AGRICULTURE INNOVATION

Posted in Blog on May 26, 2020

I often wonder about the term ‘innovation’ and have come to realise it is a bit like a jigsaw puzzle.  The pieces are all there you just have to have a vision or dream and think differently about how to put them together.  And how many times do you see a new product or service that is successful and say to yourself – wish I had thought of that it is so obvious.
 
One of the sectors that Grow Rotorua has been asked to look at through its Statement of Intent is the agricultural sector.  Now in the Rotorua district that predominantly means sheep and beef farms and dairy farms.  That also means in the Lake Rotorua catchment that new rules and targets for Nitrogen reduction will gradually come into force.  That also means the $40m incentives program which was recently announced.
 
So Grow Rotorua has been doing work looking at alternative land use options in both the agricultural (milking sheep, dairy goats, cow barns), horticultural (greenhouses, manuka, blueberries, table grapes) and aquaculture (freshwater heated pond fish) areas.  These are at various stages of investigation and some look quite promising particularly when we incorporate visits to similar operations around the country and test the financial assumptions.
 
At Grow Rotorua we always try to step back and look at investment opportunities from the wider district /  regional perspective.  And apply those principles of innovative thinking – the pieces are there just imagine them coming together in different ways.  This helps create a bigger vision of what is possible and in particular gives scale to both the size of new business and also scale to the levels of involvement.  By that I mean the number of landowners involved including the many Maori trusts, new job opportunities, the investment and sources required, the infrastructure needs and also the positioning along the value chain.
 
Now that last comment sounds like something out of an MBA degree but basically it means a number of very important questions: Are we just going to lease land, are we going to produce something, are we going to process it, are we going to sell and market it and finally are we going to own the brand?  The answers are generally limited by our own experiences, knowledge and age/stage in life.  The real danger is that we become satisficers and leave a lot of value on the table for someone else to pick up.  Basically we end up being commodity price takers – for our goods, our labour and our assets.
 
So what I am proposing is this.  Let’s explore how we can work together as best we can to tease out and make happen the economic growth opportunities for ourselves, our families, our communities and our region.  Let’s also ask the questions about how best we can extract optimum value out of any new venture by considering the options for involvement and investment right along the value chain. 
 
Any one of us doesn’t need to own or control every step (there can be different groups say owning land, farming, processing, distributing, etc.) but there are collective scale businesses that combined controls a significant portion of the value that is available.  That also includes the investment capital that will be required both as bank debt and private equity or strategic partnerships.
 
Examples of this could be in branded goats or sheep’s milk infant formula and cheeses.  It could also be in branded manuka oils, honeys and medicinals.  It could also be in branded blueberry and other health juice drinks.  
 
Yes there are risks involved the more complex a business becomes but just keep a watch on the papers to see how the ‘commodity’ businesses are performing compared with those that control their own supply/value chains and brands.
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