AGRIBUSINESS GIPPSLAND AND KPMG FORUMFeb 16, 2016 · 10:00am Welcome PaulFord, Chair Agribusiness...

AGRIBUSINESS GIPPSLAND ANDKPMG FORUM

16 February 2016

kpmg.com.au

1© 2016 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Liability limited by a scheme approved under Professional Standards Legislation. KPMG and the KPMG logo are registered trademarks of KPMG International.

With us today

10:00am Welcome

Paul Ford, Chair Agribusiness Gippsland

10:20am Thinking Regional & RuralJames Flintoft, CEO, Regional Development Victoria

10:45am A Collective Voice for GippslandIan Proudfoot, KPMG Global Agribusiness Leader

Ben van Delden, KPMG Australia Head of Markets

11:45am Coffee break

12:00pm Food for thought panelFacilitator: Tim Ada, Executive Director – Sector Development, Department of Economic Development,

Jobs, Transport and Resources

Panellists:Ian Proudfoot, KPMG Global Agribusiness Leader

Dr Chris Downs, Research Director, Food Innovation CSIRO

Dr Christine Pitt, General Manager Value Chain Innovation, Meat and Livestock Australia

Peter Liddell, KPMG ASPAC Supply Chain & Operations Leader

Piers Hogarth-Scott, KPMG Director Digital Consulting

1:00pm Lunch

2:00pm Forum closed

Agenda

Welcome

Paul Ford, Chair Agribusiness Gippsland

“Agribusiness”……

Interdependence of all parts of the value chain that work towards the production, manufacturing, distribution and retailing of food and fibre products and services

Australia:• $155bn value chain • Provides Australians with 1.6 million jobs• Earns $36bn in export revenue

Gippsland:• 6500 farm families living in and contributing to small rural communities • 3000 post farm gate “agribusinesses”• Globally competitive large and small food and fibre manufacturers • 52% of Gippsland commerce is agribusiness dependent

Why is “agribusiness” important

• Victoria’s largest region by gross regional product

• $14.3bn : Agribusiness is $6.5 to $7bn

• Dairy $3bn

• Forestry $1.5bn

• Meat $1bn

• Intensive horticulture $750m

• Fishing $300m

Gippsland Region

“Greater Gippsland” agribusiness value chains……

Image - Ian Rolfe Photography Melbourne

Nicoll family farm @ Fish Creek

Andrew Willis, Gail Beer and Phillip McIlwaine – Murray Goulburn Leongatha

Mate Batarilo – Noojee Trout Farm

Federation University & Training – attracting retain and developing talented people

Elizabeth Ross @ Ellinbank Innovation Centre

Vibrant small rural communities…….

Ken Lay - Korumburra

Build strong rural communities

Fast track economic development

Provenance of Gippsland food & fibre products

Generate new investment

Attract, retain & developtalented people

Building size &

diversity of networks

Data to give insight &

agility on emerging issues

Driving projects w

ith real world outcom

es

Smarter, uniquely A

ussie innovation processes

Collaboration on precom

petitive projects

Driv

ers

Enablers

“What Can We Do Matrix”…..Drivers and Enablers

Where are we at in early 2016?..........................

In the latter half of 2015 the Andrews’ Government has set up the policy framework that shapes agribusiness…………….

1. Food & Fibre Discussion Paper establishes “agribusiness” as a priority industry

2. The Regional Statement establishes Gippsland as the biggest region at $14.3bn GVP pa. Agribusiness represents half that value.

3. The Regional Partnerships establishes a process whereby Regions identify emerging issues and Government develops a whole of government response.

“VISION WITHOUT ACTION IS JUST A DREAM.”

“ACTION WITHOUT VISION JUST PASSES TIME.”

