is this the beginning of the end or the end of the
TRANSCRIPT
IS THIS THE BEGINNING OF THE END OR THE END OF THE BEGINNING?Finding the future of the New Zealand food and beverage industry
DISCUSSION DOCUMENT; v1.01; Late 2019
DISCUSSION DOCUMENT
IS THIS THE BEGINNING OF THE END OR THE END OF THE BEGINNING?Finding the future of the New Zealand food and beverage industry
Late 2019
V1.01
DISCLAIMERCOPYRIGHT
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Other than where we use or cite the work of others, this work is licensed under the Creative Commons Attribution 3.0 New Zealand licence. In essence, you are free to copy, distribute and adapt the work, as long as you attribute the work and abide by the other licence terms.
To view a copy of this licence, visit http://creativecommons.org/licenses/by/3.0/nz/.
LIMITATIONS
This work is based on secondary market research, analysis of information available (e.g. Statistics NZ), and a range of interviews with industry participants and industry experts. Coriolis have not independently verified this information and make no representation or warranty, express or implied, that such information is accurate or complete. In many cases regional data is incomplete or not available and therefore research includes significant modelling and estimates.
If at any point you are unclear where a number came from or how a conclusion was derived, please contact the authors directly. We are always happy to discuss our work with interested parties.
3
4
This discussion document exists to not to give you the answer, but to spark thought and discussion on the
future of New Zealand’s largest industry.The views expressed are those of the Coriolis team
involved and do not represent Government policy, or the views of the Ministry of Primary Industries, the Ministry of Business, Innovation and Employment or
New Zealand Trade and Enterprise.
The wider food chain directly employs one in five working people in New Zealand
Doing something other than working
13%
F&B Chain10%
Employed in other sectors
42%
Under 1520%
Over 6515% Primary
25%
F&B Mnfg.19%F&B
Whls.7%
F&B Retailing
18%
5
NZ POPULATION BY EMPLOYMENTPeople; m; 2017
FOOD CHAIN EMPLOYMENT BY SECTORPeople; %; 2017
Whls – wholesaling; Mnfg – manufacturing; Source: Statistics NZ; Coriolis analysis and classifications
… or one in five of working population
Total = 4.8m Total = 493,000
Foodservice31%
NOTE: Tight definition; excludes all inputs and support services; if included likely closer to 1/3
In regions outside of Wellington & Auckland, this wider food chain directly employs 20-40% of the working population
0%
5%
10%
15%
20%
25%
30%
35%
40%
Wellington
Auckland
Bay of Plenty
Canterbury
Otago
Mana-W
anga
Northland
Waikato
Nelson/Tasm
an
West C
oast
Hawke's Bay
Gisborne
Taranaki
Marlborough
Southland
6
PERCENT OF REGIONAL EMPLOYMENT IN THE FOOD CHAIN% of employees; 2018
Source: Statistics NZ; Coriolis analysis and classifications
Food Retail & Foodservice
Primary
Processing
Wholesaling
NOTE: Tight definition; excludes all inputs and support services; if included likely closer to 1/3
Food & beverage is the major New Zealand export industry, accounting for almost half of total goods and services exports
7
TOTAL NEW ZEALAND EXPORT OF GOODS AND SERVICES BY CATEGORYNZ$; b; 2017
Source: SNZ; Coriolis analysis and classifications
TravelWood & WoolFood & Beverage Other Goods ServicesTop Secret Oil & Minerals
$5.1$9.0$33.6
Metals$1.9
Oil$0.9Food & Beverage
$33.6
Other services$0.8
$16.6
Minerals$0.1
$1.0$1.7
Wood & products$6.0
$6.5Animal biproducts
$0.5
Chemicals$1.0
Travel $13.8
Transportation $2.7
Communications services $0.1
Plastics/Rubbers$0.5
Other$0.4
Machinery / Electrical$2.1
Medical Devices, other$0.7
Vehicles$0.3
Confidential/other
$1.7
Skins, Leather, & Furs$0.4
Royalties and licence fees $0.4
Business services$1.9
Media$0.3
Stone/Glass$0.7
Financial services $0.7
Apparel$0.1
Textiles$0.2
Wool$0.5
Computer and information services $0.7
The food & beverage industry achieves a large trade surplus, while most other sectors are underperforming or in deficit
8
NET TRADE POSITION IN TOTAL NEW ZEALAND TRADE (EXPORTS-IMPORTS) NZ$; b; 2017
Source: SNZ; Coriolis analysis and classifications
-$15
-$10
-$5
$0
$5
$10
$15
$20
$25
$30
Food & Beverage
Travel
Wood &
Products
Confidential/Other
Wool
Animal Biproducts
Media
Financial Services
Skins, Leather, & Furs
Comm
unications Services
Minerals
Computer and Info Services
Stone/Glass
Textiles
Royalties and Licence Fees
Metals
Other Services
Medical Devices, O
ther
Business Services
Transportation
Apparel
Other
Plastics/Rubbers
Chemicals
Oil
Vehicles
Machinery / Electrical
TRADE DEFICIT
TRADE SURPLUS
NET DEFICIT-$347m
Food & beverage is growing exports strongly, where most other sectors are underperforming or going backwards
9
10 YEAR NET CHANGE IN TOTAL NEW ZEALAND EXPORTS NZ$; b; 2007-2017
Source: SNZ; Coriolis analysis and classifications
-$3
-$1
$1
$3
$5
$7
$9
$11
