As admirable as New Zealand’s extensive grass-fed farming system might be it’s not enough of a selling point to continue improving margins in an increasingly competitive international market, Nuffield scholar Andy Elliot says.
A year spent examining NZ’s path to markets has left him convinced a better approach is to re-evaluate why people eat, what they hope to get from food and what NZ products offer that others don’t.
“To that extent the current drivers we are using, including a focus on the environment and production become simply components of the solution, not the proposition.
“Becoming more focused on consumer health and nutrition and how we can offer solutions to that would help gain new customers and change our production systems and ultimately environmental outcomes.”
NZ has a well-founded history in efficiently growing, processing and selling products on the domestic market and some, like whole milk powder, have transferred successfully to overseas markets.
But the evolution to more of a niche market by promoting grass-fed will offer only limited gains over commodity returns because NZ is not the only country pursuing that path, with plenty of bigger, well-funded competitors using the same story.
Even claiming organic status is fraught because, again, there are plenty of other, well-funded, bigger-scale producers already doing it.
“To get to that higher level of returns we have to approach it from the market end, understanding better what our food can provide in terms of nutritional solutions.”
He found Zespri is one of the few food companies that has invested and gained a nutritional claim, based around its Green kiwifruit’s ability to improve gut health. At the time it was the only fruit in the world to have a substantiated health claim associated with it.
“Interestingly, though, because Zespri has been so successful with its business model that claim has almost become a secondary aspect and not one that is always at the forefront of its marketing,” Elliot said.
However, laying claim to products’ nutritional or functional benefits can be fraught.
“But that should not be a reason to not include health and nutrition benefits within your product strategy when going into a market.
“With A2 Milk, even though the science is still being developed to validate the health benefits many believe, it has already benefited from having it as a key part of its strategy. Every sector has the potential to go prospecting among its products for potential components that deliver but not all do.”
Research has established NZ avocados have 20% more folate and double the vitamin B6 of those grown elsewhere.
Such nutritional benefits can help producers justify increased margins when competing against well-entrenched, bigger producers.
The Omega Lamb Project is also an example of a new farming system, intended to deliver a better-tasting lamb, found the unique genetic profile also produces a healthier product with high level of Omega 3 and polyunsaturated fatty acids.
“And what we can do well, having found such benefits, is apply selective breeding to accentuate genetic potential, whether it is sheep or kiwifruit, quite quickly. The trick lies in identifying what that nutritional benefit is that we can leverage off to start from.”
He identifies the emerging hemp sector as an opportunity to start from scratch when marketing its products, with hemp oil only one component of the crop’s overall output that has nutritional value.
“Blackcurrants are another – they do not taste that great but increasingly science is validating their health value.”
Elliot maintains it is the responsibility of sector groups to take a more strategic position on products’ nutritional value and functional claims, with a 10-15 year horizon better than the usual 2-3 years often used.
On one level the Chinese market’s growth has continued to lock NZ producers into a more traditional make-it-and-sell-it approach, particularly around commodity products. However the rapid rise in consumer sophistication and a traditional understanding of brain-gut health linked to nutrition lends Elliot’s case more strength.
“But China is a really tough market. However, there is still an even larger, greater Asian market that we should consider as well.”
Manuka honey is one product poised on the edge of locking in nutritional claims but Elliot fears it risks losing that opportunity amid issues around standards ambiguities and other countries’ efforts to seize some of the market.
“I do take some comfort that things are changing.
“The Nuffield project took 18 months and in that time we have already seen the Primary Industry Council formed and it represents a good opportunity for industries to collaborate more on this and other issues around our Aotearoa value proposition.”
