Industry warned to shift its focus

Irwin Valley executive officer Rory Coffey has slammed the investment tactics of the Australian grains industry, claiming growers are missing out on valuable market opportunities.

Speaking from the Innovation Generation conference last week, Mr Coffey said the Australian grains industry needed to shift its focus away from a persistent pursuit of higher yields.

“You’ve got a situation where the focus is on producing the raw material… often primarily on yield rather than quality of the market requirement, ” he said.

“What you end up with is significant production of volume of a commodity… as opposed to a quality ingredient.”

Using the example of lupins, Mr Coffey said growers were getting lower prices now compared with 20 years ago. He said spending research and development money on improving lupin yields by 3 per cent per annum wouldn’t help farmer profitability.

“At $250 a tonne the farmer is going to go broke — if he gets a 3 per cent improvement in yield, he’s still going to go broke, ” he said. “But if you develop a higher value application for that lupin and the consumer and the food industry pays $100 a tonne more, all of a sudden you obliterate that problem.”

Instead of trying to compete against high volume, cheap grain producers such as Ukraine, Mr Coffey said the industry needs to look at how it could achieve market differentiation for a quality Australian product.

Part of it, he said, lies in being able to demonstrate to the market the different applications for the grain.

“For things like lupins, for example, it’s a brand new ingredient to most of the food industry around the world, ” Mr Coffey said.

“What you’re asking the food industry to do is take a raw material that they don’t know how to use from functionality or an application point of view, while there is no known market for it out in consumer land.”

He said the Australian industry seemed unwilling to invest in product or market development through its grower-funded bodies.

“Market development doesn’t mean you take your ingredient and find somebody who will use it, (but) going to the market place and finding out what the world wants and needs, ” Mr Coffey said.

“I also have a problem with industry organisations driving that sort of innovation.

“They tend to be bureaucratic, they tend to be slow moving... what I prefer those organisations to do is to fund private sector, which has a much stronger incentive and interest in developing these opportunities.”