“TOGETHER VISION WITH ACTION CAN CHANGE THE WORLD”

Joel A Barker

Thinking Regional & Rural

James Flintoft, CEO, Regional Development Victoria

Supporting Agribusiness jobs and industry development in Gippsland

James FlintoftChief Executive

Regional Development Victoria

Agribusiness Insights BriefingAgribusiness Gippsland & KPMG

16 February 2016

UNCLASSIFIED

Regions and food and fibre are important

• 1.5 million Victorians (25% of state population)

• Agriculture: $11.6 billion exports, employs 190,000 people (2 in 6 regional jobs)

• Regional tourism: $10.9 billion Gross Regional Product and employs more than 107,000 (1 in 6 regional jobs)

– Of the 2.6 million visits to the Twelve Apostles, the average “snap and go” tourist spends 40 minutes and leaves only 18 cents in the regional economy

• Key to sustainability: food security, biodiversity, preservation of indigenous cultures, water solutions, climate change solutions

• A vital contributor to the quintessential nature of what defines Australia

– the bush, iconic landscapes, indigenous heritage etc.

UNCLASSIFIED

Regional Victoria: Opportunities and Challenges

FORCES AT WORK OPPORTUNITIES CHALLENGES

Globalisation: rise of Asia

• Food and fibre• Tourism (international)• International education

• Globalisation of supply chains (e.g. automotive)• Energy prices• Biosecurity

Demographics• Tourism (domestic)• Commuters• Tree/Sea changers

• Non-urban land use conflicts (e.g. agriculture)

• Education attainment levels• Poorer health outcomes• Entrenched disadvantage in some areas

Technology• Accessing markets (e.g. ecommerce)• Modern agriculture• Remote health and education service delivery

• Coverage (mobile black spots, broadband)

Climate• High rainfall zones in western Victoria• Gippsland weather patterns • Renewables

• Variable climatic conditions for regional producers

• Severe weather events

UNCLASSIFIED

Economic levers of Government

Transport, infrastructure and land use planning

• Six sector strategies: $200 million Future Industries Fund• $60 million Start Up Victoria initiative• Visit Victoria (tourism and major events under one agency)

• ‘Back to Work’ Scheme• TAFE Rescue Fund - $320 million• Investment in new Tech Schools (Gippsland, Bendigo, Ballarat and Geelong)

• $500 million Premier’s Jobs and Investment Fund• Trade mission programs• $200 million Regional Jobs Fund

• Murray Basin Rail Project• Regional Transport Network Development

Plan (e.g. passenger rail)

Industry and innovation policy

Taxation, efficient regulation and public

sector reforms

Trade and investment attraction

Skills and employment

• Victorian Small Business Commission• Biosecurity services and regulation

• $250 million Regional Infrastructure Fund• Advisory Council on Intensive Agriculture• $200 million Agriculture Infrastructure Fund

• Invest Victoria• Invest Assist• Victorian Government Business Offices

UNCLASSIFIED

Government Policy Frameworks

Regional Partnerships:

The centrepiece of government’s regional agenda

UNCLASSIFIED

Food and Fibre Discussion Paper

Themes from consultation

Access to innovation capabilities and accelerator services

Locally-relevant education and training close to the place of production

Reduce business compliance costs

Support businesses to be more investment ready

Market access, including addressing barriers to entry

Support a strong ‘Brand Australia’

Better and more reliable access to water (water security)

Simplify planning frameworks to support growth

Upgrade transport infrastructure, especially freight corridors to ports

Improve access to digital services in regional Victoria

UNCLASSIFIED

‘Regional Statement

Regional Economic Development & Services Review• Distinguished independent Advisory Board.• Extensive consultation across business, community

and government (early 2015). • 61 recommendations to government – delivered in

July 2015.

Victoria’s Regional Statement• Government’s response to the Regional Review

(November 2015)• Announced a new way of working with regional

communities: Regional Partnerships.

“Government needs to do more to listen to – and act on – the voice of regional Victoria.”

UNCLASSIFIED

Regional Partnerships

REGIONAL PARTNERSHIPS x 9

- Drive local action around priorities.- Mutually reinforcing activities towards a common agenda.- Find new ways of working within existing resources.- Could be time limited or ongoing.- Outcomes focussed. Progress is measured and reported.

