IIQQ AGRIBUSINESS - Thought for Food -

CRADLE COAST FOOD INDUSTRY VALUE-ADDING INITIATIVE

SUMMARY REPORT ON OUTCOMES

PREPARED FOR THE

Cradle Coast Authority

Industry & Market Analysts

95 Simpsons Rd Bardon 4065 Australia

Telephone: 07 3311 1565

Email: [email protected]

IQ Agribusiness - Thought for Food -

PO Box 2055 Toowong 4065 Australia

Telephone: 07 3371 5930 Facsimile: 07 3876 0074

email: [email protected]

September 2003

SUMMARY REPORT

TABLE OF CONTENTS

EXECUTIVE SUMMARY

1. INTRODUCTION ............................................................................................................1

2. APPROACH & METHODOLOGY...............................................................................................2 2.1 Project Approach .........................................................................................................2 2.2 Limitations of the Approach........................................................................................3

3. THE CRADLE COAST FOOD INDUSTRY ......................................................................................4 3.1 Regional Profile..............................................................................................................4

3.1.1 Geography..............................................................................................................5

3.1.2 Inputs – agriculture & marine production ..........................................................5

3.1.3 Demographics ........................................................................................................5

3.1.4 Food Industry...........................................................................................................5

3.1.5 Distribution of Food Processing Businesses .........................................................6

3.1.6 Location of Employees..........................................................................................7

3.1.7 Number of businesses in industry categories.....................................................8

3.1.8 Employment in each category............................................................................9

3.1.9 Low and High Level Processing..........................................................................10

3.1.10 Workforce by business structure ........................................................................11

3.2 Addressing the Issues..................................................................................................12 3.2.1 General Business services....................................................................................12

3.2.2 Specialised business services..............................................................................12

3.2.3 Information ............................................................................................................13

3.2.4 Technical Advice .................................................................................................13

3.2.5 Research Services ................................................................................................13

3.2.6 Training facilities....................................................................................................14

3.2.7 Packaging .............................................................................................................14

3.3 Summary.......................................................................................................................15

4. CRITICAL ISSUES ..........................................................................................................15 4.1 Megatrends for the Food Sector ..............................................................................15

4.1.1 Globalisation .........................................................................................................15

4.1.2 Demographics ......................................................................................................16

4.1.3 Identity Preservation & Food Safety..................................................................16

4.1.4 Consumer wellbeing and health.......................................................................17

4.1.5 Convenience ........................................................................................................17

© IQ Agribusiness, 16/10/03

SUMMARY REPORT

4.1.6 Eat at home – ‘cocooning’ ................................................................................18

4.1.7 The Weightless Economy.....................................................................................18

4.2 The Australian Food Sector........................................................................................19 4.2.1 Capital and Risk....................................................................................................20

4.2.2 Environmental Impacts........................................................................................21

4.2.3 Food Sector Capacity.........................................................................................21

4.2.4 Whither the Future?..............................................................................................22

4.3 Previous Work in the Tasmanian Food Sector ........................................................26 4.3.1 Tasmanian Food Park Forum ..............................................................................26

4.3.2 CCA Regional Development Survey ................................................................27

4.4 Cradle Coast Food Sector Consultation, 2003 ......................................................28 4.4.1 Food Sector Consultation ...................................................................................28

4.4.2 Finding Solutions ...................................................................................................35

4.4.3 Overcoming the Limitations ...............................................................................35

4.4.4 Encouraging the success factors ......................................................................37

4.4.5 Conclusion.............................................................................................................39

5. INDUSTRY DEVELOPMENT OPTIONS ........................................................................................39 5.1 What are the Options?...............................................................................................39 5.2 Conclusions ..................................................................................................................41

DISCLAIMER ..........................................................................................................43

ATTACHMENT 1 ..........................................................................................................44

ATTACHMENT 2 ..........................................................................................................46


SUMMARY REPORT I

EXECUTIVE SUMMARY

The Cradle Coast’s food sector includes a diverse range of activities, and makes a significant contribution to the regional and state economy. The sustainability, profitability and competitiveness of this sector will continue to be a key driver of the region’s prosperity.

From a national perspective, the food industry in the Cradle Coast region (the Region) involves a small number of companies employing relatively few people in a comparatively isolated part of the country with a very limited local market.

The industry is supplied with high quality produce based on world class production systems. Four companies (6% of the total) are owned by interests outside the Region and in each case constitute a small part of the owners’ business interests. These companies employ 36% of the industry’s workforce. The balance of the industry is characterised by a large number of small enterprises (20% of the workforce) and a small number of larger enterprises employing 44% of the workforce.

While the Region appears to be quite well serviced with various support systems, there is no (and not likely to be any) significant food research capability in the region.

As part of the CCA Food Value Adding Initiative, the project team consulted over sixty stakeholders in the Cradle Coast food sector during February – April 2003. The major issues identified during the consultation are similar to those defined during the CCA Regional Development Survey in 2002.

The issues that are most often raised relate to:

• Processing & Packaging • Innovation • Co-location.

Processing & Packaging related issues range from a notion of processing the ‘waste’ product that is left in the paddock at harvest (some say this is up to 33% of the crop), to a need for a particular piece of equipment.

Many respondents recognise that Innovation is critical to further growth in the industry. Responses range from notions of apathy at all levels holding the industry back, to specific examples of new opportunities. In reality, many respondents recognise the importance of innovation but felt that the Region did not have an environment that fostered innovation.

Few respondents actually mentioned Co-location as a concept, but many raised issues that could be at least partially overcome through co-location of enterprises (physically or virtually). Examples of these issues include:

• Insufficient co-operation between businesses • A lack of co-ordination of effort between/within government and industry


SUMMARY REPORT II

• Shared facilities • Development of value chain alliances.

Most respondents are too focused on their individual concerns to see the prospects for co-operation. Though not isolated as a specific issue, many respondents saw access to information as a critical driver as innovation and development.

The key issues raised during this project can be captured within four broad categories:

1. Support – for a large number of the issues raised the industry is in need of a support system – some financial, some professional and some technical

2. Research – for some specifics there can be an R&D solution. In a more general sense the entire industry would benefit from a better understanding of innovation, how it is applied and how it is captured. A research and training capability working in close contact with the industry may provide that platform

3. Significant initiative – a limited number of large initiatives are likely to have a more lasting impact on the Region – if they can be identified

4. Long term sustainable impact – while the CCA funds must be disbursed within three years it is desirable to put in place an initiative that will last beyond that time.

In order to address these issues we have explored three strategies, providing a guide for the development of possible business options. These strategies are:

• Strategy 1: Research based underpinning of the drive for an innovation culture. While some issues have a technical or research solution, the longer-term problem to be managed is one of fostering innovation and a culture of entrepreneurship. Currently alive and well in certain quarters these personal attributes can be taught and supported in a far more deliberate system of research, training, knowledge management and community awareness

• Strategy 2: Provide resources to support the activities of businesses in the Region. This could be a dedicated facilitation resource or simply financial support for existing practitioners.

• Strategy 3: Target a significant project/s with potential to impact on the industry, for direct funding. A Food Precinct concept is one example of a major initiative that could deliver a solution to a number of key industry issues.

Rather than select a particular strategy, we have identified the following three business options as having the potential to deliver outcomes that will address the key industry issues:


SUMMARY REPORT III

1. Food Processing Precinct

Supporting the development of a food processing precinct (FPP) in order to ensure the delivery of a range of hard assets (equipment, facilities, etc) that can be used by a number of the Region’s food industry businesses. The FPP will have the potential to develop into a significant establishment and could attract a wide range of food processing related stakeholders to co-locate.

2. Centre for Food Innovation

This Centre would be established to specialise in food innovation rather than technical food research – which is better managed through strong relationships with existing facilities elsewhere. The Centre’s objective would be to develop an innovative culture through teaching, collaborative industry projects and appropriate technology application. The Centre could be located within the Burnie campus of the University of Tasmania, but maintain a strong working association with other education and research providers around the world.

3. Food Innovation Network

This option involves an investment in the human capital of the region. It identifies talent, harnesses resources and stimulates individual excellence, creating a culture of innovation throughout the region. In reality, the Food Innovation Network should be aligned with one of the previous options.

In this instance, and given the likely delay in establishing a Food Processing Precinct (FPP), we believe that the Food Innovation Network (FIN) and the Food Innovation Centre (FIC) should be treated as one Option. Under this scenario, the FIN will operate out of an office located within the FIC where the facilitator/s will have ready access to and work closely with FIC staff and students. Ultimately, the FIN will act as a conduit between the research and development capabilities of the FIC and the local food industry practitioners.

These Options, and possible implementation strategies, are discussed in more detail in the full report to the CCA Board.

The preferred way forward is for the CCA Board to address the major issues affecting the Region's food industry by:

• Further investigating the viability of Option 1, the Food Processing Precinct, and pursuing the development of this Option if the viability assessment is favourable

• Immediately begin discussions with the relevant parties to establish a Food Innovation Centre/Network. The FIC/Network has a very wide impact as it engages with all aspects of the food industry and assists the industry to find its direction, focus on its strengths and work as a unit to meet future challenges.

This choice is in some ways more complex than the others as it has soft boundaries, though it is also more likely to produce better outcomes in the long term. This Option has been designed to take into account:


SUMMARY REPORT IV

• issues raised by industry stakeholders • current business development thinking • understanding of the regional development context • the value of innovation • the potential for the CCA to maximise its long-term influence.

The one important limitation that this option must face is the eventual depletion of the funding. This may not be a serious limitation if the outcomes are significant and noticed by potential future supporters. It will however be a distraction.


SUMMARY REPORT 1

1. INTRODUCTION

The Cradle Coast Authority (CCA) is committed to the creation of new business activity, investment and employment through increased processing and value adding in the region’s food sector.

To assist in this, the CCA commissioned a research project to:

1. Assess the current status and trends of business activity, skills, facilities and products associated with food value-adding in the region, opportunities for future growth and critical barriers to further development of this sector

2. Identify specific aspects or sub-sectors of the industry with the greatest potential to create new investment and long-term employment opportunities through strategic investment of Sustainable Regions funds

3. Evaluate options to enhance development in specific areas through strategic investment in major projects such as dedicated business incubators, cluster-based structures or specialised training, services or facilities

4. Develop business-case proposals for preferred investment options as a basis for more detailed business planning, market analysis and establishment of partnerships for implementation

5. Recommend appropriate industry-based business structures and/or partnership arrangements to oversee further development, implementation and management of proposals.