$13
$15
Food & Beverage
Travel
Wood &
Products
Confidential/Other
Business Services
Financial Services
Computer and Info Services
Transportation
Stone/Glass
Medical Devices, O
ther
Royalties and Licence Fees
Media
Animal Biproducts
Chemicals
Other Services
Plastics/Rubbers
Minerals
Other
Textiles
Apparel
Skins, Leather, & Furs
Vehicles
Comm
services
Wool
Machinery / Electrical
Metals
Oil
EXPORTSSHRINKING
EXPORTSGROWING
New Zealand has the highest ‘revealed comparative advantage’ in food & beverage of any major exporter
10
REVEALED COMPARATIVE ADVANTAGE IN FOOD & BEVERAGERCI index; top 54 exporting countries; 2016
Source: UN Comtrade; SNZ; Wikipedia; Coriolis analysis and classifications
0
1
2
3
4
5
6
7
8
New
Zealand
Arg
entina
Ukraine
Brazil
Chile
Peru
Denm
ark
Indonesia
Colom
bia
Netherla
nds
Spain
Australia
Thailand
Vietna
m
France
Poland
India
South Africa
Portugal
Turkey
Ireland
Ma
laysia
Belgium
Norw
ay
USA
Italy
Roma
nia
Hunga
ry
Philippines
Austria
Canad
a
Mexico
Swed
en
United
Kingdom
Germ
any
Czech Rep
ublic
Russia
Kaza
khstan
Slovakia
Israel
China
Switzerla
nd
Finland
Singap
ore
UA
E
Saudi Arab
ia
Taiwan
Hong
Kong SAR
South Korea
Japan
Kuwa
it
Algeria
Qa
tar
Iraq
Yet, there is a strong consensus in New Zealand that agriculture cannot continue to grow
11
“We can only feed 40 million people”
“Agriculture is a sunset industry”
“We need to produce less not more”
“We are at the limits of the environment”
“We can’t possibly produce any more”
“Farmers are already producing too much”
This report strongly disagrees with this consensus
THE NEW ZEALAND CONSENSUSINSIDE THE “PASTORAL” BUBBLE THINKING
THE HERETICAL PARADIGMOUTSIDE THE BUBBLE THINKING
New Zealand is a major food producer that leads the world;New Zealand agriculture is highly productive
New Zealand is a minor food producer that uses a large amount of land to produce very little relative output
Current New Zealand land use is ideal and optimal as it was determined by market forces
Land use is a high risk discovery process with no one right answer. Current land use is the result of historical activity
The plants and animals produced in New Zealand are highly suited to the New Zealand environment (climatic and growing
conditions) and thus will not change
New Zealand is a large country without a single monolithic climate. Regions vary dramatically in their natural endowment.
The animals and plants currently produced are a result of the country or origin of past waves of immigrants
The government does not have a role to play in new industry development; just enforce the rules
The government has played a massive role in the development of all major agricultural products in New Zealand;* the government
will need to play a role in the development of new products
New Zealand land use will not change significantly going forward New Zealand land use will continue to change
New Zealand is globally competitive in the products it currently produces in large quantities; it is not competitive in the products it does not produce or produces in small quantities; therefore New
Zealand cannot produce new products as it will not be competitive
Agricultural competitiveness is a dynamic system; new producers can and do enter markets; new entrants start in smaller niche segments and “climb down the cost curve” as volumes grow
No one wants to work in agriculture and there is currently a shortages of low cost labour; therefore agriculture cannot grow
Other rich, developed countries similar to New Zealand employ significantly larger numbers of people in agriculture; technological change is occurring and products vary in their level of automation
12
Broadly speaking, there are three key drivers available to increase revenue and employment in the agrifood chain
13
Improving yields
Changing land use
Increasing irrigation
Using high productivity production systems (e.g.
aquaculture)
Re-evaluate viability of non-agricultural lands
Limit flow of lands out of agriculture (e.g. urban growth)
Improving products
Improve positioning
Transforming product
LAND IN PRODUCTION
(Hectares)
OUTPUT PER HECTARE
(T/ha)
VALUE ADDED PER TONNE
($/t)X X =
REVENUE & JOBS
1 2 3
1. MORE FARM LANDNew Zealand is unlikely to bring new land into agriculture
14
Re-evaluate viability of non-agricultural lands
Limit flow of lands out of agriculture (e.g. urban growth)
LAND IN PRODUCTION
(Hectares)
1
Defined as 200 nautical miles from coastline
Food production uses almost half of New Zealand’s land and much of its oceans
15
NEW ZEALAND LAND USEkm2; 000; 2010
NZ ECONOMIC ZONE*Area; depth; 2018
*EEZ; Note: a nautical mile is 1,852 metres; Source: Statistics NZ; Department of Conservation; Sealord; Coriolis analysis
Farming126
47%
Forestry (private)16 6%
National parks & reserves71 26%
Other DOC14 5%
Other41 16%
TOTAL = 268,000 km2
Other government landsNon-Ag Tribal Lands
Lifestyle blocksCities and towns
Idle landsOther
