’s great. But taking leadership intent and getting that all the way out the door in terms of action, is incredibly difficult because organisations aren’t necessarily set up.

How do you cross across business units and functions to make sure that they’ve got a collaborative environment on ESG and sustainability? Culture is a big one. Is their culture one that adapts to change quickly? Or is it one that says, we won’t even be the fast follower, we’ll just wait till everybody else does it and goes through with it? Bonus structures, short term profit and loss versus long term investment strategies. Companies are not set up to succeed. So unless they are intentional and they acknowledge that by putting people and planet at the centre of their business strategy is actually going to mean they actually have to disrupt themselves. If they’re not ready for that disruption, they will fail.

It just takes real deliberate effort and action. And it’s not just in one time frame. I mean, say you have a CEO and a leadership team that says, yeah, we’re going to do this well, people change, new leaders come in. Have they built that into the succession plan and sort of the long term investment strategies, the long term production strategies or processing strategies? It just takes continuous improvement and continuous attention for companies to do it and do it well.

New Zealand Food and Fibre – and positioning for opportunity.

Bryan:  You mentioned what phase of the evolution a company chooses to be in. A lot of people in New Zealand think that our plan to price emissions is one of, if not the first in the world. Why are we doing this? We should wait and see what happens because we might get it wrong or we might overburden farmers or the industry for no reason. Having said that, we are kind of best placed to do it because we’re already in a pretty good position. What would you say to the New Zealand industry in that regard?

Devry:  Well, what I did say on stage [at the Summit] is that they will be locked out of export markets if the government doesn’t push them outside of their comfort zone and begin to position New Zealand broadly as a leader on carbon-reduced exports.

I cited what was happening in the European Commission as it relates to their movement and the conversation or the negotiation that goes on between the US Trade Representative and the Commission, where they’ve said, by 2024 we’re going to come up with an agreement on what the trade standards look like. What the border standards look like – called carbon border adjustments, which would be like a tariff or a tax at the border based on how much carbon you emitted in the whole lifecycle of the product.

New Zealand as the incubator of sustainably branded products.

So, I see it is painful. New Zealand is positioning itself to actually be what I said is like the incubator of sustainably branded products. I mean, the New Zealand brand is so strong. So, to show that New Zealand industry is actually leading on this is going to position the industry really well, especially in the markets where the segmentation is such that the consumers are willing to pay for the European and the US market.

While it’s painful right now, I see it as an opportunity. I’ve worked with New Zealand for years as it related to the implementation of the Uruguay Round Agreement and the WTO. New Zealand made some painful decisions like removing subsidies, trade distorting and production distorting subsidies, committing to Indian export subsidies, transforming its state owned enterprises. So when you go back and look at the environment back then, there were protests and it was difficult, but the country made it through.

I’m obviously not a Kiwi, but I’m citing what I have seen of New Zealand in the international marketplace, one of being flexible, adaptable and willing to make the tough changes that they need to make, even if it means that New Zealanders have to compete even more. Because the longer term view is if you’ve got competition on these things, then let it play out in the marketplace. That’s where I think New Zealand is really well positioned. I walked them all through a very simple model on how to get in the right sort of mindset to go through this change.

The truth model – as presented at the Rural Leaders Summit.

I called it the truth model, which is, it’s important when all this pressure is coming at you, whether you’re running a business or farm or a household, that when you’re being pressured with external information that your body is physically resisting this. No, I’m not going to change that. So, you actually have to face the truth.

You have to seek the truth first. Seek the truth. Is there an element of truth in what is being sort of put out there and put in front of me? And if the answer is yes, which is the climate imperative is the truth here, but then once they seek that truth, they move into, okay, how do I face that truth? Because now I actually have to acknowledge that agriculture is part of the problem, but it can be part of the solution. And after facing the truth, walk yourself toward following the truth.

That’s where the creativity can come in. Get in a room with a whiteboard and start coming up with new ideas on how you’re going to adapt. That’s where new revenue streams can come in, new business ideas. Then the last one, after you seek, face, follow, you share the truth. You tell people what you’re doing. One, so you can have collaborative partnerships with others and they can be inspired by the change you’re going through. Two, so that consumers know what you’re doing, government knows what you’re doing. So – seek, face, follow, share. A very simple adaptation model that I walked the audience through.

Bryan:  Awesome. Now, given your past experience in both working with and observing what’s happening here, and having been at the Summit and hanging out basically with New Zealand farmers, New Zealand agribusiness leaders, do you think we’re up for it?

Is New Zealand Food and Fibre up for the change?

Devry:  Well, for those that are listening, I would ask them that question. Do you think you’re up for it? I hope the answer is yes. And what Roy, this farmer, said to me when I was telling the story, he said, hey, Devry, farmers can endure a lot of pain. Once they’re at the point of real pain, that’s when the change takes place.

I want to acknowledge that it’s hard, but yes, I think they’re up for it. Absolutely. I also mentioned that I haven’t met a Kiwi that wasn’t willing to sit down with me and solve a really difficult problem and take me from A all the way to Z – and back.

The creative problem solving that I’ve observed in your culture. The desire to compete and win, the innovation that I see present there. I just want to applaud Rural Leaders for having this conference and putting it all out there because this is a really important and pivotal moment for each individual industry within New Zealand [Food and Fibre]. But also, can you imagine if the entire industry came together and said, we will be the premier supplier, New Zealand, of sustainable, regenerative, carbon neutral food and Ag products?

If they set a goal collectively and started to work themselves toward that, imagine how energising that could be, as opposed to all of the friction that comes from working against each other.

I’m going to bet on New Zealand every time.