The CCA anticipated that the project would include the following elements: • audits and surveys of existing business activities, facilities and services in the

Cradle Coast region, including consultation with local industry participants, government and education and training bodies

• reference to current state-wide industry strategies, reports and objectives and previous regional investigations based on the ‘Food Techno Park’ concept

• appointment of an individual or firm with relevant experience in the Cradle Coast region, on a sub-contract basis, to coordinate ‘on-ground’ investigations, local information and contacts.

This report presents the findings of the project and makes recommendations for the CCA to enhance the value of the food industry in the Cradle Coast region.

Note: Some of the information disclosed to IQ Agribusiness during the industry consultation, and presented in the full version of this report, is commercially sensitive and intended for the consideration of the CCA Board only. This version of the report has been edited to remove details of individual industry responses, and is intended as a summary of outcomes and recommendations suitable for public release.


SUMMARY REPORT 2

2. APPROACH & METHODOLOGY

2.1 Project Approach

The aim of this consultancy project is to identify viable long-term food industry opportunities that will enhance the economic, social and environmental resources of the Cradle Coast region.

Our approach aims to capture a ‘whole of system’ view. While time constrained the extent of the consultation, we consulted representatives of the following industry sectors: • Government – State Development; DPIWE • Farming – TFGA • Processing – across a range of industry sectors • Packaging • Education • Research • Retailing • Business Services.

The list of industry participants/stakeholders was compiled from information provided by the CCA and Department of Economic Development (DED), and supplemented by contacts identified during the consultation process. The project Brief required that we restrict our consultation to current industry participants operating beyond the farm gate, which restricted the number of interviewees to around sixty (Attachment 1).

In addition to direct face to face interviews, a short ‘survey’ was sent to all known food industry participants in the region. A copy of the ‘survey’ is shown as Attachment 2. Members of the ‘survey’ population are included in Attachment 1.

The study sought people’s views on the prominent issues affecting the food sector and/or their business in the Cradle Coast region. The focus was on identifying ‘big picture’, sector wide issues, the amelioration of which will have a regional impact.

Interview responses were collated and assessed to identify common, region-wide issues that are hindering the growth of the Cradle Coast food sector.

Our approach recognises that successful regional development is a process driven from the grass roots organisation of people who identify issues of concern and devise ways to address those issues. Successful community development depends completely on a process that harnesses and resources the participation of the people in the community.

In rural areas, programmes that have historically worked well are those that were able to listen sympathetically to local people, and apply the specialised knowledge


SUMMARY REPORT 3

that makes particular communities work. Generally, in rural areas, there is strong scepticism about programmes that are unable to reflect the local realities1.

In the process of collecting information certain key topics were consistently identified as matters of specific influence in the food sector. They are: • Innovation • Entrepreneurship • Industry Clusters • Success factors • Limiting factors • Value Adding.

Expert summaries of each of these topics are provided in the full version of this report to the CCA Board, and are available on request from the Cradle Coast Authority.

Based on the perspectives offered during the consultation and those gleaned from the desk research, this report presents two industry development recommendations for the CCA to consider.

2.2 Limitations of the Approach

As with any research project, there are limitations inherent in the approach outlined above. These include: • Restricting the ‘pool’ of interviewees to existing food sector participants

eliminates the chance of finding potential sector participants who may be/have been discouraged from entering the industry by some critical issue

• In such a small region many long standing industry participants may know each other through industry associations, etc, and may not be as creative or original in their thinking as those who are new or on the edge of the industry

• In a small region/industry political imperatives may unduly influence perceptions and responses

• The process did not consider the pre-farm gate potential to impact on food value adding initiatives

• The exclusion of two key non food inputs - pyrethrum and poppies • The pool of interviewees did not include sufficient representation from the

farming sector, nor did it include representatives from the major food retail groups

• There may be many parties who have a stake in the Cradle Coast food industry but who are located outside the region, and so were not included (with a few exceptions) on the lists of interviewees

1 Cavaye Dr J, Holley A, Williams J. (2002), “Community Development Scoping Study”, Geoffrey Gardiner Dairy Foundation Ltd, Melbourne


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• Most importantly, the process did not include any consumer consultation, which should be a significant component of any move towards identifying value-adding opportunities.

These limitations must be remembered in considering the results of the project.

3. THE CRADLE COAST FOOD INDUSTRY

3.1 Regional Profile

The Cradle Coast’s food sector includes a diverse range of activities, and makes a significant contribution to the regional and state economy. The sustainability, profitability and competitiveness of this sector will continue to be a key driver of the region’s prosperity.

From a national perspective, the food industry in the Cradle Coast region (the Region) involves a small number of companies employing relatively few people in a comparatively isolated part of the country with a very limited local market.

The industry is supplied with high quality produce based on world class production systems. Four companies (6% of the total) are owned by interests outside the Region and in each case constitute a small part of the owners’ business interests. These companies employ 36% of the industry’s workforce. The balance of the industry is characterised by a large number of small enterprises (20% of the workforce) and a small number of larger enterprises employing 44% of the workforce.

A comparison with the Victorian food industry provides some perspective (Table 1):

Table 1 The Food Industry – Cradle Coast v Victoria Cradle Coast+ Victoria* Annual turnover $0.7bn $16bn Employment 2739 47000 Enterprises 64 1200

* The Department of Innovation, Industry and Regional Development, Victoria. Food Manufacturing Guide 2002

+ IQ estimate

The following profile describes some characteristics of the food industry in the Region. For the purposes of this profile the food industry refers to any business engaged in post farm-gate product processing but excludes local retail suppliers such as butchers.


SUMMARY REPORT 5

3.1.1 Geography

The Region comprises the nine local government areas (LGA) of the Mersey Lyell Statistical Region. It covers some 22,500 square kilometres which is approximately 33% of the area of Tasmania2.

3.1.2 Inputs – agriculture & marine production

Agriculture and marine production in the Region make a significant contribution to the food industry with production valued at $349.5m in 19993 – 43% of the State total. Total state wide turnover for the food industry is estimated to be $1.7b4, adding over 100% to the value of raw material production. Major products contributing to the Region’s economy are: • Vegetables 60% of state total • Meat 41% of state total • Dairy 63% of state total.

3.1.3 Demographics

In 2000, the Region had an estimated resident population of 108 236 persons (23.0% of the State). Of those, 43400 were employed, with 2739 being in the food sector5 (5.4% of total employed).

3.1.4 Food Industry

The Tasmanian DED has identified 64 businesses engaged in food processing in the Region6. There is a natural concentration of these businesses close to the major population centres (Table 2). Table 2 Cradle Coast Food Industry Profile7 Burnie C Cst Cir Hd D’Port Kentish King Is Latrobe W/W WC Area 618 932 4917 116 1187 1700 550 3532 9200 Pop. 18.9 21.07 8.05 24.27 5.55 1.71 8.22 13.62 5.52 Bus. 9 9 14 16 2 6 5 2 1 Empl. 425 352 586 976 55 250 60 30 5 Area in sq km Population in ‘000 Bus = no. processing food Empl = employed in food processing

2 AUSTRALIAN BUREAU OF STATISTICS, Regional Statistics of Tasmania. 2001. ABS Catalogue no. 1362.6 3 ABS op cit 4 Tasmanian Food Industry Strategy, Tasmanian Food Industry Council , July 2001. 5 Dept of Economic Development, Manufacturing Capability Register, Export Guide and Food and Beverage Unit 6 DED op cit 7 ABS op cit


SUMMARY REPORT 6

3.1.5 Distribution of Food Processing Businesses

While marine and agricultural production is relatively evenly spread across the Region, Chart 1 demonstrates that food processors prefer to locate along the coastal corridor. Access to skilled staff, transport networks and availability of suitable land are the most commonly stated reasons for this.8 Chart 1 The number of food processing businesses in each Local Government Area

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B urnie C entralC o as t

C ircular Head Devo npo rt Kentish King Is land Latro be Waratah West C o as t

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8 IQ Agribusiness interviews. Feb-Mar 2003

SUMMARY REPORT 7

3.1.6 Location of Employees

Chart 2 further illustrates the concentration of employees in the food processing sector along the coastal corridor - 66% of employees work between Burnie and Devonport, and 88% work between Stanley and Devonport. Chart 2 The number of people employed in the food processing sector in each Local Government

Area

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Burnie Cent ral Coast Circular Head Devonport Kent ish King Island Lat robe Warat ah West Coast

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SUMMARY REPORT 8

3.1.7 Number of businesses in industry categories

The Region’s food industry has been divided into seven categories to illustrate the distribution of activity and employment according to activity.

The largest business category (by number of businesses) is Fruit & Vegetables with a surprisingly large proportion engaged in (non-dairy) Beverages and Other processes. Chart 3 The number of food processing businesses by category of businesses. ‘Other’ includes honey, confectionery, ingredients, bakery ‘Beverage’ is non-dairy beverage

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Dairy Meat Fruit/Veg Seafood Beverage Other Packaging

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Businesses


SUMMARY REPORT 9

3.1.8 Employment in each category

39% of all people employed in the food industry are engaged in the Fruit and Vegetable category, 17% in Seafood, 11% in Meat and 26% in Dairy. While the Other and Beverage categories include 20 businesses, they employ only 3% of the workforce with an average of 6 employees per business. Chart 4 The number of food processing employees by category of business ‘Other’ includes honey, confectionery, ingredients, bakery

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Dairy Meat Fruit/Veg Seafood Beverage Other Packaging

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SUMMARY REPORT 10

3.1.9 Low and High Level Processing

Chart 5 presents the number of businesses according to the size of their workforce (in three categories) and also according to the level of processing undertaken. It shows that the high level processors (other than nationally* owned companies) tend to be larger in number but, on average, employ a small workforce. * Four nationally or internationally owned companies are all engaged in high level processing and have

large workforces (>100 employees)

Chart 5 The number of food processing businesses engaged in low/high level processing All corporately owned firms undertake high level processing

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No. o

f bus

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High process Low Process National

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SUMMARY REPORT 11

3.1.10 Workforce by business structure

Chart 6 demonstrates that the largest proportion of employees (80%) find work in companies with the largest workforce (>50 employees) regardless of the level of processing undertaken. Chart 6 The number of employees of food processing companies engaged in low/high level

processing

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SUMMARY REPORT 12

3.2 Addressing the Issues

The following is a brief description of the business services available in the Region that have a potential to address the key issues facing the industry. The key issues are discussed more fully in other sections of this report.

