Horticulture shows big possibilities lie in value adding | OPINION

That somewhat strange, wafting smell that isn't distinctly home brewing, but keeps flowing from the corrugated iron structure, prompting questions and queries from neighbours.

The growing pile of orange peel or nut husks or sorghum stalks isn't much of a giveaway as to what's being worked on, cooked up or refined.

But it could be the next big thing. It could be the idea to take a waste product or an existing commodity and create something new.

To dismiss the backyard tinkerer in this regard is to dismiss hundreds of years of Australian innovation, many of which have led to extraordinary breakthroughs.

It is here where inventiveness, in its simplest, perhaps rawest form, is a low-end sign that value-adding is not a pipe dream for Australian agriculture.

In fact, it's a rapidly bubbling spring with the potential to turn into a flowing fountain of return, perhaps even a gushing geyser of profitability.

This piece will explore the why and how of making the most of that opportunity, with an intentional bias on horticulture, that often forgotten cousin to its larger, more historically romanticised rellies (beef, sheep, broadacre and cotton) as one sector not only showing what can be done but also containing bottomless potential for further value innovation.

If the global pandemic taught us anything, apart from the names of each of the state premiers, it's that an over-reliance on foreign manufacturing has its limits.

Food Innovation Australia (FIAL) managing director Mirjana Prica said there were gains to be had in keeping things in-house.

"When you differentiate and put special features onto your product, that's not easily substitutable and therefore you can command a premium for that, a slight margin. And that margin is what we need to capture more of in Australia," she said in April. (Sydney Morning Herald).

The incentive for embracing value-adding can be boiled down to three drivers:

PUT simply, there is coin to be made out of taking a raw product and either turning into something else, extracting a product from it or adding it to an existing product to heighten the offering.

There's nothing particularly revelatory about that. One of the stand-out examples is the much-loved Bundaberg Rum, a product that came about when in 1888, seven Bundaberg locals took the by-product from the sugar industry (molasses) and used it to make alcohol.

During COVID, the rise of fresh produce box delivery services showed entrepreneurial growers and wholesalers that rather than shipping off or on-selling fresh produce, bundling them up with other items and delivering them door to door provided a healthy profit margin.

Tree nuts also lead the way in this area. At Coles, a 400g bag of macadamia nuts costs $18, equating to $45/kg. The roasted and salted version jumps to $47.50/kg, but dip them in chocolate and that sneaks up to $64.97/kg.

The same could be said about branded beef, bacon cuts (rindless, double smoked, shortcut, etc) and of course, the elite level industry of fashion where wool and cotton go from the bale to the catwalk with extraordinary mark-ups.

Consideration of course, must be given to the cost of turning the raw product into a different form, or adding to it.

The higher the cost of that process, the more slim the profit margin. A lack of research by the backyard "tinkerer" could end up a costly experiment.

IT IS the word that sends a shiver through any primary production industry - glut, when the supply overwhelms the demand and prices plummet.

Most agricultural commodities throughout Australia would have experienced this to some degree over the years; the wool industry crash of 1991 comes to mind, or more recently, avocados falling from the darling of the breakfast plate to the realm of almost being too cheap to be hip.

Therefore, the more avenues a product can find for sale, the less pressure will be placed on traditional markets.

Many grower groups, and growers themselves, have learnt from such times and have now taken a heightened approach to shoring up export markets.

While exports could be considered a value-add in one sense, it is usually of the raw product and therefore holds the risk of falling back into the domestic market should the trade cease for whatever reason, be it political, weather-related or phytosanitary issues.

Converting a raw material into a new form, and then exporting it could be considered the "golden double" toward delivering a profit.

GONE are the days of preventing farm waste just because it cost money to dump and it didn't look great from the highway.

For the sake of this essay, garbage is used as the alternative term for waste, an increasing concern within agriculture.

Australian farmers have long been avoiders of waste, choosing to "tie it up with wire just to keep the show on the road" as John Williamson sings in the iconic anthem, True Blue.

Nothing was ever thrown out on the farm, with the idea it will come in handy at some point, whether it's scrap steel, baling twine or old tyres for holding down silage tarps. In some ways, farmers are the original recyclers, or "up-cyclers", before the term was cool with inner-city boutique fashion houses.