New Zealand already farms a reasonable percent of its total land area, similar to France or Italy, but much less than Ireland
0% 20% 40% 60% 80% 100%
NebraskaNorth DakotaSouth Dakota
KansasIowa
QueenslandTexas
WyomingNevada
New MexicoIllinois
IrelandOklahoma
MontanaUnited Kingdom
NSWUtah
ColoradoIndiana
DenmarkArizonaMissouri
RomaniaNetherlands
HungaryMinnesota
LuxembourgOhio
VictoriaSouth Aust ralia
GermanyPoland
16
SHARE OF TOTAL LAND AREA USED IN AGRICULTURE INCLUDING PASTURE/RANGE% of hectares; 2017 or as available
Source: Eurostat; Statistics Canada; USDA Census of Agriculture; ABS; Statistics NZ; Ministry for the Environment (NZ); CIA World Factbook; Coriolis analysis
0% 20% 40% 60% 80% 100%
LithuaniaOregon
SpainIdaho
CzechiaBelgium
KentuckyNew Zealand
FranceItaly
BulgariaPortugalSlovakia
Northern TerritoryWisconsinArkansas
DelawareCalifornia
MaltaGreece
WashingtonTennessee
AustriaSaskatchewan
LatviaPrince Edward Island
Western AustraliaMaryland
CroatiaHawaii
MichiganMississippi
0% 20% 40% 60% 80% 100%
LouisianaSlovenia
FloridaEstonia
VirginiaNew YorkTasmania
PennsylvaniaAlberta
North CarolinaAlabamaGeorgia
South CarolinaWest Virginia
VermontCyprus
New JerseyManitoba
SwedenFinland
Rhode IslandConnecticut
MassachusettsOntario
New HampshireMaine
Nova ScotiaNew Brunswick
QuebecBrit ish Columbia
AlaskaNewfoundland
The amount of land in agriculture in New Zealand has been trending down since the 80’s
-
5,000,000
10,000,000
15,000,000
20,000,000
189
1
189
4
189
7
190
0
190
3
190
6
190
9
191
2
191
5
191
8
192
1
192
4
192
7
193
0
193
3
193
6
193
9
194
2
194
5
194
8
195
1
195
4
195
7
196
0
196
3
196
6
196
9
197
2
197
5
197
8
198
1
198
4
198
7
199
0
199
3
199
6
199
9
200
2
200
5
200
8
201
1
201
4
201
7
17
TOTAL NEW ZEALAND AREA IN FARMING AND PRIVATE FORESTRYHectares; 1891-2018
Source: various editions of “A Statistical Account of the Seven Colonies of Australasia”; New Zealand Department of Statistics; Statistics New Zealand; Coriolis analysis
In 2018 New Zealand is now back where it was in 1898
1994-2018Discussed next page
In the last 25 years alone, a large amount of land (-17%) has left farming
1994 Lost 2018
Lost 94-18 Arablefodder
Arablefood
VegetablesFruit & Nuts WineGrapes
18
TOTAL AREA ON FARMSHectares; 1994-2018
AREA LOST RELATIVE TO SOME USESHectares; lost 94-18 or 2018
Source: Statistics New Zealand; Coriolis analysis
16,606,969
-2,882,465
13,724,504
-2,882,465
33,98134,50042,800132,400
342,900
Since 1994 New Zealand has lost -2.88m hectares of land from farming, or five times as much area as is currently in all
plant based foods
Current Area
-17%
2. HIGHER PRODUCTIVITYNew Zealand is increasing output of existing land through transitioning to higher productivity animal and plant systems
19
LAND IN PRODUCTION
(Hectares)
OUTPUT PER HECTARE
(T/ha)X
ANIMALBASED
PRODUCTION
PLANTBASED
PRODUCTION
1 2
Can we increase productivity (more output from inputs)?; products vary dramatically in terms of value created per hectare
$649 $882 $919 $933 $1,650 $2,401 $2,443 $2,485 $2,949 $2,998 $4,292 $7,900 $10,373 $11,950 $13,765 $17,211 $19,522 $20,475 $20,745 $26,196 $28,861 $34,136
$46,786 $79,400
$26,400 $80,000
$840,000
Cattle/Sheep meatRapeseed
DeerLinseed
Maize, greenOats
BarleyPeas, dry
WheatPeas, green
MaizeDairy
Pumpkins, similarCurrants
Broccoli, similarAvocados
GrapesSweet potatoes
PotatoesLettuce
Onions, similarCarrots, similar
ApplesKiwifruit
MusselsOystersSalmon
20
REALISED NEW ZEALAND “FARMGATE” VALUE PER HECTARE OF TOTAL SPACENZ$/hectare; 2017 or as available
Note: excludes high productivity, but primarily indoor animals (pigs, chickens, milking sheep and milking goats); Source: UN FAO; UN FISHSTAT; Plant & Food Research Fresh Facts; Statistics NZ; DairyNZ; Beef&Lamb NZ; Zespri; NZKS; Coriolis analysis
Top25 by area
sorted by
value per
hectare
Analysis uses total available area, not necessarily all of which is used at any one time
Only a small amount of New Zealand’s land is currently used at high productivity to create significant value per hectare
NEW ZEALAND AGRICULTURAL LAND USE: AREA VS AG VALUE PER HECTARENZ$; actual; hectares; 2017 or as available
Note: Other Hort here also includes nursery and floriculture unable to remove due to limitations of available data; Source: UN FAO database (populated by MPI); PFR Fresh Facts; Zespri Annual Report; NZW annual report; Ministry for the Environment; Statistics NZ; CIA World Factbook; Coriolis analysis
Non-Agricultural
Kiwifruit
Other H
ort
Sheep/Beef/Grain
Wine
Dairy
Forestry
Other livestock
$0$750$2,700
$7,900
$19,400
$34,600
$4,600
$79,400
Proportional to total land area of New Zealand; sqkm; 2017
Average farmgate value per
hectareNZ$; 2017
Ag land average
$2,200/ha
(Kiwifruit)
(Other Hort)
(Wine)
EXCLUDES AQUACULTURE
As a result, New Zealand currently produces an average of 11 on-farm jobs per 1,000 hectares of agricultural land
NEW ZEALAND AGRICULTURAL LAND AREA VS ON-FARM JOBS PER 1,000 HECTARESHeadcount/1,000 ha of farmland; actual; hectares; 2017 or as available