In general, the large businesses have no difficulty accessing these services at a national level. It is the small to medium sized enterprises that are most in need of a local service.

3.2.1 General Business services

The food processing sector is no different to any other business group in their need to occasionally access professional services. A number of these are available in the Region, while more specialised services must be sought elsewhere.

General business services can be obtained from a number of sources including: • Banks and accountants

While banks in many centres have been reduced to perform only elementary transactions, a number do offer the assistance of qualified staff to provide business financial advice. This service is only available in the major urban centres

There are 49 accounting firms providing business services in the Region.

3.2.2 Specialised business services

Specialised business advice can be obtained from:

• Business Consultants Excluding accounting firms, there are four (4) business consultancy services listed in the Yellow Pages Directory, three in Burnie and one in Devonport

• Graphics, packaging, design, advertising, promotions These services are provided by individual consultants, advertising agencies, packaging materials suppliers and public relations firms. There are a number of providers in the Region, however a close client–provider interface is not considered an important issue for such services.

• Department of Economic Development The DED is the Tasmanian Government's economic development agency. It offers services for companies wishing to establish, relocate, diversify or expand business in Tasmania. The DED facilitates access to other state departments, commonwealth agencies, local government and private business.

The Department has a regional office in Burnie with professional staff supported by other specialist staff in both Launceston and Hobart.


SUMMARY REPORT 13

• Enterprise Centres There are sixteen Enterprise Centres operating in Tasmania, four in the Region. They are located in Burnie, Devonport, Queenstown and Smithton. These Centres have been established by the DED to provide a local contact point for the wide range of services offered by the Department.

• Municipal Councils Each of the CCA member Councils employ staff who are able to provide advice on regulatory matters, health requirements, building and planning as well as other services.

3.2.3 Information

A great deal of general information about products, markets, competitors, technology and any number of other food industry issues can be obtained from the internet. This information is often too general for making critical decisions and can be overwhelming in volume and, therefore, time consuming for the inexperienced. Availability of good quality, relevant and timely information is more often the preserve of the industry researcher or professional association library.

• Libraries General information is available through the six state libraries located in the Region. Specialised information is only accessible through the reference sections, which places severe constraints on the typical small business operator.

• University of Tasmania The University library in Burnie has access to international literature but access is generally restricted to students and staff.

3.2.4 Technical Advice

Again, there is much available on the internet but specific problem solving advice will usually involve the engagement of an expert in the field. A reasonable range of technical support, such as engineering or refrigeration, is available in the Region. Advice on elementary food handling matters such as process hygiene or storage temperatures can be accessed through various agencies. The DED can assist with these services. More complex matters involving issues of food technology, particularly where a novel approach is being attempted, cannot easily be dealt with in the Region.

3.2.5 Research Services

There is a very limited capability in food research in Tasmania with none at all in the Region – other than that undertaken in-house by the major processing firms. While the Region has been abundantly supplied with agricultural research there


SUMMARY REPORT 14

has been no attempt to match food processing developments with an equivalent level of research support. Matters relating to food safety can be adequately dealt with by the State Government Analytical Laboratories in conjunction with the School of Agriculture at the University of Tasmania through their Centre for Food Safety and Quality. Any novel food research sought by a processing firm in the Region would need to be undertaken interstate.

3.2.6 Training facilities

Post secondary training for staff and management of food industry participants is available through four key sources: • Vocational Education and Training: predominantly short courses

provided by privately run agencies. There were 6923 people enrolled in VET courses operating in the Region in 20009. New short courses to meet market demand can be designed at short notice.

• Apprenticeships: Courses for trade related vocations which require a period of ‘in-service’ training are well supported in the region, with 4622 people enrolled in Apprenticeship courses operating in the Region in 200010. New courses can be developed to meet demand with some delay expected in implementation.

• TAFE: Tertiary courses in a wide range of disciplines are offered by the state based TAFE system. Some 11349 people enrolled in TAFE courses operating in the Region in 200011. New courses can be developed to meet demand with some delay expected in implementation.

• University of Tasmania: The University offers a limited number of courses with application to the food industry. Around 267 people enrolled in UTas courses operating in the Region in 2000, predominantly in Business and Agricultural studies. A further 578 people from the region were enrolled at the Launceston campus, with another 432 in Hobart – a total of 127712.

3.2.7 Packaging

Many of the large national and international suppliers of packaging materials are represented by agencies either in the Region or in Tasmania. Most packaging firms offer design and technical advice to clients free of charge if the order is of sufficient size. A difficulty facing the majority of small food businesses is the scale of their operation with consequently limited packaging requirements. Novel packaging designs may be beyond the capacity of many in the industry as the costs of tooling for the new design can be prohibitively expensive.

9 ABS, op cit 10 ABS, op cit 11 ABS, op cit 12 University of Tasmania, (2003), web-site, http://www.utas.edu.au/


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3.3 Summary

As illustrated above, the Region is a relatively minor player in the Australian food sector. While the Region appears to be quite well serviced with various support systems, there is no (and not likely to be any) significant food research capability in the region.

4. CRITICAL ISSUES

4.1 Megatrends for the Food Sector 4.1.1 Globalisation

The global economy is undergoing major changes, popularly referred to as globalization, characterised by closer economic integration and interdependence through the growth in international trade and investment. The reduction in trade barriers through the GATT process has contributed to this process, but there are many other factors at work.

Technological developments in the computer, communications and other industries; decreased costs of transportation; increased access to information; and other economic forces are contributing to globalization. Foreign direct investment has increased dramatically and many firms now operate in a global marketplace.

Globalisation has significant implications for the structure and performance of the food processing industry. Increased international trade will affect the variety of products, scale of operations, vertical coordination, industry concentration, geographic location, and rules of ownership in food processing. The food industry, long seen as separate from the rest of the economy and an exception to many policies, is swiftly reintegrating itself through continued technological advancement.

Globalisation means that trade in processed foods is increasingly being affected by other policies, especially those relating to competition and investment. The international effects of these policies are potential sources of friction. For example, the domestic impetus for more reform should translate into further reductions in tariffs, export subsidies, and domestic support, while there should also be a focus on the elimination of restrictions on international investment.

Hughes (2003)13 suggests that globalisation will come to the Australian retail food sector within five years, with Coles or Woolworths being taken over by one of the top ten global supermarket companies. He suggests that this represents a huge opportunity for Australia’s food producers as these global players move to regional if not global sourcing of products (e.g. supplying Australian beef into company stores in Asia).

13 Hughes, Professor D (2003), “Food Revolution Sweeps the World”, presentation at Beef 2003, Rockhampton


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4.1.2 Demographics

There are a number of significant demographic trends that will influence the development of the food sector over the next twenty years. These include: • Low population growth between now and 2020 • Declining household size leading to an increase in the number of households • The relative aging of the population will continue into the foreseeable future • There is a high, and growing, level of female participation in the workforce • Household incomes are rising but there is a widening gap between rich and

poor • Culinary diversity is being encouraged by population migration and the

broader ethnic mix in many developed countries. 4.1.3 Identity Preservation & Food Safety

Consumers today may be more overwhelmed than ever with information about risks to their livelihood — from terrorism, and SARS, to food contamination and excess food consumption.

While it can be argued that there can be greater risks to human health than unhygienic food, the issue of food safety is non-negotiable. Increasingly the spotlight is on the origin of food and the manner of production as increasingly important elements in the marketing mix. The provision of an assurance that food is safe is fast becoming a vital selling point

Consumers in developed countries are spending less of their overall income on food, but they are showing an increasing preference for non-price benefits such as food safety and quality.

These concerns have seen the emergence of product tracking technologies that enable a processor, consumer, agent, etc to trace a piece of food from the ‘plate to the paddock’. These tracking technologies have been widely adopted in the meat processing sector and are used to support/audit traditional Quality Assurance (QA) systems at the firm level.

As consumers’ concerns about food quality and safety become more common, QA systems will increasingly become the basis for product differentiation (see sidebar).

“A beef import traceability bill was introduced, then withdrawn, in the Japanese parliament last week. The Bill proposed that imported beef should be subject to the same individual identification of cattle as domestically produced beef. Japan imposed stringent traceback measures on domestic beef following the discovery of BSE in Japan. The measures included the tagging of all cattle and registering of all cattle identification numbers on a central database this year. The laws encompassing domestic beef include the information being made available to consumers at retail and foodservice outlets via the Internet. The opposition party decided not to proceed with the legislation. However, customers in Japan are expected to increase their demands for traceability from beef suppliers.”

Meat & Livestock Australia Media Release, 23/05/2003


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4.1.4 Consumer wellbeing and health

In almost every country, but particularly the more affluent, there is a growing consumer interest in health and wellbeing.

Combined with an aging population and the trend dubbed ‘egonomics’, by Faith Popcorn14, this interest underpins the growth of the functional food industry.

In 2010 the ‘Baby Boomers’ will begin to retire, creating an ‘agequake’. Aging baby boomers will become ‘geriatric boomers’. The needs of baby boomers and geriatric boomers are vastly different, creating different markets and different opportunities.

This older generation will seek health and ‘wellness’ through what they eat. They will demand ‘functional’ food — food that imparts health benefits other than basic nutrition. Some examples already on the shelves include15: • soy products that alleviate the symptoms of menopause • mono-unsaturates for healthy hearts • margarine that reduces blood cholesterol levels • fermented milk products for ‘inner health’.

4.1.5 Convenience

This trend has been evident for some years, yet shows no sign of abating. People are still ‘time poor’, and will continue to search for convenience in every aspect of their lives.

