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VALUE ADDING TO AGRICULTURE - IN CENTRAL WEST NSW - Regional Development ...
VALUE ADDING
TO AGRICULTURE
IN CENTRAL WEST NSW

                      A NSW Government Initiative
VALUE ADDING TO AGRICULTURE - IN CENTRAL WEST NSW - Regional Development ...
// This report has been prepared by:
Regional Development Australia Central West
Suite 4, 59 Hill Street
(PO Box 172)
ORANGE NSW 2800

// With funding from:

// Date published:
September 2016

// Author:
Julia Andrews, Project Officer, RDA Central West

// Additional analysis provided by:
A.P. Sheere Consulting

// About Regional Development Australia Central West
Regional Development Australia — Central West is part
of a national network of 55 locally managed, not-for-
profit incorporated associations and is jointly funded
by the Australian and NSW Governments. Our region
extends from Lithgow in the east to Lake Cargelligo in
the west and comprises the local government areas of
Lithgow, Oberon, Bathurst, Blayney, Orange, Cabonne,
Cowra, Parkes, Forbes, Weddin and Lachlan.

// Contributing agencies and sponsors:

                                                 A NSW Government Initiative

A.P. Sheere Consulting

Newcrest Mining’s Cadia Valley Operations
contributed to this project as part of its
Community Partnerships Program.

// Disclaimer
This report was produced by RDA Central West
and does not necessarily represent the views of
the Australian or NSW Governments, their officers,
employees or agents.

// Front cover:
   Ed Fagan, Cowra
   Photo by Kate Barclay

// Publication design: Sauce Design
VALUE ADDING TO AGRICULTURE - IN CENTRAL WEST NSW - Regional Development ...
Contents

Introduction                                                              5

Scope and Purpose                                                         6
Methodology                                                               6
Key Observation Highlights                                                7

Part 1                                                                    8

Value Adding                                                              9

Biotechnology                                                            11
Functional Foods                                                         11
Protein and Animal Feed                                                  15
Bioenergy                                                                18

Digital Technology                                                      20
The Digital Divide                                                      20
Digital Platforms connecting agribusiness to capital                    20
E-Commerce                                                              22
Traceability                                                            23

Processing and Packaging                                        24
The strength of Central West NSW fruit and vegetable processing 25
The decline of Central West NSW meat processing                 27

Branding                                                                29
Regional Branding                                                       29
Industry or Sector Branding                                             29
A Central West NSW Brand                                                30
“Clean & Green”                                                         31
The Organic Difference                                                  32

Collaboration and Co-operation                                          34
Collaboration                                                           34
Co-Operatives                                                           37

Export Opportunities and Trade Agreements                               40

Part 2                                                                  43

Central West NSW — an overview                                          44
Blurred Boundaries                                                      44
Agricultural land and sector characteristics                            45
Agricultural Production                                                 47
Gross Regional Product                                                  48
Employment                                                              48
Agricultural Jobs                                                       49

                           /   Value Adding to Agriculture in Central West NSW / 3
VALUE ADDING TO AGRICULTURE - IN CENTRAL WEST NSW - Regional Development ...
Livestock                                                 50
    Sheep                                                     50
    Beef                                                      51
    Pigs                                                      51
    Poultry — meat                                            52
    Poultry — eggs                                            52
    Goat                                                      53
    Deer                                                      54
    Alpaca                                                    54
    Export Opportunities                                      54

    Horticulture                                              56
    The changing wine industry in Central West NSW            57
    Protected Cropping                                        58
    Export Opportunities                                      59
    Irradiation                                               61

    Dairy                                                     62
    Export Opportunities                                      63
    Investment in Dairy                                       63

    Wool                                                      65
    Alpaca fibre in Central West NSW                          66
    Export Opportunities                                      66

    Broad-acre cropping                                       67
    Export Opportunities                                      69

    Survey Analysis                                           70

    Key Observations                                          72
    Jobs & Skills                                             72
    Agricultural Sectors                                      72
    Export Opportunities                                      72
    Regional Innovation Hubs                                  72
    Biotechnology                                             73
    Digital Technology                                        73
    Processing and Packaging                                  73
    Branding                                                  73
    Collaboration and Co-operation                            74
    Freight and Logistics                                     74

    Bibliography                                              75

4   /   Value Adding to Agriculture in Central West NSW   /
VALUE ADDING TO AGRICULTURE - IN CENTRAL WEST NSW - Regional Development ...
Introduction

This study was born of a             The Central West and                       The Central West currently
mutual recognition across key        Orana Regional Plan (Draft)                exports 65% of its agricultural
stakeholders and government          specifically states that; “the NSW         production in commodity
bodies in the region, including      Government will work with                  form.2 This shows that despite
Regional Development Australia       Regional Development Australia             the number and variety of
Central West, NSW Department         Central West and Industry NSW to           agribusinesses and food
of Industry (Western NSW),           prepare and implement a value-             enterprises, the majority of
the Department of Premier            adding strategy for the Central            wheat, livestock and horticultural
and Cabinet and Central NSW          West area.”                                products currently leave the
Councils (Centroc), that a food                                                 region without additional
and fibre strategy was needed        Debate rages over whether                  value adding.
to ensure a sustainable, diverse     agriculture will replace mining
agricultural economy reflecting      as Australia’s next big boom               This report reviews current
the changing global landscape.       to become the “food bowl of                agricultural value adding tends
                                     Asia”. There is, however, general          and opportunities in Central West
In 2016, NSW Department              consensus that, due to the                 NSW, with particular focus on
of Planning and Environment          growing Asian middle class,                the categories of biotechnology,
released two reports relating to     a well-managed Australian                  digital technology, processing
agriculture and broader regional     agriculture has a bright future.           and packaging, branding, and
development and planning for                                                    co-operation and collaboration.
the Central West and Orana           Agriculture represents 7.7% of             The report relies heavily on the
regions;                             Central West NSW’s GRP and is a            case studies of Central West
1. Central West and Orana            key industry for the region.1              agribusinesses.
    Agricultural Industries Report
    (Jan 2016)                       1 Regional Development Australia Central   2 Ibid
2. Central West and Orana            West (2014) NSW Central West Export/
                                     Import Contribution Study
    Regional Plan Draft (April
    2016)

                                                                    /   Value Adding to Agriculture in Central West NSW /   5
VALUE ADDING TO AGRICULTURE - IN CENTRAL WEST NSW - Regional Development ...
Scope and Purpose

