#44 Blessed Are The Cheesemakers - Conscious Consumerism And The Food Sector

The first speaker, first speaker is Associate Professor Mark Wilson and he is based here at Lincoln University and he is specializing in supply chains and from his background of course.

In the New Zealand Defence Force.

He is actually approaching.

The supply chains basically from where it all started. When Alexander the Great was trying to capture Europe, he basically figured out that he needed to have a well oiled supply chain machine to make sure that his advances.

Were being fed. And Associate Professor Wilson is actually taking that forward and still has that very applied approach in, in all his research and the lectures that he's giving. So without further ado, I'd like to introduce Professor Wilson to give us his insights. I will stop sharing and I will mute myself to let Mark do the rest. Mark, off to you.

Thanks.

I'll just share screen. Need to.

Using the screen behind the screens I'm having to reach over the screen. So welcome everybody to this presentation. As Wim said, I'm Mark Wilson, the program director for the Supply Chain Management program here at Lincoln University. So I've been asked to talk about conscious consumerism and particularly focus on short supply chains. So this is where we're going today. We're going to talk about conscious consumerism. Then we're going to look at basically the willingness to pay for this particular privilege and we're going to look at how conscious consumers sort of make their purchasing decisions. We're going to look at three key attributes which are important to conscious consumers. Then we're going to examine why short supply chains and how this delivers some of the attributes that the conscious consumers are looking for. And we're going to finish off by looking at an example of Bright Farms and their particular short supply chain. So I guess as the first presentation speaker I'll give a definition of conscious consumerism. My other guest speakers can probably add to this as well. But essentially it's a buying behavior that is driven by a commitment to make purchases that have a positive and I've added or at least a less adverse social, economic and environmental impact. So it's really, it's a, it's a decision process that uses the interplay between the conscious mind and the unconscious mind and the processes. And that's really driven by four main modes. So we look at control, deliberation, intention and effort. So if we think of these conscious and unconscious processes in terms of what's going on inside of people's thinking processes, we could probably argue that conscious consumerism is a result of a deliberate and intentional effort to control our own buying behavior. And even which is interesting for rational beings really, to the point of self denial or even to degrees of sacrifice. So we could sum up conscious consumerism by understanding that consumers actually vote with their dollars. So in other words, whatever they buy is really a vote for that particular product and the attributes that are attributed to that particular product. So it's a really interesting process. So we have a look at if this is what conscious consumerism is. If consumers are conscious about sustainability, environmental issues going forward, it's one thing to have these sentiments, it's another thing to pay for them. So we need to look at their willingness to pay for the attributes they're looking for in their particular products. And as producers, we've got to ask ourselves, is it really worth servicing this consumer segment? If we look at Nielsen QI and their global research that conducted in 2019 and 2021, we could see that 73% of consumers definitely or probably have definitely or probably changed their consumption behavior in an effort to reduce the environmental impact. Also, 66% of these consumers have changed their buying categories in their brands due to their changed economic circumstances. And the pandemic is a relatively new thing. So we can see between the two groups here, 73%, 66%, either through a conscious choice decision to change their buying behavior or a forced choice decision change their buying behavior is that there's quite a quite a big market segment actually available. And so as producers, we need to think about this segment and how much of the segment can we actually capture. But we also need to realize that not all consumers are fluid. Of course, we can see nearly 50% of still buying promotions irrespective of the brand, and 45% still seek private labels and home brands to save money. So there is some fluidity in the market, and yet there is still some resistance. So we can quite confidently say that price and convenience will still challenge the ethics of our conscious consumers. We need to be aware of that. So how do we understand this cluster? So we could probably break the 73% down and break it down into two groups, two broad categories that we're looking for. We've got the constrained consumers and we've got the insulated consumers. So this is even more important to understand this, given the supply chain disruptions in the pandemic and the way things have really turned over in the last two and a half, three years as well. So the constrained are really those that still feel economically sorry. Constrained are those that feel economically insecure. So they've been impacted in some way in terms of the total household income, the insulated on the other hand are those that still feel some form of economic security. And if we could break those two categories down, we've got the existing constrained and the newly constrained. We've got the cautious insulated and the unrestricted insulated as well. We see that group in the middle. That's where 73% comes from. So these are the ones that are more fluid in their buying behaviors given the circumstances of the economic security. So the globally, this sector. So what we want to do is focus as conscious consumers really on the insulated group, those that are more willing to pay for the services or the credence attributes that we could deliver. Globally, it's 38%. But in Australia, New Zealand, that's a much bigger market. We've had much more support from central governments in terms of how we go forward from here. So that group's about 45%. So that's still quite a significant chunk of the market we could actually focus. And if we boil down into willingness to pay studies. So we've gone out and measured how much are people willing to pay in terms of a price premium for certain credence attributes, such as gmo, organic, et cetera. And we found that overall, each study varies quite significantly by country, by the product and also by how it's measured. But if we combine all these studies together into quite a large meta analysis, we can quite confidently put a finger on it and say that consumers are prepared to pay approximately a 20% price premium for sustainable products or products that have conscious consumer credentials. So that's not a bad.

We're talking about a reasonably sized market segment here and also a 20% price premium on normal products as well. So we have some scope to move in this particular area. But before we understand. So, okay, yeah, we've got a market segment they're willing to pay, so how do they make their purchase decisions and how do they evaluate their particular products? We could see that the traditional supply chain models have allowed consumers to disconnect from the producers themselves. These supply chain models tend to have a number of intermediaries, as I'll talk about soon. And the consumer really is now disconnected from the source.

So.

So they can't directly assess these attributes now of the products themselves. So if they can't directly assess them, then what do they use? Well, they use proxy measures to try and evaluate whether the product actually meets their conscious consumer objectives in that sense. So there's really three main measures we could talk about here. Search attributes, experience attributes, and credence attributes. You may have heard of these before. But search attributes, these are the costs and the effort involved in actually examining the physical product features. And this could be evaluated before or at the point of purchase. And so we're looking at here things like shape, color, size, et cetera. These attributes can be evaluated pre purchase. Now the experience attributes, these can only be evaluated post purchase, that is when the product's consumed, or even at the place where it is consumed as well. So we're talking about taste, smell, flavor, etc. The things that we typically associate with pleasure in that sense. But importantly for conscious consumers, that also means the place of consumption as well. And one of the efforts that short supply chains try and do is actually put the consumer at the point of production or in the same area where the product is produced. So you're telling the story about how the products produce and the care involved. You know, for example, cellar door sales for wineries, for example, puts the consumers actually on the winery itself. Restaurants use the same to try and create the right ambience for their consumers. So the experience attributes are important as well. But the ones that really sort of tick the conscious consumer buttons are credence attributes. Now, credence attributes cannot be assessed directly either pre or post purchase. These are really need to have third party verification to determine whether you're actually meeting these attributes that consumers are looking for. For example, are your products fair trade, are they eco friendly, non gmo, organic, carbon neutral, et cetera. These are attributes which can't be assessed pre or post consumption, but can only be assessed really through third party verification. And as producers, our supply chains must deliver these attributes. And also we must allow consumers to interrogate our supply chains to verify our branding claims. For example, if we make a claim, a true statement in our supply chain, then we need to allow consumers to verify that and build trust in that particular branding supply chain. And that can really only be achieved through visibility. And I could tell you it's much easier to provide visibility for consumers for short supply chains than it is for long term, long, complex global supply chains. So these are three attributes which are quite important that the consumers actually go through and looking for and searching for their particular products, and particularly the credence attributes going forward. So how do we deliver this? How do we shorten our supply chains? There are two really key dimensions in supply chains that add a lot of cost and complexity, and that's time and space. Essentially it means that the longer and the further products travel, the greater the chance that things will go wrong. The more transaction costs are actually incurred on the way and the more disconnected consumers are with the final producer. So the aim here really is two areas, time compression and space compression. So time compression is effectively to increase the velocity through the supply chain. So getting your products through the supply chains as quickly as you possibly can. And that is greatly facilitated by space compression. And that is when we deliberately go about seeking to eliminate steps, decision points and distance, particularly within our supply chain. So the whole effort here in time and space compression is to shorten our supply chains to come up with supply chain which is a lot shorter. So we can start that journey by asking some key questions. And this is one thing I really, really emphasize to the students come through Lincoln here is to really ask the question in every stage and every point of the supply chain, what adds value and what destroys value? What adds value to your product and supply chain and what destroys value? So key questions, and with these questions in mind, you could then start the process of actually shortening and quickening all your production steps, all the business process, and I'm talking about interferm business processes here as well, all the decision points. Waiting for a decision is probably one of the biggest wastes in supply chains and the physical distances between the entities in the supply chain as well. So, so the emphasis of shortening your supply chain is to remove, bypass or disintermediate all non value adding steps. So let's talk about this process of disintermediation and reintermediation. So I will acknowledge at this point is that changing extent supply chains is difficult. You're gonna run into some solid structures and some mental models that people are not willing to bend or change or flex in the short term. And as a consequence, changing extent supply chain is hard. Now I would recommend that if you're going to go down the short supply chain model, that you actually add this to your portfolio, that you create a new channel to market, not forgetting your traditional channels to market because they're still important for your base income, but actually creating a new channel to market using a short supply chain model and develop an omnichannel strategy to get your products out there.