- Receives priorities requiring policy/budget response from State Government.

- Advocates regional priorities to Ministers and decision-making committees.

- Commissions work on regional policy priorities.

RURAL AND REGIONAL MINISTERIAL COMMITTEE

- Develops priorities across economic, social and environmental issues based on:

• existing strategic plans,• community engagement, and• good data and analysis.

- Identifies outcomes / indicators for priorities and measures them.

Working Groups (examples only)

REGIONAL SKILLS-TAFEs-DET-Strategic Industry Sector Leads (DEDJTR)-Industry reps (e.g. food + fibre or tourism)-Office of Victorian Skills Commissioner

REGIONAL TOURISM-Regional Tourism Board-Local Government-Visit Victoria-DELWP-Regional Directors (RDV)

Y12 ATTAINMENT-Children and Youth Partnerships-Local Learning and Employment Networks-DET-DHHS

Agribusiness-Regional agribusiness groups-VFF/grower groups-Catchment management authorities-Local government (inc. relevant metro councils)

UNCLASSIFIED

Gippsland Plans

Gippsland Workforce Plan

UNCLASSIFIED

Questions?

UNCLASSIFIED

APPENDIX - Fast facts: Regional Victoria

Population (2014p)

Unemployment Rate (December

2015)

Labour Force Participation (Dec 2015)

% who completed year

12 (2011)

% who are obeseBMI ≥30(2011/12)

Gippsland 265,150 7.1% 58.6% 36.2% 19.3%

Regional Victoria 1,467,496 5.4% 60.9% 39.2% 20.7%

VICTORIA 5,841,667 5.9% 64.6% 54.2% 17.3%

Source: Regional Development Victoria Information Portal; DTF Victoria Economic Fact Sheet; Estimates based on ABS Census Place of Work; NIEIR 2015; ABS 3218.0; DHHS.Unemployment Rate and Labour Force Participation Rate derived using a three month average

A Collective Voice for Gippsland

Ian Proudfoot, KPMG Global Agribusiness Leader

Ben van Delden, KPMG Australia Head of Markets


32

VOICES FROM THE NEW ZEALAND PRIMARY SECTOR2008

“We are all operating in Silos, nobody understands what real collaboration looks

like”

“Young people are walking past the industry, we can’t attract the talent we need, despite

the competitive pay”

“It’s all about movies for the government, we are yesterday’s

game”

“We know we should focus on growing value but it is far easier to focus on

growing more volume”

“Everybody is head down bum up on the day to day stuff and lack the time to focus on the

future”

“Nobody is investing in building the infrastructure to support strong connected rural communities”

“I compete with the company down the road, why would we work together in the

market?”


33

FORUMS WERE NEEDED FOR THE “WHAT IF” CONVERSATIONS

THE AGRIBUSINESS AGENDA BECAME A CATALYST FOR US TO BE ABLE TO ENABLE THESE FORUMS


34

WHY HAS THE AGENDA SUCCEEDED?

- EXTENSIVE STAKEHOLDER CONTRIBUTIONS

- COMPREHENSIVE RESEARCH

- OPINIONATED, INDEPENDENT ANALYSIS

- LEVERAGING KPMG GLOBAL NETWORK

- CONSTANT INNOVATION IN APPROACH

- MARQUEE LAUNCH EVENTS

- COMMITMENT TO LEVERAGE THE CONTENT


35

WHAT HAVE WE COVERED?

- NOTHING IS OFF LIMITS (IF IT IS RELEVANT)

- ILLUSTRATIVE CASE STUDIES

- STATE OF THE NATION INSIGHTS

- DEEP DIVES (MARKETS, LABOUR, SUSTAINABILITY,INNOVATION, INDUSTRY GOOD, VALUE ADD)

- ANNUAL PRIORITIES SURVEY

- ANALYSIS OF FOOD IMPACTS OF MEGAFORCES

- EMERGING LEADER PERSPECTIVES


36

EMERGING LEADERS SUMMIT: SEPT 2015


37

ENABLING THE ‘WHAT IF’ FORUMS


38

WHY IS THIS RELEVANT?

