Agriculture exports on track to earn a record $52b-plus this year. Photo / Warren Buckland.
Agriculture exports on track to earn a record $52b-plus this year. Photo / Warren Buckland.
Tension and frustration are boiling over for some New Zealand agribusiness sector leaders but the focus must be on what is controllable to catch many opportunities in the current crises, says KPMG's Ian Proudfoot.
The leader of the 2022 KPMG Agribusiness Agenda said in past years the sector narrative for the report has been relatively straightforward to distil - not so this year.
"There are so many priority issues facing the food and fibre sector today that it is no surprise the first comment at our first roundtable was 'now where do we start?'," said Proudfoot, KPMG's global head of agribusiness.
"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 close to, life support.
"This year's Agenda tells us a story of an industry that is muddled - both opportunity-packed and risk-burdened by high highs and almost as many low lows. But it also tells us a story of an industry where each leader is busy fighting through the fatigue we wrote about in our 2021 Agenda to show the resolve and resilience necessary to identify and catch opportunities flying at them from various directions."
Sector leaders noted a lot of focus was being put on uncontrollables, like climate change, wars and pandemics "which will not go away because we get angry about them", the report said.
"Others pointed to a wave of government initiatives such as fair pay agreements, unemployment insurance, Three Waters, He Waka Eke Noa, low emission vehicle rules and the immigration reset as driving increased tension, particularly as input costs surge with inflation."
Ian Proudfoot, KPMG global head of agribusiness. Photo / Andrew Warner.
The report comes as the Ministry for Primary Industries forecasts export revenue will climb 9 per cent to hit $52.2 billion for the year to June 30.
Proudfoot said the sector was doing a "remarkable" job to keep trading, growing and delivering record returns to the economy "when such returns are so desperately needed".
However, the assortment of issues that had to be balanced to create and capture value were increasing.
One roundtable participant said having returned from an overseas trip, they were feeling less resilient than they had done at any time in their professional career, the report said.
"They noted it was the first time they have not had all the tools they need in their toolbox to respond to the battles they must fight.
"They talked about a world that appears to be driven by fear rather than purpose, and of so many factors that will define the sector's future, feeling like they are currently outside of organisational control."
One call the sector could make was to decide to focus on controlling factors within control, said the report.
"Given the strong returns being generated across the sector at the current time, it should not be a difficult decision to make. For once the cash is available to invest in the future.
"However there is a risk that if we keep winning on the commodity cycle, as we are doing in red meat and dairy, that we are not proactive in taking control of the thing we can change that will assist in creating a sustainable competitive advantage."
The most important thing the sector controlled now was how it reconnects with world markets and consumers, the report said.
• Accelerating towards the future of work: Current labour shortages will change the way the sector works forever. The industry will face continuing competition for talent, resulting in the economics for automation of repetitive roles becoming more compelling, long-term certainty around seasonal labour programmes being critical, and the investment in future talent pipeline into schools and universities more urgent than ever.
• Capturing the unique opportunity in decarbonisation: Unlike other sectors of the economy, which at best can aspire to net zero, the food and fibre sector has the potential to be climate positive.
• Collaborating substantively: New Zealand had shown its ability to collaborate effectively in a crisis during the last two years. It was time to bring that same mindset to solving the problems communities and consumers will face in the future. A crucial part of this was partnering with Māori more profoundly, bringing openness to different ways of doing things than the way they had always been done.
• Bold steps now to ensure agribusiness thrives in future generations: These included initiating a national discussion around the use of biotechnology, exploring the opportunities inherent in our oceans, investing in water infrastructure, creating an industry data exchange platform, and building a globally relevant bioproducts sector.
• A food system that worked for all New Zealanders. The country had two food systems; one world-class exports, and a domestic system that had demonstrated its frailties over the last two years.
"We need different business models to lift the resilience of domestic food producers. A failure to provide accessible, quality, nutritious food to all New Zealanders will ultimately impact our ability to continue to generate the export returns we enjoy today."