So we need to understand disintermediation and reintermediations here. So I've got four supply chain models here. The model A is one we could probably be familiar with. This is a traditional producer model. It's a push model where the producer, distributor, wholesaler, retailer deliver products to the consumer. So the consumer only interacts at the retail level here. And the red star effectively is a key critical piece of information. This is the actual consumer Demand. This is the demand that consumers plan place on the supply chain. And really the supply chain needs to deliver.

In other words, it's a decoupling point. This is where a supply chain changes from a push model to a pull model. And that's only, as you can see in the model A, that has only happened at the retailer end. So in this sense, the consumer is very largely disconnected from the producer and it's hard for them to interrogate the credence attributes of their particular supply chain. Model B is where we disintermediate the retailer. So here now the customer is interacting directly with the wholesaler or further up the supply chain. So the information is getting closer to the producer, but it's not quite there yet. Strategies that really suit this particular model is logistics postponement and manufacturing postponement. So some form of postponement models for your particular products. When you're dealing with Whole Foods, that's difficult to achieve because you can't postpone certain aspects. But certainly logistically you can as well. There's, there's a whole lecture just on that model B there. So model C is really a model of the short supply chain. And this is where we have disintermediated the entire channel to retail channel in that sense. So we've got rid of the whole distribution channel from the producer to consumer. And this is often facilitated through some form of E commerce or E commerce, where consumers can now interact directly with the producer. And as you can see, the decoupling points move right back up the supply chain. And the producer is now.

Building that relationship with the consumer and understanding their preferences on a more intimate basis. So models that use this as such as seller doors, farmers markets, for example, farm shops, collective shops, community supported agriculture and community purchasing groups, or consumer purchasing groups, or buying clubs online, such as through Facebook, et cetera. The problem with this is you've got to ask the question, is the producer ready to be the customer facing part of the supply chain? If they're used to dealing business to business transactions, now they're dealing with business to consumer transactions. And that requires a different skill set and different systems to be set up for that. And sometimes the reach is not as far. So a stall at the local farmers market is not going to reach the customer base that you possibly need to support that particular model in the longer term. So we then turn to re. Intermediation and reintermediation is where we put back in an entity which then facilitates the transaction which between the producer and the consumer. If we look at Amazon and AliExpress for example, these are e commerce giants and effectively what they do, they become shop fronts for thousands of small businesses that could not afford or don't have the access to the wider consumer base. So they rely on Amazon and AliExpress to be the shop front for them and they sell through these entities and of course they clip the ticket on the way. My food bag is another interesting one. So my food bag adds value here by combining producer products into attractive meal options for time poor and health conscious consumers. So the key point here is if you are going to re intermediate with another entity, that entity must, the value that that entity provides must supersede the transaction costs that are incurred by reintermediating.

That entity. So there is some value in terms of what they do and how they provide that to you. So we've got four models here in terms of shortening our particular supply chain. So I'll just finish on this. This is our Bright Farms example here. Bright Farms is a US startup.

Agriculture startup in the US By Paul Lightfoot Essentially what these guys do is they design, they finance and they build and they operate hydroponic greenhouses. But more importantly they do so on supermarket roosts. So they really are.

Shortening their supply chain to the degree. So they really, they focus on leafy greens and packed salads and they've actually increased their product range. But essentially those crops which are amenable to hydroponic agriculture. The US market for salad greens is quite large. 6.8 billion in 2021 and it's growing quite quickly at close to 9%. They have products in over three and a half thousand stores. And, and the key to their success really is they actually operate on a fixed price long term contract up to 10 years and that price is adjusted by using price adjusting clauses in the contract such as CPI and other adjustment mechanisms. But this is essential because they have a long term planning horizon. Now they're able to actually.

Plan what they're doing, provide finance and the infrastructure to build these things, build their facilities and actually provide that short supply chain. The old supply chain model for greens in the US is effectively that most of them were grown in California and then they were trucked over 5,000km through reefer containers around the US. It would often take a week for these products to reach consumers. With the new model they're co locating right next to the retailers or the majority population hubs. So it's a three stage model now. So they're just either producer, the retailer and consumer often co located. So the supply chain is incredibly short and they connect. They, their credence claims is basically halves to consumers under 24 hours. So you really are, you know, from a week to 24 hours for a packet of leafy salads. That's a quantum difference. So how does that relate to conscious consumerism? What, how does this model deliver attributes that appeal to conscious consumers? So we can see here that hydroponic farming actually yields 10 times more leafy greens per hectare than field grown crops as well. So automatically you've got a much better utilization of land and land use. Secondly, it uses 80% less water, 90% less land and 95% less transport, fuel and costs than long distance field grown produce as well. So.

These are claims on the sustainability, carbon footprint claim, et cetera that have some real impact to consumers minds. Also add on top of that the other.

Experience attributes such as taste and freshness. And also meeting the trend for local preferences is important as well. So key to their supply chain model is that I'll break it down into four key things we need to. I've got a controlled and optimized agricultural system so they know what they're doing. They're very, they have, they've taken a lot of variability out of their growing season, etc.

They have shortened their supply chain to the nth degree, they've compressed the time and distance to the absolute bare minimum. So they're now setting up large warehouses, not particularly on supermarket roofs anymore, but really actually in the center of gravity method close to major cities and population basis.

To scale up what they're doing. Their stable fixed term price contracts actually benefit the growers and retailers. That allows the retailers to actually have, you know, sort of longer distance planning horizons and a much more stable relationship with their supply base as opposed to the adversarial arm's length horse training that goes on at the moment. And more importantly, it meets the growing demand for sustainable credence attributes as well. But within that particular model you can't forget the basics as well. Okay, don't forget about quality. They unfortunately had a salmonella outbreak last year, recalling products across four states. So that can have a big impact on your reputation. So in summary, short supply chains, what are the advantages and disadvantages? Well, the time to consume a short supply chain has improved dramatically. In that sense it has some real benefit in terms of freshness and taste, et cetera. The cost to serve for your consumers reduces as well and it allows a direct consumer interface with the consumers by the producers. And this builds, allows the ability to build Brand loyalty and customer loyalty, your shelf life increases. That allows you a greater window to sell the products and that actually corresponds to less waste in the supply chain. So you're not growing out time expired or rotten fruit and veg, etc. The unique selling point for the retailers is that they are able to claim green credentials and this is important for their marketing image. And this gives them some competitive advantage visually, their competitors as well. Short supply chain models that focus on environmental credence attributes, et cetera tend to be more attractive to those investors concerned about ESG with ESG Motors. And also interestingly there it is a model which I believe allows producers to capture more of their value of their supply chain. So finally we've get, we're getting some answers about this question. How do we increase value to producers? Some of the disadvantages are is that there's a real inertia in current supply chain structures. So it's going to take quite a bit to break out of current models. This is particularly of concern in New Zealand. We've got the oligopolistic market conditions of the New Zealand fast moving consumer goods market. Very difficult to break down their dominance. In that sense as producers we need to ask ourselves what is actually the size of the conscious consumer market segment is, is it worth servicing? The short supply chains tend to be localized. That means that we move away from industrial farming scales and that will suffer from a lack of a scales of economy. We also can see that if you're serving locally, the local preferences can change. So you need to build in agility within your short value chains to meet changing local preferences as they go forward. And of course not all food crops are viable candidates for supply chains. If you look at wheat and rice for example, they are much better, much more efficiently done on a grand scale. They're much easier to store and transport in bulk as well. And also we need to think about our supply chain roles and.

Workforce as well. So we're actually asking people to change their roles from being a farm producer. We're now actually asking you to be a consumer facing marketing specialist as well. And in particular with these specialist skills around MCOM and E commerce going forward as well. So really.

