Meanwhile, the $7 billion meat sector weighs its strategic responses to potential annihilation; the word ‘disruption’ is in the air. For while the recent face-off between the Impossible Burger and ‘delicious NZ red meat’ is one audacious signal from the future, it’s indicative of a whole dynamic web of change.
Future of food is millennial
Our global population, along with global warming, is rising at an unprecedented rate, as the world is ‘woke’ to the disturbing realities of climate change and the unsustainable resourcing of modern lifestyles and demands. According to the UN, 30% of Earth’s landmass already goes to meat, dairy and egg production, while it’s estimated that in order to feed the world (set to tip 9 billion by 2050), food production needs to increase 70% over the next 35 years.
This is the context for a confluence of disruptive factors, as outlined by Beef + Lamb NZ’s recent report, Future of Meat:
• Global and governmental institutions tabling the negative impacts of agriculture;
• Growing support for a plant-based diet from the medical industry;
• The massive flow of private capital into alternate protein development;
• Technology, having cracked consumer-ready plant-based mince with the likes of the Impossible Burger, on the verge of roll-out capacity;
• The influence of elite athletes and celebrities going vegan, creating new cultural narratives around meat;
• A new generation of conscious consumers with different eating patterns.
With significant spending power and persuasive mass, tech-connected, increasingly urban millennials (age 18-34) are the demographic changing the traditional consumer chain to a ‘consumer-centric value web’ (KPMG Agribusiness Agenda 2018). Almost 60% of the world’s millennials live in Asia, with its rapidly growing middle classes; they make up a third of China’s total population, while the US has more millennials than either baby boomers or gen x.
Compared with previous generations, millennials have a more holistic view of health, are better educated on food and sourcing; more likely to consider factors like environmental sustainability and animal welfare in their purchasing decisions; and are trending towards vegetarian, vegan and flexitarian choices.
Put the pieces together, and you get apocalyptic headlines like ‘The Vegans are Coming!’ and ‘The End of Meat’ (The Spinoff).
Only, say our local experts, it won’t be. But what is absolutely certain: change is afoot and ‘business as usual’ won’t be an option (see sidebar for their pick of disruptors). So, if the future of food is changing, what does the future of farming in Hawke’s Bay look like?
Return to value
Mat Aries is a millennial with a stake in meat, so to speak. Two years ago, he and his younger brother bought into the Organic Farm Butchery – the original founders still own a quarter-share but Mat runs the business.
From purpose-fitted premises in the middle of Hastings they ‘batch-produce’ over a tonne of meat a week for a niche domestic market, with near zero waste. “It’s quite traditional, taking the whole carcass in through the back door and cutting it up from scratch,” he says. And unlike in a supermarket, out the front the mince, steak, slow-cook cuts, bones in the freezer, dripping and lard, all come from the same animal.
“We have full traceability – it’s not that just technically I can tell you where it’s from, we’ve got good relationships with the 6-8 Hawke’s Bay farmers who supply us, these are families we know, and usually we have spoken to them on the phone last week.”
He says currently, most conventional farmers can make a really decent margin on prime cuts, the Scotch fillet and sirloin, and a few other cuts in between, and then rely on being able to sell to burger bars in America and everywhere else a really cut-price, cheap grinding beef. “Because the thing with beef,” says Mat, “is there’s so much mince on it!”
Synthetic meats, which are primed for that burger market, “will totally wreck the model – it will take away the ability to sell your trim for next to nothing and still make money. People will have to go back to a model more like ours of selling everything for a value.”
Mat has friends around the world who are choosing not to eat meat – for environmental reasons or because they can’t source or can’t afford good meat. The thought of adding insects to our diets seems entirely plausible to him:
“We probably need to be using every and any bit of energy that’s floating around, which means a really diverse diet. We have to get away from eating meat every meal of the week, it’s just not sustainable – it’s probably got to be a cricket burger one night of the week at least, and then vegetarian 2-3 nights and then something else like nuts.”
He’s not concerned for business, “If we’re good red meat, then we’ll be around for that one-day a week meal, which is plenty for us.”
Change brings opportunities
John Loughlin, chair of the Meat Industry Association, believes over a farmer’s lifetime, and probably the lifetime of their kids, “the world will continue to demand meat options as a premium choice … with a greater opportunity emerging for pasture-fed, free-range, non-GMO natural products, coming from farming systems that have integrity.”
He continues, “At the same time, opportunities will emerge in the non-meat sector in ways farmers haven’t even thought about,” with premium niches demanding vegetable proteins and non-GMO vegetable products that farmers will be able to grow.