    The purpose of this report is to             The most significant aspect of       business information including
    provide deeper analysis of the               the project was the interview        approximate annual turnover,
    agriculture sector in Central West           stage, which involved face-          number of staff, location and core
    NSW including the current value              to-face meetings with over           business type. The survey asked
    adding landscape. This report                twenty regional agribusinesses.      participants why their business
    assesses trends across various               Individual case studies and          was based in Central West
    agricultural sectors, considers              business perspectives form a         NSW and the advantages and
    domestic and international                   key component of the report.         disadvantages of their location.
    market demand trends and                     All interviews were followed         Participants were also asked
    factors such as Free Trade                   up with phone calls and emails       to describe any value adding
    Agreements that may impact                   and subjects were given the          activities they were currently
    future growth, and identifies                opportunity to proof read            engaged in or planned to
    promising opportunities to                   transcripts of their interviews      engage in.
    increase the extent of value-                to ensure no information of
    adding in niche areas. This report           a commercial in confidence           Over 100 surveys were
    relies heavily on the experiences            nature was revealed. Developing      distributed through various
    and insights of regional                     and maintaining trust with local     food and agribusiness networks
    agribusiness case studies.                   businesses was imperative in         including RDA Central West’s
                                                 order to ensure meaningful           own database, Agribusiness
    Methodology                                  participation in the process.        Today forum members (including
                                                                                      regional LLSs), Farmers’ Markets
    The first stage of this report               During the case study process,       networks and through RDA
    involved the completion of a                 four key agribusinesses were         Central West’s social media
    comprehensive literature review              selected to be interviewed,          pages (Twitter and Facebook)
    and desktop study. Sources used              resulting in the production of       and newsletter. Surveys
    include industry and academic                a two-minute video showcase          completed and returned for
    research papers, government                  designed to be used on a             analysis represented a range
    reports and media commentary                 variety of mediums to promote        of agricultural sectors and
    covering regional, national and              investment and agribusiness in       businesses including dairy, meat,
    global issues relating to the                Central West NSW.                    horticultural and grain producers,
    broad field of value adding to                                                    organic farmers, wine producers,
    agriculture and current trade                The five key “value-adding”          bee keepers, cheese makers,
    opportunities. Please refer to               categories featured in this          fibre and meat processors and
    the bibliography for a full list             report (biotechnology, digital       packaging enterprises.
    of sources.                                  technology, processing and
                                                 packaging, branding, and
    The second stage involved                    collaboration and co-operation)
    stakeholder consultations                    were identified as a result of the
    including State and Federal                  stakeholder engagement and
    Government departments,                      individual business case studies.
    research and academic
    institutions, banks, industry                The final stage of the project
    bodies and individual businesses.            involved the development,
    Please refer to the stakeholder list         distribution and analysis
    at the end of this document for              of an on-line survey. The
    more information.                            survey established basic

6   /   Value Adding to Agriculture in Central West NSW   /
VALUE ADDING TO AGRICULTURE - IN CENTRAL WEST NSW - Regional Development ...
Key Observation                           accessibility to major centres;            supply chain may present
Highlights                             // Existing industry confidence               opportunities for some niche
                                          in the region with two private             sectors.
Jobs & skills                             enterprise biotechnology
                                          ventures already operating;                Investment in innovative
Although it is one of the most         // The location of the NSW                    processing and packaging R&D
important sectors and employers           Department of Primary                      and infrastructure may create
in the region, jobs are shrinking in      Industries;                                new opportunities for both
agriculture in Central West NSW. If    // The region’s close ties with               domestic and export value
the region is to leverage the value       Charles Sturt University                   adding to a broad range of
adding opportunities afforded             and the Graham Centre for                  agricultural sectors in the region.
by the predicted growth of the            Agricultural Innovation;
agricultural industry, it will have    // The region’s attractiveness                Branding
to consider the consequences              to higher skilled workers
and develop strategies to manage          (affordable housing, cost                  A unified approach is needed,in
shrinking jobs and skills gaps.           of living, work/life balance,              collaboration with existing
                                          schools and higher educational             destination marketing, to
Export and domestic                       facilities, medical services and           regional branding between Local
markets                                   specialists and culture.)                  Government Areas, Regional
                                       // The region’s status as one                 Tourism Organisations and
Considerable growth demand                of seven “centres of regional              agricultural stakeholders to
expectations in middle class              growth” Australia-wide                     develop an authentic, effective
Asian markets, and various                expected to contribute over                regional agricultural brand.
trade agreements with those               $15b to the national economy
regions, will create significant          in 2031.3                                  Maintaining and protecting our
opportunities for Central West                                                       “clean and green” reputation
agricultural products, including       Digital Technology                            is critical to the region’s ability
premium pre-packaged cuts of                                                         to command high global
meat and fresh, packaged or            Advances in digital technology                prices for agricultural products.
processed horticultural produce,       are creating myriad opportunities             International competition to be
which are key strengths of the         for on-farm and post farm                     “clean and green” means Central
region.                                gate value adding. There is an                West NSW needs to remain
                                       urgent need for robust, future-               vigilant and unified in this space.
The ability to transport produce       proof and wide-reaching
by air from Canberra to                telecommunications capabilities               Collaboration & Co-Ops
Singapore — and 11 Chinese cities      in Central West NSW, specifically
connected through Singapore —          the rectification of mobile                   There may be a need for
is a potential game-changer for        blackspots and sufficient NBN                 continued advocacy to ensure
agricultural exports from Central      capacity, without which the                   regional agricultural co-
West NSW.                              agriculture sector will not be                operatives are not excluded for
                                       able to grow domestically or                  eligibility for government grants
Biotechnology                          compete on an international                   on the basis of their business
Innovation Hub                         level. Growth in the region is                structure.
                                       currently stunted by inadequate
Central West NSW is ideally            telecommunications.                           Freight and logistics
placed to be an Innovation Hub
for research and the application       Processing and Packaging                      Connectivity to market is a key
of biotechnology in agriculture                                                      challenge for Central West NSW
due to:                                Processing weaknesses in the                  agricultural SMEs.
// The region’s diversity of high      Central West NSW agricultural
   quality agricultural produce;                                                     For a full list of key observations
// The region’s proximity and          3 Commonwealth Government, (2016)             see pages 72–74.
                                       Australian Infrastructure Plan, pp 60–61

                                                                         /   Value Adding to Agriculture in Central West NSW /   7
VALUE ADDING TO AGRICULTURE - IN CENTRAL WEST NSW - Regional Development ...
Part 1

    // Agritechnology, Borenore. Photo Kate Barclay.
8   /   Value Adding to Agriculture in Central West NSW   /
VALUE ADDING TO AGRICULTURE - IN CENTRAL WEST NSW - Regional Development ...
Value Adding