I'll just sum up by saying that short supply chains actually is a disruptive strategy and it will meet resistance. Yet it is actually starting to make more sense now than ever before. And we see in an era of declining globalization and regionalization or even reshoring or friend shoring, we're seeing that shorter supply chains are really the topic du Jour in that sense. And I'll just finish by saying that there's real value in free. So that's it for me.

Thank you for listening and I will hand back to Wim.

Professor Wilson, thank you so much. That was a nice concise.

Overview with a lot of things that we need to think about. But it leads nicely into our next. The speaker.

Our next speaker.

And there he is.

Tim Jones. And Tim is the first.

Qualified B Corp consultant in.

New Zealand. Professor Wilson already talked about third party verification and Tim is in the. Is in the midst of that. So I will.

Share and I will give the floor to Tim. Thank you very much Tim, for aligning us.

No worries. Let's find the old screener. Excellent. Right, can you see my screen?

Yes we can, sir.

Excellent. Cool. So yeah, conscious consumerism.

So, yeah. Kia ora Kouto. I'm Tim. I run a small but beautifully formed consulting company based here in Otatahi, Christchurch. And we specialize in helping companies navigate one of the many third party independent or one of the many credentialing systems out there that Mark kind of alluded to. However, the one that we like and support and help people with is this one called B Corp certification. And why we like it is because it is possibly the only one at a global scale with the depth and rigor that is also independently verified to be able to prove the claims that you're making. So yeah, we like that. And it looks, looks at your business across your governance, your workers, your community impact, your environmental impact and then what it is you actually make. So we really like that. Yes, we're helping a lot of companies go through that and this will become relevant. And I'll talk to this assessment specifically later on in my session.

So I'm going to briefly cover off some of the points that Mark already mentioned. What is conscious consumerism? I'll look at maybe a little bit more about how it has become a thing and then really I'll probably spend the bulk of my time looking at this, what we call stakeholder capitalism and the rise of ESG reporting in companies, which is now having an influence on people's supply chain and how that is affecting how and in what ways companies are looking to partner with supply chain partners and then try and tie that all together in terms of how does local supply chain fit into this and potentially support this journey.

So totally agree with Mark. The definition of conscious consumerism, it's this ethical consumerism or green consumerism where consumers are deliberately making a purchasing choice that they believe is having a Positive social, economic and environmental impact. So it's kind of this triumvirate or the trio that you're aiming for. And I think, as Mark said, it's sometimes hard for consumers to always make that decision because there is a cost payoff quite often.

I guess the idea of conscious consumerism is not that new. It's probably come from around about the 1970s in its original form. And I guess it probably span out of consumer rights, people advocating for consumer rights, making sure that, hey, what is the thing I'm buying? Is it actually a fair and true representation of what it is I'm asking, asking for? But I think as people have become more aware of the impact of products over time and increasingly over the last 10 to 15 years, particularly, you know, with the rise of the Internet, it's really easy for people to go and find out where their product has come from and who's involved in that process.

Again, I was going to quote this. I will quote the same survey that mark mentioned, that 2019 Nielsen survey. You know, 73% of global consumers would definitely or probably change their consumption habits to reduce their impact on the environment. There are many other survey companies. It's in some ways impossible to keep up with the data. However, over the last. Well, since about 2014, since I've kind of been involved in this world of conscious consumerism and B Corps, year on year, the numbers keep getting higher. And whether that's the local Better Futures Report that used to be run by, I can't remember the company now. It's now owned by Kantar Global Company, but they were a local company that was running the Better Futures Report every year looking into the trends and insights around social and environmental decision making. For kiwis as a whole, year on year, the numbers have just been going up in terms of the percentage of Kiwis that want to support companies that can prove that they're doing good, desire to support brands that are socially and ethically responsible, so on and so forth. And, you know, as people are becoming more aware of the effects of the products that we're putting into our bodies and the world around them, this, you know, the concept of sustainable purchasing is just getting bigger and bigger. And again, Nielsen estimated that in 2021, it was about $150 billion of money was being spent in this sector. Some of you might be aware that there's a classification of consumers called LOHAs or LOHAs, which is lifestyle of health and sustainability. So in the marketing world, there is a dedicated sector of the population who are fully into this and this is how they are looking to make their decision making around purchasing products.

Examples of conscious consumerism in action. I think we're probably all seeing this. Anecdotally, you go to your local restaurant or your local cafe, this regional sourcing, local sourcing. That's definitely becoming a trend and has becoming a trend within companies. What I feel we've seen is conscious consumers have realized that they are also employees and they're taking the ideals of how they want to live and support, you know, the brands doing the right thing in their personal life. And that is kind of creeping into.

Their professional life. And so, yeah, you know, more and more consumers who are perceiving that local food is healthier, fresher, higher quality, the same going for health and beauty products. There's a lot of claims being made by a lot of companies already and they want to be better at being able to say, let's, you know, we've got all natural ingredients and they're locally sourced, locally, locally high quality, harvested, so on and so forth. So we're definitely seeing, I think, some good examples of conscious consumerism in action.

In terms of what's been driving it. Like I say, I think the big part of it has been people realizing that, hey, I buy local, I support local on my weekends when I'm going to the cafe or I'm going to my restaurant or when I'm going to the supermarket, I'm trying to make better, more informed decisions. And I think people have realized that they are also able to make those same decisions, same decisions in the workplace. Increasingly, you know, in general, over the last 20 or so years, the impact that we are having on the planet is becoming increasingly, you know, well recognized and it's becoming more of a thing for more people. So whether it's climate change, whether it's plastic pollution, you know, whatever, the environmental, you know, biodiversity decline, so on and so forth. Again, you know, the little picture in the middle. We demand justice and change. People are increasingly aware of social issues around the world and they're connecting to those. And through the power of social media we can galvanize, we can come together and we can, you know, ask for change to happen within certain sectors. And I think a big thing has been Covid, I think collectively we've all walked our dogs to within each of their lives. And whilst we've been going on those walks, we've been having a think about, okay, well, what am I doing? You know, am I on? Am I, you know, even in the right job? But beyond that, you Know, what impact am I having through my work and through my life? And you know, I think this is really well reflected. You know, the GNA Institute in 2013 showed that only 20% of S&P 500500 companies were disclosing any ESG so environmental, social or governance information. But by 2019, 90% of the S&P 500 companies were publishing a sustainability report. So you can see that at a corporate level, the rise of conscious consumerism and the ideals behind environmental, social and governance reporting are definitely becoming a thing. There was a 2021 report from McKinsey that showed actually the pandemic has increased the level of interest in conscious consumerism. And I think what they were alluding to is, you know, we were all sort of stuck at home in various states of lockdown all around the world and we were probably all cleaning our houses a little bit more than we would normally and people having an opportunity to look at the product lists of, you know, what's on my cleaning solution. They were looking at their fridge, they were thinking about health to a new level. And so all of this is kind of again driving and driving. If we look at organic farming, 20 years ago organic farming was a pretty niche industry worth about 3.6 billion in the US in about 1997. But by by 2016 organic food sales were worth 43 billion and worth about 50 billion by 2019. So there's definitely been a consistent rise of interest in conscious consumerism. There was also a report from a data or insights firm in Europe called IRI and they surveyed a pan European or 10 European countries. And seven out of 10 shoppers said that they identify strongly with ethical purchasing practices and express a clear preference for buying locally sourced products. So I kind of think the evidence is there that conscious consumerism is a thing.

I guess we also look the rise of the kiwi made labeling if you've got a physical product. And I think just in general there's perhaps again really sparked by Covid or pushed by Covid, there's this real interest and desire for people to be part of community and think local.

Like I say, this is on the backdrop of of this rise of what within the B corp world is called stakeholder capitalism. And so like I say, I feel like conscious capitalism or sorry, conscious consumerism is feeding into this idea of conscious capitalism or stakeholder capitalism. So businesses are increasingly realizing that not just their customers care about how they operate, employees care, investors care, and supply chain care. When we're helping companies go through their B Corp process, typically They've come to us because one or all four of the main people that every business needs leads, which is customers, employees, investors and their suppliers, one or all of them have all come to them and said, hey, we want to know more about what you're doing around your social and environmental footprint. And.

