Young Farmers scholar recommends farmers protect against Foodtech start-ups

Posted by Nadine Porter on 22 September 2017 | Comments

 

A NZ Young Farmers ANZ Future Leader Scholarship recipient believes FoodTech innovations are unlikely to create significant disruption to Kiwi farmers in the medium term, but recommends protecting against them in the longer term. 

 

Former Hi Tech Enviro Solutions Consultant Daniel Risi was awarded the scholarship to study disruption on the dairy farm and quantify the New Zealand Agricultural Industry's resilience to disruption. 

 

The report saw Daniel travel to America where he investigated the expanding FoodTech sector because of his own concern for his family’s future in dairy farming. 

 

"I always believed agriculture was here to stay – that the way we farm may change slightly, but the fundamentals would remain the same, - growing meat, wool and milk using animals on pasture." 

 

But after reading the book 'The Rational Optimist' by Matt Ridley, Daniel began to question if New Zealand agriculture could be disrupted to a point where tomorrow's farming production methods are completely different to what they are today. If so, he asked himself, what would the impact of that be? 

 

"The digital camera turned Kodak from one of America’s finest blue-chip companies to a shell of its former self. Could the same happen to a company like Fonterra?" 

 

In his report, Daniel recommends Fast Moving Consumer Brands (FMCG) will need to target high value demographics that FoodTech disruptors are unable to cater for by using differentiation if they want to survive. 

 

"A suggestion for protecting against disruption involves securing a greater percentage of the high value, conscious consumer market that is currently captured. The products sold to these consumers must have strong point of differences compare to their FoodTech offerings." 

 

Those differences include using GMO and GE free to New Zealand's advantage, as most alternative proteins use the technology to create their products.

 

"Even though these (GM and GE) innovations may benefit production in New Zealand operations, they will offer greater benefits to FoodTech disruptors. More value will be gained by not using GE and GMO's in New Zealand products and using "GE free" as a distinction to increase value." 

 

Having a verifiable environmental footprint will also be an important point of difference and can be further enhanced by using Blockchain technology (a digital ledger in which transactions are recorded chronologically and publicly and are unable to be corrupted). 

 

"Brands will need to prove the truly unique story that they wish to tell consumers. Reliance on existing high, trust FMCG brands is not enough as consumers become less loyal to established food brands and marketing alone." 

 

Daniel also recommended methods to mitigate a farmer's wealth from disruptive technologies. These included increasing an equity position, using free cashflow to create an investment fund, purchase income protection insurance and increase the equity position on farm.

 

Selling the farm operation and diversifying risk by investing in variety of investments and purchasing AgTech tools are other options that to enable a flexible approach to future risks. 

 

NZ Young Farmers CEO Terry Copeland said Daniel's report was an important analysis in this disruptive age. 

 

"Daniel's assessment of the threat of FoodTech to the New Zealand traditional farming system is timely and vital for the future of our farmers. That this kind of work is being undertaken by one of our members shows the depth of talent we have in our young people to be the creative thinkers of tomorrow and Daniel is an excellent example of that." 

 

For the full report go to youngfarmers.co.nz

 

For more information please phone Nadine Porter, National Communications Manager, NZ Young Farmers on 021 2140703 or nadine.porter@youngfarmers.co.nz