Value-adding includes any                    // Precision agriculture5 is                 In Central West NSW,
process or service in the supply                creating opportunities for                organisations such as the farmer-
chain that adds to or enhances                  farmers to optimise returns               driven Central West Farming
the value of products to                        on inputs while preserving                Systems exist to trial and research
customers. Value-adding may                     resources;                                new farming methods and
include supplying new products               // Intensive livestock farms                 innovations, to share knowledge
or different varieties, changing                can earn carbon credits by                and create valuable farming and
presentation to meet market                     capturing methane gas for                 agribusiness networks. Local
requirements, providing expertise               the Government's Emissions                Land Services bring together
and/or services and promotion                   Reduction Fund, and many are              agricultural production advice,
and marketing activities to                     converting biogas into energy.            biosecurity, natural resource
differentiate products.4                                                                  management and emergency
                                             With these technological                     management into a single
Value adding to agriculture is               opportunities come challenges,               organisation. NSW Farmers’
about finding ways for farmers               such as the continued struggle               “AgInnovators” is a news and
and agribusinesses to move                   for farmers and regional                     information site designed to
from being “price takers” to                 communities to have adequate                 connect the world of technology,
“price makers”.                              telecommunications capabilities              business and communication
                                             to take advantage of new                     with leading agricultural thinkers.
In agriculture, value-adding can             technologies and growing
be achieved on-farm, post farm               data needs.                                  While, on-farm value adding
gate, or as a combination of the                                                          represents significant
two. On-farm value adding can                In keeping with its Innovation               opportunities for agriculture in
be achieved through harnessing               Agenda, the Federal Government               the Central West, the main focus
science and new technologies                 has developed a “Farming                     of this report is post farm gate
to create greater efficiencies and           Smarter” section within the                  value adding.
cost competitiveness in farm                 2015 Agricultural White Paper,
production. For example;                     addressing the need for Australian              Key Observation
// Advances in biotechnology                 agriculture to continue to have
   are increasing the genetic                access to the most advanced                     While farmers and
   performance of animals;                   farming technologies and                        agribusinesses continue
// Increasing competition and                practices, as well as the skills                to strive towards cost
   cost of labour is leading to the          and labour to drive innovation                  efficiencies, largely through
   development and adoption of               and growth.                                     digital and bio technological
   new technologies, software,                                                               advances, they struggle to
   mechanisation and robotics;               5 “Precision agriculture provides the           compete with Asia on price
                                             means for measuring the variability             competitiveness. However,
                                             observed in crop yield and quality
4 Commonwealth Department of                 parameters. Precision agriculture tools         they can compete on quality
Agriculture, Fisheries and Forestry (1999)   also provide the means for site specific        and uniqueness — by value
Increasing Value-adding to Australia’s raw   crop management and when combined
materials.                                                                                   adding to their product and/
                                             with traditional agronomy tools, can
                                             lead to improved crop yields, quality and       or marketing and ensuring
                                             efficiency of crop production.” Society         that quality and authenticity
                                             of Precision Agriculture Australia (2014)
                                             Strategic Plan, available from http://www.      can be verified and traced.
                                             spaa.com.au/strategic-plan.php

                                                                              /   Value Adding to Agriculture in Central West NSW /   9
VALUE ADDING TO AGRICULTURE - IN CENTRAL WEST NSW - Regional Development ...
Agricultural sectors are                       One of Central West NSW’s
     increasingly realising the value of            most significant agribusinesses,
     moving away from “commodity-                   MSM Milling in Manildra, is a
     based” marketing and into more                 commodity based (canola)
     “value-based” marketing in order               business with a growing focus on
     to ensure long term profitability              value-adding, through research
     and sustainability.                            and development and packaging
                                                    and processing, to its high quality
     The Cattle Council of Australia,               vegetable oils and stock feed.
     for example, recently released
     its five-year industry assessment              Post farm gate value adding
     advocating for a shift towards                 can be achieved through
     ‘value chains’ rather than ‘supply             various methods. As a result
     chains’ and the production of                  of consultations with regional
     beef that is ‘fit for a purpose’.              stakeholders and agribusinesses,
     The plan describes the needs                   the following value-adding
     of consumers from paddock                      categories have been developed
     to plate as the foundation of a                and will be further explored in
     comprehensive industry plan                    this report;
     aimed at building long-term
     profitability into grass fed beef
     production.6
                                                                                     Value adding through
     6 Cattle Council of Australia (2015)                                            Biotechnology
     National Strategies for Australia’s Grassfed
     Beef Sector, available from http://www.
     cattlecouncil.com.au/assets/documents/
     Beef%202015%20and%20beyond.pdf
                                                                                     Value adding through
                                                                                     Digital technology

                                                                                     Value adding through
                                                                                     Processing & packaging

                                                                                     Value adding through
                                                                                     Branding

                                                                                     Value adding through
                                                                                     Collaboration &
                                                                                     co-operatives

10   /   Value Adding to Agriculture in Central West NSW   /
Biotechnology

“Bioscience is critical for the world not just for the
Central West. We need to develop systems to add
value to horticulture, agriculture, food waste so that
we can reuse, recycle all of those things we need
to do; we all know we need to do them. Bioscience
gives us a natural means of doing that.”
— Derek Robinson, Business Development Manager, Agritechnology

Agribusiness can add value to              reduced chemical use or through         between diet and health, and
products by harnessing science             the development of alternative          the move towards preventative
to create greater efficiencies, cost       fuels (biofuels) made from plant        health and wellness in an
competitiveness and premium                and plant-derived resources.            ageing population.
products.
                                           After conducting primary                Functional foods may include, for
According to the Convention                research through consultation           example, high antioxidant fruits
on Biological Diversity,                   with local agribusinesses and           such as the Queen Garnet Plum,
biotechnology refers to “any               secondary research through              a new plum variety developed
technological application that             international market analysis,          by the Queensland Department
uses biological systems, living            three areas of opportunity for          of Agriculture, Forestry and
organisms, or derivatives thereof,         Central West NSW agriculture            Fisheries. It may also include
to make or modify products or              in biotechnology have been              value added food ingredients
processes for specific use”.7 This         identified;                             such as oils, vinegars, whey
may include, for example, using            1. Functional Foods                     protein powders, freeze dried
bacteria to make yogurt, cheese,           2. Protein and Animal Feed              powders and yeasts.
and vinegar, or the use of plant or        3. Bioenergy
animal cross-breeding techniques                                                   “I believe that in the future we
to produce stock with enhanced             Functional Foods                        will have grain varieties with
qualities. Biotechnology includes,                                                 enhanced health properties
but is not limited to, genetic             Increasingly, biotechnology is          that will attract a premium in
modification (GM).                         playing a role in value adding          the market.”
                                           through the development of
Biotechnology has a critical               agricultural products with greater      — Professor Chris Blanchard,
role to play in helping to deal            health benefits.                        Functional Grains Centre, Wagga
with emerging challenges                                                           Wagga
facing agriculture, including              “Functional foods” or
climate change, pressure on                “nutraceuticals” are food products        Key Observation
global food supplies and the               that have been manipulated in
management of pests and                    order to deliver perceived health         Agricultural sectors in
diseases. Biotechnology can also           benefits to consumers. Functional         Central West NSW with
benefit the environment, through           foods are a growing field in              significant “functional foods”
                                           food science and biotechnology            potential include grain
7 Ruame, J. (2001) Agricultural            due to advances in technology,            and oil seeds, horticulture
Biotechnology for developing countries,
Food and Agriculture Organisation of the   health-conscious consumer                 and dairy.
United Nations                             interest in the relationship

                                                                      /   Value Adding to Agriculture in Central West NSW /   11
engineering support we need to
                                                                                            run a plant here — the Central
                                                                                            West still allows us to have access
                                                                                            to all of that.”