You know, the impact of your operations as a business, beyond just making a financial return is increasingly a thing that business is trying to grapple with. So we're moving from this idea of profit maximization to impact maximization. And companies wanting to do more good will often look at potentially the ingredient list of their product rather than trying to remake the entire product from scratch. And so I think there's a real connection here through that. Like I say, just to make it really clear what B Corp is, B Corp is this new form of businesses that aim to balance purpose and profit. So rather than solely focusing on profit maximization, they must consider the impact of their operations on their workers, customers, supply, community and the planet. And by becoming certified, they will meet the highest levels of independent verification and accountability and transparency around their social and environmental performance. And like I said, the assessment looks at five main sections of your business and one of the areas that you get assessed on is your local economic development. So this is a screenshot from a. I basically, I've got a demo account for this.

For the platform, and I took a snapshot here and you can see here, this is where you can score points on this assessment. So, commitment to local communities, purchasing from local suppliers, purchase from local independent suppliers, local business models serving underserved local communities, you know, efficacy of local business models. So there's a real focus from this framework which is increasingly gaining interest globally. So there's over 5,000 B Corps globally, which is still not a massive number, but that number is increasing at a rate of about between 25 and 38% year on year at the minute. So we had 4,000 B Corps about a year ago, and we went from 4000 to 5000 in just under 12 months. So this at a global level, there's about 70 in New Zealand. But what we're seeing with the companies that we're working with is they currently have very poor visibility on their supply chain. It's a real area of weakness. But like I say, it's a. It's an area of increasing awareness within this community of businesses who are being rewarded for potentially supporting local communities. And like I say, what we're finding is most of the companies we're helping, they kind of go, yeah, we know we buy Stuff from some people. And that's pretty much where it stops. We don't have any insight as to whether they're good people, whether they, you know, are we buying from, you know, they might know if they're buying through a wholesaler or distribution distributor, but really they've got very, very poor visibility. But all the companies that we're working with, and there's a large number who are in the FMCG sector and so there's a large number of companies in health and beauty and food and beverage who are now becoming hyper aware of their supply chain. And they recognize that there is a consumer demand for more natural, locally sourced ingredients. And for them as an organization going through an independent audit of their business, they are recognizing that they can score more points. So the B Corp assessment is based on a point system. So you need to score a minimum of 80 out of 200 points on the assessment. And so a lot of companies go point hunting to try and get, get the best score that they can. And so there's a definite advantage for this group of businesses to be able to prove that they're sourcing and getting their products as locally as possible. And in the B Corp framework, local is described as within 80km of where you're at.

And this was kind of proven with some interesting stats here. So within the B Corp world, B Corps are 210% more likely to be screening their suppliers for environmental and social practices. So not only are B Corp starters become more aware of their supply chain, they want to know more about their supply chain and social and environmental impact. For you, as an organization, supplying into the sort of the mothership is becoming increasingly a thing. And like I said, allied to that is this concept or this real desire to try and create local supply chains where possible.

Like I said, what we're seeing in general is most companies we're working with have got very little idea about their supply chain. And the first thing that most of them are grappling with, and Mark and I, we probably need to have a separate conversation around this, a lot of people just don't understand their supply chain at all. Like I say, they're just buying stuff and they're kind of, they're pretty happy with it, but they haven't really interrogated or looked at their supply chain in any real depth. And so the first thing that most people are implementing is some kind of supplier code of conduct so that they're surveying or reaching out to their supply chain and saying, hey, we want to know, are you running to all local Laws and governance. Are you, do you have a code of ethics and transparency or code of ethics within your business? Have you done any reporting on your social environmental impacts and are you independently certified as fair trade or organic or what have you? So we're definitely seeing that as the first step and then the next step is people starting to really look at their options. Like I say, mainly around their sort of ingredient list of okay, well, can we swap this, this one product that we might be sourcing from some really bad country, you know, with some really poor labor laws. Can we find that locally? The flip side to this is we're definitely seeing interest from the B Corp community around this ide of distributed or local manufacturing. And I think this is maybe where I did see there was a question in the Q and A talking about.

From, is it Julio or Julio, you know, producing under license overseas?

I think this is an interesting way that we maybe flip it. Instead of you as a part of a supply chain looking to get your product into something overseas, how could we maybe work with global companies who are trying to sell into New Zealand to provide your products into a locally or, you know, regionally licensed product that's being made here under license? So I think there's a couple of ways we can sort of look at skidding that cat, so to speak. But yeah, we're definitely seeing an interest. There's a couple of well known B corp brands that are now really looking into this. There's a smaller one, I can't name them unfortunately, because we have to keep it quiet. But there's one company we've been working with who are using a lot of timber in their products and they've realized that it is just really stupid for them to look at manufacturing here and trying to sell that offshore when actually it would make sense to create a local manufacturing hub in the countries that they're interested in.

Selling into. All right, so to finish up, you know, Mark again, he mentioned some of these things, but you know, local supply chain benefits, CO2 emissions. It's at a government level now, it's at a governance level now, it's at a consumer level now. There's increasing demand for companies to look at increasing their emissions and general overall pollution through their products.

So, you know, local supply chain certainly fits in with that. I think there's a potential for a reduction in packaging as well. It's that whole classic, you know, the cucumber that comes in the plastic packaging. Well, the reason we do that is because there's more damage to the cucumber when it's being transported and when it's in the shop. Well, if we can reduce the level of transport that the product's going through and we can reduce the food miles that it's going, then there's less risk of it being damaged. Potentially we can lose some of that packaging. The farm that Mark talked about, that's just genius. You know, so on time delivery, cutting the freight costs, you know, all of that kind of stuff. Really, really obvious. I think that the thing that on a. On a slightly more holistic level is this idea of increased sense of community, you know, having better relationships with your supply chain, but also recognizing and getting to see if we kind of think back when we were, you know, literally sitting in tribes somewhere, you know, trying to survive. And even through to my degrees in medieval history, which I know is nothing really to do with science or farming. So indulge me for a minute. You know, I'm trying to see. None of us on this call have currently got a name that I would recognize as fitting into this. But, you know, it's not. If you think back, people used to be named after what they did in terms of how they contributed to the tribe. So if you are a Cooper, if you are a Fletcher, if you are a Schumacher, you know, you are named after the contribution that you did to the community to help us all keep going. And I think these really long mechanized supply chains disconnect us as communities from who's made our food. And there's a sense of meaning and contribution that I think when we look at mental health in the. In the rural sector more broadly, connecting the fact that I've made something that I've given to my local community that they're now eating, I think there's something really, really in that that we probably haven't tapped into.

Some of the challenges. Again, Mark mentioned a couple of these. You know, what. Again, what we found with some of the companies we're helping with the B Corp is there's just some stuff we can't grow here, particularly food and beverage stuff. There's just some products that either due to the, you know, the temperature here or the land conditions, we just can't grow here. So we're going to have to import it. Equally. Some things, it's just not economic to grow here or to source here. And so, you know, that's going to be some of the challenges. And again, as Mark alluded to, sometimes, you know, if you've been part of a big supply chain and the product just gets picked up from Your farm gate, that's been fantastic. But now all of a sudden you might be having to, you know, deal directly with the business. But I would, I would suggest, you know, the B corp community, we are a friendly, open community of people that want to help and we want to support local. So we won't bite. We'll work with you to make sure that, you know, it all goes well. And I think the last thing that Mark mentioned, you know, a lot of this is quite complicated and it's not always obvious as to actually what the best solution is. And for me, you know, the cucumber wrapped in plastic is the obvious one. You know, people, this is ridiculous.

I can't.

Why are you doing this? Well, on the current way we're shipping it, it's less impactful on the environment to put it in plastic. It's counterintuitive, it doesn't make sense. And so again, I think, you know, having smart people like Mark involved who can help, help you work out and go, actually no, this is your best outcome. You know, this is what we need. And it's, I think we're going to have a messy period of maybe the next, you know, two to five years where there is some transformation happening here. There's going to be some changes, it's going to be messy, it's going to be complicated. It's not always going to make sense. But I think the general trend is going to be in the right direction and I think we will all benefit from it in the long term. That's it from me.

Thank you so much, Tim. That was really good. Now we're going to our third and final speaker, Bruce.

Bruce is.

A producer of X locally produced Xulana.

I do apologize. I practice, we practice this, Bruce. Right. It is Tulani.

Free range eggs.

So yeah, without further ado, I'll leave, I'll leave it up to Bruce to give that local perspective. Thank you so much, Bruce.

Thank you.

Good morning to everybody. Can everybody hear me okay?

Yes we can, Bruce. Thank you so much.