“Hawke’s Bay farmers are blessed with having Heinz Wattie’s, McCains on their patch, able to process and produce for some of those channels, as well as the niche producers,” he says.
John believes there will always be consumers who genuinely enjoy meat.
“There have been threats to our industry for years. The cheapness of industrial-farmed chicken and pork has been an enormous threat and we’re still here after all that. It’s carved out a big part of the market. The trick for us is to up our game, to offer absolute premium quality, absolutely reliably and with a great story and a great set of systems and processes to underpin confidence and trust.”
Verifiable attributes
Hawke’s Bay company, First Light, is the pin-up poster for how the traditional farming sector should be looking to position itself. With a compelling story as ‘pioneers’ of finely tuned, specialist farm practices, First Light farmers produce tender, marbled “grass-fed” Waygu beef for premium markets. In July this year, the company won the gold medal in the World Steak Challenge in London – “I mean, what an incredible story for Hawke’s Bay!” exclaims Mike Petersen, CHB farmer and the government’s special agricultural trade envoy.
In a unique role that regularly takes him overseas, Mike is better placed than most to consider future horizons.
“The pace of change is only going to increase, there’s disruption like we’ve never seen before. So companies and farmers need to be agile and nimble; they’ll have to be able to respond really, really quickly for the changes that are going to come. There’s going to be multitudes of them coming, every time you look around, there’s something new and something different.”
Mike believes nobody does agriculture better than NZ, “but we have to tell our story better. That’s one of the things we haven’t done well enough, because we’ve always assumed that people, when they bought food from NZ, knew that they had the brand of the best. It’s not in our nature to go out and skite about stuff, we quietly get on with the job.”
But in the current race to the top, with every food-producing nation trying to elbow their way into the premium space, it’s not enough to produce a great product, which had a good reputation in the past. Global agribusiness consultants, KPMG talk of ‘verifiable attributes’, and Mike agrees, saying there will have to be some auditing and planning involved.
“If we’re truly going to capitalise on the grass-fed movement around the world, for example, at some stage we’re probably going to have to verify it. Now NZ farmers would say, don’t be crazy, everything’s grass-fed, but you have to remember most of the livestock in the world isn’t – 90% of them are all fed on concentrated feed. So grass-fed is unique in the world, even though it’s commonplace here.”
Mike says he’s been calling for some time for all farmers to have a farm environmental plan as part of their contractual arrangements with their export or processing partners; “it should be driven commercially”.
He also convenes the Farming Leaders Group, which pledged to make rivers swimmable last year and in July swung behind the government’s zero-net emissions goal for 2050, with the aim to position NZ “as a producer of sustainable, low-carbon and trusted food.”
“I don’t underestimate how challenging it’s going to be for a number of farmers to get their head around this,” says Mike, “but we’ll be working hard to make sure the commitment is turned into reality.”
He believes that on a regional level, a ‘single farm plan’ is the way of the future, in which “farmers are able to verify what they’re doing when it comes to a whole host of areas: farm environment, animal welfare standards, NAIT trace & tracking, and then climate change commitments, biodiversity counts. There will be layer upon layer in a single plan, which will be a very big part in being able to verify what our product is and how it’s been produced.”
He’s encouraging farmers not to dismiss the proposal out of hand, but to look at it as an opportunity rather than a set of compliance they need to complete. “Because this is the sort of differentiation that can take the sector ahead, when we look at what Ireland’s doing on Origin Green.”
Different strategies, diverse supply chains
Paul Paynter, apple grower and iconoclast, is sceptical that things will change on an industry level: “Industry loves to acknowledge things and then ignore them. It’s as bit like Fonterra acknowledged their responsibility to the environment and then they do the bare minimum they can possibly get away with. Same thing with animal welfare.” A vegan (with fish his occasional ‘Paris exemption’), Paul stepped away from animal products in protest five years ago.
In terms of lab-produced, meat-like proteins, which will definitely have positive advantages, “It’s a disruptor, but not really. It’s going to happen, but so slowly you’ll see it coming. Most technology is like that. They’re not going to build massive factories and say, we’re going to put the meat industry out of business over night.” It has to become cost-effective and then people have to make the switch, says Paul. It will probably take a generation to reach tipping-point.
He’s sceptical too of how deep reaching value-based consumer decisions will be:
“People become very discerning when they’re affluent enough to be so. Take away their money and they’ll kill the neighbour’s dog for a decent feed.” But he completely agrees that NZ has to get away from commodity foods, “because we can’t win a commodity game”, transitioning these to branded FMCG goods (fast-moving consumer goods) with a compelling story to tell.