Note: Other Hort here also includes nursery and floriculture unable to remove due to limitations of available data; Source: UN FAO database (populated by MPI); PFR Fresh Facts; Zespri Annual Report; NZW annual report; Ministry for the Environment; Statistics NZ; CIA World Factbook; Coriolis analysis
Kiwifruit
Sheep, Beef Cattle and Grain Farming
Other hort
Other Livestock
Wine
Dairy Cattle
516
28
126
273
366
Proportional to total agricultural area of New Zealand; hectares; 2017
Average jobs
created per 1,000
hectare;Headcount;
2018
New Zealand creates an average of 11 on-farm jobs per 1,000 hectare of
agricultural land
(Kiwifruit)
(Other Hort)
(Wine)
EXCLUDES AQUACULTURE
At 11 jobs per hectare, New Zealand is performing like a desert region, rather than a temperate climate foodbowl
23
TEXAS8
NEW ZEALAND
11
ALASKA11
IRELAND22
ITALY68
NETHERLANDS106
There is a strong high level case that New Zealand can create more on-farm jobs
-
50
100
150
200
250
300
350
ConnecticutM
assachusettsRhode IslandM
altaN
ewfoundland
New
JerseyRom
aniaSloveniaBulgariaCyprusN
ew Ham
pshireN
ova ScotiaPortugalPolandN
etherlandsM
aineG
reeceBritish Colum
biaN
ew Brunsw
ickItalyCroatiaPennsylvaniaVerm
ontAustriaHungaryQ
uebecW
est VirginiaN
orth Carolina
Hawaii
FloridaW
ashingtonBelgiumSouth CarolinaM
arylandO
ntarioCzechiaG
eorgiaPrince Edw
ard IslandVirginiaFinlandN
ew York
Germ
anyM
ichiganTennesseeLithuaniaDelaw
areSpainAlabam
aCaliforniaKentuckyO
hioW
isconsinLuxembourgFranceLatviaSlovakiaDenmarkUnited KingdomIrelandSwedenLouisianaM
ississippiIndianaEstoniaArkansasM
issouriM
innesotaIow
aO
regonIllinoisAlaskaN
ew Zealand
Oklahom
aM
anitobaTexasIdahoAlbertaKansasColoradoN
ebraskaSaskatchewanUtahSouth DakotaN
orth Dakota
ArizonaN
ew M
exicoM
ontanaW
yoming
Nevada
24
ON-FARM JOBS PER 1,000 HECTARES: NZ VS. PEERSHeadcount/1,000 ha of farmland; 2017 or as available
Source: Eurostat; CIA World Fact Book; StatisticsNZ; USDA NASS; USDA Census of Agriculture; UN FAO AgStat; MPI; LCDB database; Coriolis analysis and estimates
New Zealand
11
Germany34Ireland
22
Italy68
UK23
Netherlands106
France26
New Zealand is moving to higher productivity animal production systems
25
LAND IN PRODUCTION
(Hectares)
OUTPUT PER HECTARE
(T/ha)X
ANIMALBASED
PRODUCTION
PLANTBASED
PRODUCTION
WANDERING AROUND
SUPPLEMENTARY FEEDING
BARNSAQUA-
CULTURE
1 2
Unlike other countries, New Zealand still uses most of its agricultural land for “low density/extensive” animal systems
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Scottish Hig
hland
s
New
Zealand
Ireland
SW Scotland
West W
ales/Valleys
East W
ales
Northern Irela
nd
Devon
Eastern Scotla
nd
United
Kingdom
Slovenia
Portugal
Luxembourg
NE Scotland
Austria
Greece
Netherla
nds
Croa
tia
Belgium
Romania
Latvia
Spain
France
Estonia
Germ
any
Slovakia
Czechia
Lithuania
Bulgaria
Italy
Poland
Sweden
Hunga
ry
Denm
ark
Cyp
rus
Finland
Malta
Grassland & Fodder Crops Grains, Vegetable, Fruit & Nuts
26
SHARE OF AGRICULTURAL FARMLAND IN GRASSLAND/PASTURE: NZ VS. EU% of agricultural area; 2018 or as available
*New Zealand agriculture follows the ‘idealised’ British Isles pastoralist world view; Source: Eurostat; CIA World Fact Book; StatisticsNZ; UN FAO AgStat; MPI; LCDB database; Coriolis analysis and estimates
Places that sent many immigrants to New Zealand*
Places that did not send many immigrants to New Zealand
# OF DEERHead; m; 1999-2018
FISH CAPTURETonnes; 000; 1997-2017
Production of New Zealand’s “low density/extensive” animal systems is falling
-
10
20
30
40
50
60
70
80
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
27
# OF SHEEPHead; m; 1984-2018
Source: Statistics NZ; UN FAO FishStat; Coriolis analysis
# OF BEEF CATTLEHead; m; 1974-2018
-
1
2
3
4
5
6
7
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
-
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
-
100.0
200.0
300.0
400.0
500.0
600.0
700.0
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
New Zealand “low density/extensive” animals are low yield relative to other developed countries and regions
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Brazil
Chile
Uruguay
New
Zealand
Ireland
Tasm
ania
Germ
any
UK
Netherla
nds
Ca
nada
Denm
ark
Neva
da
Ca
lifornia
Arizona
Idaho
New
Mexico
Colorad
o
Israel
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Albania
Roma
niaBulg
ariaN
ew Zealand
Ukraine
Monteneg
roN
etherland
sSerbiaG
reeceC
roatia
Switzerla
ndC
anada
Portugal
Hunga
rySlova
kiaD
enmark
Spain
Australia
Norw
ay
ItalyC
zechiaPolandBelgiumFinlandFra
nceG
erma
nySw
eden
United
KingdomIrela
ndA
ustriaU
SA
28
MILK PER COW PER YEARLitres; 2018 or as available
MEAT PER CATTLE ANIMAL KILLEDKG; 2018 or as available
Source: StatisticsNZ; UN FAO AgStat; Coriolis analysis
Wandering Around Barn
3x
2x
New Zealand’s “low density/extensive” animal products often sell at a discount, not a premium to world prices
29
GLOBAL CHEESE TRADE: VOL VS. VALExport tonnes; US$/t; 2016
GLOBAL BEEF TRADE: VOL VS. VALExport tonnes; US$/t; 2018
