“It Can Be Done” Article from the AICC(WA) seventh Dr Harold Clough AO OBE Annual Event, held at KPMG

Perth on 16 February 2017, featuring keynote speaker Mr Graham Laitt, Managing Director

Milne AgriGroup Pty Ltd (MAG) and AICC(WA) President, on the topic “Mining to Dining”.

From L to R – back row : Mr John Cluer, Chief Executive, Australia-Israel Chamber of Commerce (WA), Mr Stephen

Quantrill, Executive Chairman, McRae Investments Pty Ltd, Dr Patricia V Kailis AM OBE, Founding Director, MG Kailis

Group, Professor Dawn Freshwater, Vice Chancellor, The University of Western Australia, Mr Gary Smith, Chairman of

Partners, WA, KPMG, Mr Geoff Simpson, Managing Partner, Perth, Allen & Overy, Professor Eeva Leinonen, Vice

Chancellor, Murdoch University, Professor Deborah Terry AO, Vice Chancellor, Curtin University

Seated L to R - Mr Graham Laitt, Managing Director, Milne AgriGroup Pty Ltd, Dr Harold Clough AO OBE, Chairman

Emeritus, McRae Investments Pty Ltd and Mr Malcolm McCusker AC CVO QC

KPMG are long-standing hosts of the AICC(WA) Annual Executive Boardroom Lunch in

honour of Dr Harold Clough AO OBE. The Chairman of Partners, Mr Gary Smith paid tribute

to special guest Dr Clough for his contribution to the business community and economic

accomplishment in Western Australia. Mr Smith set the scene for the keynote address by

emphasising the need to broaden and diversify the local economy through agricultural

development, whilst acknowledging the resources sector as the primary powerhouse of the

Western Australian economy.

This sentiment was echoed by Mr Stephen Quantrill, Executive Chairman of McRae

Investments, who on behalf of the Clough family introduced the keynote address by Mr

Graham Laitt. Noting that Mr Clough and Mr Laitt shared an entrepreneurial spirit that was

“coded into their DNA”, Mr Quantrill went on to describe Mr Laitt as a person who “lived

the spirit of the Start-Up Nation; Israel”.

Mr Gary Smith, Chairman of Partners, WA, KPMG

Mr Stephen Quantrill, Executive Chairman, McRae Investments Pty Ltd

Mr Laitt used his experience as CEO of Peters & Brownes in the 1990’s to illustrate the

challenges faced by medium sized WA agribusinesses as they defend their home market and

look for growth overseas. He explained how Peters and Brownes had been transformed

from a company that outside consultants had described as “on the very of corporate

disaster” into a large FMCG company in ice cream and dairy using innovation and export

market development. At the time Mr Laitt was appointed CEO of Peters & Brownes the

company faced the perfect storm of constraints that limit WA agribusiness; small and

concentrated local market, production constraints, freight limitations, and increasing

competition. The company used innovation and export strategies to overcome the perfect

storm and successfully compete with much larger multinationals. Mr Laitt referred to the

success with ice cream exports to the Japanese market as one example. In telling the story,

he shared his insights into how sustainable business relationships are established, the

cultural settings required and the direct and indirect benefits that flow. He illustrated how

the innovation and export strategies had helped to retain a high performing team and build

the business efficiencies that were all required to turn the business around. The strategy

resulted in the shipping of 60-70 containers a month, more than $100m of ice cream, being

exported from Perth. The virtuous cycle established lifted the professionalism of Peters &

Brownes and led to it being licenced with Cadbury brand for ice cream (the importance of

branding in consumable goods being paramount to success), and ultimately to Peters &

Brownes becoming the largest ice cream producer in the region.

Mr Graham Laitt, Managing Director, Milne AgriGroup Pty Ltd

Through the prism of this experience, Mr Laitt discussed the challenges for agribusiness

development into the high growth Asian markets. He noted that the supply of goods to a

specification often leads to a disconnect between producer and consumer, and in the

context of an export market, condemns WA exporters to being price takers.

As WA is not always able to be the lowest cost producer in competitive export markets,

there is either a need to change that or to differentiate the product.

Mr Laitt suggested that long term relationships which are trustworthy can form the basis of

differentiation if the other party has commercial interests that are aligned and the other

party is expert in marketing to the consumers in the export market. Ultimately, if WA

exporters are to succeed in differentiating their products they must find out what the

consumers in target markets want and a way of communicating how the WA product

satisfies those needs. Apart from Education and perhaps some Wine exports Mr Laitt said

there were few examples of WA directly developing and exporting a consumer product

tailored to consumers in an export market. He said that even “If you develop a good idea for

a differentiated product, you need to be able to scale-up before international competition

copies and arrives.”

Mr Laitt outlined his move to Milne Agrigroup (MAG) and the pursuit of agribusiness models

that would target the consumer needs of Asia but also be scalable and sustainable in WA.

He noted that the primary opportunity in China and many other Asian markets is their

demand for food that is healthy and safe. Consumers, particularly across Asia, are worried

about food security, improper and unethical production, disease incubation, antibiotics, and

food modification. The geographic isolation, quality control, and regulation associated with

WA production can deliver the confidence to Asian consumers that our agri exporters meet

their needs and give us premium prices from these markets.