Okay, well I've been asked basically to share my experience.

And so that's what I'll do. And I'll try and answer the question I've been posed which was how have I adapted or diversified my farm to meet my consumers needs and how is my experience with consumers changed the way I do things? So that's the experience I'd like to share and I'd like to make some comments that are relevant to what the other speakers have said. When I look at this from a practical point, of view, implementing it on a daily basis. So the essence of my business is it's a free range egg, free range egg producer, but it's free range eggs with a difference. And so some of you may be familiar with the term pastured free range. And so this is the free range model on the extreme end. And if you can see that picture that I'm sharing, that's one of my sheds on the farm.

And Bruce, you are not sharing at the moment.

Okay, sorry, we'll fix.

Can people see that picture?

Yes, we can see that.

Right, that's better. So the essence of the model is that these chickens are, there's no cages, there's no fences, there's no hormones, there's no antibiotics, there's no writing, there's very few restrictions.

And so it's an extreme form of free range. It's not what I would term industrial free range, which we can talk a little bit about later. And the next thing that's special about this is it's integrated with another farming system. And in this case it was dairy farming or grazing. So those cows and those chickens share the same paddock. We must remember that a chicken is not a ruminant. So a chicken cannot produce eggs based on eating grass. So they do need high concentrated grain to produce, to commercially produce eggs. But the advantage of the pasture is that they're free to.

Roam there on the grass and pick and look for all the things they like. They also eat a small, about 5% of their diet, a small amount of grass. The biggest influence of that is that the keratin in the green grass gives them a yellow yolk. And some one of the most distinguishing features that people believe as a perception is that darker yolks are more healthy and come from healthier chickens. And so that's one of the attributes, if you like one of my eggs is that they tend to have a darker yolk, which consumers believe, rightly or wrongly, is a good attribute of an egg. So that's how I created that. And so there's some environmental benefits. The reason for having this on a dairy farm was that the fertilizer inputs of the dairy farmer could be lower because of the nutrients brought in by the chicken feed and because of the recycling and distribution of the manure. And also aesthetically, people, most people's perception of free ranges is what I'm showing you now. And that's not the most common type of free range. There are only six producers.

Pasture produced free range eggs in New Zealand, only six of us that look like this, the rest of the country, if it's defined as free range, doesn't necessarily mean that they go onto green pasture. And so the trick for me, of course, is how do I expect a premium above the normal free range for this? So that's the basic system. And my marketing strategy has changed over the years. And as a result of identifying some of the risks and some of the volatility in the system, I've diversified my marketing.

System.

The best price I get for my eggs are the eggs that I sell directly to a consumer. In other words, they go straight from my farm, they don't go through any middlemen and they go direct to the consumer. So that's either at the farmers markets that I attend or it's the online deliveries, the deliveries that I make through an online purchase. And so that must be one of the shortest supply chains you can find. I collect those eggs in the morning, I put them in my car and the customer has those eggs within hours of them being laid. And that has been the number one driver of my business, has been freshness. Another thing, if I may call them housewives or homemakers or decision makers in the home, the thing they recognize about eggs is freshness. And that has been a major part of my business, has been the ability to get them there. People understand or they recognize that eggs may have sat in for a period of time on a supermarket shelf. And that's part of the supply chain and that's how it works. But I must point out my system is very small. New Zealand produces about 102 million dozen eggs a year and I produce 30,000 dozen eggs a year. So you've got to appreciate that I'm very, very small. It's a part time thing. I'm a full time academic at Lincoln University, so this has done a part time. And so I have limitations around scale, I have limitations around capital, I have limitations around time.

And so this system could not supply the needs of a New Zealand egg consumer or New Zealand consumer all of their needs. I could not, we could not produce the quantity of the eggs divided by the market on this system. So it's very much a niche or a boutique type system. I have lots of limitations in terms of my expansion and in terms of profitability. This is working partly because it's an integrated system. But if I'm, if I've only got 1300 headings on 20 hectares, that's a very, very low stopping rate compared to industrial free range. That will put a hundred thousand birds on a hectic. And so my Efficiencies, I lose a lot of efficiency, I have a lot of wastage. And so that pushes up the costs. And I could not survive by selling my eggs at the caged or even the free range price. There's considerable extra cost in running a system like this, and I'm not always able to capture that in a premium because my experience is you have to meet the market. No matter how good or how different or what attributes you think you have, you still have market competition. And people look at my age and say, what's different? And you can explain all this. And that takes time, it takes effort. And the shorter, in my, in my experience, the shorter you make the supply chain, the more effort you've got to make and the more cost you have. Now, theoretically, you're capturing more of the retail price. But sometimes, and it's been alluded to, it's easier if you can just get your milk to the gate or get your lamb to the gate and let somebody else take care of the rest. When you're in a system like this, you're doing two jobs. You're a farmer and you're a businessman or a marketer. And it's very tricky to do both at the same time. And also because you're dealing with a biological product, it's very difficult to make supply and demand consistently well over time because you can create a market. If you don't have the eggs to fulfill that market, you've got a problem. The same time as if you produce eggs but don't have a market for them, you've got even a bigger problem. So you have to grow in tandem with your market. And for that reason, for example, if I'm going to supply my farmers market on a Saturday morning with fresh eggs, that means eggs laid on a Friday. I've got to have enough eggs laid on Friday for that market. So what do I do with the other eggs for five days, the other five days or six days? Those eggs have got to go somewhere. 2. And they've got to go that day or that afternoon. So. And the volume of eggs that I can sell at the market is extremely limited. It's a ceiling to that. There's only a small amount of the population that purchase at farmers markets. And. And I always have a competitor at the farmers markets because that's what they like. They like to have a competitor to keep you honest. And also because the owner of the market likes to have two options. And so there will always be a scene. I cannot sell 100% of my eggs at the market on a Sunday. And the bigger I get, the smaller the farmer's market proportion. And so I have to have alternatives. And when the farmers market falls over, like during COVID you can't ask your hens to stop producing eggs. And so we're in a supply chain that doesn't stop, it never stops. And you've got to get those eggs, fresh eggs, to a customer as soon as you can. And you cannot be left at the end of a week with three or four hundred trays of eggs and saying, well, where are these going to go? Because every day they get older, and every day they're less risk, and every day they're less marketable, and they leave, they're worth less. So you. In my opinion, in my experience, I've had to have a diversified. And so some of my eggs I sell at the very best price, which is $8 a dozen. And some eggs go at less than half of that price to a wholesaler or somebody. And I need that. I need those channels to be able to get rid of all my highly perishable eggs every week. And so that's one of my experiences and one of my biggest challenges every day is matching supply and demand. And what I hope to do. One of my strategies is the other essential part of my business is I have a personal relationship with almost every one of my customers. So the person who's going to eat the eggs has got them out of my hand, either at the farmers market or at a restaurant or a cafe or wherever. And I get instant feedback because of that. But also, I have to front up with anything that's wrong. I can't say I go and see my complaints department or go and fill in a form. I might have a person standing in front of me on a Saturday morning saying, I'm not happy with this or I'm not happy with that. Why don't you do this? And I'm being verified every minute on the spot. There's no certification, there's no documentation. People see me, they know my name, they know where I live, and they want to know what may or may not be going on, what might be going on.

So I want to come back to the point that the closer you get to the consumer, the higher your cost. So if I just dump my eggs at a wholesaler, I get a much lower price, but I've got no more effort. So I concentrate on farming produce. The best eggs, I can dump them at a wholesaler, and I get paid for it. If I'm then going to take them to a consumer directly. I have to package them, I have to grade them, I have to clean them, I have to invoice that customer and I also have to do all the paperwork and all the promotion because.

