Tuesday, September 20, 2016
What incensed me enough to write about this were Labour’s Damien O’Connor and some Green MP waffling on about what and how we should be producing and marketing ourselves. I say waffling as both seem to draw no distinction between marketing ourselves as clean and green and marketing ourselves as organic producers of food, as if these two things were interchangeable. These terms are not interchangeable they are very different with very different consequences for our economy.
I need to make it quite clear that I am not anti-organic farming, it’s a niche area of the economy where a few producers can make good money. The key thing to remember with Organics though is that it relies on the rest of the world’s (or a major portion of it) economy doing really well. As successful organic farming is highly dependent upon people having a high discretionary income and as such being prepared to pay a substantial premium over and above a non-organically produced product; their desire for such product drops away quickly when times are tough.
A perfect example was the global financial crisis in 2008; it killed the market for organic milk; the market and the price for it went through the floor. It’s only in the last coupler years that Fonterra has again sought to ramp up its organic milk supply and paying a decent premium for it.
You need a considerable premium for organics because as a general rule your productivity is considerably less. How much less is debateable, but anecdotally based on samples and scaling up, possibly 30 to 40% less than what we produce now. Some would say well the difference in price would outweigh the loss of production, but quite bluntly that would be crap because the reality is that all these niche markets are limited in size and as such it doesn’t take too much extra product to flood such a market which then means the price drops dramatically and hey presto you end up with the price you were already getting for non-organically produced food, but now producing a lot less of it.
Accordingly for Green MPs to continually harp on about organics being the way to go for New Zealand and citing Fonterra with organic milk as an example, shows their ignorance and complete lack of understanding of the market for such a product.
Again good luck to any organic farmer supplying their niche market, but don’t try and tell the rest of us this is what we should all be doing, because if we all did, we would swamp the market and destroy any premium they presently gain.
The clean green image is a different story: this is not something that applies only to organics, this is about our mountains, our rivers and lakes, our air and beaches and how we feed and raise our animals on grass and wide open spaces.
This is the marketing story that needs to be associated with virtually every food product we sell overseas. We need to continually reiterate this story to the rest of the world, have labelling and packaging that reflects it. All brand names need New Zealand in big letters, so the word New Zealand becomes synonymous with the clean green image we wish to promote.
All packaging should be in colours that back up this clean green image we wish to promote, i.e. blues, greens, clear water, pictures of mountains and rivers etc, animals grazing in wide open spaces. This sort of marketing, which some companies presently do well, others not so, is what helps to differentiate our product from other countries and in turn allows us to obtain a premium (certainly not as much as organics) as the market we are targeting is more mainstream and inevitably will still be price sensitive but nevertheless it’s a premium that we obtain simply because of where it has come from.