“WITH GREAT COURAGE, INTEGRITY AND LOVE, WE EMBRACE OUR RESPONSIBILITY TO CO-CREATE A WORLD WHERE EACH OF US, OUR COMMUNITIES, AND OUR PLANET CAN FLOURISH – ALL THE WHILE, CELEBRATING THE SHEER LOVE AND JOY OF FOOD.”

PURPOSE STATEMENTWHOLE FOODS MARKET INC

IT IS TIME FOR A PARADIGM SHIFT


39

RECOGNITION IS GROWING THAT THE FUTURE IS COMING AND LOOKS VERY DIFFERENT

TANGIBLE CAPITAL ASSETS

PEOPLE BRAND EXPERIENCE INNOVATION CONSUMER

CONNECTION

CRITICAL INTANGIBLE INVESTMENTS

Often lack governance focus on intangiblesMore difficult to articulate expectationsHarder to do and lack the capability to collaborate


40

FRAMEWORK FOR CAPTURING GIPPSLAND’S AGRIBUSINESS POTENTIAL

February 31 March Mid May Late July August/ September

IDENTIFY & ENGAGE• Business• Research• Government

CONDUCT ROUNDTABLES• In market / pan industry

•Qualitative •Compliments Regional Partnerships pathway

SHARE• Inform Regional Partnership representative

•Independent•Free access

ONLINE SURVEY•Sector specific•Opportunities•Challenges•Scalable

WRITE AGENDA•Local & independent author

•Sector agnostic• Ian Proudfoot peer review

Indicative timeline

DESKTOP RESEARCH•Consolidate existing research•Build in agility

Coffee Break

Facilitator: Tim Ada, Executive Director – Sector Development, Department of Economic Development, Jobs, Transport and Resources

Panellists:Ian Proudfoot, KPMG Global Agribusiness Leader

Dr Chris Downs, Research Director, Food Innovation CSIRO

Dr Christine Pitt, General Manager Value Chain Innovation, Meat and Livestock Australia

Peter Liddell, KPMG ASPAC Supply Chain & Operations Leader


Food for thought panel

Accelerating into a disruptive future

Ian Proudfoot, KPMG Global Agribusiness Leader

44

ACCESSIBILITYENVIRONMENT

BOUNDARIES

COMMUNITIES

DISRUPTION

THE FORCES DRIVING OUR CHANGING, MULTIPOLAR WORLD

BIODIVERSITY

RELIGION

FOOD ON DEMAND

COUNTERFEITINGFOOD PRINTING

45

EMERGING ISSUES THROUGH A MACRO LENS

CLIMATE CHANGE FORCES SYSTEM CHANGE

ACTIVIST ENGAGEMENT(WELFARE VS RIGHTS)

RESPONDING TO EVOLUTION OF GM

ACTIVELY MINIMISING FOOD WASTE

CONSUMER RESOURCE CONSTRAINTS

CONNECTING DIRECTLY WITH CONSUMERS

46

EMERGING ISSUES THROUGH A MACRO LENS

ALTERNATIVE PROTEIN EVOLUTION

CORPORATE RESPONSE TO AMR

THE ROLE OF ARTISAN ENTERPRISES

COMPLIMENTARY NUTRITIONAL

MARKETS

CLONING IS DELIVERED AT SCALE

DEVOLVED AGRICULTURE

© 2016 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International Cooperative.

THANK YOUIan ProudfootGlobal Head of AgribusinessKPMG Auckland, New Zealand

+64 (0) 9 367 5882+64 (0) 21 656 [email protected]

Megatrends and Agri-food innovation

Dr Chris Downs, Research Director – Food, CSIRO

7 Global Megatrends

Opportunities for agri-food innovation?

