KPMG: Gold Sponsors of the 2020/21 Market Report
Ian Proudfoot, Global Head of Agribusiness, Partner - Audit at KPMG
Doing what matters is at the heart of KPMG’s values and culture, and an essential component of the company’s common purpose of fuelling the prosperity of New Zealand.
With a commitment to improving the health, wealth and wellbeing of all New Zealanders, KPMG chose to support the OANZ 2020/21 New Zealand Organic Sector Market Report as a gold sponsor. The Market Report explores the growth of the New Zealand organic market by capturing the current state of the domestic market across the entire supply chain.
Here, Ian Proudfoot, Global Head of Agribusiness, Partner - Audit at KPMG, shares his thoughts on Aotearoa’s growing organic market.
As a Gold sponsor, why is the Market Report so important for the organic sector?
We want to support the areas of New Zealand's food and primary industries where there is real opportunity to create and realise value, that will ultimately create wealth and prosperity that benefits all New Zealanders. We see the Market Report as a very useful contribution to the long-term discussion around what we need to do with our food growing systems, and how we offer our products to consumers.
Additionally, we see the report as a very useful element in the current debate around what regenerative farming means for New Zealand. We were keen to ensure that the report has resources available that would enable it to get some really useful economic data, and explore some of these key themes that are important to not just the organic sector, but the whole agricultural sector in New Zealand.
Where do you think the organic sector is headed?
We see long-term real opportunities for growth in respect of the organic sector, but also, we see the organic sector having a chance to take a lead in giving people a pathway to different farming systems. For example, how can the organic sector help conventional farmers make steps towards farming in a way that further supports the environment? How can they take steps towards regenerative? How can they learn to utilise some of the abilities that organics has demonstrated in certifying the quality of product? How can they learn and convert those stories into stories that are valuable to consumers and therefore generate higher returns?
The global organic sector has benefited from the fact that there is a recognized brand in certified organics. But it is a sector that's always been exposed to changes in economic circumstances. If something in people's financial capability reduces, then their willingness to buy goes down. It will be very interesting to see in the data how the sector has come through, or is responding, to COVID-19.
Ultimately, organics appeals to consumers who have a desire to commit to what they eat, with positive benefits for the planet and positive benefits in respect of their own health. Our overall assessment of where markets are heading is that this group of consumers will continue to grow — and grow strongly — into the future.
Going forward, what do you perceive as some potential roadblocks or challenges for the sector?
Firstly, I think the sector itself could be a challenge to its future. There is an element within the organic sector that is incredibly passionate about pure organic — the concept of organics in its rawest, purest sense — that raises concerns or challenges anybody that doesn't come up to meet that gold standard. I think it's important that if the organic sector is going to thrive, it becomes a broad church and recognises that within organics, there may be more than one level that consumers will be able to afford to engage with or want to engage with. As a consequence, it's important that the sector thinks about what the journey towards gold standard looks like, where people can gain certification, and how can it help people to progress quickly, rather than challenging people for not reaching the gold standard straight away.
Secondly, the sector has to address the perception of its products as more expensive, and instead change the narrative towards the value that's been delivered by the products — in terms of economic value, benefits for an individual’s health, and also benefits for the planet. There is some work to be done to make consumers stickier than they have historically been, so when we do get economic downturns there is not a mass migration back towards conventional farming systems.
Thirdly, it's important that the sector comes to what OANZ is talking about in its Regenerative Capital webinar — where is the funding going to come from to enable it to progress at speed. The sector has some really interesting opportunities in some of the new sustainable finance tools that are becoming available. So, working out how it can access new capital, and give the capital providers the necessary assurances that meet sustainability standards that they are looking for is important.
If the sector doesn’t address where capital comes from, then there is a possibility that it will have great products and a great solution for the planet — but doesn't deliver on the opportunity to the extent that it could. That may potentially mean the sector has to open itself up to new capital providers, which may come from the more conventional part of the agriculture sector — as long as the investment is coming with the right purpose and is delivered in a way that enables the sector to achieve its aspirations and without compromising its values this should be explored.
It's a matter of finding that middle ground, that happy place where both parties can exist together, and recognising that organics and the mainstream conventional agriculture are very likely to become closer together— and finding a comfortable place where the two can operate effectively and increasingly connected.
The organic sector can make a real contribution to delivering the ambitious Fit for a Better World vision the government has articulated, but the conventional sector needs to be seen as an ally in something that's ultimately moving us all to a better place.