Hughes16 states that, “…the trend is not over yet…we will see convenience foods by 2010 that will astonish us”.

This rush to convenience has spawned much of the food industry’s interest in ‘value adding’. Many commentators immediately infer this demand for convenience to mean pre-packaged, pre-cooked, microwave meals. While this approach has had success in some countries it has not had the same impact in Australia. Australian food processors are now realising that ‘value adding’ for Australian consumers can be as simple as dicing the raw material and/or packaging it in portion controlled quantities.

However, consumers are demanding lower levels of processing, instead asking for minimally processed raw foodstuffs as they grapple with the implications of food health scares and other unsettling influences. Fresh-cut vegetables and fruits are now the fastest growing segment in the food sector. Despite this, in the United States, less than 10% of food sales are fresh (though this percentage is now increasing), in Australia the percentage is over 30% and growing17.

14 Faith Popcorn is considered to be one the world’s leading futurists and consumer commentators. 15 Neal S. (2000), “Social Trends: Implications and Opportunities”, Business Strategy Unit, QLD Department of Primary Industries, Brisbane. 16 Hughes (2003) op cit. 17 Thomason D (2003) Meat & Livestock Australia, presentation to Beef 2003, Rockhampton.


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4.1.6 Eat at home – ‘cocooning’18

Reversing the trend of the last 10-20 years, consumers are tending to eat out less often than has previously been the case. In fact, where once units/houses were being built with the minimum (if anything) in terms of kitchen design and installation, consumers are spending more time in their own kitchen. The number of eating self-cooked, eat-at-home meals has risen quite significantly in recent years.

This trend is amplified by events such as the World Trade Centre attacks, the Bali bombings, the Gulf war and health scares such as SARS. These sorts of events ‘force’ consumers to retreat to the safety of their homes.

The corollary to this is the practice of ‘debit and credit eating’19 that sees consumers accumulate ‘credits’ through healthy eating during the week, only to ‘spend’ those credits on indulgences on the week-end. Thus, even in a time where health and well being are paramount, there remains a high demand for indulgence foods.

4.1.7 The Weightless Economy

Until relatively recently, economic growth came from increasing resource inputs and/or increasing consumer demand. As evidenced by the growth in Korea the use of resources and technology can rapidly raise the productivity of a pre-industrial and unskilled manual labour force to world class levels. However, future surges in economic growth in developed countries will come from a very sharp and continuing increase in productivity initiated by knowledge work and knowledge workers.

While the value of world trade continues to increase, the mass (weight) of trade has declined over the last forty years due to the rise of brands and the emergence of intellectual property and the ‘knowledge economy’. Some commentators have called this information age the third phase of world economic development (the first two being the agricultural age and the industrial age).

Knowledge is different from all other resources in that it is constantly and rapidly made obsolete and it is highly transient – today’s advanced knowledge is tomorrow’s ignorance20. To manage and profit from this resource, individuals, organisations, regions and nations need to adopt life-long learning processes – to continually build their capacity.

This trend is having a significant impact on the global economy as knowledge is one of the main drivers of prosperity and wellbeing. It defines a developed society by raising the productivity and autonomy of its people, the value of its industries, the success of its government, and its place in the global economy. 18 A term developed by Faith Popcorn to describe consumer’s seeking sanctuary in their homes 19 Hughes (2003) op cit 20 Synnot W (1999), “Major Global Influences at the Start of the New Millennium”, paper presented to the Australian Society of CPA’s, Brisbane


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Unlike physical resources, knowledge provides a platform for further discovery and increased innovation, especially in the development of new technologies. Investment in knowledge provides far greater value-adding to raw material or capital investment, than that gained from traditional increases in efficiency. Similarly, investment in infrastructure for knowledge and learning underpins the economic growth of successful nations.

Some knowledge is more valuable, some less so. Futurists say that in many of today’s companies, up to 80 percent of the embedded knowledge is about the company itself and only 20 per cent about what’s happening outside the company. Companies that try to reverse the proportion of ‘internal’ and ‘external’ knowledge are more likely to survive and prosper.

There is now far greater emphasis on the ability to create, store, distribute and apply knowledge. Information-communication technology generates and manages vast quantities of information but knowledge has always been a higher-order, higher-value asset. The Internet provides people with access to unlimited information, but information has to be turned into knowledge to become really valuable.

It follows that investment in education will be more important than ever. But it will have to be clever, continuing education. Knowledge constantly makes itself obsolete, hence the need for continuing life-long education.

4.2 The Australian Food Sector

Many of the issues affecting food sector performance in the Cradle Coast region will be common to other areas in Australia. Thus, the process of identifying the critical issues facing the Cradle Coast food sector cannot be conducted in isolation from the broader Australian agri-food sector. What then are the critical issues facing the Australian agri-food sector?

Growth in processed food exports from Australia has generally lagged behind global growth averages, and some commentary uses this as a basis for criticising the ‘performance’ of the Australian agri-food sector. The rationale is that, because the growth of highly transformed food exports from Australia is lower than the world average, the sector in Australia must be ‘under performing’ and thus needs to improve in some way.

However, this argument is ill-informed as, apart from overlooking the unique capabilities of different countries, it ignores the following points21:

• Australia’s exports of ‘traditional’ food products (commodities and minimally transformed foodstuffs) continues to increase and the total value of food exports from Australia has increased above world growth averages

21 Ginns (2002) “The Agri-food sector in Australia; Where is it going? Some thoughts on the future of the sector”, AAANZ, Sydney


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• There is a strong element of ‘comparative advantage’ in the current make up of Australian food exports, i.e. Australia is ‘good’ (profitable and competitive) at what it currently does and is able to increase its share of the world food market profitably without the risks associated with changing the basic nature of the sector in Australia.

Various State and Federal Governments have lauded the Australia food sector as the future ‘food bowl’ of Asia, with a focus on transforming the sector into one dominated by highly transformed food exports. One could be forgiven for thinking that this ‘food bowl of Asia’ vision is based on the notion that there is a lot of spare land in Australia and, if it was farmed, we could feed Asia with the produce.

This is overly simplistic and, in fact, there are several critical factors that will determine the growth and viability of the Australian food sector. These include22:

i. Access to capital The industry cannot expand without capital, and this may be hard to find and/or may come at a cost that makes investment in agri-food ventures unattractive to many investors

ii. Environmental impacts Arguments rage over the ‘carrying capacity’ of Australia and the sustainability of our agricultural production systems. The resources used for food production are limited and need careful management

iii. Food sector capacity By world standards, the Australian agri-food sector is small, and our capacity to supply significant quantities of food into large markets is limited without a major expansion of the production base

Let us consider these issues in more detail.

4.2.1 Capital and Risk

There have been many ‘reasons’ put forward for the perceived inability of the Australian agri-food sector to increase the volume of ‘value added’ exports. One of the more common of these reasons is the somewhat dubious, ‘…lack of an export culture’. In fact, many potential exporters cite a lack of available and affordable funds for expansion or other logistical difficulties, rather than a lack of interest or willingness, as their reason for not exporting.

It is the ability of an enterprise to attract finance or investment for establishment or expansion of activities, followed by the capacity of the business to service debt and/or provide an acceptable return to investors, that largely determines whether

22 Ginns (2002) op cit


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or not the business is able to move into export markets. This fundamental reason is shared by all businesses, not just those in the agri-food sector.

There will be significant investment required if Australia is simply to expand the production base, let alone create ‘new’ value adding opportunities. Returns on investment in the agri-food sector often fall well short of market expectations, meaning that investor interest is minimal or the cost of finance is too high.

This is exacerbated by the Australian venture capital (VC) industry’s insistence on returns that border on usury, with an expectation that businesses return two or three times the original investment within three to five years. Some industry practitioners maintain that this is the single most important reason behind Australia’s dismal record of venture capital investment23.

4.2.2 Environmental Impacts

Traditional, European style agriculture does not seem well suited to Australia’s generally poor soils, low nutrient levels and limited water supplies. However, with the assistance of significant research funds over the last 200 years, food producers have developed and applied innovation and technology to become highly efficient, producing significant annual surpluses for export. Continued innovation will see the food sector maintain or enhance the current productivity.

However, overriding this is the realisation that there have been many unintended environmental costs from agri-food production. Probably, the most prominent of these are increasing soil and water salinity and increasing competition for water.

Unless there are new ways of managing resources and producing food, or new technologies are adopted, resource availability will be a major determinant of the agri-food sector’s ability to maintain or expand its current productivity.

In effect, the environment has been ‘subsidising’ agri-food production in Australia and the impact of this is only now being recognised. This subsidy, coupled with the innovation mentioned earlier, has allowed a reduction in the real cost of food, helped our society become prosperous and well fed, and generated significant export income.

Whatever has occurred, it is indisputable that we must continue to apply innovation and invest resources in redressing or avoiding the environmental degradation that has been an unfortunate by-product of Australia’s agri-food production. The implication is that environmental issues will play a much larger role in determining how and where food is produced in the future.

4.2.3 Food Sector Capacity

Expanding the value of the food sector is not simply a function of ‘area available to grow things’, or a belief that our ‘clean green’ image will give us unchallenged access to emerging and/or established consumer markets.

23 Hocking P (2002), personal communication, The Hewson Group Pty Ltd, Sydney


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Australia’s population provides the agri-food sector with a domestic market large enough to sustain a sector that can generally achieve economies of scale to compete successfully with imports. However, the domestic market is, generally, not large enough to produce truly global companies capable of operating in international markets, and with the economies of scale and supply capabilities necessary to meet large market demand.

There are global companies whose turnover from a single sector (e.g. Nestle’s dairy business, excluding chocolate, turned over some A$20 billion in FY2002) is not much less than the total value of Australia’s primary production. Indeed, the top 30 global ‘food’ companies turn over more than US$300 billion per annum, which is more than ten times the value of Australia’s annual agricultural production.

The structure of Australia’s agri-food sector is not just a function of the size of our domestic market. There are other factors that impinge on the continued development of the agri-food sector, including:

• fragmentation of the production and processing sectors • geographic dislocation between production and consumption (both domestic

and export) • distance to export markets • communication bottlenecks • transport technology • the cost of serving a population of 20 million.