Global Megatrends | Dr Stefan Hajkowicz, CSIRO Futures

More From Less

Planetary Pushback

The Silk Highway

Forever Young

Digital Immersion

Porous Boundaries

Great Expectations

Global megatrends: Opportunities for agri-food innovation

More from Less

• Population growth >9b by 2050• Economic growth• Protein demand growth• Limited global resources• Innovations in water, energy and agri-

food production

CSIRO Agriculture / Data 61CSIRO Land and WaterCSIRO Energy

More From Less

Planetary Pushback

• Climate change – increased risks • More invasive and resistant pest species• Antibiotic resistance • Increased food safety risks• Innovations in product safety and

stability

CSIRO AgricultureCSIRO Food and NutritionCSIRO Health

Planetary Pushback

The Silk Highway

• Population growth in Asia• Rapid economic and income growth• Growth in urbanisation• Proximity to Australia, export growth• Innovations supporting value addition -

healthy, safe, stable products

CSIRO AgricultureCSIRO Food and NutritionCSIRO Health

The Silk Highway

Forever Young

• Ageing population – Australia and Asia• Rising health care costs• Increased chronic disease and inactivity• Innovations in designed food, diet and

lifestyle products and services

CSIRO Food and NutritionCSIRO HealthCSIRO Data 61

Forever Young

Digital Immersion

Digital Immersion

• Incredible growth in the digital economy• Digital disruptions in agri-food• New business models - productivity and

competitiveness • Innovations in digital agriculture / food

CSIRO Data 61CSIRO Food and NutritionCSIRO Agriculture

Porous Boundaries

• Digital technology and globalisation• Porous boundaries – countries, governments,

companies, professions, research disciplines• Innovations in networks and business models• Innovations in global food and ingredient

supplies. Risk around ethics, image, brand

CSIRO Data 61CSIRO AgricultureCSIRO Food and Nutrition

Porous Boundaries

Great Expectations

• Increased desire for personal experiences• Income growth• Personalised products and services• Personalisation and mass customisation• Innovations agri-food products and services:

Genomics-ICT-3D printed foods

CSIRO Data 61CSIRO HealthCSIRO Food and Nutrition

Great Expectations

Global Megatrends

More From Less

Planetary Pushback

The Silk Highway

Forever Young

Digital Immersion

Porous Boundaries

Great Expectations

Opportunities for agri-food

innovation

CSIRO Food and NutritionDr Chris DownsResearch Director - Foodt +61 7 3214 2001e [email protected] www.csiro.au

Thank you

CSIRO FOOD AND NUTRITION

Food innovation

Dr Christine Pitt, Meat and Livestock Australia


Insights2Innovation Initiative


Innovation Insights & ServicesMarket Intelligence

Consumer & Customer InsightsCompetitor Analysis

Technology ScanningOpportunity/Business Analytics

Product DevelopmentInnovation Toolkits

Young Food InnovatorsValue Chain Design & New

Business Models

R&D/Prod Development

Facilities

Global R&D Providers

TechnologyProviders

Finance

Education & Training

Government

Food EntrepreneursMarket &

Consumer Knowledge

Open Innovation Partners

Producers Value Chain Partners Global Customers

Create Connected Food Innovation Eco-system


THANK YOU

Dr Christine Pitt

General Manager, Value Chain Innovation

Meat and Livestock Australia

Tel: 0411680520

Email: [email protected]

Operating in Asia Pacific – a focus on ChinaPeter Liddell, KPMG Partner

ASPAC Supply Chain & Operations Leader


China’s economy is largerthan the combined value of Russia, Brazil, and India.