Source: UN Comtrade database; Coriolis classifications and analysis
Proportional to 2018 global export volume; US$ / kg FOB
Belgium
Mexico
Australia
Germ
any
Canada
Argentina
ItalyU
ruguay
New
Zealand
SpainFrance
Poland
Other
Paraguay
Brazil India
United Kingdom
Ireland
USA
Netherlands
$4.92
$4.78$4.72 $4.43
$4.34
$4.22
$4.03
$3.04
$6.53
$4.99$5.15
$7.18
$6.27$6.24
$5.70
$5.67
$5.59$5.49
$5.44
$5.28
Proportional to 2018 global export volume; US$ / kg FOB
Australia
Austria
Belgium
Denm
ark
Italy
EgyptIreland
Spain
France
New
Zealand
Other
Belarus
Germany Poland
USA
Saudi Arabia
United Kingdom
Greece
Switzerland
Netherlands
$5.32
$4.08
$4.44
$3.84
$3.75
$3.57
$4.20
$4.01
$4.65
$5.53
$4.29
$9.31
$6.43
$4.74$4.88
$4.21
$4.66
$4.53
$7.80
$4.39
Average $5.03
Average $4.66
BRITISH COLUMBIA WALESTASMANIA OREGON
ITALY
NETHERLANDSIRELAND
Being a stable, picturesque country with functioning environmental regulation in the temperate zone (Clean & Green) is not a “moat”
30
BAVARIA WISCONSIN
SWITZERLAND DENMARK FRANCE
New Zealand is increasing supplementary feeding, through both (1) feed grain production and (2) animal feed imports
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
199
61
997
199
81
999
200
02
001
200
22
003
200
42
005
200
62
007
200
82
009
201
02
011
201
22
013
201
42
015
201
62
017
201
8
Grains Animal feeds
31
AREA IN FODDER GRAINSHectares; 2002 vs. 2016
IMPORTS OF ANIMAL FEEDS/PKE*/ETC.Tonnes; 000; 1996-2018
*PKE = Palm Kernel Expeller; Source: StatisticsNZ; UN Comtrade database; LCDB database; Coriolis classifications and analysis
46,330
291,745
2002 2016
Apparent area of all non-market cash crops
New Zealand production of barn raised animal protein is growing
-
50
100
150
200
250
196
11
965
196
91
973
197
71
981
198
51
989
199
31
997
200
12
005
200
92
013
201
7
32
POULTRY MEATTonnes; 000; 1961-2017
EGGSTonnes; 000; 1994-2017
*Mix of barn and grazing; Source: Statistics NZ; UN FAO AgStat; Coriolis analysis and estimates
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
199
5
199
7
199
9
200
1
200
3
200
5
200
7
200
9
201
1
201
3
201
5
Goat Sheep
MILKING SHEEP/GOATS*Headcount; 1995-2016
-
10
20
30
40
50
60
199
4
199
6
199
8
200
0
200
2
200
4
200
6
200
8
201
0
201
2
201
4
201
6
Poultry meat has been a long term growth platform for NZ; a simple model suggests production will exceed lamb by 2028
0
100
200
300
400
500
600
700
1985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320142015201620172018201920202021202220232024202520262027202820292030
33
NEW ZEALAND MEAT PRODUCTION VOLUME: LAMB VS POULTRYT; 000; 1985-2017; 2017-2030f
Source: UN FAO AgStat; Coriolis analysis and modelling
Sheep meat
Poultry meat
Simple extrapolation
New Zealand aquaculture production was growing until it was stalled by “non-market action”
34
AVAILABLE AREA VS. AQUACULTUREkm2; 2018
TONNES AQUACULTURET; 000; 1980-2018
Source: UN FishStat; Statistics NZ; MPI/MAF/MoF; industry sources; Coriolis analysis and estimates
-
20
40
60
80
100
120
198
01
982
198
41
986
198
81
990
199
21
994
199
61
998
200
02
002
200
42
006
200
82
010
201
22
014
201
6
Mussels
Salmon
Oysters
4,083,744
464,537
4,301 57
Sea Area Land area Inland water Aquaculture
Stalled
Aquaculture currently uses 0.001% of New Zealand’s water space
New Zealand has clear potential to produce more aquaculture
35
MATRIX: TONNES/KILOMETRE VS DOLLARS/KILOMETRE VS TOTAL INDUSTRY VALUET/km (actual); US$/km (actual); total US$m; 2018 or as available
Source: UN FAO FishStat; Eurostat; MPI; CIA World Fact Book; Coriolis analysis
60 14030 702010 50400
$300,000
$250,000
$0
$200,000
$150,000
$50,000
$350,000
$100,000
EstoniaIceland Latvia
Bulgaria
SloveniaUK Lithuania SpainTurkeyIreland
Romania Poland
NetherlandsFrance
Norway
Belgium
Cyprus
$1,000
Finland
DenmarkSweden
Croatia
PortugalGreece
NZ
GermanyItaly
Tonnes of aquaculture produced per kilometre of coastline; t/km; 2018 or as available
US$ per kilometre of
coastline;2018 or as
available
Size of bubble is proportional to total value; a bubble this size is US$1b
New Zealand is increasing production higher productivity plant production systems
36
LAND IN PRODUCTION
(Hectares)
OUTPUT PER HECTARE
(T/ha)X
ANIMALBASED
PRODUCTION
PLANTBASED
PRODUCTION
ARABLECROPS
PROTECTED CROPPING
TREE CROPS(FRUIT & NUTS)
MECHANICALLYHARVESTEDVEGETABLES
1 2
Most New Zealand farm land is currently used to to graze animals; only 2.2% of all land is used for plant based foods
Other Hort0.32%
Kiwifruit0.05%
Wine0.14% Arable crops
1.69%
Sheep/Beef36%
Dairy5%
Other livestock1%
Forestry7%
Non-Agricultural49%
37
NEW ZEALAND AGRICULTURAL LAND USEArea; % of area; 2017
Source: UN FAO database (populated by MPI); PFR Fresh Facts; Zespri Annual Report; NZW annual report; Ministry for the Environment; Statistics NZ; CIA World Factbook; Coriolis analysis
TOTAL = 264,537 sqkm
Grazing animals41% of all land97% of ag (x forestry)
Plant based foods2.2%
44% of all land
