Farmlands returns to profit with strong FY25 result
Rural retailer Farmlands has reported a return to profitability, something the co-operative says shows clear progress in the second year of its five-year strategy.
We can’t win on the most efficient farming model in the world. China, USA and Australia each have 40 times the land mass in agriculture. Other countries are prepared to adopt lower standards in factory farming, GMOs, people practices and impact on the environment.
That means we can’t win on scale and low cost.
Also, the world is changing, and what consumers want is making greater demands. We must be aware of, and manage, the consequences of what we are doing on the earth. The role of technology is growing massively and the role and expectation of food is being redefined.
In my view, we must produce less that is worth more.
An example that brings it home to me is NZ wine in China. NZ wine is an amazing international success story: we are now generally accepted as the best producers of sauvignon blanc and pinot noir in the world. But we haven’t cracked it in China. China takes about one fifth of all our exports and this is consistent across all our sectors. The exception is wine: China buys only one fiftieth of NZ’s wine exports.
Why is this? Because in China there are two types of wine purchased: what we would call ‘plonk’ – very cheap and generic, and the best. The best in the perception of the Chinese is wine from France; serving French wine is the way to make an impression in China.
In China you can buy plonk for $2 a bottle, or $200/bottle French wine, and there is very little in between. And you don’t want to be stuck in the middle as neither one thing nor the other; hence only 2% of our wine exports are going to China because we are in the middle.
This sums up the opportunity for the food we produce. We can seek to provide ‘plonk’ -- a losing strategy as already outlined, because others have scale and practices that enable them to produce plonk more effectively than us -- or we can seek to become the ‘French wine’ of food; or as I have heard one farmer put it – become the premium delicatessen to the world.
NZ must produce less that is worth more. NZ can only produce for 30 - 40 million people – that’s 0.5% of the world’s population. If we target the fussiest 0.5%, here is what they will be asking:
- Where is my food from?
- What has gone into my food?
- Is my food good for me?
NZ is incredibly well placed to own the critical answers to these questions. This strategy is not only sound; we are very well placed to deliver on it. Most NZ landowners look after their land, animals and people very well.
We must modify the behaviours of those who don’t, ensure those who do keep doing it and provide the means to prove it to the fussy consumers of the world. Technology will play a huge part in this.
When I am talking to farmers about the change we need to make, I tell them to be aware of what the consumer is asking: not the Government, not the regulator, not the manufacturer, but the consumer – the person who eats our food.
The consumer is not going to accept dirty rivers or overuse of sulphates or bad animal practices.
By meeting the demands of consumers we can deliver on this strategy for a prosperous primary sector for NZ.
• This is an edited version of a recent speech given by Farmlands chief executive Peter Reidie at the Universal College of Learning graduation ceremony in Whanganui.