And that takes time. If you're going to have a Facebook or a website, it takes time to keep that up to date. You've got to respond to consumer queries instantly these days. And this is a, you know, this is a daily thing. These eggs come out every day and you can't stop for a break, you can't go away. And so once again matching supply and demand. If you let customers down and your demand is going to change, if you promise customers that you've got eggs and then you haven't got eggs and that customer, you lose. One of the important things about this biological product is it's a seasonal product. If you can't control the environment like a caged or indoor farmer can. So chickens respond. Their laying responds to daily. And so in the winter, naturally a chicken will stop laying eggs because the amount of sunshine or daily length that it has is less than say 14 hours that it needs. Now, consumers don't understand that and they want to say to you in winter, well, where my eggs? And if you say to them, well, sorry, you've got to wait, the chickens are having the rest, they'll find somebody else to supply the eggs for the rest of the winter and then they'll never come back to you. So here's an ethical question. The reason that my eggs, my chickens stop laying is they don't have artificial light. But if I'm claiming to be ethical, different pasture raised, is it acceptable to have lights in my shed? And so I can claim that I'm this very ethical supplier who doesn't force feed or provide lighting for my chickens. But then how do I supply eggs in the winter? And that's a major problem for my market. There are ways around that and it's taken me some years to do that. And I can normally grow my market in the winter because other egg producers might not be able to. But then the conventional industrial free range guys have got lighting, they've got temperature control, they've got humidity control, they've got all of that kind of control so that their daily production of eggs doesn't change over the season. And consumers in today's modern world don't understand the seasonality of biological systems. And so would they be prepared to pay more for eggs that are produced in this way.

Rather than paying cheaper eggs produced in a different way? And my experience is that there's only a few consumers within the Canterbury region that are prepared to pay a premium price for these types of eggs. Most of the time I have to meet the market and I have people standing in front of me on a Saturday, I'll say $8 a dozen. And they say that's far too expensive. The supermarket is $7. And I say, well, all right, go and eat the supermarket eggs. Because.

These eggs are worth more. And once they taste them and they get used to them, they never go back. They always say these are the best eggs around and, but you have to capture them in the first place. And one of the first things a consumer looks at is the price of eggs. I have to meet the market, otherwise I cannot sell my eggs. No matter how good my marketing is, no matter how ethical or how value added or what credence attributes I'm displaying or I'm claiming, they will always compare the price of my eggs to what the price is at the supermarket. And it's only once you've proven the quality of your eggs that people realize the difference. But then there's only a small section of the population who's prepared, in my opinion. I know the other speakers have said differently, but in my opinion it's a small proportion of the population.

And globally the majority of our consumers are not wealthy. The majority of our consumers don't have, they want cheap food because that's what they can afford.

And if I go back a step, the reason this business was created is I saw a gap about six years ago when I was introduced to this idea of pasture raised poultry. It had never been my intention to do it. What attracted me to it was that I could start small scale. So with limited capital I could start with one share and I could grow organically. As my market grew, I didn't have to come up with a million dollars and build a million dollar shed and do I can start with a few thousand dollars with a few hundred chickens and I can build that way. And so what appealed to me was I minimized the risk by being able to grow with the market.

The second thing that happened is that at that time, and right now cages in New Zealand have been phased out. It's illegal now. By the end of the year, it will be illegal to raise chicken egg producing chickens in a cage. And so we've seen a major shift.

Of people who prefer free range. But there are still a large number of consumers who want cheaper eggs. And any production system beyond a caged, highly controlled environment is going to produce eggs at a higher cost. And so we have to consider not only the animal welfare aspects of caged and uncaged systems, but we also have to consider the social welfare of people in terms of the, the price. And so that's the opportunity I saw was that legislation was changing people's, the agribusiness environment around price of land, price of inputs, all that sort of thing was changing. And that's why it appealed to me. I was never interested in a cage type system, but this appealed to me because.

It could do the kind of things at the sort of scale I wanted. And it's been an interesting experience. And.

As I say, getting closer to the consumer gets you a greater share of the retail price, but it's much riskier, much, much riskier because customers are fickle, really fickle, and just a slight change in price or a slight change in something.

And they'll drop you. And unfortunately, some of my experiences as you build a business like this, where you value the personal relationships and you're building a relationship for the future and you go out of your way to provide the customer with what they want, but yet they'll drop you in an instant. And that's very frustrating that you build all this time and effort that you put into building relationships with customers. I've got some very good relationships with people who've been with me for years and years and years and don't use anybody else's eggs. They swear by my eggs. Those relationships are really value. But I've had lots of ups and downs with customers who for simple reasons and sometimes for not valid or for verifiable reasons, just decide to stop. And so once again, you have to have a diversified market. You cannot rely on one market segment when you're so small and when you're dealing with a biological product. I also think.

All our ideas about being local and being close to the consumers are really attractive ideas. But the supermarket still remains a hugely significant convenient place place to buy food. You can get everything you want at one time in one place. And so if people come to the farmers market, that's an extra trip for them because they can't get everything they want at the farmer's market that I can only get a few things. And I have customers who come every week, year in and year out, and they just come for eggs, but it's not very convenient for them. First of all, they've got to have cash at a farmer's market, so they can't pay with eftpos, which is not Very convenient. Then they have to drive out of the way, and they can only come between a certain hours on a Saturday morning. They can't pop in anytime. And I get lots of customers saying, where else can I buy your eggs? I even get customers then saying, will you deliver eggs to me now? Can you pitch up at the supermarket and say, hey, I can't come in here on a Saturday. Will you deliver my eggs? Nowadays you can, of course, for a price. But the expectations of consumers these days are very, very high. And that's possibly a result of COVID My business grew enormously during COVID And if I talk about the impact of COVID all of my regular channels dried up overnight at Covid. So all my restaurants closed, all my cafes closed, all the farmers markets closed. And so I had all these eggs coming every day. What was I going to do? And so I created a Facebook page and I said to people, I will deliver your eggs. You pay online, you text me an order, and I'll deliver. And that's how I did it. And the people that had been my customers at farmers markets, they continue to be customers. And I delivered to them every second or third day in that suburb.

But once again.

You know, there was a surplus of eggs, and then there's a shortage of eggs. And so you go on trying to meet. And because it's a biological product, you've got all those perishability, shelf life things to consider. And, you know, every day that quality of that egg deteriorates and the value of that egg deteriorates. So you've got to be able to move those eggs really quickly. People still use the supermarket as the benchmark for the price. They say, why are you more expensive in the supermarket? And I like to say, well, I think my eggs are better. You're meeting the farmer right here. Here I am. I. I fed these chickens, I looked after these chickens, I picked up every one of these eggs, and I've delivered them to you. That's the personal relationship we have. I know exactly where these eggs have come from. You know where I live, you know where my farm is. So all of that is advantageous. But I'm not sure myself how I can capture any more of a premium. Because everybody will benchmark back and say, well, free range eggs in the supermarket is $7 a dozen. Why are you selling them for eight? And if I have to prove that that is costly and very time consuming, I have to explain to every customer that I come that story. And that takes time, and that takes. That takes.

In terms of verification. The only verification I have is I have to have a risk management plan through NPI Ministry of Primary Industries and I have an annual audit and that's under the Food Safety Act. So the main requirement of that audit is to prove that my eggs are clean and safe, they don't have salmonella or any of the other diseases.

And that's the only accreditation that that's compulsory or mandatory. And it's a huge burden. It's a huge burden. And it's not just the cost of MPI's visit, it's the daily documentation I have to do and the steps I have to take to meet that, to meet that assurance. And the New Zealand.

Egg industry is about, was trying to introduce a hen assurance scheme and that's going to add considerable cost and consider considerable complexity to my business. We've just recently, as some of you would know, we have an egg stamping program in the egg industry that was, that was an attempt to try and minimize or eliminate fraud. People selling free range eggs that weren't free range eggs that hasn't in my opinion being hugely successful.

And so all of these things add more cost to me. But I don't know if I get a better price. I get no better price for my E eggs because they stamped. I get no credit price for my eggs because they're NPR verified. And if I was SPCA or any other verification verification I don't think I'd get a better price. And so all of these things kind of add cost that they kind of add complexity. And I already have a system that's complex but also highly labor intensive and very inefficient in a lot of ways.

Rose, sorry to interrupt you. We are running out of, running out of your time so appreciate it if you could wrap up.

Yeah, that's fine.

Let'S do that. I hope you've given you a bit of an idea of my system. I've also given you some idea of my challenges. I've also just made a few comments about this is not easy. And if you want to have a direct relationship with the customer, it's not easy. And not every form we're using is can have a relationship with every consumer in New Zealand. And I know we're highly critical of the supermarket chains and all that but.

They'Re there for a reason, unfortunately.

And all of this is backing the trend and it's disruptive and it's very nice but we have to be realistic about how many of us can do this, to what extent.

Thank you so Much. Bruce, we are getting ready for the Q and A and so I would ask everybody online to use the Q and A button. I already see some questions in there and to give everybody a little bit of time to actually come up with this, with their questions that they want to be answered. I have a couple of questions to our. A question to each panelist to basically give our.

People online, our visitors online, the time to actually come up with their own questions.