                                                                                            Agritechnology has formed
                                                                                            wholly owned subsidiaries and
                                                                                            joint-venture companies to
                                                                                            further the commercialisation
                                                                                            of a number of its discoveries.
                                                                                            One such company is Australian
                                                                                            Functional Foods Pty. Ltd. (AFF).
                                                                                            Using technology developed by
                                                                                            Agritechnology, AFF processes
     // The Agritechnology site was originally a vineyard.                                  fresh fruit and/or vegetables into
                                                                                            premium healthy functional and
                                                                                            nutraceutical food and beverage
     Case Study: Agritechnology — harnessing science to                                     products.
     create new agrifood opportunities
                                                                                            Being located in a major cherry
     Agritechnology is a bioscience                 “Agritechnology is a world class        growing region where second
     company developing new                         outfit, our market is global,” says     grade cherries represent about
     products and processes                         Derek. “Our customers come              20–50% of the annual cherry
     for clients in agriculture,                    from all around Australia for           crop, Agritechnology recognised
     nutraceuticals, biofuels, and                  our continuous fermentation             the opportunity to value add
     food and beverage production.                  expertise particularly.                 to the significant cherry waste
                                                    Agritechnology is a business that       stream in the region by extracting
     Overlooking the rolling hills of               allows us to pursue real science,       nutraceutical compounds and
     the Orange Wine Region, the                    real business opportunities and         converting waste cherries
     Agritechnology HQ originally                   yet still live in such a great place.   into food.
     functioned as a vineyard and                   There’s about thirteen of us on
     winery. Over the years, the                    site in Orange, it varies a little      Cherries have substantial levels
     vineyard business was scaled                   bit project to project. People          of anthocyanin (an important
     back and the bioscience work                   are drawn literally from all over       antioxidant) with nutraceutical
     scaled up on location. The                     the world. We have people from          properties including for gout,
     winery infrastructure and                      Pakistan, French Reunion, from          inflammation and other health
     equipment now forms part of                    India, from China. We have              benefits. Cherries are also a
     the plant used for bioscience                  brought people back to Australia        recognised low-GI food and
     research and production.                       from Sweden who are working             cherry-derived products appeal
                                                    over there. It’s quite a melting        to the diabetic market in
     “Bioscience is critical for the                pot here.”                              particular.
     world, not just for the Central
     West,” says Derek Robinson,                    “Our physical location is               The Agritechnology team
     Business Development Manager                   fantastic for us. We are an R&D         applied its expertise in food
     at Agritechnology. “We need to                 company that works with fruits          science to develop a process to
     develop systems to add value                   and vegetables, [and] with [the]        create a cherry juice with shelf
     to horticulture, agriculture, food             grain belt. Where we are we             stability, high yield, good texture
     waste so that we can reuse,                    have got canola and wheat               and flavour and high levels of
     recycle all of those things we                 within an hour, and we’ve got           anythocyanin. The team also
     need to do, we all know we need                fruit and vegetables just over          developed a functional food from
     to do them. Bioscience gives us a              the hill. Mixed horticulture, it’s      the cherry waste in the form
     natural means of doing that.”                  fantastic for us. But more than         of a powder with a strong red
                                                    that we’ve also got access to the       colour, intense cherry flavour, and

12   /   Value Adding to Agriculture in Central West NSW     /
antioxidant profile demanded
by ingredient distributors and
food manufacturers.

“I think there’s a recognition
that agribusiness and adding
value to our agricultural
production is attractive in the
investment world generally at
the moment. Orange is seen as
an R&D base and the Central
West is seen as a ‘hub’, so that
works to our advantage in
attracting investment as well.”

— Derek Robinson, Business
Development Manager at
Agritechnology.

                                   // The Agritechnology team. Photo Kate Barclay.

                                                                  /   Value Adding to Agriculture in Central West NSW /   13
Case Study: Botanical Innovations — the fusion of                              Global trends and
     technology and botany                                                          market opportunities for
                                                                                    Functional Foods
     Botanical Innovations, a biotech          The company can manufacture
     start-up based in Orange, looks           liquids, solids and powders.         There is an increased demand
     like the basement of Willy                Specific capabilities include        for healthy functional food both
     Wonka’s Chocolate Factory. Vats,          essential oil manufacturing,         domestically and internationally,
     pools, pipes, valves, gauges and          cold pressed oils, drum and          especially in growing middle
     pumps fill the 550 sq. metre              spray drying and powder              classes of Asia.
     shed on the outskirts of town,            manufacturing, extruding
     where Managing Director Kerry             for product and ingredient           The functional food
     Ferguson can be found deeply              manufacturing and packaging.
     engrossed in the innovative R&D
                                                                                    market was worth
     phase of her business.                    Things are moving quickly for
                                               Botanical Innovations, which
                                                                                    $US25 billion
     Combining herbs, fruits,                  was established in late 2014 and     globally in 2011, yet
     vegetables, plants and woods              already has investors and markets    Australia had only a
     with the latest technological             showing a keen interest in its
     advances in extraction,
     purification and packaging,
                                               range of products.                   1.6% share.                  8

     Botanical Innovations                     “Having finally worked out how       Strict regulations on health
     manufactures botanical extracts,          best to package my vinegars,         claims have made Europe a
     essential oils, flours and oil for the    oils and extracts I am about to      centre for clinical trials in the
     food, nutraceutical, medical and          commence exporting,” says Kerry.     functional food market. Until
     cosmetic industries.                      “I have worked with a business       March 2014, the European Food
                                               partner in India for many years      Safety Authority (EFSA) had only
     The company’s location, in the            and will be exporting Botanical      approved 254 health claims out
     heart of Central NSW, provides            Innovations products to India.”      of the 2,242 submitted.9
     proximity to a wide range of raw
     materials, including horticultural        Kerry, who has a corporate           Japan, on the other hand, has
     “waste” such as apples, cherries          background in health care and        become a test hub for innovation.
     and grapes.                               agribusiness, says Southern Cross    In early 2014, total approvals
                                               University, Austrade and industry    in Japan had reached over
     Botanical Innovations products            specific trade fairs have been       1,100; five times higher than the
     include apple, grape and cherry           key to establishing contacts and     number of approvals in Europe,
     seed oils, vinegars and phenolic          networks in this critical start-up   standing out among developed
     extracts. Botanical Innovations           phase of the business.               countries for the range of health
     also manufacturers Australian                                                  ingredients.10
     Buddha Wood essential oil                    Key Observation
     and industrial fumigants and                                                   This has made Europe a hard
     disinfectants formulated from                There is value to be realised     market for manufacturers of
     essential oils.                              from agricultural waste           functional foods, but one with
                                                  streams, currently being          high standards for health claims.11
     Botanical Innovations                        done with cherry waste
     services include research                    streams in the region and         The largest number of functional
     and development, pilot                       could also be applied to          food and drinks consumers is in
     manufacturing, market testing,               grapes, apples, olives and
     business planning and market                 other stone fruits which          8 Charles Sturt University, (2013) New
                                                                                    $2.1 million grains and research centre at
     entry, commercial manufacturing              are produced in significant
                                                                                    CSU, ://news.csu.edu.au/
     and formulating.                             quantities in the Central West
                                                                                    9 Ibid
                                                  NSW region.
                                                                                    10 Ibid
                                                                                    11 Langley, S. (2014) Ausfoodnews.com
                                                                                    The future of functional food regulation,
                                                                                    Canadean, July 14
14   / Value Adding to Agriculture in Central West NSW   /
the US — especially as a market
for lifestyle health products.
Emerging hubs such as China,
India and Brazil are also likely to
exert significant influence over
the functional food and drinks
market in the future.