All these factors contribute to a Catch 22 situation in which the domestic market is large enough to sustain a viable agri-food sector that doesn’t need to export, but the market is not big enough to support the growth of global companies that can dominate in the global food market. This raises the question of how best to increase the value of the agri-food sector in Australia.

4.2.4 Whither the Future?

What, then, does the future hold for the Australian food sector? Assuming that real growth is both desired and desirable, what are the options for increasing the value of the sector?

Ginns (2002) identifies three options:

i. Business as Usual ii. Pursue global alliances and integration iii. Lead the Biotechnology revolution


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Option 1 – Business as usual

A realistic option is to maintain the status quo – to keep doing what we are currently doing, allowing the agri-food sector to find its own way and expand at its ‘natural’ rate.

Under this option, there will be some structural adjustment of the sector, but it will probably remain fragmented and continue to be dominated by minimally transformed food/ingredients and commodity exports. These will be supplemented by ‘value added’ exports such as dairy products and wine, high value niche exports like seafood and small exports of horticultural produce, and a small percentage of highly transformed food exports.

The next obvious question is, “…what is value adding”, and “…how much is enough (or too much)”?

It is generally accepted that ‘value adding’ refers to the enhancement of a product beyond its raw material or commodity state. Traditionally this implies some sort of physical processing such as milling or baking to transform the raw material into a more expensive product. However, there is a growing realisation that value may also be added through more nebulous means such as:

• product description • identity preservation • quality systems • objective measurement • other knowledge based processes.

Numerous papers and industry commentators have called for the agri-food sector to pursue a greater degree of this ‘value adding’ in Australia. This is understandable based, as the call is, on the belief that transformation of relatively low value commodities into higher value food or ingredients will lead to the overall growth of the Australian economy.

However there are a number of factors that need to be considered before we adopt the somewhat compelling, but rather simplistic aim of moving from being a commodity exporter to being an industry based around the elaborate transformation of raw materials.

These factors include:

• competition from existing processors in the target markets • changes in consumer tastes • technological advances • changes in the global food trade due to political/economic factors.

The increased risk facing a food manufacturer, compared with a commodity producer, is often overlooked in comparisons between these two sectors.

As it is, a large proportion of Australia’s food exports already undergo some form of value adding before leaving the country. Taking into account the risks


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associated with further transformation and offsetting these against the potential returns, the margins for minimally transformed food and ingredients can be comparable to or better than those for elaborately transformed foodstuffs.

Advances such as improved processing/packaging technology, greater mechanisation, and improved transport efficiencies create a vast array of marketing opportunities, for minimally transformed foodstuffs, that have not previously existed.

Any or all of these advances provide an opportunity for Australia’s agri-food producers to ‘add value’ and differentiate their products.

Ginns (2002) asks whether we should, “…be heeding the calls for greater involvement in elaborate transformation of foods or instead be concentrating more of our efforts on developing technologies that enhance our current domestic and export market activities?” This notion could be extended to not only include, “…technologies…”, but also industry/sector structures and processes.

As mentioned, the ‘Business as usual’ approach may well include rationalisation of the agri-food sector and encourage the removal of the final traces of bureaucratic influence in the industry. Ginns (2002) cites the transformation of the New Zealand dairy industry as an example of how rationalisation can add value to an industry be creating economies of scale that allow the industry to more effectively target export markets. The Fonterra Co-operative Group is now one of the world’s largest dairy companies, able to compete, or form alliances, with other major global dairy companies. The recent merger talks between Bonlac and Murray Goulburn indicates that similar rationalisation is imminent in the Australian industry.

On another level, the recent growth of the Australian wine industry is largely due to the industry’s development, in 1995, and almost universal adoption of its Strategy 2025. The initial export goals, requiring a five-fold increase, set under this Plan were achieved in around half the expected time.

Contrast this with the Australian horticultural sector where an export goal of A$1 billion by 2000, was set in the early 1990’s. Almost 10 years later the value of exports had not quite doubled to around A$750 million. A significant difference lies in the fact that the horticultural industry goal was set by the then Agriculture Minister, while the wine industry goal was developed by the wine industry and the whole industry was committed to it.

The single, most important advantage that the Australian wine industry has over its international competitors is its national unity in terms of strategic planning, regulation, sharing of knowledge and international promotion (Hardie, 2000)24. Option 2 – Pursue Global Alliances and Integration

Another option to stimulate the growth of Australia’s agri-food sector is to actively pursue greater integration with established global agri-food enterprises, through 24 Hardie W.J. (2000), “A cohesive industry, Strategy 2025 and the CRC for Viticulture”, CRC for Viticulture, Adelaide


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higher levels of integration with international processors or retailers, to better ‘lock’ Australia into global food markets.

Under this option there will be greater integration, by the Australian agri-food sector, into global value chains. This integration will come not just as a supplier of commodities or minimally transformed foods, but as a partner in developing and producing minimally and elaborately transformed foods for export into established supply chains.

The key to achieving this integration lies in greater foreign investment in the food-sector, as foreign ownership facilitates access to export markets and reduces the cost of entering a new market25.

As mentioned, many industry commentators maintain that there are large markets for commodities and the increased production of highly transformed foodstuffs from Australia. However, while Australia has many products that are of interest to international markets, in many cases we cannot supply the quantities required to interest the world’s major players.

Attracting the investment required for increased, or more valuable, production largely depends on managing the risk associated with entering what are already crowded and highly competitive markets.

Perhaps the most effective way of minimising this market risk is to attract foreign partners for export oriented expansion that is tied to market access. However, this will require a shift in the psychology of Australia’s agri-food sector to embrace a greater degree of interdependence and co-operation.

One example of the successful application of this approach is the investment, by Con Agra, in Australian Meat Holdings (AMH) during the 1990’s. This relationship allowed AMH to expand significantly, to the point where it now controls around 40% of Australia’s annual cattle kill, and can compete with all but the very largest of the United States meat processors. At the same time, the dominance of AMH has forced other Australian meat processors to improve their operations or leave the industry.

One of the critical issues with this approach is the availability of long lines of consistent supply. This may require that the agri-food sector examine alternative organisational structures to act as vehicles by which smaller producers can organise to provide the critical mass required when dealing with vertically integrated supply chains. Option 3 - Lead the Biotechnology Revolution

This controversial option requires that the agri-food sector takes the decision to lead the world in the development and adoption of agricultural biotechnology.

25 Michael D. (2000), “Foreign Investment in Australian Food & Fibre: It Improves Productivity, Exports and Access to Capital and Global Markets", RIRDC, Canberra


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Because the ‘first’ batch of ag-biotech crops were developed primarily for their input traits, they have not captured the imagination of consumers because the technological benefits do not accrue directly to the consumer. However, the genetically enhanced crops of the future will offer consumers a much more attractive suite of benefits that will include so called ‘functional foods’.

These foodstuffs already exist (e.g. omega-3 enhanced eggs), and they will only become more prevalent as the range of products and the benefits they convey, continues to grow.

Under this option, the Australian food industry must expand its links with global bio-tech leaders, become more active in jointly funded research, develop institutions for experimenting in ag-biotechnology, and take a lead in the commercialisation of the subsequent waves of ag-biotechnology.

The technological sophistication in the agri-food sector continues to increase and, if Australia positions itself towards the front of the field, we can not only take advantage of being ‘first to market’ with innovative products or techniques, we may also develop significant intellectual property exports.

Becoming the leader in the new world of functional/medical foods is a high risk/high reward strategy but someone will lead the way, and it could well be Australia (sidebar).

Minister Truss recently announced the successful applicants for assistance under the first round of the Food Innovation Grants (FIG) scheme administered by the National Food Industry Strategy. Nine companies will share some $5.7 million after the first round.

Interestingly, 5 of the 9 projects (and most of the funding) involved functional foods and/or extracting bio-active compounds.

What ever happens, there are two key issues that have to be addressed if the agri-food sector is to grow. These issues are:

i. The availability of funds to invest into the sector

ii. Resource management will become increasingly important, both in maintaining current industry productivity and viability, and also in accessing investment and export markets.

4.3 Previous Work in the Tasmanian Food Sector 4.3.1 Tasmanian Food Park Forum

A survey conducted by Tasmania Development and Resources (TDR) and the Food Industry Group (FIG) in the late 1990’s, to determine the prospects for establishing a Tasmanian Food Park, indicated a strong preference amongst respondents for a Food Industry Cluster Facilitator. The perceived role of the facilitator was to maintain close contact with food processing companies and be


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available to provide advice, collaboration, information and assistance to these companies, particularly with regard to: • Quality assurance • Marketing • Food processing • Information gathering • General industry support.

The survey found that, while respondents generally supported the notion of a Food Park, only one (1) company indicated that they might be interested in relocating to such a facility.

Many stakeholders saw the required capital investment (estimated at up to $50 million for a ‘full-blown’ facility26) as being prohibitive and, ultimately, a waste of money. However, the intangible benefits (information sharing, joint marketing, facilitation, networking, etc) of a ‘Food Park’ concept were generally seen as being desirable and necessary for the continuing growth of Tasmania’s food sector.

Overall, the study concluded that a physical food park would not be viable in north-west Tasmania but that the option of a Food Industry Facilitator was worth further investigation. It was suggested that part of the facilitator’s role could be to establish a ‘Miniature Food Park’.

4.3.2 CCA Regional Development Survey

Respondents to a CCA survey (2002) of businesses and local community leaders identified a large number of factors perceived to be holding back development in the Region.

