New Zealand

Details

  • Service: Advisory
  • Industry: Agribusiness
  • Type: Business and industry issue
  • Date: 1/06/2012

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 Ian Proudfoot

 

Ian Proudfoot

 

Head of Agribusiness

+64 9 367 5882


Ross Buckley

 

Ross Buckley

Executive Chairman

+64 9 367 5344

 

Agribusiness and Food

Our Agribusiness group can help you improve the efficiency and profitability of your businesses through our wide range of advisory services.

Agribusiness Agenda: 'Industry good' organisations? 

Agribusiness Agenda

Is there a future for industry good organisations?

What is good for the industry is not always immediately beneficial to an individual. Acknowledging this creates the need for industry good bodies that are able to take a longer term perspective on strategic opportunities.

 

  • Are industry good organisations creating long-term value for those that provide their funding?
  • How do industry leaders believe the role of the organisations should evolve in the future?

 

Agenda recommendations

  • Industry good organisations should:

A. Explore opportunities to leverage a wider range of channels to reach their levy payers (through banks, rural suppliers and advisers) to maximise the uptake of
innovation.


B. Aim to limit their focus on the three or four key areas that will create the greatest value for their levy payers.

 

C. Actively support initiatives that engage with women, to support them in their role as director or trustee of their farming business.

 

D. Seek to include independent directors from outside the sector on their boards to fill any skill gaps the board has and provide objective opinions.

 

E. Look to take more active roles in people development and establishing standards to protect the key attributes of New Zealand production.

 

  • Review the structure of the industry good sector, as part of any pan-industry strategy exercise, to identify the optimal number of organisations and their alignment to support the future development of the industry.

 

  • Explore whether the sector would benefit from creating a single industry good organisation incorporating representatives from across the value chain.

 

  • Make changes to the levy voting system to deliver amore equitable outcome to the major funders of the organisation.

 

  • Amend the levy system to allow organisations to have a series of targeted levies of differing lengths to match the timeframes of the associated projects.

 

Are the organisations currently delivering to their funding members?

 

It is recognised that industry good organisations are a necessary part of New Zealand’s primary sector.

 

During our discussions, organisations were credited with many successes. These include:

 

  • providing proactive on-farm support to farmers (for instance in the dairy and arable sectors)
  • addressing the market access issues that arise (particularly in the horticulture and red meat sectors)
  • integrating food safety standards into production models (notably in the pork and poultry sectors)
  • providing a voice with government to change legislation (a recent example being aquaculture)
  • promotion of sustainable production systems (for example: the sustainable wine growing initiative).

 

Industry good is at its most effective when a levy payer sees their contribution as an investment rather than a cost, because the organisation’s programme is focused and relevant to them.

 

Are industry good organisations constrained by their governance models?

 

It was no surprise that there is a widely held view that industry good organisations are inherently political.

 

The democratic nature of board elections gives the levy payers the opportunity to direct the course that the organisation takes. Yet it does not always deliver the skills to the board table that the organisation and its management require.

 

The fear of ‘gumboot politics’ is considered to prevent many strong candidates from standing. 

 

Where should industry good organisations focus their resources?

 

We asked participants in the KPMG Agribusiness Survey to priority rank a range of activities that industry good organisations could deliver to their funding members. 

 

The highest ranked activities were representation of the sector with government agencies, and managing R&D investments. This is not surprising, as these are generally delivered by most industry good organisations.

 

Is there a role for industry good organisations in market development and promotion?

 

As the survey demonstrated, there is a general level of support for the market access work that industry good organisations perform. The same cannot be said for the marketing role that many organisations take on. It’s fair to say that the role in market development and promotion was the greatest area of contention in respect of industry good activity.

 

Many argue vociferously that marketing is a commercial activity, and should be left to the companies that have product to sell. Yet there is a counter argument. The history of many industry sectors suggests that the exporters will not invest in marketing if is not also being done by an industry good organisation.

 

What does KPMG think about the future of industry good?

 

Overall, industry good has made a regular and important contribution to the primary sector over the years – and it has the potential to continue to deliver significant value to levy payers into the future.

 

However the role of the industry good organisations is likely to continue to evolve. The precise nature of the evolution is dependent on a range of factors – not least the development of a panindustry
strategy.

Read more:  download pdfAgribusiness Agenda 2012 - Part 3 [PDF: 1.7MB]

 

Field notes - Weekly news update from KPMG Agribusiness. 
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