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A while ago when I was in a Koru Club lounge I was stopped in my tracks by a sight that really struck me. I pulled out my smart phone and took a photo of it and then emailed it to myself. What I took a photo of was a phone booth.
The koru lounge had three very elegantly designed booths, with world beating phones stuck to the wall. No doubt after years of continuous improvement, they were world beating products. However, when I looked around the lounge, it was clear that this phone and its booth were missing the mark big time – the phone could not text, take photos, receive emails, keep a calendar or play games. People thinking differently had overtaken the phone booth.
For New Zealand, for agriculture and for organization like Federated Farmers, it is critical that we don’t become like the phone booth - best in the world in our own minds, but not realizing that there is change a plenty and others are working hard to surpass us.
Right now we are enjoying an agricultural commodity boom, driven in part by demand and supply fundamentals, but in my mind, also USA monetary and fiscal policies. These policies have devalued the US Dollar by about 50% against an ounce of gold, ie the USD gold price has doubled. Trillion is an emerging word. That’s about the number of snowflakes that fell across New Zealand last week, and the number of dollars that will possibly be printed across the USA in the next while. And what I don’t understand, is that if too much debt, like too much snow, is the problem, how can more of it be the solution. Is the USA at risk of becoming like the phone booth?
So what about agriculture? Have we got a phone booth mentality? With increasing numbers of affluent buyers and not much to sell, there are some serious opportunities out there. But are we thinking differently and optimizing the opportunity? Maybe. Our meat industry has made some great strides, wool a very mixed bag, and dairy has simply ridden the commodity wave. But I am not sure that this is enough.
Recent speculation about the ownership of Fonterra perhaps misses the point. The real question is what is Fonterra’s strategy to capture the maximum benefit for New Zealand. There is probably mutual agreement that Fonterra has generally executed its existing strategy pretty well. However, after the introduction of the Global DairyTrade online auction system, it is not clear what their next big move is to ensure Fonterra doesn’t become like the phone booth.
There are any number of possibilities. Fonterra could forward integrate into infant nutrition and become the Coca-Cola of infant formula. They could broaden their milk supply base and further dominate commodity milk products through either merging with other farmer co-ops in other countries or by becoming a global dairy farmer and leverage New Zealand genetics, safe food and quality systems. They could broaden their current global dairy ingredients business into other food ingredients, offering a one stop shop to key customers, leveraging their expertise in global logistics. Perhaps they could deepen their consumer brands business or look to acquire other dairy supply chain assets in targeted markets. Or they could keep on doing what they are doing right now, but just work at getting better at it. Perhaps just like the phone booth manufacturer? The cost of the missed opportunities will eventually catch up on us as a nation.
I am sure Fonterra, and many others in the export sector are working on it. It is easier said than done, but we all need to roll up our sleeves and think like smart phone makers, not phone booth makers. As Yogi Berra said, “the future ain’t what it used to be”