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Capturing value.

Executive Summary

The world is seeking two things which are NZ’s strength areas: food production & agriculture expertise. NZ has a goal to increase the value of exports 50% by 2025 but is hitting production capacity. For decades NZ’s exports of expertise has been ad hoc & uncoordinated, leaving money on the table. An integrated framework for trade negotiations, market access & exports of expertise = value capture. Robust strategies & management plans to commercialise intellectual property need implementing. Utilising its strengths to capture value, exports of expertise enables NZ Agriculture to transcend borders. Developing nations will meet the production gap – they have the scope for growth. Farmers and the primary industry need to get feet on the ground and seats at the tables of influence.

Capturing Value – Mel Poulton

The use of mobile technology in the red meat sector.

Executive Summary

The research in this report was gathered in order to determine how mobile technology can deliver improved on-farm and industry productivity gains now and in the future and also to understand technology adoption and how mobile could deliver positive outcomes. The scope was limited specifically to New Zealand sheep and beef farming and focused on opportunities that can give a genuine return on investment. The information was collected both in New Zealand and in a number of their largest trading partners around the world including China, Northern Ireland, the Republic of Ireland, England, Wales and the US.

The initial research found that low numbers of farmers record data on-farm using mobile technology for simple day to day decision making. This in turn means that the level of data that is then attached to the animals electronically as they move through the supply or value chain is also low. The only data that remains with the animals is related to animal health declarations. The main reason that farmers gave for not carrying out more data collection was due to the time available to collect the data in relation to the perceived cost: benefit ratio. Further to this, almost all farmers felt current available mobile data collection equipment was not suitable to use to a level that will have a significant lift to their individual farm performance, nor is it able to create industry change that will provide enough financial benefit to them directly.

A further significant observation was the performance of those who were measuring their key performance indicators compared to those who were not. It was noted that there are individuals with a natural farming ability who are able to perform extremely well with little or no technology, often with higher on-farm performance than the innovators or early adopters. These individuals are able to monitor grass levels, stock condition and market conditions with little technology. However, the fact that 80% of farmers believe that they are in the top 20% would indicate there are far more farmers thinking they are able to do this successfully than actually can. This leads to the question : “how much could farmers improve if they increased the monitoring they undertook on farm?”

Research has shown that the adoption of mobile technology has not only changed the buyer behaviour of consumers, but also their decision making process. The improvement in logistics systems for perishable goods is enabling smaller retailers to compete with larger retailers for premium markets by shortening the supply chain. This in turn provides opportunities for more niche markets to be opened up for high end products, the likes of which New Zealand creates.

The red meat sector in New Zealand continues to underperform due to the huge variation in on-farm performance and supply/value chain inefficiencies, rather than change in demand or the product’s ability to attract a price premium over other proteins. Some of these in adequacies are small and could be reconciled relatively easily, while others are far more “There is nothing amazing about collecting data. Collecting data is just the basics” Eric Reid, Ex production director Moy Park Mobile technology is the technology used for cellular or wireless complex and would require the cooperation of processors, industry good and government organisations, both here and abroad. Individually incremental changes would not reform the industry but collectively they would have the ability to increase the overall performance to a level that would have a satisfactory return and may enable new opportunities to open up.

Mobile Technology has the potential to change farming as we know it by providing a platform that enables a more transparent value chain. In conjunction with a behavioural change, mobile technology can provide an easy, affordable, convenient data collection and delivery platform at all points of the supply chain.

This may create disruption by by passing agents as businesses up and down the supply chain could communicate information directly relating to products made transparent to them. This matching of specific products or product attributes between the seller and buyer at all levels is a way of turning the red meat sector into a more transparent value chain and deriving premiums for all stakeholders.

Before adoption of technology can take place, industry extension must look at what can be done to engage with different types of farmers. Once identified it may be possible to develop strategies that target the individual groups and enable them to achieve their desired outcomes. Moving to this more structured holistic model would provide an ongoing cycle of improvement.

Conclusions

  • Although some farmers use mobile technology very few have it as an integrated part of their farm decision making system , but instead use the information in isolation.
  • Many of the mobile applications are emerging but not in a commercially viable form because they are unable to satisfy farmers’ seven principles of the adoption matrix.
  • Technology will be responsible for the next doubling of farm productivity throughout the world – red meat is no exception.
  • The red meat industry is underperforming which, if it continues, will cause declines in stock numbers, exacerbating the problem.
  • Reforming the industry must start at both ends of the value chain. On-Farm–Developing Premium Markets
  • There is more gain to be made in the industry by concentrating on moving the middle rather than moving the top.
  • Cellular coverage in New Zealand is poor compared with many third world countries. Our future relies on it improving.
  • Using ave rage as a measure of performance averages out potential value.
  • New farm data tools are required focusing on automation and user experience (UX)
  • Farmers who want to continue must collect key metrics otherwise they will eventually be swallowed up by those t hat have created their own certainty.
  • Transfer of information between industry stakeholders is currently poor. Good research is not being utilised and a lot of the extension is confusing and unsuitable for the farmers it is intended for. “We need a market where quality attributes are rewarded” – Tina Mackintosh White Rock Mains

Recommendations

  • Information systems that provide positive productivity outcomes and enable a transparent value chain should be developed and implemented.
  • Investment in increasing the broadband coverage in rural areas is crucial.
  • Marketing should be focussed on product attributes that are inimitable to New Zealand as much as possible.
  • Farmers must monitor key performance indicators to aid decision making.
  • Accurate, clear Return on Investment (ROI) models focused on farmers must be created by industry that simplify the decision making process of adopting technology.
  • New technology should focus on simple problems first instead of trying to fix all problems at once.
  • Extension should be accompanied by personal service that is focused on thought leadership and enables the individual farmer to identify and achieve their individual outcomes (enabling).
  • We must not focus on farm productivity in isolation of the consumer.
  • Industry good extension needs to be clear, concise, modernised and include ROI modelling.
  • Integrated Farming Systems should be used to enable farmers to exploit the interaction not the average.

