reviving agriculture
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Reviving Agriculture. How to move from planning to action T&T – March 1, 2010. What it really comes down to. Agriculture is a business!. So, who is going to produce all the ‘cheap food’ everyone is talking about?. Me either!!. Not me!!. Setting the global context. - PowerPoint PPT PresentationTRANSCRIPT
March 2010
CARDI Lecture
©
Reviving AgricultureHow to move from planning to action
T&T – March 1, 2010
March 2010
CARDI Lecture
©
What it really comes down to
Agriculture is a business!
So, who is going to produce all the ‘cheap food’ everyone is talking about?
Not me!! Me either!!
March 2010
CARDI Lecture
©
Setting the global context
March 2010
CARDI Lecture
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We need to follow the right model of thinking
Forecast Model – is dangerous
because it perpetuates the traditions of the
pastForesight Model – the foresight
model, is essential
because it identifies the
opportunities in future
Foresight Model
+5-10 yrs
Forecast Model
+1-2 yrs
Today
Future Shapers
‘Best Bets’
March 2010
CARDI Lecture
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The global ‘triple whammy’
Energy costs
Food prices
Resources
March 2010
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3 big challenges to 2030
1.7 billion more mouths to feed – 50% more food
1.8 billion live with absolute water
scarcity
Ratio of arable land / population declines 40-55%
March 2010
CARDI Lecture
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Key trends shaping global agriculture
Technologies
More wealthier consumers
Increasing population
Renewable resources
Land and water constraints
Health and wellness
Security of supply
Sustainability
Climate change / Environment
March 2010
CARDI Lecture
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Agriculture transition roadmap
2010 2015 2020GM/ non GM bio-entities
Multiple trait GM and non GM enhanced bio-entities – genetic markers
Bio-pharming – GM animals and plants
Major supply constraints lift global prices and drive technology driven alternatives
Food as a fuel Food is your medicine
Bio-fuels 1 – 2% of market
Bio-fuels 5 – 10% of market
Bio-fuels are now in decline
Food supply / demand concerns
Non-sustainable agriculture Sustainable agriculture
Extensive rural agriculture Intensive urban agriculture – feeding cities
Like cheap energy and water, the era of cheap food has now become part of history. The best positioned are ‘winners’
Demand for renewable commodities grows rapidly
Limited ‘Factor X’ value adding Extensive ‘Factor X’ value adding
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FUTURE BUSINESS
BIG High volume mass
production units that deliver on a global scale,
have the latest technology and lowest
cost.
UNIQUESmart,
customised, high value, niche businesses
Trends in business – big or unique
There is no middle ground any more
March 2010
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Global food security trends
SwitzerlandJapan
Sweden
ChinaSingapore
Some Arabian countries
Favour offshore lowest cost options
Favour high cost home production and subsidies
Globally competitive food prices
No or low subsidies for farmers
Highest food prices in the world
Most highly subsidised farmers
At one extreme.... .....and the other
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What about the Caribbean?
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Poor image
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Local food is often not ‘cheap’.
Product Cost % more in TT CommentNZ TT
Bananas $8/kg $15/kg +88% Imported into NZ
Pineapples $10 ea $20 ea +100% Imported into NZ
Tomatoes $10/kg $15/kg +50% Greenhouse in NZ
Corn $1 ea $2 ea +100% Both field grown
The cost of much home-grown food in the Caribbean is helping keep people poor!
March 2010
CARDI Lecture
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What’s a mega-farm?
The largest dairy farms in NZ now milk 3000+ cows on 1,500+ acres.
China recently paid US$ 10.5 billion to The Philippines and Indonesia to grow food and fuel on 1.3 million+ ha.
An average Idaho potato farm is 1,500 acres, grows 500 acres of potatoes a year, and pays US$ 50,000 for labour.
An average Australian extensive farm is 3,500 hectares (8,750 acres) and half is cropped each year.
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What is food security in the Caribbean?
“Food security means you need to be able to feed yourself.If it is based upon core competencies then it would mean you would focus
on those areas which you are best at. Food security is not just about growing your own food.”