These include: • Disincentive to investment because of difficulties in attracting suitably skilled

employees • A lack of awareness by potential investors, both in regional areas and

otherwise, of opportunities that may exist for business development in the regions

• A shortage of experienced business people, entrepreneurial risk takers, strategic leadership and external business networking

• A lack of competitive infrastructure when compared to more urban areas • Perceptions of various shortcomings in the lifestyle of regional areas, whether

sporting, cultural, personal or otherwise • A shortage of readily available and competitively priced investment capital

26 Knie M. (undated), “File Note – Tasmanian Food Park”, DED, Burnie


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• A poor take up of available government assistance (or a poor understanding of its availability)

• Anti-development attitude, or at least, bureaucratic difficulties, placed before business and potential investors – particularly at local and state government levels

• Lack of co-ordination between levels of government and within each level as it approaches issues relevant to economic development of regional areas

• Low, slow growing population bases leading to lack of economies of scale and inability to meet threshold demand for some goods and services

• Poor co-ordination between local and regional businesses, leading to a lack of partnership and joint venture opportunities and a failure to capitalise on potential economies of scale and increases in purchasing power

• Isolation and lack of access to markets • Social conservatism • Poor provision of infrastructure and low availability of suitable correctly zoned

sites for industry • Lack of co-ordinated, planned marketing of business advantages, together

with necessary information, from community profile data through to baseline site data (eg geo technical etc)

• Lack of partnership/joint venture opportunities and appropriate business models that allow local and regional businesses to co-operate confidently

• Poor access to ancillary services such as education and health. 4.4 Cradle Coast Food Sector Consultation, 2003 4.4.1 Food Sector Consultation

As part of the CCA Food Value Adding Initiative, the project team consulted over sixty stakeholders in the Cradle Coast food sector during February – April 2003.

Encouragingly, the major issues identified during the consultation are similar to those outlined above (CCA Regional Development Survey).

Interviewees include representatives of the following groups (Table 3):


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Table 3 Food Sector Interviewees, 2003

Government/Research Industry Associations Industry Agronico DED DPIWE Local Council Serve Ag TIAR University of Tasmania

TAPG TFGA

Aquaculture Bio-active compounds Confectionery Dairy processing Fresh Vegetables Honey Meat Processing Olives Packaging Potato Processing Seafood Seed Potato Spring Water Transport Walnuts

This process identified the following main issues or impediments to the further development of the Region’s food sector:

i. Transport: Small businesses find it difficult/expensive to ship small volumes of product. The freight subsidy is seen as an impediment to value adding in Tasmania as the subsidy does not apply to air cargo or to goods intended for export

ii. Fragmentation: There are too many small, marginally profitable farms in some industries. There needs to be a rationalisation of farms in some sectors, similar to that which took place in the dairy industry. Farms need to be larger and more efficient. Similarly there is a lack of co-ordination between Government and industry in the Region, and little co-operation between businesses

iii. Innovation: A culture of innovation is generally lacking in the Region, whether in production, processing, packaging or marketing. Individuals can see opportunities for innovation but lack either the capacity or the will to pursue it. There is some perception of apathy, amongst both the Government and business sectors, towards industry expansion. A number of interviewees indicated their business was performing well, and they had no desire to expand. Some respondents suggested that a facilitator could assist the innovation process. Small operators suffer from the lack of a suitable facilitator to help them develop their venture. The role may involve acting as simply another pair of hands, or as a mentor, a sounding board, a networker, or as a conduit between the businessperson and the various Government agencies (funding, research, education, regulatory, planning, etc). For many small businesses, consultants/accountants are too expensive to fill this role


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iv. Industry Politics: This relates to (ii) - there is a feeling that the various Government agencies, industry associations and/or businesses do not adequately work together or take an holistic view of regional and industry issues. Some suggest that both industry and Government are apathetic when it comes to industry development

v. Environmental Management: Respondents realise that environmental issues are becoming increasingly important and that businesses must ensure that they and their suppliers are environmentally responsible if they are to remain in business. It is important that the whole region/State has appropriate Environmental Management Systems (EMS) if the region/State is to really remain ‘Clean & Green’ from the customers’ perspective

vi. Production: Some interviewees felt there was a general lack of production capability and innovation amongst the farming population (especially potato and dairy). This constrains the growth potential for these industries. Further, finding farmers with the skills and willingness to embrace new industries (e.g. medicinal herbs) is difficult

vii. Organics: There are mixed perceptions about the potential for organic agriculture in Tasmania. Some felt that there are big opportunities for Tasmania to become the organic centre of excellence in Australia, others felt that the potential was being over represented. There was a general agreement that organic production requires a higher level of skills than does traditional agriculture

viii. Waste Processing: Waste disposal is not seen as a big issue for most processors, though there is a general realisation that it will become an issue. Current waste disposal methods are generally inexpensive, compared with further processing or alternative treatment. This is linked to the Environmental Management issue. Could be opportunities to process vegetable waste from either/both the packing and harvesting operations

ix. Funding: New or small to medium sized businesses continually face the issue of raising development/expansion capital. In a number of cases relatively minor amounts could expedite the development of small businesses and create a substantial return on investment by way of additional jobs, etc. Funds are typically required to assist with equipment purchases and business research. Operators are generally looking for a simple process to access capital (with some of their own matching funding), thus reducing the risk to the project proponent. Accessing industry and government schemes can be difficult and time consuming for small operators

x. Processing & Packaging: As one might expect, this issue raised the greatest number of responses, which ranged from the need for a particular piece of equipment, to the observation that there is a lack of novel technology being applied in the Tasmanian food sector. Food processors rely on proven technologies and hence are unable to establish an advantage based on modern science. The absence of pilot-scale contract packaging services or


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novel-packaging systems may limit the ability of some entrepreneurs to advance new ideas. Access to pilot scale processing facilities and ancillary services may assist some "kitchen" scale ideas to flourish

xi. Co-location: A number of respondents noted opportunities for co-location of existing/new operations. This issue relates to the notion that there is insufficient effort devoted to developing demand chain alliances, leaving many businesses to operate as niche commodity producers with little opportunity to extract additional returns from their product.

xii. Water: Contradictory messages were presented about water with some interviewees suggesting that sustainable, effective water utilisation will be the biggest issue to face the food sector in the next decade. There appears to be a need to better understand this issue if the food sector is to maintain, let alone expand, its production. The issue primarily relates to the production side of the industry rather than the processing side at this stage

xiii. People: This was a relatively minor issue but it relates to the next issue as well – some operators noted the difficulty in finding adequate seasonal labour, and in retaining good people

xiv. Skills & Training: This is an issue at the production, processing an marketing stage of the industry. High quality food technologists are not readily available at an affordable price, particularly for developmental work where early stage intervention could overcome significant problems. High level training seems to be done on the mainland. Any training needs to be tied in with industry needs

xv. Regulations: Some industries are finding it difficult to find suitable land for expansion (vegetables, potatoes, dairy). Working through the red tape is the biggest impediment to development for many businesses. Respondents felt that there is often an anti-development attitude amongst the regulatory authorities

xvi. Co-products: A number of respondents identified opportunities for processing co-products (including waste). Generally, the missing ingredient is someone to investigate the opportunity and make it happen

xvii. Research & Development: The large companies tend to have internal R&D processes. Smaller companies either work with mainland service providers or try to work things out themselves. A number of respondents suggested that there was a need for more co-ordination between the research providers and, perhaps, a shared use facility

xviii. Marketing: Tasmania’s ‘Clean Green’ image could be promoted more seriously to take advantage of the growing world demand for such products. Contradictory views are held concerning the potential for ‘Clean Green’, ‘Organic’ or ‘GMO Free’ labeling and these should be tested more thoroughly.

There is an almost complete lack of quality regional data on which to establish a base line. In the absence of an accurate profile of the region it will be


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impossible to assess the benefit or otherwise of any regional improvement strategy.

There may be an opportunity to clearly identify the Cradle Coast region as a supply source of quality produce. For some products, the region is more important than the State or country of origin. There are conflicting opinions on the benefit of Regional versus State versus National branding.

For new or small to medium sized operations, gathering quality market intelligence can be prohibitively expensive. The provision of a service or system to assist with product and market specific information gathering would benefit many businesses.

The relative importance of these issues can be estimated by assessing the number of times each (or one closely related) was raised by respondents. Table 4 illustrates the number of responses for each issue.

As illustrated in Table 4, the issues that are most often raised relate to:

• Processing & Packaging • Innovation • Co-location.

Processing & Packaging related issues range from a notion of processing the ‘waste’ product that is left in the paddock at harvest (some say this is up to 33% of the crop), to a need for a particular piece of equipment.

Many respondents recognise that Innovation is critical to further growth in the industry. Responses range from notions of apathy at all levels holding the industry back, to specific examples of new opportunities. In reality, many respondents recognise the importance of innovation but felt that the Region did not have an environment that fostered innovation.

Few respondents actually mentioned Co-location as a concept, but many raised issues that could be at least partially overcome through co-location of enterprises (physically or virtually). Examples of these issues include:

• Insufficient co-operation between businesses • A lack of co-ordination of effort between/within government and industry • Shared facilities • Development of value chain alliances.

Most respondents are too focused on their individual concerns to see the prospects for co-operation. Though not isolated as a specific issue, many respondents saw access to information as a critical driver of innovation and development.


SUMMARY REPORT 33

Table 4 Issue by Respondent

ISSUE R

espo

nden

t

Tran

spor

t

Frag

men

tatio

n

Inno

vatio

n

Indu

stry

Po

litic

s

Envi

ronm

ent

Prod

uctio

n

Org

anic

s

Was

te

Fund

ing

Proc

essi

ng

Co-

loca

tion

Wat

er

Peop

le

Skill

s &

Tr

aini

ng

Reg

ulat

ions

Co-

Prod

ucts

R&

D

Mar

ketin

g

Agronico X X X X Anvers X X X X X X Bellamy X X Betta Milk X X Bonlac X X X X X X X X X X X X BRA X X X X X Brandsema Tomatoes

X X X X

Burnie C Council X Cherry Hills Coolstore

X X X X X

Classic Foods X X Clover Meat DCA X X X X X X X X DED X X Dew South X X DPIWE X X X X X X X DPIWE X X X DPIWE X ERTLER X X X X X Field Fresh X X X X X X X X Forth Farms X X X X X X X X Greenham X X Heidi Farm Cheese X X X Lacrum Cheese Lactos X X


SUMMARY REPORT 34

Table 4 Issue by Respondent

Res

pond

ent

Tran

spor

t

Frag

men

tatio

n

Inno

vatio

n

Indu

stry

Po

litic

s

Envi

ronm

ent

Prod

uctio

n

Org

anic

s

Was

te

Fund

ing

Proc

essi

ng

Co-

loca

tion

Wat

er

Peop

le

Skill

s &

Tr

aini

ng

Reg

ulat

ions

Co-

Prod

ucts

R&

D

Mar

ketin

g

McCain Mike Badcock X X X X X X X National Strategic Services X X

Naturally Nicholls Nick Evers X X X Roberts Ltd X X Russell Patterson X X Simplot X X X X X X X Southern Ocean Trout

Supreme Cakes Tasmanian Honey X X TAPG X X X X X Tas Octopus X X Tas Olives X X Tas Seafoods TIAR

TFGA X University of Tasmania

X X

Websters X X X X X X X X West Coast Council X X X


SUMMARY REPORT 35

4.4.2 Finding Solutions

In order to develop potential ‘solutions’ for the food sector in the Region it is important to describe the major impediments to development and to recognise features that encourage success. The consultants have applied knowledge from experts in the field as well as input from practitioners in the region to produce a set of Cradle Coast Business Indicators.

