So land-based industries needed more savvy, entrepreneurial people.
The big problem for traditional New Zealand farming had been land use change but more entrepreneurial leadership was needed to take up new opportunities.
Land use change from sheep and cattle to dairy had resulted in ever-increasing meat industry processing overcapacity and greater competition for livestock.
Seasonal supply was driving behaviour and to the outside world that looked irrational, Harrison said.
It was cut-throat business and while there was vision the industry needed to secure the right people to make it happen, Harrison told the Institute of Agricultural and Horticultural Science forum at Lincoln.
In responding to the challenge of getting the right people, the primary industries sector must get better connected with the urban sector, he said.
NZ had the capability but he was concerned about land-based industries’ ability to attract that capability.
“I’m worried we don’t draw enough urban people to see the real opportunities the agri-food sector can provide to the future of NZ.”
The prospects had never been better in terms of growing the middle class in Asia.
But the meat industry was in survival mode with little or no surplus capital to invest in innovation to help it compete.
“This siege mentality around survival is working against serious, collective, industry-good initiatives,” Harrison said.
NZ’s predicament was distance to market.
“That has huge impact on our behaviour.
“This makes it tough to undertake a value-add strategy against those who sit in the middle of the market.”
Today’s food security realities would require 60% more animal-sourced foods by 2050.
“The siege mentality around survival is working against serious collective industry good initiatives.”
Graeme Harrison
Anzco
Growth in meat would be faster with a high proportion of that in pork and poultry but there would still be good opportunity for lamb, Harrison said.
China’s middle class was the greatest opportunity.
Before the late 1990s China barely had a middle class.
In 2000 five million households earned between $11,500 and $43,000 a year. This year, 225 million people were in that bracket.
By 2020 the Chinese middle class might outnumber Europeans and that stunning development had boosted growth around the world and transformed China.
But, sadly, when it came to economic integration there was no bipartisan approach in NZ politics.
“If we could get rid of trade barriers the growth in beef and sheep meat for NZ would be almost 50% and for milk anything between 18% and 100%.
“This will be a goal for NZ.”
NZ had experienced limited success in value-add because of small domestic markets, trade barriers, distance from customers, capital constraints and entrenchment in commodity business.
“Anzco made Australia part of the domestic market otherwise we would not yet be there.
“It really is not clear-cut what is the right way to go when it comes to success in the value-add story,” Harrison said.
Profits needed to be re-invested in innovation and product development.
“But farmers don’t necessarily know about that.”
It was also difficult because of product variability and technical skill capabilities.
Harrison backed the development of a NZ story and NZ Inc brand with each sector having overarching standards to preserve and grow NZ’s reputation.
“The opportunities have never been so good but there are big challenges managing risk in a more volatile world,” he said.