“Innovation is our business” said Mr Laitt as he described the agribusiness models deployed

across the pork, chicken and stock feed operations of the Milne Group. “To change the

rules we must be able to second guess the customers in the commodity supply chain and

develop a product that consumers really want. How do we do that? How do we work out

what they want and determine whether we can produce it at a profit?”

Using the business models of Mt Barker Free Range Chicken and Plantagenet Free Range

Pork Mr Laitt described how MAG has used cooperative relationships with family farms to,

differentiate based on high animal welfare and health status, increase scale, manage

environmental constraints and build a sustainable business model. He explained how this

had led to the development of a market leading brand in the case of chicken and to a unique

national supply agreement in the case of the exclusive supply of free range pork to Coles. In

the case of Stock feed Mr Laitt referred to Milne Feeds extensive R&D and development of

advanced feed. In each case Mr Laitt said these business models having established sound

domestic market positions were now poised to begin exporting – he said MAG will be

launching its chicken and pork products in Hong Kong in the next few months and is

developing North Asian markets for its feed solutions. Mr Laitt said that the search for

differentiation was continuing with MAG having completed a substantial capital investment

in an advanced development kitchen and meat value adding plant at Rockingham.

From L to R – Mr Malcolm McCusker AC CVO QC, Dr Harold Clough AO OBE, Chairman Emeritus, McRae Investments Pty

Ltd, Mr Graham Laitt, Managing Director, Milne AgriGroup Pty Ltd, Mr Stephen Quantrill, Executive Chairman, McRae

Investments Pty Ltd and Mr Geoff Simpson, Managing Partner, Perth, Allen & Overy

Mr Laitt illustrated the work done by MAG in North West broadacre cropping and irrigation

farming and commented that these models were relevant to the WA mining sector and that

many if not all the northern mines will or already have water management issues. In

agribusiness excess water is considered an opportunity but for Miners it is often a constraint

or a problem. Mr Laitt said that while our WA billionaire Miners have diversified into

agribusiness it is a diversification and for them and other miners, agribusiness is still not part

of the core mining business. Miners are in primary extraction rather than primary

production and the emphasis in mining planning development is on rehabilitation and

conservation rather than development.

Mr Laitt argued that opportunities to develop sustainable agribusinesses in remote mining

areas that would benefit the local economy and community are perhaps missed because of

too narrow a focus.

Mr Laitt acknowledged that in the scheme of most Mineral Resource projects the

agribusiness opportunities may seem small and high risk. He referred to the example of

Israel’s remote area development where out of necessity viable and thriving communities

have been built producing products in remote regions with poor soils, brackish and limited

water. He said the models for our remote mine sites would likely be different but felt WA

had as many opportunities but would need to develop these using innovation and a focus

on export market opportunities. Mr Laitt cited examples of sunflowers, canola and lupins as

crops that MAG has successfully grown in remote North West regions give the right soil and

water. He said that a wider range of high value crops could be grown and that many of the

variables involved in these areas can be controlled using greenhouses but, WA has only 44

hectares of greenhouses compared to Israel’s 26,000 hectares.

Mr Laitt said the beef industry was the logical starting point for our Miners and it was

pleasing to see many Miners now actively involved in the beef industry but he suggested

they needed to look at using the remote areas for the breeding part of the model and then

take the cattle to where the feeding cost was cheaper and they were closer to market.

Mr Laitt concluded saying that while it would not be correct to say we have moved from

Mining to Dining we have made some progress. The State Government has invested

substantially in funding research into the many agribusiness opportunities for WA and is

now focussed on attracting the investment and other resources to realise these

opportunities. Our Miners who have very good reasons to consider agribusiness as part of

their business are a potential force in this development. The local entrepreneur Miners have

made an important and substantial start on agribusiness development but the international

Miners have not really given it the focus it needs to date.

Mr Laitt with Mr Geoff Simpson, Managing Partner, Perth, Allen & Overy

In proposing a vote of thanks, sponsor Geoff Simpson, Managing Partner, Perth, of legal firm

Allen Overy, referred back to the achievements and legacy of Dr Harold Clough, AO OBE, to

draw inspiration for agritech development. Mr Simpson commended Mr Laitt for his

leadership and clarity of vision for the agritech industry.

With such a big gap to fill, Mining to Dining can be a reality. Either miners should

seek opportunities for themselves or support others to come in and create new industry and

new economic stimulus.

AICC(WA) Event Partner Sponsor Event Host Sponsor Event Co-Sponsor

From top left clockwise: Mr Malcolm McCusker AC CVO QC, Dr Harold Clough AO OBE, Chairman Emeritus, McRae Investments Pty Ltd,

Professor Eeva Leinonen, Vice Chancellor, Murdoch University, Mr Graham Laitt, Managing Director, Milne AgriGroup Pty Ltd Dr Patricia V

Kailis AM OBE, Founding Director, MG Kailis Group, Dr Harold Clough AO OBE, Chairman Emeritus, McRae Investments Pty Ltd, Mr Stephen

Quantrill, Executive Chairman, McRae Investments Pty Ltd, Mrs Mimi Packer, Professor Kadambot Siddique AM CitWA FTSE FAIA FNAAS,

Director, The UWA Institute of Agriculture, The University of Western Australia