Paul believes there’s room for different strategies, preferable to top-down sector management. “That’s what we’ve seen in the apple industry, it used to be a monopoly where we all had the same thing; now you’ve got diversity, you’ve got little Rockit apples in tubes, you’ve got Mr Apple with a new Dazzle variety, you’ve got Johnny Bostock off with his organics. You’ve got lots of people pursuing different strategies, with different market segments. It’s really healthy and much more robust than having an industry strategy … You get more innovation and exploitation of market opportunities when you’re a bit more decentralised and fast on your feet. And I think that’s the future of NZ.”
“Market access is becoming more complicated and a little bit fragile,” says Paul, so “risk management through diverse supply chains is a reality for our country.” Paul counsels growers “not to lose sight of your domestic market close to home. We have quite a strong domestic market, and it’s a wonderful learning ground if you’re an innovative company.”
Restorative farming
While Mike Petersen is “absolutely optimistic about the future of food out of Hawke’s Bay,” commentators like Rod Oram point out that in order to truly up our game (to be the best of the best), we need to aim well above and beyond ‘no impact’ agriculture, developing farming systems that actively restore and rebuild the natural environment.
Regenerative farming practices, that revitalise land, water, communities, means less livestock and more diverse farm activities. It means planning for an overall decline in farming activities by focusing on high value, less on volume. It means taking note of ‘fringe’ farmers, like the Greg Harts and Tait-Jamiesons of Hawke’s Bay, who are doubling their soil carbon and integrating more radical holistic systems.
Our future may lie in the regenerative potential of farming for ‘healing the planet’, Oram suggests, if we can genuinely back and promote this story.
Ed note: Hawke’s Bay is home to some of the most innovative and business-savvy farmers and growers in the world. From new products to soil restoration and environmental stewardship to premium marketing. To capture this talent and propagate its lessons, the Regional Council is launching a Future Farming Initiative that will take shape in the coming months. More on this in a future BayBuzz.
7 things farmers should have on their radar
Biosecurity incursion
A colossal concern, it’s not if but when. So far border customs have intercepted the marmorated stink bug 2,000 times. An outbreak of foot & mouth would be economically crippling, and as mycoplasma bovis showed, compliance with traceability requirements needs urgent addressing. Anything that attacks bees is calamitous, as most of our pastoral and horticultural crops rely on bees for pollination. And let’s not forget climate change, with warming temperatures raising the risk of diseases once suppressed by cooler climes.
Competing protein
When meat-replacement products, otherwise known as ‘synthetic’, ‘lab’ or ‘cultured’ meat, become commercially viable they will be cheaper, have less environmental inputs and impacts and none of the associated animal welfare issues, disrupting traditional meat demand. Novel proteins, like insects, are also on the menu (you can buy cricket flour in local shops already). Nutritionally superior to red meat, with a lower climate footprint – they will be one way to feed a growing global population.
Environmental footprint
Increasing demand from society for responsible water and land-use practices, as well as water access and allocation issues and eventual charges, will behove farm systems to be low-water and best-practice performers. Pressure will mount (cost-, market- and government-driven) to reduce inputs, such as agrochemicals and fossil fuels (one of the biggest on-farm costs as well as environmental impactors). Being a ‘carbon-neutral’ producer will become an expectation. And with growing awareness of the ‘sixth extinction’, biodiversity is the next big thing – UK supermarket chain Waitrose, for example, is now requiring all NZ suppliers to provide on-farm bird counts.
Consumer trends
In China, 70% of all purchases are made via mobile phone – e-retailing and social media are increasingly the interface. Consumers are seeking integrity and safety in their food – transparency, but also reputation is huge. Producers will need to be savvy, in not just meeting those needs, but telling their story.
Geo-political instability
Trade wars, protectionist policies, food security, regional conflicts, energy crises … these all have the potential to throw a spanner in the works of our exports, and there’s plenty in 2018 to signal disquiet on this front: the rise in nationalist governments, Trump’s tit-for-tat trade sanctions with China, the EU.
Natural events
An extreme weather event (with climate change, it’s definitely in the cards) or a big earthquake will be hugely disruptive – just witness Kaikoura. A 7+ earthquake could put the Port out of action and close main arterial roads; a major cyclone could devastate crops, and ditto roads – apparently we’re overdue for both. If global emissions are not brought in check, within 20 years we could have thrice the hot days, thrice the droughts, high-extreme fire risk 4-6 months of the year, and more soil loss/sedimentation driven by intensified rainfalls.
Treaty settlements
With half a billion dollars set to enter the region over the next few years through various Treaty Settlement claims in Hawke’s Bay, Māori investments and opportunities, along with substantial statutory influence, will be a game changer, particularly if there’s a will to engage in land-based activities.