Demand for functional food
is being driven worldwide by
a growing interest among
consumers in health and
wellbeing, due to an ageing
society and increasing prevalence
of lifestyle related diseases.

The functional food market
is particularly strong in Asia
with growing opportunities
for businesses operating in the           of animal feeds which are                   “We are looking at
Australian food industry.12               considered safe, appropriate and            opportunities to extract
                                          cost-effective.14                           proteins from pulses and
Australian-based businesses are                                                       use them as high value food
in a good position to market              The Protein Challenge 2040 is a             ingredients. We are also
functional food products                  global coalition of organisations           working on incorporating
effectively, with Australia having        and NGOs exploring how                      omega-3 unsaturated fatty
a strong reputation in credible           we feed nine billion people                 acids in animal feed so that we
research (despite ranking                 enough protein in a way which               can produce premium meat
low worldwide in terms of                 is affordable and good for the              products... I believe that in
commercialisation13), and general         environment. A key priority is              the future we will have grain
food and product safety.                  to scale up sustainable feed                varieties with enhanced health
                                          innovation to meet the consumer             properties that will attract a
Protein and                               demand for animal protein.                  premium in the market. We
Animal Feed                                                                           are working on wheat varieties
                                          14 Protein Sources for the Animal Feed      with reduced allergenicity
                                          Industry FAO UN 2004 http://www.fao.
Rapid income growth in Asia                                                           properties. We’re working on
                                          org/3/a-y5019e.pdf
is associated with an increased                                                       new high value options for
demand for high protein foods                                                         canola meal. We also think
such as meat, fish, milk and eggs.                                                    there is a lot of potential in
Meeting the growing consumer                                                          new uses for protein isolated
demand for meat, milk, eggs                                                           from pulses.”
and other livestock products is                                                       — Professor Chris Blanchard,
dependent to a large extent on                                                        Functional Grains Centre, Wagga
the availability of regular supplies                                                  Wagga15

12 corrs.com.au (Sept 2014) Marketing                                                 15 Professor Chris Blanchard, email
Functional Foods in Australia — How                                                   interview 20 April 2016
to navigate the rules on health and
therapeutic claims
13 OECD ranking of Australia globally
in terms of research, as referred to in
the National Innovation and Science
Agenda (high in research, low in
commercialisation). http://www.
innovation.gov.au/page/national-
innovation-and-science-agenda-report

                                                                         /   Value Adding to Agriculture in Central West NSW /   15
Case study: Research finding new ways to turn                                          Global trends and market
     commodities into value added products.                                                 opportunities for protein
                                                                                            and animal feed
     The Australian Research Council             healthy food or food with novel
     (ARC) Training Centre for                   applications," Associate Professor         The Farm Animal Production
     Functional Grains, funded through           Blanchard said.                            industry has performed well
     the Industrial Transformation                                                          despite difficult trading conditions
     Training Centres program from               “What is called the 'functional            over the past five years. Volatile
     2014 to 2016, is a research hub             food market' was worth $US25               weather patterns and resulting
     for grain scientists from Charles           billion globally in 2011, yet              shifts in demand for animal
     Sturt University (CSU), NSW                 Australia had only a 1.6 per               feed, fluctuating grain prices
     Department of Primary Industries            cent share."                               and strong competition in the
     (DPI) and CSIRO, with a focus on                                                       industry have contributed to
     three commodities — rice, pulses,           CSU Vice-Chancellor and President          revenue movements over
     and canola.                                 Professor Andrew Vann praised              the period.
                                                 Associate Professor Blanchard
     Also involved is the Graham                 and his team for securing the              The proportion of grain being fed
     Centre for Agricultural Innovation          competitive ARC funds.                     to livestock has been increasing.
     — a collaborative research                                                             This places more significance
     alliance between CSU and NSW                “Charles Sturt University's position       upon Australia having a
     DPI. Other partners include Grain           in the food bowl of Australia              consistent and reliable source of
     Growers, MSM Milling, Flavour               offers natural linkages between            animal feed grains into the future.
     Makers, Teys Australia, Woods               researchers and food-processors            The major companies in the
     Grains, Grains and Legumes                  of these major commodities."16             animal feed industry, which earn
     Nutrition Council, Grains                                                              90.9% of industry revenue, have
     Research and Development                    May 2016 Update — The ARC                  remained profitable by reducing
     Corporation and Rural Industry              ITTC funding was only for 3                their exposure to market supply
     Research and Development                    years from 2014 to 2016 and                volatility through sheer size.17
     Corporation.                                there is currently no opportunity
                                                 for extension.                             Animal feed industry revenue
     "Rice, pulses and canola account                                                       is projected to grow at 3.6%
     for $2.5 billion of earnings when              Key Observation                         per year over the five years
     sold as commodities, with even                                                         through 2015–16 as demand
     greater economic potential for                 Research, development and               increases both domestically and
     the Australian economy through                 training to assist Central              internationally. According to
     value-adding."                                 West NSW producers                      the Stock Feed Manufacturers'
                                                    supply worldwide demand                 Council of Australia (SFMCA),
     The aims of the Centre include:                for sustainable, quality                the major risk Australia faces is a
     identifying the preferences of                 protein and animal feed for             nationwide drought that extends
     Australian and international grain             both human and animal                   over two winter cropping years
     customers; improving grain                     consumption respectively                affecting the supply of animal
     storage; developing new grain-                 should be encouraged and                feed.18
     based products with enhanced                   supported.
     sensory and health attributes:                                                         17 ibisworld.com.au, (2015) Farm Animal
     and training the next generation                                                       Feed Production in Australia: Market
                                                                                            Research Report, July http://www.
     of food science researchers.                                                           ibisworld.com.au/industry/farm-animal-
                                                                                            feed-production.html
     “We want to transform the three             16 Charles Sturt University News (2013),   18 Ibid
                                                 New $2.1 million grains research centre
     commodities by examining the                at CSU, 19 Dec http://news.csu.edu.
     functionality of food, particularly         au/latest-news/agricultural-science/
                                                 food-production/new-$2.1-million-grains-
     the growing demand for                      research-centre-at-csu

16   /   Value Adding to Agriculture in Central West NSW   /
The Australia Meat Processing
industry has performed strongly
over the past five years. A mature
domestic market has constrained
local consumption of industry
products, with the exception of
premium and organic products.
However, rapidly rising demand
for Australian meat, particularly
beef, in export markets has
contributed to strong industry
revenue growth over the past
three years.