BRAZIL$2.3 BN

RUSSIA$2.0 BN

INDIA$1.9 BN

CHINA $8.4 BN

The opportunities in China remain vast compared to other emerging markets, even the other BRICS


A deeper look at China’s Consumer Market Rise of the middle class

Major shift in urban household income between 2010 and 2020

The future China domestic market will be driven by the emerging urban middle class

Source: “Winning the $30 trillion Decathlon: Going for Gold in Emerging Markets,” McKinsey Global Institute

82%

6%2%

7%

36%

51%

6%Affluent

(>34K per year)

Lower class(6K-16K per year)

Poor(<6K per year)10%

2010 2020

Middle class(16-34K per

year)

Non traditional players (disruptors) are emerging


Shifting landscape…

Source: China Statistical Yearbook, KPMG Analysis

Construction growth continues in inland cities

Jiangxi

24%

21%

19%

18%

14%

12% 11%

10%

1%1%

2%

8%

Shanghai

Beijing

Dalian

Xiamen

Harbin

Shenzhen

ShijiazhuangUrumqi

Xi’an

Haikou

Zhengzhou

Chongqing

Chengdu

8%

5-year CAGR change in finished construction by floor space

1 Slowing coastal markets

2 Development “goes west”


A complex logistics environment

1. Supply chains are still developing

• Becoming more complex• Require more control over

lead-time, service levels, cost and working capital

• Competitive advantage

2. Different regions / market segments require customizedlogistics network structures and more targeted services

3. A responsive supply chain is essential – move away from a single point of source and distribution

4. Using local distributors can support relatively quick expansion with less investment and lower risk level

5. Focussing on Logistics at the outset - is critical to success

Internet of things



“The Internet of Things (IoT) is the network of physical objects or "things" embedded with electronics, software, sensors, and network connectivity, which enables these objects to collect and exchange data.

The Internet of Things allows objects to be sensed and controlled remotely across existing network infrastructure, creating opportunities for more direct integration between the physical world and computer-based systems, and resulting in improved efficiency, accuracy and economic benefit.

Each thing is uniquely identifiable through its embedded computing system but is able to interoperate within the existing Internet infrastructure. Experts estimate that the IoTwill consist of almost 50 billion objects by 2020.”

Source: Wikipedia

Making ‘dumb’ things ‘smart’ by connecting them to the Internet

A Definition


Why IoT Matters


1. Wine Quality EnhancingMonitoring soil moisture and trunk diameter in vineyards to control the amount of sugar in grapes and grapevine health.

2. Green HousesControl micro-climate conditions to maximize the production of fruits and vegetables and its quality.

3. Meteorological Station NetworkStudy of weather conditions in fields to forecast ice formation, rain, drought, snow or wind changes.

4. CompostControl of humidity and temperature levels in alfalfa, hay, straw, etc. to prevent fungus and other microbial contaminants.

5. HydroponicsControl the exact conditions of plants grown in water to get the highest efficiency crop

6. Animal TrackingLocation and identification of animals grazing in open pastures or location in big stables.

Source: Libelium

Use Case – Smart Agriculture


“IoT technology is driving the concept of ‘precision agriculture’. Precision agriculture is the use of technology aimed at improving growers’ decision-making through data analytics. It includes software, such as big data solutions and farm management tools, and hardware, such as drones and satellites. Development of IoTtechnologies is likely to drive this segment in the long-term.

Currently, growers make uniform decisions across large plots of land, which can lead to high variability of crop yield across the farm. Integration of sensors into fields will improve the availability of localised information to growers regarding temperature, soil moisture, and soil nutrients. Drones and satellites will provide real-time snapshots of farm situation.

The aim of ‘precision agriculture’ is to reduce uncertainty for growers, minimise variability of crop production and ultimately increase crop yields.”

Ros Harvey, CEO, The Yield

Image source: www.theyield.com

IoT Precision Agriculture


Piers Hogarth-Scott Director, Digital Consulting KPMG Australia 0405 151 971 [email protected]/app

THANK YOU

Food for thought

IN CLOSING

AGRIBUSINESS GIPPSLAND AND KPMG FORUMFeb 16, 2016 · 10:00am Welcome PaulFord, Chair Agribusiness...

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