Agribusiness and Trade: NZ food security at risk as dairy, meat prices soar, says KPMG

NZ Herald

5 days ago

Using dairy products as an example, he says in the interests of food security and protecting New Zealand's 'brand' – an export marketing feature on which it heavily leans - farmers could opt into voluntary domestic pricing initiatives through their milk processors with a portion of their production priced to meet Kiwis' needs for healthy and nutritional food at a reasonable cost.
In the interests of food security and protecting New Zealand's 'brand' – an export marketing feature on which it heavily leans - farmers could opt into voluntary domestic pricing initiatives through their milk processors with a portion of their production priced to meet Kiwis' needs for healthy and nutritional food at a reasonable cost. Photo / Bloomberg
The carrot to any buy-in by farmers will be the reassurance that New Zealand is investing in bioeconomic tools and systems to ensure the whole of their farming system - not just the milk or meat - is monetised, Proudfoot says.
He cites the wine industry as an example of where an entire farming system could be monetised.
In wine production only about 2% of the product becomes wine. All the leafy matter, and the woody matter left over from pruning vines has had 'huge' money invested in their production but becomes unutilised waste, he says.
'It could be a bioenergy source. It could be thinking about what's an active ingredient in the leaves that we can extract? It could be thinking about how we use the grape waste creatively?
'If we can say to farmers we are investing in a bioeconomy which offers all these other business opportunities, then the idea of finding circular solutions for everything they are growing and asking them to give up a small percentage of their price on a small percentage of their production starts to make sense.'
To the suggestion that farmers, already burdened by high costs, would throw their hands up in horror at the idea, Proudfoot says on the contrary, he is sure some would like to protect the New Zealand brand and help build resilient domestic food security.
'If we don't have the ability to be resilient, to ensure that our people here in New Zealand have food security, it can very quickly become a part of how the food we export is viewed – are we exporting at the expense of our society?'
Proudfoot says food security is still under-prioritised among the 200 agribusiness leaders whose insights formed the 2025 Agribusiness Agenda, despite an increased global focus and action on food security challenges.
'Food security is national security', he says, and despite data showing higher food insecurity among Kiwis due to the cost-of-living crisis, the subject recorded the lowest-score since surveys started. Biosecurity ranked top priority for the 15th year running.
On whether farmers would support a domestic price, Proudfoot says internationally, initiatives haven't stopped because they didn't get 100% support.
'The price of food is under constant direct or indirect regulatory pressure ... in some countries it is set by the Government , you can't sell it for more than that price. But in many other countries what we are seeing, and that's definitely the case in New Zealand … is governments are looking to manage the cost of living because of the political consequences and they are putting pressure on supermarkets in particular not to increase the price of food. We're basically seeing it all over the world.
'It's not a question of will the farmer be able to generate enough money from selling their food. We think the answer to that is probably no, but actually how you ensure the farmer is able to monetise the full value of their farming system and be able to gain a return for 100% of what they grow.
'How do you monetise and get a return for the biomass you grow alongside the food you're targeting to produce, how do you ensure you are paid for the way you act in your farming system, the way you grow, look after biodiversity, water.
'It's the answer for a much more secure farming and food system and it also enables us to think much more about how we ensure local domestic food security.'
Proudfoot's Agenda this year also calls for a national food and fibre data exchange to unlock value and accelerate innovation, with surveyed agribusiness leaders citing poor data quality, challenges integrating technologies into farming systems and unclear returns-on-investment as barriers.
He says it's time New Zealand 'started having the sort of conversation the rest of the world has been having for a number of years' about bioenergy and a bioeconomy.
Overseas, agribusiness leaders talk about the three Fs - food, fibre and fuel, he says.
'Why are we only able to talk about food and fibre, not the fuel part of the equation?
'When I sit down with clients all over the world, so often the conversation hasn't started with how much butter has been exported or what countries they're exporting to, but very often it's what the farmer is doing with farmer and grower partners in connecting them up to energy.
People are starting to work out that a big part of the answer to our energy challenge sits within the farm gate. Ian Proudfoot
'There's a lot of talk about green co-ops in villages and towns in Europe and a lot of talk about investment into anaerobic digestors or other forms of bioenergy. You come back to New Zealand and the conversation just hasn't been happening.
'We must be one of the best places in the world to grow biomass, and climate change makes us even better. People are starting to work out that a big part of the answer to our energy challenge sits within the farm gate.'
Proudfoot reckons the most important job in New Zealand agribusiness right now is held by Mark Piper, chief executive of the New Zealand Institute for Bioeconomy Science, launched this month. A public research organisation, it was formed by merging four Crown Research Institutes, AgResearch, Landcare Research, Plant & Food Research, and Scion.
'The priority of this organisation is how we ensure we connect our farmers to the bioeconomy, whether it be the energy part or the animal feed part, other forms of fuel replacement or whatever. It is so important because that is the future for a resilient food sector.'
Proudfoot says a stark message relayed to him by KPMG offshore agribusiness teams was that 30% of farmers in 14 key food-producing countries in Europe plan to quit farming in the next 10 years because it doesn't make economic sense any longer.
'I've tested that in New Zealand, Australia and the US and it's probably the same. We have that risk of people deciding it's not worth farming any longer ... if we can't make farmers economically resilient they will stop making food, and if food doesn't arrive at the back door of the store, it's not available at the front door.'
Ian Proudfoot: Opening up opportunities
Some years, Ian Proudfoot looks back at the KMPG Agribusiness Agenda he's just published and thinks: 'Why are they just not getting it?'
Why are agribusiness leaders whose insights form the Agenda not 'getting' that food security or energy, for example, should rate higher on their top-of-mind issues?
'But that just means I'm not communicating properly and I have to do better,' says KPMG's global head of agribusiness, lead author of the project that recently marked its 16th year.
The Agenda is Proudfoot's baby. He created it and writes most of it.
It's a love-hate relationship, he says.
Writing up the priority issues of the 200 agribusiness leaders surveyed can be an all-consuming grind.
But gathering the information and knowledge that goes into the publication is a joy.
'They are fascinating conversations. We start with a blank piece of paper and you never know what themes will come out.
'People look forward to the Agenda. They engage with the content ... it has helped change the perspective of people towards not just thinking about volume and price but the broader opportunities …
'It has contributed to change in the narrative in the food and fibre sectors. Some of the things talked about have been adopted and are now accepted.
'But there are still some areas we've got to keep banging away on.
'I'll keep banging away on the fact we have to focus on how to build a vibrant, growing, sustainable ocean economy.
'The bioeconomy is a massive opportunity but one we are underplaying, I think.'