“There is a need to define what is meant by ‘national food security’. In my view it is the ability of a nation to feed itself with the least risk – at least in the basic food area. It doesn’t mean we need to grow all our own food. It
means we need to set up a structure to minimise risk. In that case it may be better to contract the growing of food to Guyana if they can produce it more
competitively.”
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Conflicting expectations
Commercial ‘Public good’Being highly focused Be everything to everyone (and do nothing well)
The commercial dividend The public good dividend
Maximising profitability Reducing the price of food
Being competitive Not hurting small farmers
Be high-tech Provide more jobs
Intensive cropping (high value) Extensive cropping (low value). Small size and economy of scale issues
Commercial agenda Political agenda
High value niches Only the elite can afford to buy your food
Exporting (high value?) Importing (low value?)
Business security Food security
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CARDI Lecture
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‘Promoters and resistors’
Aging players, traditional attitudes
Poor inefficient value chains / marketing
A lack of trust and the sharing
of ideas
‘Waiting for something to
happen’- no R&D
Low value extraction / lack of IP protection
AGRICULTURAL SECTOR TODAY
THE RESISTORS
THE PROMOTERS
SECTOR 2020
Passionate people breaking
with tradition
Smart efficient value chains /
marketing
Cooperation, networking, and
synergies
Making things happen – being
innovative – R&D
High value extraction / IP
protection
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What really drives agriculture?
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What I want and what I need
What I want is priceless!
What I need is the lowest
price!
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Let’s talk about cocoa
Commodity products and
services
World Class
Unique
+1000%
+400%
‘First Class’
‘Business Class’
‘Economy Class’
$ 300 /kg $ 105 /kg$ 1500 /kg
$ 23 /kg $ 12 /kg
$ 3 /kg
March 2010
CARDI Lecture
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Let’s talk about Sea Island cotton
Commodity products and
services
World Class
Unique
+1000%
+400%
‘First Class’
‘Business Class’
‘Economy Class’
$ 22 / kg
$ 400 $ 500$ 660 /kg
$ 42
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Customers now drive the value chain
Channels / alliances / key partners
CustomersProviders
R&D / Knowledge / Education / Networks
State agencies / support services
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‘Tobago Wild’ value chain
Advance electronic
customs clearance
FishermanAggregator
E-commerce interface
Door to door logistics
New York restaurant (and
customers)
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CARDI Lecture
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Grenada Choc value chain
Local supermarkets
UK / EU Distributor
Online Retail
High-end Retail
High-end Retail
Online Retail
USA Distributor
By sea/air
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What are Caribbean entrepreneurs doing in
agriculture?
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What’s happening in the region?
Almost without exception Caribbean entrepreneurs in
agriculture have gone ‘unique’
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Entrepreneur success factors
Funding & Scaling - up
Value - add
Value chains
Science & Technology
Novel uses
Cooperation
Branding
Sustainable
Marketing
Exporting
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Tropical Farm Produce - Dominica
Exports to the region/USAWin-win relationhips
A networked business
Darwin Telemaque
9 of the 10 success factors
TFP
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SVG Dasheen Growers Network - SVG
Exports to the UK/EuropeWin – win alliances
100% increase in value
Jethro Greene
9 of the 10 success factors
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Baron Foods LtdSt Lucia
Grown 1000% in 15 years Exports to Europe, North America
and Caribbean countriesAlso does private labels
9 of the 10 success factors
Ronald Ramjattan
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Goodfellow FarmsThe Bahamas
‘Mini-greens’Appropriate technology
Customised services
Karin & Ian Goodfellow
9 of the 10 success factors
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USDA ApprovalInternational markets
Internet marketing
Denis Noel
Nut-Med Grenada
9 of the 10 success factors
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The Grenada Chocolate Co.