New Zealand currently performs like a desert country in share of land in plant based foods (grains, vegetables, fruit & nuts)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Monaco
Vatican City
Western Sahara
Djibouti
Iceland
Oman
Mongolia
Mauritania
Suriname
New Caledonia
Botswana
Bahamas
Kuwait
United Arab Emirates
Namibia
Libya
Qatar
Saudi Arabia
Gabon
Democratic Republic of the Cong
o
Republic of the Congo
Somalia
New Zealand
Andorra
Faroe Islands
Papua New Guinea
Guyana
Norway
Chile
Turks and Caicos Islands
Yemen
Bhutan
Singapore
Brunei
Colombia
Jordan
Central African Republic
Algeria
Solomon Islands
Egypt
Bolivia
Cayman Islands
Venezuela
Chad
Angola
Peru
Turkmenistan
Belize
Zambia
Canada
Equa
torial Guinea
Mali
Australia
Sweden
Mozambique
Eritrea
Laos
French Polynesia
Madagascar
Tajikistan
Kyrgyzstan
Liberia
Russia
Finland
Georgia
Bahrain
U.S. Virgin Islands
Iraq
Kazakhstan
Isle of Man
Brazil
Slovenia
Panama
Netherlands Antilles
South Africa
Lesotho
Ecuador
Uruguay
Aruba
Samoa
Swaziland
Kenya
Switzerland
Uzbekistan
Paragua
y
Costa Rica
Vanuatu
Iran
Afgha
nistan
Puerto Rico
Cape Verde
Niger
Japan
Saint Pierre and Miquelon
China
Cyprus
Palau
Honduras
Mexico
Fiji
Montenegro
Argentina
Guinea
Timor-Leste
Nicaragua
Estonia
Guinea-Bissau
Seychelles
Ireland
Sudan
Nepal
Ethiopia
Cameroon
Tanzania
San Marino
United States
Austria
Northern Mariana Islands
Israel
South Korea
Croatia
Armenia
Senegal
Macedonia
Palestine[3]
Burma
Latvia
Portugal
Montserrat
Bermud
a
Jamaica
Morocco
Burkina Faso
North Korea
Bosnia and Herzegovina
Guam
Saint Kitts and Nevis
Malaysia
Antigua and Barbuda
Guatemala
Cote d'Ivoire
Cambodia
Trinidad and Tobago
Lebanon
Luxembourg
American Samoa
Cook Islands
Liechtenstein
Indonesia
United Kingdom
Albania
Azerbaijan
Sierra Leone
Benin
British Virgin Islands
Dominican Republic
Niue
Belarus
Belgium
Greece
Pakistan
Saint Lucia
Slovakia
Turkey
Netherlands
Syria
Italy
Bulgaria
Dominica
Ghana
Vietnam
Tunisia
Spain
Malta
Germany
France
Grenada
Lithuania
Saint Vincent and the Grenadines
Philippines
Sri Lanka
Cuba
Tonga
Poland
Barbados
Thailand
Malawi
Mauritius
Romania
Serbia
Gambia
Czech Republic
Wallis and Futuna
Maldives
El Salvador
Nigeria
Uganda
Haiti
Togo
São Tomé and Príncipe
Gaza Strip
Hungary
Kiribati
Micronesia
Burundi
Marshall Isla
nds
India
Rwanda
Ukraine
Denmark
Moldova
Bangladesh
Tuvalu
Comoros
38
SHARE OF TOTAL COUNTRY AREA IN GRAINS, VEGETABLES, FRUIT & NUTS% of total area; N=Earth; 2015 or as available
Source: UN FAO AgStat; CIA World Factbook; Coriolis analysis
New Zealand
SaudiArabia
JapanIreland
Italy France
Yemen
UK
New Zealand currently uses an almost negligible amount of total land in arable crops
0%
10%
20%
30%
40%
50%
60%
70%
80%
NZ
Wales
N. Ireland
Ireland
Scotland
Netherlands
Norw
ay
Luxembourg
Slovenia
Belgium
Cyprus
Greece
Sweden
Italy
Latvia
Austria
England
Spain
France
Estonia
Croatia
Germ
any
Lithuania
Slovakia
Finland
Czech Republic
Romania
Denmark
Poland
Bulgaria
Hungary
39
SHARE OF TOTAL COUNTRY AREA IN ARABLE GRAINS & PULSES**% of area; ha; 2018 or as available
*New Zealand agriculture appears to be overweighed to the ‘idealised’ British Isles pastoralist world view; ** excludes fodder crops; Source: Eurostat; CIA World Fact Book; StatisticsNZ; UN FAO AgStat; MPI; LCDB database; Coriolis analysis and estimates
Major contributors to early NZ colonists*
New Zealand is moving to more crop farms with more area per farm and more overall area in arable crops
2,472
3,219
2002 2018
40
CROP FARM UNITS#; 02vs18
AVERAGE AREA/UNITm2; 02vs17/18*
*Uses 2017 area over 2018 units (no 2018 area available); ** Includes fodder; Source: Statistics NZ; UN FAO; MAF/MPI; Ministry for the Environment; Coriolis analysis
TOTAL AREA IN CROPS**m2; 02vs17
90
139
2002 2018
222,791
448,777
2002 2017
New Zealand can produce more mechanically harvestable vegetables
216,108 112,603
418,853 55,412
274,889 300,568
200,113 55,051
17,875 43,075
17,519 124,614
26,674 25,681
233,772 30,660
164,739 5,871
24,729 663 13,585
30,359 9,420 20,012
12,338 6,557 1,998
23,027 26,547 28,710
15,544 374,936
636
NetherlandsBelgiumPoland
DenmarkRomania
GermanyUnited Kingdom
SerbiaAlbaniaPortugal
SwitzerlandItaly
LatviaLithuania
FranceAustriaSpain
SloveniaHungary
LuxembourgCroatiaGreece
SlovakiaBulgariaIrelandEstonia
MontenegroNew Zealand
FinlandSwedenNorwayCanadaIceland
41
AREA IN MHV*Hectares; 2017
% OF TOTAL AREA% of country; km2; 2017
* MHV = Mechanically Harvestable Vegetables (defined as potatoes, sweet potatoes, other root crops, onions, carrots, cabbages, cauliflower and similar); Source: UN FAO; CIA World Factbook; Coriolis analysis
HOW MUCH ADDITIONAL LAND WOULD COME ONLINE IF NZ MATCHED THIS PEER?Model; New NZ ha in MHV; 2020+
5.8%3.7%
1.3%1.3%
1.2%0.8%0.8%
0.6%0.6%
0.5%0.4%0.4%0.4%0.4%0.4%0.4%0.3%0.3%0.3%0.3%0.2%0.2%0.2%0.2%0.2%0.1%0.1%0.1%0.1%0.1%0.0%0.0%0.0%
NetherlandsBelgiumPoland
DenmarkRomania
GermanyUnited Kingdom
SerbiaAlbaniaPortugal
SwitzerlandItaly
LatviaLithuania
FranceAustriaSpain
SloveniaHungary
LuxembourgCroatiaGreece