Industry revenue is forecast to
grow at an annualised 9.0% over
the five years through 2015–16,
to reach $19.4 billion. Despite
ongoing strong demand from
export markets, industry revenue
is projected to grow at a more
subdued 5.8% in 2015–16.19           // MSM Milling silos

19 Ibid
                                     Case study: MSM Milling — Providing stockfeed
                                     to the world

                                     In 2008, MacSmith Milling               they are experiencing favourable
                                     Manildra (MSM Milling) was              growth and conditioning
                                     formed to produce canola oils for       using the pellets. International
                                     industrial and retail markets under     producers are also benefitting,
                                     The Healthy Baker and Manildra          including dairy farmers in
                                     Gold brands.                            New Zealand.

                                     MSM Milling’s decision to re-           In 2015, MSM Milling joined
                                     invest in the Manildra site to          forces with the Manildra Group
                                     allow for further value adding has      and Oilseed Products (OSP) NZ
                                     resulted in locally grown canola        to form Manildra Stockfeeds
                                     being transformed into stockfeed        New Zealand.
                                     which is sold both domestically
                                     and internationally.                    MSM Milling’s range of stockfeed
                                                                             is constantly expanding, with
                                     The feed mill produces protein          specialised pellets now available
                                     and energy-dense pelletised             for beef and dairy cattle, dairy
                                     stockfeed, using canola meal            goats and lambs.20
                                     and oil products as well as local
                                     wheat and barley and products
                                     from the Manildra Flour Mill.
                                     Some local award-winning
                                     producers have indicated that           20 MSM Milling (2015) Year in Review
                                                                             Newsletter, Stockfeed to the world

                                                                /   Value Adding to Agriculture in Central West NSW /   17
Bioenergy                                    An example of how this                       Corporation (RIRDC) to undertake
                                                  could be developed is evident                a comprehensive assessment
     Bioenergy is produced through                in the work of Regional                      of using biomass for bioenergy.
     the conversion of biomass (solid             Development Australia Orana,                 This project is set to identify new
     or liquid) to electricity and heat           which neighbours the Central                 opportunities and make it easier
     via processes of combustion,                 West NSW region. RDA Orana                   to develop biomass generation
     fermentation and digestion.                  have been working with local                 and biofuel projects in Australia.
     Bioenergy has the potential to               councils, businesses and
     play a significant role in providing         industry to progress investment              RIRDC plans to geospatially
     future biofuels and electricity to           in a regionally-based BioHub,                map existing and projected
     the region.                                  ultimately leading to the                    biomass resource data alongside
                                                  establishment of a network of                other parameters such as
     Agriculture can provide a range              Hubs across the region and                   existing network and transport
     of feedstocks such as woody                  developing new supply chains                 infrastructure, land use capability
     biomass, crop residues, oil seed             in an emerging ‘bio economy’.22              and demographic data.
     crops and tallow for bioenergy.              Stakeholders perceive a range
                                                  of opportunities arising from                “This will provide better linkages
         Key Observation                          establishing a BioHub to                     between biomass suppliers and
                                                  transform invasive woody weed                end users and support local
         Biofuels and bioenergy                   species into bioenergy in areas of           businesses to get more value
         present new opportunities                Western NSW.23                               from organic material destined
         to value add across all                                                               for landfill, disposal or other low
         agricultural sectors of Central          Global trends and                            value uses,” says ARENA CEO,
         West NSW including broad-                market opportunities for                     Ivor Frischknecht.24
         acre cropping, forestry,                 bioenergy
         dairy, horticulture, beef and                                                         The first iteration of the database
         intensive livestock.                     Bioenergy has the potential                  is planned for release in late 2016.
                                                  to play a crucial role in the
     A Victorian Government report21              provision of sustainable energy.             According to ARENA, Australia’s
     found that bioenergy production              However, bioenergy’s potential               bioenergy use is projected to
     could assist the development of              in Australia is yet to be fully              increase by 60% from 2007–08
     regional areas in a number of                realised and its fortunes will likely        to 2029–30. There is potential
     ways including;                              be influenced by Government                  to expand Australia’s bioenergy
     // Reducing greenhouse gasses,               incentives and various State                 sector with increased utilisation
        such as biogas being captured             Government requirements for                  of wood residues from
        and used to generate power                greenhouse gas mitigation, in                plantations and forests, waste
     // Providing additional electricity          the absence of well-established              streams and non-edible biomass.
        for expansion of regional                 markets in this area.
        industries                                                                             Global demand for bioenergy
     // Using waste streams through               The Australian Renewable Energy              resources is expected to increase
        processing agricultural                   Agency (ARENA) announced in                  with the projected growth in
        produce                                   January 2016, $3 million funding             bioenergy use. In the short-
     // Providing alternative options             support for the Rural Industries             term, demand for bioenergy
        for land use, should warmer               Research & Development                       resources are likely to be met by
        and drier weather experienced                                                          sugar, starch and oilseed crops,
        in the recent past continue               22 Further information in the Dubbo          as well as utilising the large
                                                  Biohub Project is available at http://www.
        into the future                                                                        volumes of unused residues and
                                                  rdaorana.org.au/our-initiatives.htm
     // Providing employment in
                                                  23 Cobar Weekly (2016) RDA says a
        regional areas                            biohub might not be just a pipe dream        24 Australian Renewable Energy Agency
                                                  http://cobarweekly.com.au/?p=1279            (Jan 2016) National bioenergy database
                                                                                               to create new opportunities http://
     21 State Government of Victoria (2010)                                                    arena.gov.au/media/national-bioenergy-
     Bioenergy from Agriculture http://                                                        database-to-create-new-opportunities/
     agriculture.vic.gov.au/agriculture/food-
     and-fibre-industries/industry-profiles/
     bioenergy-from-agriculture

18   /    Value Adding to Agriculture in Central West NSW   /
wastes. Lignocellulosic25 crops              Case Study: CLEAN Cowra                   Key Observation
are expected to contribute in                — Developing a model to
the medium-to long-term and                  convert locally-sourced                   Central West NSW is well
algae could make a significant               biomass into cost                         placed to be an innovation
contribution in the longer term.26           competitive energy                        hub for research and
                                                                                       application of biotechnology
“There is a widespread                       Cowra Low Emissions Action                in agriculture for the
scientific consensus that                    Network (CLEAN) Cowra is                  following reasons;
agriculture (including the                   a community-based group                 // significant diversity of high
agrifood chain) and, more                    advocating for a decentralised,            quality agricultural produce;
generally, the rural sector has              aggregated biomass-to-energy            // proximity and accessibility to
considerable potential for                   model to be developed that                 Canberra and Sydney
providing renewable energy,                  could service local agricultural        // existing market attraction
both by supplying the biomass                industries by using produce and            — two private enterprise
(including waste products)                   waste, subsequently providing              biotechnology ventures
needed as feedstocks for                     a platform for sustainable                 already operating in Orange;
various forms of renewable                   economic development.                   // location of the NSW
energy, and by utilising the                                                            Department of Primary
spatial dimension of rural land              The Cowra biomass project                  Industries;
(much of which is under the                  estimates it will produce around        // the region’s close ties with
ownership of farmers) as a                   60% of Cowra's energy needs                Charles Sturt University
catchment area for the ‘free’                at full capacity. It would involve         and the Graham Centre for
resources wind and                           construction of a biomass                  Agricultural Innovation;
solar energy.”                               plant — an initial 2MW version          // attractiveness of the region
— OECD report on                             is estimated to cost around $8             to higher skilled workers
Sustainable Agriculture27                    million.                                   (attractions include affordable
                                                                                        housing, cost of living, work/
25 The Oxford Dictionary defines             The Initial Project Scoping                life balance, schools and
lignocelluose as “a complex of lignin
                                             Review of CLEAN Cowra                      university, medical services
and cellulose present in the cell walls of
woody plants”.                               suggests it could provide a best           and specialists and culture.)
26 Geoscience Australia and the Bureau       practice waste processing and           // the region’s status as one of
of Resources and Energy Economics            energy supply model that can               seven “centres of regional
(2014) Australian Energy Resource
Assessment 2014, Chapter 12 —                be implemented elsewhere                   growth” Australia-wide
Bioenergy                                    in regional areas, given the               expected to contribute over
27 Burrell, A.(2010) Renewable energies      availability of appropriately              $15b to the national economy
from the rural sector: the policy            zoned and serviced blocks                  in 2031.28
challenges, available at http://www.
oecd.org/greengrowth/sustainable-            of land.
agriculture/48309185.pdf                                                             28 Commonwealth Government, (2016)
                                                                                     Australian Infrastructure Plan, pp 60–61