Makes premium organic chocolate
Markets only in high end offshore outlets
One of the top 4 brands globally
Mott Green
9 of the 10 success factors
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Montpellier Farms - Antigua
Exports to Europe / USAWin-win relationships
Appropriate technology
Micha Peretz9 of the 10 success
factors
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Setting priorities
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Agriculture opportunity areas
FOOD FOR HUMANS & ANIMALS
BIOTECHNOLOGY & HI-TECH FARMING
AGRICULTURAL SECTOR
ENVIRONMENTAL & AESTHETIC USES
PERSONAL HEALTH, WELLNESS,
PERFORMANCE
INDUSTRIAL RAW MATERIALS
BIO-FUELS AND ENERGY
SUPPORT SERVICES & INPUTS
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But not every growth opportunity is appropriate
RatingSub-sector niche Opportunity area Potential
resource availability
Potentialcapability
availability
Potential value-add
National food security To produce more food internally but by using modern growing technologies to be competitive internationally.
♦♦ ♦♦ ♦
Organic food To produce organic products for the tourism, processing, and export sectors.
♦♦ ♦♦ ♦♦
Alternative sources of animal feeds
To develop alternatives to increasingly costly imported animal feed.
♦ ♦♦ ♦
High value gourmet food products
Aimed at the high-end connoisseur market locally and globally.
♦♦♦ ♦♦ ♦♦♦
Ethnic food products More sophisticated, well branded, and well marketed ethnic food products.
♦♦♦ ♦♦♦ ♦♦♦
Heritage fruits and vegetables
Mainly for the regional tourist trade but there may be some specialist export.
♦♦♦ ♦♦ ♦♦♦
Exotic meats To exploit high value niche opportunities for unique farmed ‘wild meats’.
♦♦ ♦ ♦♦♦
March 2010
CARDI Lecture
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The ‘Best Bet’ project approach with key players
Global Foresight & Global Growth Market Niches
Capabilities & Enablers Assessment
Best Bet 1
Best Bet 6
Best Bet 2
Best Bet 3
Best Bet 4
Best Bet 5
Business Investment Case Completion – Top 3
Commercialisation Action Plan
Phase 1
Phase 2
Phase 4
Phase 5
Phase 3
March 2010
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What’s viable?
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Making decisions
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Making things happen
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Moving towards a common ‘destination’
H1: Operational
View 1 Year
H2: Strategic
View 3-5 Years
H3: Long Term Vision
10 Years
Alignment of Key Stakeholders
OUTCOMES
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Taking a systems approach
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Providing a framework
The longer term vision for the business
Key strategic goals that need to be realised
Annual business and operational plan implementation
Horizon 35 Years +
Horizon 11 year
Horizon 22-3 years
The 3 business planning horizons
March 2010
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Cocoa sector roadmap
2010
2013
2016
2020
Develop win-win alliances with key offshore partners
Release first PEA based pleasure products
Identify – secure key high value channels
Advanced proof of effect clinical trials
Achieve US$ 10 /kg for Trinitario cocoa
Achieve US$ 20 /kg for Trinitario cocoa
Achieve US$ 30 /kg for Trinitario cocoa
Move to an integrated networked business model
Release health related product range
Survey biotypes and confirm 4x factor X variations
Initial proof of effect clinical trials
Develop S&T based rating scale
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Commercial targets and
KPIs
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Strategic focuses
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Using benchmarks
Un-competitive Competitive
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The work environment
Unfriendly Friendly
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Actions and accountability
Focus area Action Item Who By when TargetProduction Crop choice Manager/Marketer 1 month Av 20% GM *
Production Crop choice and quality of outcomes Manager/Marketer 24 months Av 30% GM
Production Crop choice and quality of outcomes Manager/Marketer 36 months Av 40% GM
* Forecast
March 2010
CARDI Lecture
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How to revive agriculture?
March 2010
CARDI Lecture
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10 ways to revive agriculture in the Caribbean
1 The right scale of operations (viability - $$$/unit area)2 The right product/crop focuses (more on the unique)3 The right value propositions (more high-end niches)4 Develop modern win-win value chains (> share of end-price)5 The right branding and marketing approach (less trading)6 More alliances, partnerships and networks (must be win-win)7 Appropriate technologies (often quite simple)8 Attractive to young people (‘friendly’ working conditions)9 Take a systems approach (agriculture is a business!)
10 Financially viable (ROI of 10 – 20% - minimum!)
Agriculture is a business!