SlovakiaBulgariaIrelandEstonia
MontenegroNew Zealand
FinlandSwedenNorwayCanadaIceland
1,541,734 974,595
339,273 324,750 288,849
204,614 199,797
145,480 145,145
103,484 91,747 88,821 88,723 83,341 76,885 75,845 65,031 55,299 48,869 46,315 41,897 39,199 28,932 25,788 24,460 16,185 16,098 -
(1,810)(5,434)
(10,043)(12,871)(21,357)
NetherlandsBelgiumPoland
DenmarkRomania
GermanyUnited Kingdom
SerbiaAlbaniaPortugal
SwitzerlandItaly
LatviaLithuania
FranceAustriaSpain
SloveniaHungary
LuxembourgCroatiaGreece
SlovakiaBulgariaIrelandEstonia
MontenegroNew Zealand
FinlandSwedenNorwayCanadaIceland
Countries in the actual arctic circle
New Zealand can produce more fruit, nuts and wine grapes
4,576,628 2,604,547
678,766 426,502
614,689 328,948
1,820,962 682,921
80,382 822,258
39,948 103,886 163,324
43,092 105,288
3,210 42,869 47,249 15,677
379,190 186,321
55,134 25,819 137,173
14,042 60,918 12,718 8,336 3,332 14,190 8,716
189,443 8,000 -
SpainItaly
PortugalSerbia
GreeceHungary
FranceRomaniaAlbaniaPoland
SloveniaCroatia
BulgariaBelgiumAustria
LuxembourgNetherlandsSwitzerlandMontenegro
GermanyBelarus
LithuaniaSlovakia
New ZealandEstonia
United KingdomLatvia
DenmarkIrelandFinland
NorwayCanadaSwedenIceland
42
AREA IN F, N & WGHectares; 2018 or as available
% OF TOTAL AREA% of country SQKM; 2018 or as
Source: UN FAO AgStat; ; CIA World Factbook; Coriolis analysis
IF NZ MATCHED THIS PEERS %?New NZ ha in FNWG; 2020+
9.0%8.6%
7.4%4.8%
4.7%3.5%
2.9%2.9%2.8%
2.6%2.0%1.8%
1.5%1.4%
1.3%1.2%1.1%1.1%1.1%1.1%
0.9%0.8%
0.5%0.5%
0.3%0.3%0.2%0.2%
0.0%0.0%0.0%0.0%0.0%0.0%
SpainItaly
PortugalSerbia
GreeceHungary
FranceRomaniaAlbaniaPoland
SloveniaCroatia
BulgariaBelgiumAustria
LuxembourgNetherlandsSwitzerlandMontenegro
GermanyBelarus
LithuaniaSlovakia
New ZealandEstonia
United KingdomLatvia
DenmarkIrelandFinland
NorwayCanadaSwedenIceland
2,309,164 2,200,563
1,856,353 1,168,321 1,122,731
819,201 641,088 637,636 619,077 574,066
395,783 359,306
261,223 244,606 202,359 198,557 173,226 172,373 169,814 150,014 105,571 91,187
5,239 -
(53,199)(69,341)(83,892)(84,855)
(124,349)(125,832)(129,893)(132,041)(132,271)(137,173)
SpainItaly
PortugalSerbia
GreeceHungary
FranceRomaniaAlbaniaPoland
SloveniaCroatia
BulgariaBelgiumAustria
LuxembourgNetherlandsSwitzerlandMontenegro
GermanyBelarus
LithuaniaSlovakia
New ZealandEstonia
United KingdomLatvia
DenmarkIrelandFinland
NorwayCanadaSwedenIceland
Countries in the actual arctic circle
Peers suggest there are opportunities to increase the amount of crop produced in greenhouses
89,600
81,000
72,800
71,698 57,444
49,746
49,049
26,500 15,000
14,981
7,560
5,400
4,670
2,790
2,700
2,700
2,286
2,200
2,100
1,600
1,341
1,200
1,075
1,000
688
418
209
150
115
80
Netherla
nds
China
Italy
Spain
South Korea
Turkey
Japan
France
United
States
Greece
Poland
Hunga
ry
Germ
any
Romania
Ukraine
Portugal
Ca
nada
Arg
entina
Chile
Belgium
Australia
Colum
bia
Bulgaria
Serbia
New
Zealand
Austria
Switzerla
nd
Ireland
Denm
ark
Czech Rep
.
43
AREA IN GREENHOUSE/UNDER COVER: NEW ZEALAND VS. SELECT PEERSHectare; 2014 or as available
NOTE: Data is from a wide range of sources and may not be perfectly comparable; many countries include glasshouse, greenhouse/PE tunnel & low tunnel; range of estimates for China (up to 2,760,000ha); Source: Cuesta Roble Consulting; “Greenhouse production systems in Mediterranean area” Leonardi/De Pascale May 2010; “Greenhouse Technology Globally: The future of food”; Coriolis analysis
The Netherlands has more area in horticulture
inside than New Zealand has outside
3. ADDING VALUEThe third potential driver is to add more value to existing output
44
Improving products
Improve positioning
Transforming product
LAND IN PRODUCTION
(Hectares)
OUTPUT PER HECTARE
(T/ha)
VALUE ADDED PER TONNE
($/t)X X =
REVENUE & JOBS
1 2 3
New Zealand’s food & beverage exports are currently still over-weighted to low value-added, unprocessed ingredients
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Switzerland
United Kingdom
Italy
Japan
Germ
any
Ireland
Netherlands
Sweden
Finland
Spain
Denmark
Canada
New
Zealand
45
AGRIFOOD EXPORTS VALUE SHARE BY SEGMENT: NZ VS OTHER RICH COUNTRIES% of value; 2017
Source: UN Comtrade database; Coriolis classifications and analysis
Beverages
Processed FoodsOilseeds, Oils & Fats
Produce
Dairy
Seafood
Meat
Grains
CLEAR STRATEGIC DIRECTION
New Zealand predominantly sells ingredients to others; as a result, it is currently missing out on food manufacturing jobs
46
FIGURE 1: FLOW OF NEW ZEALAND MILK POWDER FROM THE FARMER TO CONSUMERSimplified model
Photo credit: public domain; Source: Coriolis
Baked goods
Dairy products
Infant formula
Specialised nutritionals
Proc. meat/analogs
Beverages
Nutrition bars
Condiments
Confectionery
Dessert-type snacks
Pet foods
Savoury items
FARMERS(milk)
DAIRY PROCESSORS(milk powder)
FOOD MANUFACTURERS(processed foods)
RETAILERS(products)
CONSUMERS(food)
POTENTIAL NEW JOBS
The New Zealand food industry has a clear strategic direction towards greater product complexity