                                                                        /   Value Adding to Agriculture in Central West NSW / 19
Digital Technology

     Across all agricultural sectors,            “Lack of reliable access to           Digital Platforms
     digital technologies are radically          internet and mobile coverage          connecting
     changing agricultural business              is one of the most restrictive        agribusiness to
     models and providing significant            elements in preventing the            capital
     opportunities for value adding.             wider uptake and adoption
                                                 of existing and emerging              Lack of capital and land assets
     While precision agriculture,                technologies in Australian            are a significant impediment
     mechanisation and robotics                  agriculture… (there is) dire          to growth and value adding
     all contribute to value adding              need for better and more              for agribusiness in the region.
     on-farm, this report focuses                reliable regional and remote          New online platforms, such as
     on the post-farm gate digital               internet and mobile access”.          Condobolin-based AgValue,
     technology opportunities                    — Grains Research and                 are being developed to expand
     including E-commerce, which                 Development Corporation30             the range of capital available to
     is providing new and more                                                         agribusinesses, including sourcing
     direct pathways to market both                Key Observation                     alternative investment methods
     internationally and domestically.                                                 and connecting investors with
                                                   Advances in digital                 family farms and agribusinesses.
     New methods of ‘traceability’ are             technology are creating
     important as the provenance and               myriad opportunities for            Andrew and Nadia Hulme from
     safety of food becomes critical to            on-farm and post farm gate          Adagio Alpaca Mill in Orange,
     the competitiveness of products               value adding.                       used digital platform ‘Kickstarter’
     in the international market and                                                   to create a crowdfunding
     increasingly the domestic market.             There is an urgent need             campaign and raise $21,000
                                                   for robust, future-proof            of start-up capital for the mill.
     The Digital Divide                            and wide-reaching                   Although Kickstarter raised the
                                                   telecommunications                  $21,000 sought, a significant
     With these opportunities                      capabilities in Central             amount of work and costs were
     come challenges, most                         West NSW, specifically              involved in the process. Raising
     notably the continued struggle                the rectification of mobile         capital to start the venture has
     for farmers and regional                      blackspots and sufficient           been a major impediment.
     communities to have adequate                  NBN capacity, without
     telecommunications capabilities               which the agriculture sector          Key Observation
     to take advantage of new                      will not be able to grow
     technologies.                                 domestically or compete on            While advances in digital
                                                   an international level. Growth        technology and applications
     The Agricultural White Paper                  in the region is currently            are creating new avenues
     addresses the need for Australian             stunted by inadequate                 for capital-raising, finances
     agriculture to continue to have               telecommunications.                   remain a major impediment
     access to the most advanced                                                         for start-ups. Although
     farming technologies and                    30 The Land (2016) Regions Wait for     grants and other assistance
     practices, as well as the skills and        Digital Revolution, 4 April             are available for expanding
     labour to drive innovation and                                                      existing business activities,
     growth.29                                                                           research and development,
                                                                                         innovation and exporting,
     29 Commonwealth of Australia (2015)                                                 there are no grants available
     Agricultural Competitiveness White Paper,
     http://agwhitepaper.agriculture.gov.au/
                                                                                         for starting a business in
     SiteCollectionDocuments/ag-wp-chpt4-                                                Australia.31
     farming-smarter.pdf
                                                                                       31 Australian Small Business
                                                                                       Commissioner http://www.asbc.gov.au/
20   / Value Adding to Agriculture in Central West NSW   /                             resources/faq/funding#t36n167
Case Study: Bryton Wool — video sales platform
                                     connecting Regional Australia to the world

                                     Geoffrey Beath, Managing Partner        samples online which eliminates
                                     of Bryton Wool in Canowindra,           the need to display sample at
                                     says the success of his wool            a show floor, giving buyers the
                                     buying and brokering business           ability to view wool samples from
                                     is due to a continuing push for         anywhere in the world.
                                     expansion and keeping up with
                                     technology in an ever-changing          Geoffrey says he was inspired to
                                     industry.                               develop the technology partly
                                                                             due to the diminishing number
                                     The business, established in            of exporters in Sydney; a result of
                                     1973 and taken on by Geoffrey           declining wool production and
                                     and his wife Sue in 1992, now           the costs involved in displaying
                                     has warehouses in Canowindra,           wool in Sydney.
                                     Young, Crookwell, Forbes and
                                     Oberon, and around 4,000                “It just made sense to digitally
                                     growers on the books. Business          show samples,” says Geoffrey.
                                     has grown solidly over the past
                                     two decades, but it is in the           “We went through some
                                     last five years that the most           experimentation with stills
                                     significant growth has occurred         but weren’t able to provide an
                                     and it is all down to taking on         accurate viewing of the wool.
                                     digital innovation.                     Stills couldn’t provide enough
                                                                             information regarding length,
                                     “Currently at the Canowindra            colour, style and crimp. We
                                     store we have thirteen employees,       needed to show movement.”
// Broadband technology used by      eighteen employees total spread
   Bryton Wool for digital trading   out in four centres,” says Geoffrey.    Broadband technology made
   platform.
   Photo Kate Barclay.               “The people that are employed           a video trading platform viable
                                     here at Bryton Wool are all local       in Canowindra. Bryton Wool
                                     people. We have two new young           invested around $18,000 in
                                     juniors who have just started.          developing its video trading
                                     It’s a natural progression to bring     platform, including purchasing
                                     youth into the trade.”                  camera equipment, digital
                                                                             platform software, data collection
                                     “We source wool from as far west        and storage capacity.
                                     as Wilcannia through to Oberon,
                                     down as far as Braidwood,               “Once we were able to reliably
                                     Bungendore across over to               describe the wool our buyers
                                     Tumut, Caragabal and as far north       gained confidence in what we
                                     as Yeoval and Euchareena. We do         were selling and the true value of
                                     cover a large area. Last year we        the wool,” says Geoffrey.
                                     put 25,000 bales through the shed
                                     here. In a shrinking industry we        Between 2012 and 2015, Bryton
                                     find ourselves travelling to distant    Wool increased the number of
                                     areas to source our product.”           bales handled from 18,000 to
                                                                             25,000 with the help of the video
                                     Since 2010, Bryton Wool                 sales platform they employed.
                                     have been working on video
                                     technology to display wool

