New Zealand is one the few developed countries that relies on primary products to generate the majority of its export earnings. It is therefore critical that our food, fibre and timber products are not only equal to what’s produced by the rest of the world – they must be more innovative, of better quality and safer.
Continuous innovation is required in order to maintain the standard of living we have in New Zealand.
There is a widely held perception that the innovation system in New Zealand is failing to deliver the step changes that the primary sector needs to maintain its position on the cutting edge of global markets. This has been a regular topic of conversation since we published the first KPMG Agribusiness Agenda.
There are some encouraging signs that the long-term decline in agricultural science may have bottomed out. Graduate numbers are growing; the Crown Research Institutes (CRIs) are adapting to a new policy framework; and there is increasing collaboration between Lincoln and Massey Universities.
We canvassed the views of industry leaders on the relevance of current innovation activities in New Zealand, and the steps that the industry and government should consider to ensure New Zealand secures a leading position in the global primary sector.
- The Government to explore opportunities to create non-financial assistance programmes to encourage and support innovation by New Zealand companies.
- Establish a national primary sector innovation award scheme to recognise the importance of innovation and continuous process improvement to success in global markets.
- Explore greater levels of trans-Tasman co-investment in primary sector innovation, to better leverage the combined investment of the two countries.
- Investigate the consolidation of all government investment in primary sector innovation under a single structure, facilitated by the Ministry of Primary Industries.
- The Ministry of Primary Industries and the fishing sector to explore opportunities to reform the Quota Management System to increase its independence and relevance to the needs of international customers.
- More active monitoring of global innovation by the CRIs to deliver opportunities to New Zealand companies.
- Explore mechanisms to encourage greater investment in early stage agritech innovation.
- Commercial organisations to commit to higher levels of investment in innovation programmes, reflecting other developed countries with a large investment in the primary sector.
- Create a network of in-market incubators focused on identifying opportunities in our key markets that can utilise New Zealand-based innovation.
- Ensure the innovation programmes of industry good organisations are continuously tested with groups of producers, so they are addressing their most relevant business issues.
- All political parties to commit to supporting the long-term future of the Primary Growth Partnership.
Raw numbers – how do we perform against comparative countries?
Earlier in this Agenda, we noted a surprising fall in the priority that industry leaders attached to R&D activity.
We floated the idea that given the amount a dairy farmer is investing in innovation − via their levies, co-operative investment and taxes − it is not the primary sector that is under-investing in R&D but the remainder of the economy.
That argument aside, the cold hard facts show that New Zealand is significantly under-investing in innovation.
Do we spend enough time thinking about what we will need in the future?
The most effective innovation is not reactionary. Rather it forms part of a longterm strategy; based on a robust analysis of customer and market requirements, and a clear vision of the opportunities with the best potential to deliver incremental value to investors.
Is the Primary Growth Partnership (PGP) leading a step change in innovation?
Government spending on the PGP programme has increased significantly over the last year. The initial projects that received a commitment for coinvestment have moved from their establishment period into an operational phase.
There is acknowledgement that PGP represents a significant commitment from government into the primary sector, and does mitigate some of the risk associated with large-scale innovation projects.
There is also a view that the programme is starting to create a greater culture of collaboration among industry participants – such as the broad groups involved in the dairy industry initiative, FarmIQ, or the seafood sector projects. This creates some confidence that the organisations will naturally find further opportunities for commercial collaboration as the PGP projects run their course and beyond.
Innovation: taking stock
Innovation should be driven by the market aspirations that an industry sector holds for the future.
Our stocktake highlights the effectiveness of the primary sector in delivering value to potential users of the innovation.
What is needed to create an innovation ecosystem in New Zealand?
The famous ‘No.8 wire culture’ has been widely celebrated by the New Zealand media for many years.
However in our recent discussions, we have increasingly come to see it as an impediment to the creation of a worldclass innovation system in this country.
At the heart of our current innovation culture in New Zealand there is a degree of arrogance (that a solution will come along when we need it); a degree of complacency (that we don’t need to spend at international levels because we will have a higher rate of success); and a belief in luck rather than process.
New Zealand urgently needs to invest in putting the infrastructure in place to support a world-class innovation ecosystem. A continued reliance on piecemeal innovation giving rise to an occasional ‘eureka’ moment will not deliver the future this country requires.
Could we make more use of international technology?
As a small country with limited resources, we cannot afford to ignore the technology innovation that is taking place internationally.
The reality is that New Zealand’s innovation programmes will not convert more ideas into realisation than any other country and, as such, we need to make as much use as possible of international innovation to give ourselves the best chance of success.
We need to be sourcing the best ideas – from any innovation pipeline and at any stage of development − that have the greatest potential to work in New Zealand, and invest in commercialising these ideas.
Read the full articles: Agribusiness Agenda 2012 - Part 4 [PDF: 1.3MB]