47Source: The Investor’s Guide to the New Zealand Processed Foods Industry 2017; Photo credit: various firms or fair use; low resolution; complete product/brand for illustrative purposes
BulkPowder
Retail MilkPowder
Retail Infant
Formula
Medical & Specialty
Infant Formula
IngredientChocolate
Crumb
Instant Chocolate
Drink
Retail BarChocolate
Assorted/MixedChocolates
Complexity
Fresh Canned Frozen Meal
Complexity
BasicHoney
ManukaHoney
ManukaHoney
Lozenges
MedicalHoney
New Zealand has large and growing volumes of raw materials suitable for making more complex, consumer-ready products
48
TOTAL NEW ZEALAND FOOD PRODUCTION VOLUME AT FARM GATE1T; 000; 1961-2018
1. Dockside for seafood production; *Milk is milk solids; meat is dressed but bone-in; seafood is green weight as reported; **Fruit includes wine grapes; honey line is thickened to make it visible; Source: United Nations FAOStat & FishStat; MAF/MPI; Coriolis analysis
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
196
1
196
3
196
5
196
7
196
9
197
1
197
3
197
5
197
7
197
9
198
1
198
3
198
5
198
7
198
9
199
1
199
3
199
5
199
7
199
9
200
1
200
3
200
5
200
7
200
9
201
1
201
3
201
5
201
7
Cereals
Vegetables
Fruit**
EggsSeafood
Meat
Dairy*
Honey
CAGR(61-18)2.1%
Peers suggest New Zealand can create more processed foods jobs from its abundant raw materials
8.7
6.7 6.1 6.0
5.3
4.4 3.9 3.8 3.8 3.8 3.6 3.5 3.5 3.3 3.2 3.1
2.2 2.2 2.1 2.0 1.9 1.9 1.9 1.8 1.8 1.7 1.6 1.6 1.5 1.2
Estonia
United Kingdom
United States
Switzerland
Croatia
Slovenia
Czechia
Slovakia
Finland
Hungary
Lithuania
Ireland
Canada
Sweden
Latvia
Australia
Germ
any
Denmark
Austria
Portugal
Italy
Poland
Romania
New
Zealand
Greece
France
Belgium
Norw
ay
Spain
Iceland
49
PROCESSED FOODS JOBS PER 1,000 TONNE RAW MATERIALS* Headcount/1,000t; 2018 or as available
*Non-grain based; Source: UN FAO AgStat; UN FAO FishStat; Eurostat; Statistics Canada; US DOL; USDA NASS; Statistics NZ; Australian Bureau of Statistics; Coriolis classification and analysis
Going forward, growth will come from creating more output from less land and selling it as complex products at a higher prices
50
LAND IN PRODUCTION
(Hectares)
OUTPUT PER HECTARE
(T/ha)
VALUE ADDED PER TONNE
($/t)X X =
REVENUE & JOBS
1 2 3
UNLIKELY YES YES
38
18 1510 7 5 3 2 2
38
1815
107
53 2 2
A B C D E F G H I
38
18 1510 7 5 3 2 2
7
-1
28
-1
28
112 18
8
A B C D E F G H I
In practice, growth will require some sectors to grow much larger, as other sectors have growth constraints
51
MODEL 1: EVERYTHING DOUBLES MODEL 2: SOME GROW/OTHER NO GROWTH
Source: Coriolis
100
+100
100
+100
- Simple story: “Rising tide lifts all ships”
- Assumes all sectors can double in the timeframe
- Often how it is “spun” politically
- Unlikely in reality
- More complex story: “The Good, the Bad and the Ugly”
- Assumes some sectors cannot grow significantly
- Other sectors will need to grow 5x or 10x to compensate
- Peer group regions suggest this is the likely outcome
10 10
50
100
Potential Growth Sector "A" Potential Growth Sector "B"
Therefore there is a need to focus efforts in sectors with the potential to grow five or ten times larger
52
SIMPLE GROWTH MODEL SHOWING 5X OR 10X GROWTH
Source: Coriolis
5x
10x
Numerous product categories have been identified that can contribute to this growth
DAIRY RED MEAT POULTRY SEAFOOD F&V
Advanced/Medical Infant Formula
Meat-Based Snacks Further Domestic Consumption
Atlantic Salmon Under Cover/Glasshouse
Root Crops
Processing VegetablesDairy-Based Nutritionals
Target Key Export Markets
Branded, Packaged Consumer Case Ready Nuts
Region Suitable Aquaculture
ApplesNon-Cow Dairy Develop Value Added Products KiwifruitConsumer-Ready
Convenience Meals AvocadosSpecialty Cheese Alternative Poultry Species Emerging Fruit
ARABLE/GRAIN OTHER FOODS PROCESSED FOODS WINE OTHER BEVERAGES
High Dairy Baked Products Honey Nutraceuticals Sparkling Wine Alcoholic Spirits
Oat ‘Milk’ Pet Food Water‘Cognac’Seeds Eggs Confectionery/Snacking Cider & Similar
Non-Marlborough RedsHemp (F&B usage) New & Innovative Foods Premium Non-Alcoholic
53
IDENTIFIED PRODUCT CATEGORIES THAT CAN CONTRIBUTE TO GROWTHModel; 2019
Source: Coriolis analysis
Realising this growth opportunity requires three specific sets of potential investors
54Source: Coriolis analysis
EXISTING LARGE FIRMS
AT SCALE
NEW LARGE INVESTORS WITH SCALE AND SKILLS
NEW AND EMERGING
FIRMS
REINVESTMENT ATTRACTION NURTURING
- Remove barriers to investment
- Ensure available capital is reinvested in New Zealand (not elsewhere)
- Sell New Zealand; make the case for investment in F&B here
- Identify the right investors (rather than ‘waiting for the phone to ring’)
- Focus on firms able to add value to New Zealand volume
- Sell New Zealand; make the case for investment in F&B here
- Encourage both existing small firms and new start-ups
- Focus effort on scaling small and medium firms into large, globally competitive firms at scale (currently falling over here)