Thursday, July 7, 2022

Time to build on our competitive advantage, KPMG says

MC Fieldays KPMG’s global head of agribusiness Ian Proudfoot found it harder to identify common messages from sector leaders.

The primary sector is doing a remarkable job of trading, growing and keeping delivering record returns to the New Zealand economy when such returns are so desperately needed.

But this year’s KPMG Agribusiness Agenda reports a sector that is muddled, opportunity-packed and risk-burdened, global head of agribusiness and author Ian Proudfoot says.

When interviewing agribusiness leaders this year the first comment was “now, where do we start?”

No single theme or trend stood out in the interviews, unlike past years.

“For some leaders, things have never been better; others face an existential crisis, while many have aspects of their operations that are humming and other parts that are on (or are close to) life support.”

Proudfoot said each leader is still fighting through the fatigue for the resolve and resilience necessary to identify and catch opportunities flying at them from various directions.

Little has been done to mitigate the tsunami of rules and regulations approaching, while leaders battle labour scarcity, supply chain disruption, covid absences and water availability.

He noted that the Ministry of Primary Industries Situation and Outlook Report highlighted the primary sector’s contribution of $52 billion in export earnings from food and fibre in FY2022.

Almost on the same day, the He Waka Eke Noa report made recommendations requiring farmers to report emissions numbers, plan for greenhouse gas management, and pay for methane and long-lived gas emissions. 

“These two reports perfectly highlight the complex yet opportunity-packed environment in which the sector currently operates.”

“For some in the sector, tension and frustration are boiling over, but the focus must be on what is controllable.”

Ian Proudfoot

The assortment of issues that organisations and leaders must balance to create and capture value is increasing.

“For some in the sector, tension and frustration are boiling over, but the focus must be on what is controllable to catch the many opportunities inherent in the crises and challenges we face,” Proudfoot said.

On the back of good product prices, those with cash to invest in the sector should concentrate on the things they can control, he advised.

These including reconnecting with the world, automation of repetitive roles, capturing opportunities in decarbonisation, collaborating substantively, and unifying the food systems across export and domestic.

Proudfoot advised a laser-like focus on the sustainable competitive advantage in the future for food value chains rather than the productive aspects of commodities.

The advantages could come from intellectual property, a health attribute, or a brand story.

Efforts must go into understanding consumers, recruiting diverse thinkers, choosing the right partnerships and growing on a balanced platform.

“We must choose to build our future value chains around globally relevant, science-based, nature positive, health engendering opportunities that have the potential to be scaled quickly enabling us to leverage our competitive advantage while it exists.”

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