Mark, you were talking about economy of scale. That is quite an issue and I heard Bruce talk about it as well.

If you look at, for example, the building industry, you would see.

GJ Partners, Builders, Blacklight as being a brand, but they're basically local business owners having the same brand. Have we seen something like that in the agri food industry here in New Zealand, where the franchise business, the franchise model is being used to actually create that economy of scale.

I'd probably ask the other panelists to chime in on this as well. In this sense.

You know, you've got the retail outlets, for example, like Coffee Culture, which is a food outlet in that sense. But it's all based on a franchise basis where, you know, individuals own their own business. As a small business owner, but you tied into a franchise environment. The issue with the franchise, franchisee franchisor relationship is it can be fraught at times, is, you know, the contract is actually quite tight on what you can and can't do. Your marketing is supposed to be centralized, so you have little control over the localization of what you're trying to achieve under a franchise arrangement.

So the products that you serve are specified. The, you know, the branding marketing sector is all specified in that sort of sense. So I'm not sure that would be a suitable model, I think, for this particular industry, but I could be wrong. I think Bruce and Tim might have some other ideas.

Yeah.

I was just wondering, Mark, if this, this could be a model or, or a cooperative model or something like that to actually create that economy of scale.

I mean, if you're talking about a cooperative model, that's slightly different in that sense.

And sort of the modern cooperatives are actually a deliberate attempt to create scale. That's the whole purpose is working in collaboration to create scale. And this is something which we should be exploring further. I think, I think it's. It's more untapped. Not all cooperatives are successful. Of course, there's issues in terms of the relationship, the understanding of why you're forming cooperatives in the first place, and this idea of collectivization of Sort of collective interests, it can be a powerful model going forward. It can achieve the scale. And if you're dealing in particular with the gatekeepers, which happens to be at the retail end, the major supermarkets, for example, you know, they could pick you off one by one. But as a cooperative, you've got a greater chance to actually move ahead. You know, MG Marketing, for example, that's a cooperative model which is created by the growers themselves to actually face the supermarkets. And that is actually quite a successful model that works quite well.

Cool. Thank you so much for that, Mark.

Tim.

Yes.

If I buy. If a consumer buys an organic apple, right, and then you see the label organically produced, they probably know what they're getting. Right.

How is the awareness when it comes to a B Corp certified label on a consumer product.

How is that sitting?

Yep.

Yeah. If you played the family Fortune game, we asked 100 Kiwis to, to name their top 10 certification, you know, for, for brands, B Corp would probably not be on that list.

But watch this space. Like I say, in the FMCG sector, the number of brands that are going through B Corp certification currently is immense. We've actually just, we're about to be engaged hopefully tomorrow by what we think will be New Zealand's first farm. To look at them becoming a B Corp.

It's coming.

Like I say, we've got. Well, Kathmandu is a B Corp. They do quite a lot of promotion in store. Kiwi banks and B Corp, they're doing quite a lot of promotion in store. We've got some bigger B Corps that have recently come through that are helping to increase that consumer awareness. But yeah, when you look at the picks, Peanut Butter as a B Corp fix and Fog is a B Corp. Raglan Coconut Company is a B Corp. Etique is a B Corp. There is a growing number of food and beverage companies that are B Corp certified. So I think that consumer recognitions is not great at the minute, but it's going to come. And I think the other thing, I don't know, Vim, you and I had a brief conversation about this not so long ago. If you are part of a global supply chain currently in offshore markets in the UK there is now almost 1000b corps. I was in London in March and within four blocks of Covent Gardens tube stations, I saw four retail shops with B Corp logos in their, in their window selling natural based health and beauty products. So if you're providing a. I think, like I say, we're in this interesting transition page phase where right now there's potential for you, for a kiwi farmer or grower to be still part of a global supply chain where you can provide a significantly higher performing environmentally or ethically based on products, socially based products. But increasingly those companies are going to start looking and the consumers are going to start going. That's great. But why, why are you using maybe this Manuka honey from New Zealand when actually there's some really good honey down the road here in England that we could put in the product that's maybe just as good, you know, in terms of what it needs to do in this product. So, yeah, I think we're in this interesting phase. But, yeah, increasing recognition of B Corp is coming. Yeah, watch this space.

Thank you very much, Tim. Bruce, you are using.

A system that has ruminants and chickens coincide.

In one pasture. I know examples of Europe where farmers are basically putting alpacas or llamas in with their chickens just to protect the chickens from the birds of prey. Are you seeing a similar effect, a similar benefit in putting ruminants together with your chickens?

Very good question. One of the biggest inefficiency I have is wastage from predators. I lose an enormous number of birds to hawks in New Zealand. Now, hawks are protected birds. You can't shoot them.

And.

So I have used ducks in this case which haven't been hugely successful. My next step is alpacas and after that it's donkeys.

And after that I don't know. So the cattle don't make any difference to a hawk. So remembering also that cattle will only be in the paddock with the chickens once every three weeks or something. So there isn't a chicken shed in every pattern and the cattle aren't in every paddock every day. But cattle pretty much don't chase hawks away. You can get specially bred dogs like.

That will protect, but then you've got to have a dog for every shed and then you've got to feed the dog and you've got to keep the dog off the neighbours and there's all sorts of inefficiencies. But yes, I'm sorry, but cattle don't chase away hawks.

Okay, thank you very much for that answer, Bruce.

I have an image now of an alpaca with a gun. It's like the alpacas allowed to shoot the hawk. Is that the. Is that the workaround?

No, apparently the alpacas are really territorial and so they basically do not allow. They do not allow the hawks to come near. At least that's what it happened in Europe. Mark. Question from Julio. Mark New Zealand is not too far from world markets and one of the strategies of SESPRI is using shortening of their supply chains to produce on the license overseas. Can small growers follow this lead?

Yeah, that's a really good question. You know, New Zealand suffers from being stuck on the asshole of the world. Oh, sorry. Bottom sort of, let's be.

And we've got this tyranny of distance between us and our major markets and there is, there is definitely.

Inequality in terms of the supply and demand dynamics we're actually facing. So you know, Zespres, a big company and what should small growers do in this case? Well, I think really you've got to ask the question of why you want to go overseas in the first place. So maybe, you know, you need to examine your values and you also need to.

Examine the value that you get from this. So the values are, if you want to meet the market for the conscious consumerism, that's great, okay. And you go through the efforts to meet this. But I think Bruce has actually really introduced a note of realism here and that means you actually have to value that desire. So if you want to enter an overseas market as a small producer in that sense, you really got to ask yourself what are your motivations a want to deliver your values or are you trying to extract some value here? And really it's an interplay between the values and the value that you need to understand why you actually entered the market. Tim's actually brought out the idea that if you are producing a high value product in New Zealand and then if you want that product to be placed in an overseas market, then you need to actually go through the collaboration route. You need to find someone to partner with to provide that distribution channel that you actually need. Because small producers simply don't have the scale nor the capital or the ability to raise the finance necessary to build their own channels to market. So the really the only solution you actually have is to partnership Zespri do so because they, they own the IP on the cultivars, they are actually able to provide protections around what they do overseas. Even though they may be licensed, licensing it to entities overseas that they have strong IP protection around that that protects the value that they actually charge for their particular product. So yes, small, small growers, small entities, ask yourself why you want to be there in the first place. Do you want to satisfy your values? That may be the case, but you need to understand that you've got to get some money out of it at the end of the day, otherwise there's no point doing it.

Thank you very much, Mark. Tim, I think two questions that are.

For you. One from Julio, basically looking at certification process for small growers and I think Shelley is coming up with the same question. A small direct to consumer business with very short shelf life products.

Such as raw milk on sale, home delivery, farm shop sales are the benefits to be BCOP certified.

Yep.