The use of mobile technology in the red meat sector – Daniel Shand

How does an agricultural business maintain its essence and become better at fulfilling its purpose.

Executive Summary

Sometimes the purpose of a business is very clear, however many times it is below the surface, as businesses simply get on and “just do it”, but are driven by something in them that is great. Some themes come up frequently in terms of purpose – whether the businesses are outwardly successful or struggling. These are a willingness to:

  • fulfill a personal drive and ambition to do something great or to be the best
  • provide a foundation for family well being
  • fulfill a way of life and a genuine love of farming
  • provide something different that is good for people and the world
  • enhance financial wellbeing
  • simply do it, because it’s what we do.

The operations I have observed had a variety of ways of driving performance, and many different ways at attempting to improve their practices to achieve better results. Focuses included:

  • building and working from a solid financial foundation
  • enhancing competitive advantage and responding to the market
  • being more expert in technical aspects of their operation than others
  • having a good knowledge of the regulatory environment and using this to advance business and gain competitive advantage
  • maintaining stable access and right-to-farm suitable land-investing in their business and enhancing innovation
  • pushing the operation beyond its natural performance trajectory
  • recognising the capability of people in the enterprise and enhancing this as required
  • effective collaboration throughout the supply chain
  • an integrated approach to the supply chain
  • having a good story and telling it well-maintaining a commercial edge
  • organising themselves well and disciplining their strategic decision-making
  • trusting their gut
  • taking the leap into the unknown when it felt right
  • working collaboratively to enhance the businesses advantages as above

It is important to note that whilst many of the operations I studied are operationally sound, run professionally, and inspirationally led, not all are overwhelmingly viable businesses from a profit and loss perspective, or necessarily successful farming operations. There are many reasons this might be the case, but common themes are vagaries of the market and fickle consumer behaviour affecting demand in market, distortion of markets due to government influence, bad luck playing a part in business, or a lack of focus on profit and loss due to other factors being the prime driver of an operation.

To summarise, in observing the above strategies to achieve the purpose of farm businesses, I have distilled some of the key aspects that agri-businesses should focus on to drive performance.

Many if not all of these drivers are needed in some form to run a good business – and indeed many of the seemingly positive behaviours can be a negative and hold a business back if applied in the wrong manner (e.g. hyper competitiveness leading to low pricing, driving market share up and profitability down).

In this paper I will further expand on what I believe to be the key drivers of the agricultural businesses I have studied.

Perhaps the key overarching factor is that these businesses affect what they can, take account of the factors beyond their control, and get on with the job and make things happen. They are results-orientated rather than problem-focused. They work hard AND smart to make their own luck.

How does an agricultural business maintain its essence and become better at fulfilling its purpose? – John Murphy

Global potato production: Helping feed the world.

Executive Summary

New Zealand potato growers produce on average 50tonne/hectare in the current farming system which on a global level within the potato industry is within the top spectrum. (www.fao.org)

For New Zealand to move up the ladder and raise the bar in terms of production, further investment into technology and advanced farming systems not commonly used in New Zealand to date is required.

One technology that could benefit the industry significantly moving forward is Genetic Modification (GM) of varieties. This could aid overcoming pest and disease pressures and allow growers to further maximise yields. The most important opportunity for farmers offered by GM is to drive some cost out of production and therefore increase the grower’s profit margin.

Research and development conducted to date in this area globally, GM has resulted in the development of varieties tolerant to the likes of blight, which does not only reduce chemical use (and the cost associated with this), but also makes the crop more environmentally friendly.

The identification of the Tomato and Potato Psyllid (TPP) in 2006 in New Zealand has resulted in a considerable increase of insecticide chemical use throughout the growing season to keep the crop clean and decrease processing defects. The use of  GM could help by developing varieties to overcome such issues and further decrease the chemical use.

GM is not used in New Zealand to date commercially, and it will require education by industry for the consumer, and further research to prove GM is not harmful. I believe embracing the potential of GM crops would be beneficial to the potato industry in New Zealand, and increase New Zealand Export Income as a result.

The other technologies that will help potato production dramatically will be the use of variable rate fertiliser, especially nitrogen. Intensification of other farming systems in New Zealand is putting pressures on the environment and impacting the clean-green image we as a nation are currently renowned for. By using variable rate input technology we can manage fertiliser inputs based on potential outputs of the crop resulting in better efficiencies and returns to the grower.

Variable rate irrigation in – conjunction with GPS and yield monitoring will be another technology that could play a major role in potato (and other edible crop) production in New Zealand in the future. Although some of this technology is already available and is being used currently, it is not used as standard practice in Primary Industries as yet in New Zealand.

With increased data collection and more precise use of inputs we are likely to see a direct outcome of better utilisation of crop inputs resulting in increased efficiencies and possibly yield increases. Importantly this data and efficiency will play a role in meeting customer demand for food production with high environmental awareness (especially if marketed effectively on an industry scale), and demonstrate best farm practice and decisions made as a result of increased knowledge.

With global regulation so stringent and only likely to get more challenging we need to be at the forefront of quality assurance programs, meeting regulatory requirements within current farm systems and leverage off our historical “pure” clean and green image to maintain our competitive advantage as a primary exporting nation.

Global Potato Production: Helping Feed The World – Paul Olsen 2014