These impediments/success factors are as follows:

Table 5 Cradle Coast Business Indicators Limiting Factors Success Factors

Markets Management skills Research & Development Institutional support Industry fragmentation New blood Professional assistance/support Processing & packaging skills & equipment

Marketing Innovation Information People, skills, training Strategic focus Collaboration Networks Value Chain alliances

4.4.3 Overcoming the Limitations

1. Markets

In their study of 25 new crop introductions to Australia over the past three decades Wood and Chudleigh 27 identified market research and market development as the most significant drivers of success for industries based on those new crops. Good market research and development is expensive. This is a service limitation that could be overcome through targeted grants, subsidies for consultancy services or through industry support for an industry development facilitator.

2. Management skill

In some cases such skills will be generic to any business, in others the required skills will be peculiar to the food sector. Both the University and TAFE run general business courses which have the potential to be aligned to food industry needs. The recent survey of Australian food industry management skills28 highlights this shortcoming as a national problem. Monash University recently won the right to offer a postgraduate courses in food industry management. Eligible Cradle Coast residents could access

27 Wood I., Chudleigh P. and Bond K. “Developing New Agricultural Industries, Lessons from the past”, Rural Industries Research & Development Corporation, Canberra, Research Paper Series No. 94/1 28 Emfor Corporation, (2003), “Developing a food industry management education program for Australia”, a report prepared for the National Food Industry Strategy, Canberra

© IQ Agribusiness, 2003

SUMMARY REPORT 36

these courses on an external basis or via a joint facility negotiated by the University of Tasmania.

3. Research & Development

Australia’s principal food research centre is located at Werribee in Victoria. For all the technical research needs of the region’s food industry the most efficient response to problem solving is to develop a close relationship with Food Science Australia.

Regional food businesses have the potential to build a service not available in Werribee, namely project development. A close working relationship between regional business and University of Tasmania (and their counterparts in Food Science Australia) researchers could provide a catalyst for establishing a technology trial capability, with possible specialisation in the vegetable sector.

Overcoming this limitation could involve funds for research projects but more importantly liaison between parties to ensure innovative ideas do reach the market place.

4. Institutional support

In the survey conducted by the CCA (2002) several respondents referred to the ‘anti-business’ sentiment in the region. For many business people interactions with institutions and bureaucrats is high on the list of stressful events.

This may be partially due to the attitude of the personnel in the agency, and partially a lack of appreciation for the needs of the business. It is also partly due to the lack of understanding, by the businessperson, of the need for the particular rules and regulations.

Overcoming this limitation may take time. It will probably involve the introduction to schools, of business related studies such as economics and sociology. It could be assisted through better communication of the rules and their importance. Professional assistance is available to businesses in the region through the DED and the local Enterprise Centres. Further, local authorities may need to focus on helping businesses to find solutions rather than simply enforcing the regulations.

5. Industry fragmentation

This is a structural issue with two parts. Physical fragmentation is caused by the distance between members of the industry community and their operational diversity. Good communication networks can overcome the tyranny of distance if the parties wish that to happen.


SUMMARY REPORT 37

The second, and more difficult fragmentation, is caused by mistrust and (sometimes imagined) competition. Overcoming this limitation will take time and considerable patience. A dedicated liaison or facilitation person could have some impact on this limitation.

6. New blood

Attracting new talent from outside the region will take more than green paddocks and cheap real estate. To an extent there has been some success in attracting new blood into the dairy and vegetable production sectors but to find new people to manage food processing businesses will require a different suite of incentives.

Innovative and entrepreneurial people will need to see that the environment is rich for their talents to grow. Their income expectations will be high and demand for job satisfaction exhausting. The Region will need to develop an image as a place where innovation thrives. Any image creation programme will need to be backed up by reality. The solution is long term, complex and will need a great deal of community support.

7. Professional assistance and support

As with the need for marketing inputs, the Region’s food businesses need other professional support. Financial management, business structures, export programmes, training, advertising and any number of other activities can benefit from quality professional support.

The Region boasts quite a number of specialists but they usually come at a price. That price is often prohibitive for a small business, particularly if it is new. Overcoming this limitation could involve grants or subsidies to encourage people to seek support. In some cases training may provide a solution.

4.4.4 Encouraging the success factors

1. Marketing

Refer to the previous section.

2. Innovation

Innovation in a business is considered an essential ingredient for survival. Innovation needs linkages and collaborative mechanisms across all components of the food sector including education, training, research, finance, production, marketing and promotion.

Innovation is the result of a participatory process coupled with a relentless determination to make things happen. Support for this factor can best be achieved by creating the linkages and the collaborative mechanisms. An


SUMMARY REPORT 38

industry facilitator charged with that responsibility could ensure this factor was receiving constant attention.

3. Information

Information is the backbone for any innovative undertaking. Access to good quality, current, timely information is critical for all businesses but is not always easy to achieve. The agriculture sector is drowned in information and yet it still strives to find better and more efficient ways to ensure industry participants have access to the best information. The food sector in general is bereft of that type of support. The Region could begin to redress that through a dedicated information service.

4. People, skills, training

Education, education, education. Not quite as simple as that but it would be a good start. Attracting new people, embedding business courses in school lessons, providing specialist skills training aimed at industry needs and setting advanced courses for food industry innovation could all assist in supporting this success factor.

5. Strategic focus

The state level industry body (Tasmanian Food Industry Council) has produced a Food Industry Strategy Plan. That plan has grand objectives that may or may not be pertinent to the region’s businesses. A regional plan which can be seriously ‘owned’ by the businesses of the Region may assist in setting the sort of goals, and engendering the industry ‘ownership’, that are needed to support this success factor.

6. Collaboration

Refer to ‘Industry fragmentation’ above.

7. Networks

To some extent see ‘Industry fragmentation’ above.

Networks can be formal such as industry associations or Rotary. They can also be informal such as a local business group meeting for dinner. Both can be quite successful but neither may bring about any significant change or advances without a purpose. Networks based on sharing information, services or facilities will more often focus the attention of participants on real issues and real solutions. A facilitator could assist in supporting this success factor.

8. Value Chain alliances

This is a network with a commercial focus. It is uncommon to see them emerge naturally unless there is considerable vertical integration among the business units. As a general rule, suppliers and receivers in a value


SUMMARY REPORT 39

chain are suspicious of each others’ role and will not engage in open alliances. When they do, usually brought about through commercial imperative, they become very strong.

A skilled facilitator could also assist in supporting this success factor.

4.4.5 Conclusion

Most of the limitations and success factors identified by this project require the dedicated attention of a skilled facilitator. Many of the products or services required to ameliorate or support the factor exist already. Some are unattainable due to cost, but many simply need to be better coordinated to make them useful to the food industry. Some can be brought in to focus in the short term, others will need considerable patience and dedicated effort if they are to impact on the performance of the Region’s food sector.

5. INDUSTRY DEVELOPMENT OPTIONS

5.1 What are the Options?

Based on the issues identified earlier, a number of options have emerged for investment in the Region’s food sector. These options relate to the treatment of the issues and to the methods of delivery.

The key issues raised during this project can be captured within four broad categories:

1. Support – for a large number of the issues raised the industry is in need of a support system – some financial, some professional and some technical

2. Research – for some specifics there can be an R&D solution. In a more general sense the entire industry would benefit from a better understanding of innovation, how it is applied and how it is captured. A research and training capability working in close contact with the industry may provide that platform

3. Significant initiative – a limited number of large initiatives are likely to have a more lasting impact on the Region – if they can be identified

4. Long term sustainable impact – while the CCA funds must be disbursed within three years it is desirable to put in place an initiative which will last beyond that time.

In order to address these issues we have explored three strategies, providing a guide for the development of possible business options. These strategies are:


SUMMARY REPORT 40

• Strategy 1: Research based underpinning of the drive for an innovation culture. While some issues have a technical or research solution, the longer term problem to be managed is one of fostering innovation and a culture of entrepreneurship. Currently alive and well in certain quarters these personal attributes can be taught and supported in a far more deliberate system of research, training, knowledge management and community awareness

• Strategy 2: Provide resources to support the activities of businesses in the Region. This could be a dedicated facilitation resource or simply financial support for existing practitioners.

• Strategy 3: Target a significant project/s, with potential to impact on the industry, for direct funding. A Food Precinct concept is one example of a major initiative that could deliver a solution to a number of key industry issues.

While each of these strategies has merit, they also have disadvantages (Table 6).

Table 6 Strategy Overview Advantages Disadvantages

Strategy 1 Wide regional impact Provides essential support Builds long term capacity Create an innovation culture

Long gestation Hard to measure impact in

short term Potentially narrow application Can be over run by

bureaucracy Strategy 2 Quick to establish

Inexpensive Builds human & social capital

Difficult to measure sustainable impacts

May be seen as duplication Relatively intangible

Strategy 3 Highly visible outcome Ongoing facility Potential to generate financial

support for other programmes Could be the catalyst for co-

location

Too many strings to pull Limited regional impact High risk in new ventures Requires one or more key

tenants to underpin it Large capital investment

Rather than select a particular strategy, we have identified the following three business options as having the potential to deliver outcomes that will address the key industry issues: 1. Food Processing Precinct

Supporting the development of a food processing precinct (FPP) in order to ensure the delivery of a range of hard assets (equipment, facilities, etc) that can be used by a number of the Region’s food industry businesses. The FPP will have the potential to develop into a significant


SUMMARY REPORT 41

establishment and could attract a wide range of food processing related stakeholders to co-locate.