                                                                /   Value Adding to Agriculture in Central West NSW / 21
E-Commerce                                   “The image of foreign products              Recommendations are
                                               as being cleaner and greener,               expected to be, firstly,
  E-commerce is the transaction                and the many food safety                    establishing an e-commerce
  for goods or services via the                scandals in China, makes it                 flagship shop front site.
  internet .                                   hard to see Chinese customers               Secondly, developing a project
                                               switching to domestic                       that will look at what Chinese
  E-commerce has revolutionised                alternatives, no matter the                 consumers are searching for
  the way business is conducted,               price rise. While the price of              and what are their shopping
  from record and account keeping              Australian milk powder and                  methodologies. Thirdly,
  to marketing and promotion,                  vitamins will rise, so too will             publishing fact sheets
  banking, communication and                   the price of our competitors'               which the agrifood export
  product or service research.                 milk powder and vitamins.”33                can use as a source of
  It provides agribusinesses the                                                           information and guidance
  potential to reach new customers             In 2014 the total sales value of            when considering the China
  anywhere in the world and to                 China’s e-commerce sector was               e-commerce industry.
  cut out the “middle men” in                  worth more than half a trillion             — Dr Fay Haynes,
  the supply chain. E-commerce                 Australian dollars. Around 90%              NSW Department of
  is opening up expanded sales                 of online shopping in China is              Primary Industries36
  avenues to niche value added                 transacted through e-commerce
  agricultural products and                    marketplaces which have the                 36 Ibid
  commodity producers.                         potential to bring China's online
                                               consumers within reach of even
  Recent changes to China’s                    the smallest Australian exporters.34
  e-commerce regulations mean
  that from April 2016, goods                  The NSW Department of Primary
  bought and sold online to China              Industries are expecting to
  will be subject to new duties.               publish a review on the China
  Some food suppliers, such as                 e-commerce sector by the end
  powdered milk providers, will be             of 2016.35 The intention of the
  required to have their product               review is to establish a body
  licensed or re-licenced by China’s           of knowledge on the nature of
  food and drug regulators.                    e-commerce in China, what it
                                               means for the Australian agrifood
  Although China’s new                         industry, an understanding of
  e-commerce duties are expected               the e-commerce supply chains
  to increase the cost of Australian           and identification of areas of
  goods by an estimated by 10–20%,             inefficiencies.
  Australian producers remain in
  a strong position to capitalise              33 Ibid
  on the huge Chinese market for               34 The Australian Trade and Investment
  high end, reliable, clean food               Commission, (2016) E-commerce in
                                               China http://www.austrade.gov.au/
  products.32                                  Australian/Export/Export-markets/
                                               Countries/China/Doing-business/e-
                                               commerce-in-china
  32 Manuel, R (2016) China’s e-commerce
  laws not a crackdown but closing a           35 Dr Fay Haynes, International
  loophole, The Conversation, 1 April          Engagement, NSW Department of
                                               Primary Industries, personal conversation
                                               and email, 11 May 2016

22 /   Value Adding to Agriculture in Central West NSW   /
Case Study: Igrain — online trading platform for the grain industry

igrain.com.au is an online                  “Igrain assist farmers find the best       ready for online transacting, he
grain trading platform based                price for the grain on any given           says things have changed rapidly
in Bathurst. The business was               day that they sell,” explains Igrain       over the past five years.
established in 2009 shortly after           founder Tom Roberts. “We do
market deregulation in response             this by providing access to more           “(We) see opportunities for
to a specific need from grain               buyers in the one location. We             agriculture in greater adoption of
growers for greater pricing                 always ensure farmers will be              technologies and improvements
transparency and a broader                  paid for what they produce by              in freight and logistics to move
market access the grain buyers.             underwriting every transaction             what we produce here into key
                                            with trade insurance. Growers              markets,” says Roberts.
In 2015, igrain transacted 410,000          not being paid for grain is a huge
tonnes. The company has                     industry problem due to traders’           Robert’s cites good staff,
transacted close to 2 million               going receivership.”                       technological capability, close
tonnes with over 260 grain                                                             proximity to markets and
buyers across QLD NSW VIC and               While Roberts concedes they                perseverance as key to igrain’s
SA since its inception.                     may have over engineered                   success in Central west NSW.37
                                            technology in the early stages
                                            when farmers where not quite               37 Email interview with Tom Roberts,
                                                                                       Founder igrain, Bathurst, 6 May 2016

Traceability                                The food traceability market is            Traceability has been identified as
                                            projected to reach $14 billion by          one of the key global megatrends
“Consumers will be                          2019. The Asia-Pacific is projected        in agriculture. The ‘where did
“information-empowered”                     to be the fastest-growing market           my food/fibre come from?’
and rural industries stand                  for food traceability, driven by the       factor is a powerful motivator
to gain or lose market share                technological advancement and              for consumers. Establishing
based on this increase in                   growing concern for food safety            provenance, quality and safety
consumers’ knowledge.”                      among consumers in developing              will be key to attracting market
—CSIRO Megatrends Report38                  countries such as India and                premiums both domestically and
                                            China.39                                   internationally in the future.40
Agribusinesses throughout the
food supply chain are using a               Traceability can be provided at               Key Observation
variety of digital traceability tools       the item, case, pallet or container
to capture critical information             level, through the use of smart               Traceability is an increasingly
during the path from paddock                farming sensor systems, Radio-                important capability within
to plate. Traceability not only             Frequency Identification tags                 the supply chain facilitated
provides reassurance of food                (RFID), bar codes and QR (Quick               by advances in digital
quality and safety, but also                Response) codes, GPS satellite                technology; in order to
creates branding and marketing              locations, packaging, data loggers            remain competitive this is an
opportunities to build a valuable           and more.                                     area in which Central West
connection between consumers                                                              NSW agribusinesses cannot
and producers.                              39 Food Traceability Market Global Trend      afford to lag behind.
                                            and Forecast to 2019, Marketsandmarkets.
                                            com; International Union of Food Science
38 Sandra Eady, Stefan Hajkowicz (2015),    & Technology; US Food and Drug             40 New trends research predicts mega
Rural Industry Futures: megatrends          Administration                             opportunities for Australian agriculture
impacting Australian agriculture over the                                              as world grows hungrier, wealthier
coming twenty years, Rural Industries                                                  with fussier consumers by 2035, Rural
Research & Development Corporation &                                                   Industries Research and development
CSIRO                                                                                  Corporation, 14 Aug 2015 & Dr Stefan
                                                                                       Hajkowicz, CSIRO

                                                                          /   Value Adding to Agriculture in Central West NSW /   23
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