So I think, yeah, I've had a quick look at the two questions. I'll do, I'll do Julio's question first. You know, the cost for small, small growers. I think there's two parts to that. So firstly it's, it's going to become increasingly, there's going to be increasingly be pressure from your value chain that they want you to do it. So it's potentially going to become table stakes that you have to be able to demonstrate, improve some kind of independent verification so that you maintain your part, you know, or your role with that, with, with a, with a customer. The second, you know, in terms of helping with that, what we are suggesting to some of our bigger clients is if you've got some, you've got the resource. If you're a zespree, well could you maybe support and can fund your supply chain to go through the process because you as the wholesaler, retailer or distributor or end, you know, a bigger unit that there's a marketing value in you being able to say, well you know, 90% of our supply chain are B Corp certified. So I think have the conversation with the companies that you're selling into because there's a benefit for them as much there is for you. And I guess also on that the entry level fee for B Corp certification is, I think it's $1,500 or is it $1,000? It's somewhere around that. It's not that big. And the benefit that you'll get from that, both for you in terms of your own understanding, your own internal systems and processes and some improvements, internal improvements you'll get from that plus the connection and the value that you'll get from the marketing it to the right stakeholders. Which leads me to Shelley's question. I think the value for a small direct to consumer business is, is proving that you are a good business, you know, and being able to say, because I don't know without knowing the Internet of your business, Shelley, like presumably you don't have masses of employees. It might just be you and, or a small family business, but to be able to demonstrate the transparency and accountability of what you're actually doing is I think A massive advantage over some of the bigger companies where you know, you have. There's a real depth and substance to the good that you're probably doing because it's your small business.

By volume. The vast majority of B corps globally are small to medium businesses. So it's firmly in the small to medium business enterprise. Happy to have a conversation one on one with either Julio or Shelley to go a bit deeper on that. But yeah, size is not a barrier to B Corp certification. My business up until about 18 months ago was just me and I've been a B Corp since 2016.

Thank you very much, Tim. I think Shelley is just.

Replying to you Tim, and basically saying that she's running a small family business.

There is one more question and I think it's directed to Tim, but I think it is a nice question to actually round up this, this session as well. It is about that we, as New Zealand we have the ability to produce way more food than is required for the population. And of course I'll take in some of the comments that you guys made that we will not be able to produce all the foods we want simply due to the fact of climate, climate of economy, of skill reasons. But what is the solution? Are we going to export more or more food or are we going to import or allow people to come to New Zealand and live here?

I'll just do a round. I'll start with Mark, Tim and Bruce and then we'll end. Mark, your.

Yeah, this really comes down to the question of basically why do countries trade?

You know, there's the difference between point of production and point of consumption. Consumption is always going to be very in terms of either volume and also distance as well. So there's lots of economic theories telling you why countries trade. So yeah, New Zealand produces a lot more food than our, than the source of the population. And to be honest, that's a good thing because there are a lot of areas in the world where they can't produce the food of a sufficient scale that they need. So the challenge really.

Is to actually get the food from point A to point B. So transportation will always be there. It's a necessary thing. And I suggest that rather than balancing production and population, we need to start thinking about how do we distribute that food to where it's needed more efficiently and more effectively. And that actually means coordinating the market signals, market demands, meeting their preferences and delivering that food product to where it's needed through the global transportation system. So it's always going to be there. And so the challenge for this idea of short supply chains is that short supply chains is never going to be a model which is going to be ubiquitous and take over. It's always going to be an addendum. It's going to be an alternative disruptive strategy to extend supply chains. So we need our global supply chains as they are falling apart at the moment, but we need them to be operating as efficiently as they possibly can. So that's the necessary part of it. But growing local, going short supply chains, it's important for a number of reasons. But as I think the panelists have talked about today, there's real issues in terms of scale, in terms of.

The challenge and motivations between delivering value to the conscious consumer as well as actually making sure that it's economically profitable to do so.

Thank you very much, Mark. Tim, your thoughts?

I love a good existential question to end a webinar on. I mean, there's many layers to that. You know, I think you look at how the pandemic, you know, just shut a whole lot of stuff down. I think we're increasingly going to have, you know, as Mark alluded to, this tyranny of distance that New Zealand suffers. Like, is it. Does it make sense on many levels that New Zealand is trying to be the breadbasket for the world when, with the environmental pressures that we're seeing and what's happening. I think it's an interesting. I think these are the tough conversations that collectively New Zealand needs to have. And who drives that and where do we have that conversation? I don't know. That's way above my pay grade. Perhaps there's a university institution that could take that mantle on. I mean, bringing more people into New Zealand, you know, it's like, shh. No, New Zealand's like, there's that whole website, maps without New Zealand on, Like, that's our secret weapon. You know, do we really want 10 million people living here when we've got this beautiful, pristine paradise that many of us have ended up here through fortune, or what other ways? Yeah, I don't know. Like, I'm not an agronomist or agricultural expert by any means. I'm a human just trying to get through to the end of my 80 or 90 years, hopefully on this planet having made a bit of a difference and done some good. And I think these big questions are the big questions we need to think about. Like, does New Zealand have the right to supply the rest of the world when there is clearly an environmental and social impact on that? You know, us supplying products into Europe is denying Someone in Europe the ability to work and source and supply locally, which has a community effect then. And I think that's what we need to be looking at. So, yeah, I don't know. I don't think anyone knows would be my answer.

Thank you very much, Tim. Bruce, your thoughts.

You'Re muted, Bruce?

Yeah, I think what we're talking about here is competitive and comparative advantage. And New Zealand has some very competitive and comparative advantages, and that's in natural resources. We have no other source of income pretty much in New Zealand in our domestic economy, other than agriculture, timber or forestry or whatever. And so our competitive advantage is our temperate maritime climate where we're able to export some of these products at cheaper prices than they can be produced in other countries that we're exporting into. And that's the whole concept of comparative advantage. And New Zealand couldn't have the standard of living that it has or support its population without its export economy. And we have no other export economy other than tourism and agriculture. That's so. And, and in the case of eggs, I can get really practical here. We shouldn't be producing our own eggs because we can import eggs cheaper and we can produce them in New Zealand. There's no doubt about that. We don't have a comparative advantage in producing eggs because our major input is wheat and we are not big wheat producers. The reason why we don't import eggs is because we are an island that has only struck bicycle and we don't have any of the three major avian diseases in the world and we continue to protect our country against that. But that costs us in the price of our eggs. Most consumers don't know that, but we could. And most consumers would prefer to eat cheaper eggs even if they weren't produced in New Zealand. And so.

You know, we get down to this question about how much are people prepared to pay for food.

And our whole supply chains and our whole production systems and our whole food system at the moment has all been geared and engineered towards producing the cheapest food. And that's why New Zealand has intensified agriculture and that's why we have an impact on environment, because we produce cheap food.

Thank you so much, Bruce. I see that Professor Wilson has put up his hand, so.

He probably wants to have the last say in this. Mark.

Always the last word. This does raise the issue of another topic which when we're talking about supply chains, we're talking about the food or the.

Food miles debate and the carbon footprints of international transportation of food. So this is a particularly interesting debate. It Started off when British farmers and producers actually started quite a major campaign which saying that, you know, why should we accept New Zealand dairy and meat in the UK supermarkets? Because it's traveled or flown such an incredible amount of miles and the carbon footprint of that transport is exceeding the local carbon footprint of their local farmers. And initially it's easy for consumer to accept this idea that locally grown food is more carbon neutral or more carbon efficient than imported food. But the studies done at Lincoln University put a light of that and Carolyn Saunders for the AERU system here debunked this whole idea quite simply by looking at the total systems. So the food miles debate was predicated on the transport costs and transportation transport costs only and that's what was sold to consumers and it was pretty successful. But when the wider picture came out we got to look at the total systems. Okay, what is the total carbon footprint of that farming system? What is the total carbon footprint of that supply chain from point of production to point of consumption overall? And because of the advantages that Bruce just mentioned, pasture fed for example, natural sunlight, the natural advantages New Zealand have, but it's actually the we can actually pull put food in the UK supermarket for a lower total carbon footprint than could the more intensive farming and indoor farming systems that Britain had as well. So if you're going to go down a debate about local and international, we need to take quite a critical view and a more realistic view of understanding the total systems and how that actually impacts the debate and the argument what's been put forward. So you know, marketing works and if you take half a story and then sell half a story, people are going to believe you. But if you want to be honest about this, if you want to really sell the truth and trust through the visibility of your supply chain, you need to tell the whole story and sometimes that's not easy to get across.

Mark, thank you very much for the closing comments. I feel a new innovation series topic coming on and because this requires a larger discussion and perhaps we can get some of our politicians involved in that discussion as well. Thank you so much Bruce, Tim, Mark for your contribution and we're going to end our webinar but not before I will actually tell you that there are more events coming up so please go to beelinkinnovation.com and look and join us for Smart and Green Future together on the 16th of August and we'll have on the 25th of August we're actually looking at planting Banks Peninsula. Thank you so much for joining us. Thank you so much panelists for sharing your wisdom with us and have a wonderful dry day today. Bye. Bye.

Please, everyone. Thank you.

Thanks. So, yeah.