2. Centre for Food Innovation

This Centre would be established to specialise in food innovation rather than technical food research – which is better managed through strong relationships with existing facilities elsewhere. The Centre’s objective would be to develop an innovative culture through teaching, collaborative industry projects and appropriate technology application. The Centre could be located within the Burnie campus of the University of Tasmania, but maintain a strong working association with other education and research providers around the world.

3. Food Innovation Network

This option involves an investment in the human capital of the region. It identifies talent, harnesses resources and stimulates individual excellence, creating a culture of innovation throughout the region. In reality, the Food Innovation Network should be aligned with one of the previous options.

In this instance, and given the likely delay in establishing a Food Processing Precinct (FPP), we believe that the Food Innovation Network (FIN) and the Food Innovation Centre (FIC) should be treated as one Option. Under this scenario, the FIN will operate out of an office located within the FIC where the facilitator/s will have ready access to and work closely with FIC staff and students. Ultimately, the FIN will act as a conduit between the research and development capabilities of the FIC and the local food industry practitioners.

These Options are considered in more detail in the full report to the CCA Board.

5.2 Conclusions

Bearing in mind the limitations outlined in Section 2.2, the preferred way forward is for the CCA Board to address the major issues affecting the Region's food industry by:

• Further investigating the viability of Option 1, the Food Processing Precinct, and pursuing the development of this Option if the viability assessment is favourable

• Immediately begin discussions with the relevant parties to establish a Food Innovation Centre/Network. The FIC/Network has a very wide impact as it engages with all aspects of the food industry and assists the industry to find


SUMMARY REPORT 42

its direction, focus on its strengths and work as a unit to meet future challenges.

This choice is in some ways more complex than the others as it has soft boundaries, though it is also more likely to produce better outcomes in the long term. This Option has been designed to take into account: • issues raised by industry stakeholders • current business development thinking • understanding of the regional development context • the value of innovation • the potential for the CCA to maximise its long term influence.

The one important limitation that this option must face is the eventual depletion of the funding. This may not be a serious limitation if the outcomes are significant and noticed by potential future supporters. It will however be a distraction.

These Options are discussed in more detail in the full report to the CCA Board.


SUMMARY REPORT 43

DISCLAIMER

The accompanying Report/Advice has been prepared from information supplied to us by and on behalf of our Client, The Cradle Coast Authority.

In accordance with our standard practice, this Report/Advice is solely for the use of our Client. We take no responsibility to any third party who relies on the whole or any part of this Report/Advice unless authorised by us in writing to so use the said Report/Advice.

This Report/Advice is prepared on the basis that full disclosure of all information and facts which may affect our Report/Advice has been made to us, and we cannot accept any liability or responsibility whatsoever for the Report/Advice unless such full disclosure has been made.

Information contained in this Report/Advice may be commercially sensitive and no part of this Report/Advice may be reproduced in any document or representation to a third party without our prior approval of the form and context in which it is to appear.

IQ Agribusiness


SUMMARY REPORT 44

ATTACHMENT 1

LIST OF INDUSTRY CONTACTS


SUMMARY REPORT 45

INDUSTRY CONTACTS S = SURVEY, I = INTERVIEW 1. Agronico Pty Ltd S/I 41. Forth Farm Produce P/L S/I 81. Quality Produce Tasmania S 2. Anvers Confectionery P/L S/I 42. Fromberg, W A S 82. R Stephens Tasmanian Honey S 3. Ashgrove Cheese S/I 43. Glaxosmithkline Australia S 83. Red Rock Lobster Pty Ltd S 4. Australian Bush Tucker Wild Food S 44. Gondwana Estate S 84. Ritchie Fishing Company S 5. Australian Cement Holdings S 45. Greenhams Tasmania Pty Ltd S/I 85. Roberts Limited S/I6. Australian Hop Marketers S 46. Gunns Plains Hop Farm S 86. Serve Ag Pty Ltd S/I 7. Australian Live Seafood Pty Ltd S 47. Harvest Moon S/I 87. Simplot Australia S/I 8. Bellamy's Country Baby S/I 48. Highclere Abattoir S 88. Small Concern Whisky Distillery S 9. Betta Milk / Whisky Tasmania S/I 49. Hobart Port Corporation S 89. Smithton Shellfish Culture S 10. Bolduans Bay Oysters P/L S 50. Homestyle Golden Pastries S 90. Spirax Sarco Pty Ltd S 11. Bonlac Food Limited S 51. Hursey Seafoods S 91. Squibb, RW & Sons S 12. Botanical Resources Australia S/I 52. Jones, H L & Son Pty Ltd S 92. St Regis Bates Pty Ltd (Amcor) S 13. Brandsema Market Garden S/I 53. K G B Exports S 93. Stanley Fish Pty Ltd S 14. Britton Bros Pty Ltd S 54. Kelp Industries Pty Ltd S 94. Stephenson's Cherries S 15. Burnie Chamber Of Commerce S/I 55. King Island Cloud Juice S 95. Strahan Aquaculture Processing S 16. Burnie Port Corporation S 56. King Island Dairies Pty Ltd S/I 96. Supreme Cake Co Pty Ltd S/I 17. Cadbury Schweppes Milk S 57. King Island Free Range Meats S 97. TAFE Tasmania S18. Cape View Venison S 58. King Island Free Range Pigs S 98. Tas Seafoods S/I19. Chas Kelly Transport S 59. King Island Honey Farm S 99. Tas Traditional Seafoods S 20. Cherry Hill Cool Stores S/I 60. King Island Meat Company S 100. Tasman Starches Pty Ltd S/I 21. Classic Foods S/I 61. King Island Seafoods Pty Ltd S 101. Tasmanian Agricultural Productivity Group S/I 22. Clements Marshall S/I 62. King Island Trading Company S 102. Tasmanian Farmers & Graziers S/I 23. Clover Country Meats P/L S/I 63. Klaas's Bakehouse S 103. Tasmanian Forest Waters S 24. Coles Supermarkets S 64. Lactos Pty Ltd S/I 104. Tasmanian Fresh Pty Ltd S 25. Cooee Point Abattoir S 65. Langworthy Cold Stores S 105. Tasmanian Gourmet Cheesecake S 26. Costa's Fresh Produce S 66. Leatherwood Liqueur S 106. Tasmanian Independent Wholesalers S 27. Country Bake Tasmania S 67. Leven Gold Wines S 107. Tasmanian Institute of Agricultural Research S/I 28. Cradle Coast Water S 68. Marawah Kelp S 108. Tasmanian Leatherwood Liqueur S 29. Craig Mostyn & Co S 69. Mccain Foods Australia S 109. Tasmanian Mushrooms S/I30. Davey Maynard S 70. Mella Cheese S 110. Tasmanian Octopus Products S/I 31. Daybreak Apiaries Pty Ltd S 71. Montague Cold Stores S 111. Tasmanian Quality Food Programme S 32. Department of Economic Development S/I 72. Mrs McNally's Shortbread (Cripps Nu Bake) S 112. Tyhen International S 33. Dept of Primary Industries, Water & Env’t S/I 73. National Food Industry Strategy S 113. Ulverstone Pet Food Works S 34. Devonport Chamber of Commerce and Industry S 74. Naturally Nichols S/I 114. United Milk Tasmania Ltd S 35. Devonport City Abattoir S/I 75. New Life Industries S 115. University Of Tasmania S/I 36. Devonport Port Corporation S 76. Nichols Poultry S/I 116. Van Dieman Olives S 37. Dew South Tasmanian Spring Water S/I 77. Norries International Seafoods S 117. Visypak S 38. Essential Oils Tas S 78. Perfecta Produce Pty Ltd S/I 118. Watercress Valley S 39. Field Fresh Tasmania S/I 79. Petuna Seafoods P/L S/I 119. Websters Ltd S/I 40. Food Industry Council S/I 80. Premium Fresh S/I 120. Woolworths Ltd S


SUMMARY REPORT 46

ATTACHMENT 2

INDUSTRY ‘SURVEY’


SUMMARY REPORT 47

Address CRADLE COAST FOOD INDUSTRY VALUE ADDING INITIATIVE Dear The Cradle Coast Authority has appointed IQ Agribusiness to develop options for strategic investment in the region’s food industry that will increase value adding activity and employment in this important sector. Based on the options presented, the Authority will direct seed funding of up to $3 million to one or more major initiatives that have the potential to create regional benefits to the industry. Investment options under investigation include cluster-based structures and shared use facilities, specialised training, services and research and development capabilities that can increase returns to producers and processors and create new investment and employment in the region. Further details of this initiative are provided in the enclosed information sheet and Sustainable Regions Investment Plan brochure. IQ Agribusiness is currently seeking input from individuals and organisations involved with the region’s food industry to identify issues and needs for further investigation. You are invited to participate in the initial stages of this process by completing the attached questionnaire and returning it to the consultants by March 21. IQ Agribusiness may also contact you directly to request an interview, and I would appreciate any assistance you could offer their investigations. If you would like to request an interview with the consultants, please contact IQ Agribusiness through Ian Locke on 04 1968 9479 or email [email protected]. Thank you for your interest in this important regional initiative. If you have any further questions regarding this, or any other of the Cradle Coast Authority’s regional activities, please contact Sarah Poortenaar on 6431 6285. Yours sincerely Roger Jaensch

Executive Chairman


mailto:[email protected]

SUMMARY REPORT 48


CRADLE COAST FOOD INDUSTRY VALUE-ADDING INITIATIVE

QUESTIONNAIRE Name_______________________Company_______________________________Phone____________

Address___________________________________Fax_____________Email________________________

1. What do you consider to be the main opportunities for growing the value of the food industry in North-West Tasmania? (please be specific)

2. What are the barriers that might prevent these opportunities from being realised?

3. How do you think these barriers can be overcome?

4. Would you like to be interviewed by the consultants? Yes/No

5. Would you like to receive updates regarding this initiative? Yes/No

(please provide contact details above) Please return to: IQ Agribusiness Or return by fax 03 6428 2864 Ian Locke 161 Allport St East LEITH 7315

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