NZ remains lowest-cost milk producer - report
The cost of producing milk in New Zealand continues to compare favourably with other exporting regions despite a lift in production costs over the past five years.
To say New Zealand was haphazard in its marketing approach was probably too generous, Palmer said at the HortNZ conference. But he also challenged HortNZ to look at whether aiming to be a $10 billion industry by 2020 was “aspirational enough”.
Palmer said we did have good entrepreneurial initiatives and people with industry endeavour and energy. “But it is poorly coordinated and in strongly emerging markets it will be to our detriment.”
Palmer said McDonalds was acknowledged to have the best market position in the world.
“What they do – and what we must do – is intensively research the market, the factors in the market, the location issues, the changing demographics and how and where they should promote themselves despite the fact they have this fantastic product.
“Before we entrench ourselves in low leverage in those markets, we have got to have a different approach and that doesn’t start with a fabulous product. It starts with understanding the market and the cost and value chains in the market and how they are changing.”
Palmer said we need to admit most Asian nations are instinctive traders, some have been trading for thousands of years and we are just starting. “So we should accept they will be much smarter, much brighter and much better prepared than us. We need to acknowledge entrepreneurs who have already trodden that path.
“Rather than talk about the quality of our product and how we grow more of it, we should start in the market, specifically China and the China regions, to understand supply and value chains in those markets. Who makes decisions, how decisions are made, what you have to do to influence decisions and potentially where you can invest to get some market leverage which you will never get from Auckland or Central Otago.
“What we need is the development of a ‘New Zealand Incorporated’ operational-country capability to provide infrastructure for New Zealand exporters or importers. It should not be entirely dominated by the operatives in those markets who will take more share of the value chain unless we do something to protect it.”