But the nature of production means an amount of farm waste is inevitable. Every industry has it but more eyes tend to glare at primary production because it's so close to what's put in mouths and worn on bodies, two very emotive areas of life.

So diverting that waste adds to the social licence and credibility of farming. In turn, there is monetary gain to be made from using that waste and to be seen to be using it.

Consumers, the ultimate dictators of what floats and what falls, are increasingly aware of how much waste is generated within food production.

The new wave of shoppers is willing to pay more for products from companies that can prove their efforts to reduce waste. Likewise, major partners (ie. supermarkets, restaurants, cafes, food outlets) are being driven more and more to link up with like-minded businesses that can exhibit a chain of reduced waste and better environmental care.

The conundrum (or "opportunity" if you're a motivational speaker addressing producers at a national conference) is how to reduce the use of proven methods of packaging like convenient and hygienic plastics, but also maintain the freshness and quality those same buyers expect.

Yes, they want it all; no, they don't often care about that dilemma.

Value-adding to waste products doesn't necessarily mean it needs to leave the farm though.

The sugar industry realised this in the late seventies when "cutting green" largely took over from the tradition of burning the cane prior to harvesting.

A layer of trash is left on the paddocks which growers quickly realised provided a mulch, added organic matter to the soil and gave better moisture retention, among other things.

In the past decade, increasing numbers of piggeries are using effluent to generate biogas, reducing power bills.

These things have the two-fold effect of providing cost savings but also flying the environmental flag for the industry, lifting its profile in the eyes of the public.

Tapping the pipe, funding the flow

So how does Australia tap the bubbling spring to unleash the vast aquifer of value-adding goodness below the surface? Here are some possibilities to chew through.

IT might be a bridge too far for some, but perhaps it's time a ministry of manufacturing (or industry as the case may be) became a bedfellow with the agriculture portfolio.

Once upon a time few would have thought water and agriculture would share the same portfolio and yet that's quite commonplace now within various levels of government.

Bringing the joint portfolios together brings natural synergies and cross pollination.

The usual perception of manufacturing (as often seen during election campaign television advertisements) is of a workshop or a factory with sparks flying, robotic arms lifting parts into place and workers in eye protection and earmuffs getting on with the job.

Rarely is primary production considered within the manufacturing suite. A minister across both would make natural connections as the portfolio sees benefits in the shared spotlight.

Prime minister Anthony Albanese, talking up homegrown manufacturing during the 2022 federal election campaign has maintained the call for a reinvigoration of Australian manufacturing saying: "We need a future made in Australia."

He would do well to also suggest a future that is "grown in Australia". Any calls for more manufacturing must include agriculture as much as they do for pharmaceuticals, intellectual property and minerals.

PLENTY of Australian businesses do value-adding very well. Often, those businesses are large ones, perhaps with the funds to do the required market research and product development to explore.

That experience could be tapped with incentives to create further product partnerships, maybe with smaller companies in a Value-Adding Partnership Program.

A bit like a big brother (in the beneficial sense... not the intruding all observing type) program where a more significant company takes a smaller one under its wing in the hope of creating a combined product.

Even a limited run of an item could give enough of an insight to a small producer in order to give them a taste of what's involved, helping them make a decision on whether that step is for them.

There are substantial possibilities for partnership brands both known and unknown. Arnotts highlighted this possibility by taking its hugely popular Tim Tam biscuits and merging them with iconic Australian flavours such as Moreton Bay Raspberry and Dark Chocolate, Kensington Pride Mango and Cream, Murray River Salted Double Chocolate, the Dimbulah Mountain Estate Coffee and Chocolate, and Sunshine Coast strawberries and cream flavours.

Then again, it may not always necessarily be a big brother-little brother approach. Two or more "little brothers" could pursue their own project in pooling resources to create a value-added product off their own bats.

Grants and low-interest loans are the obvious methods for such a program to assist but other ways may help also.

An app or desktop dashboard equivalent that guides producers through the various steps and questions could be a ground-level entry to see what's possible.

Workshops or online consultations would help bridge the distance gap for such methods.

The path toward a value-added product can be both highly complex and yet incredibly simple.

The complex end may incorporate many different elements such as the creation of a new brand, lab testing, investor attraction, partnership agreements, marketing strategies and consumer workshops.

Having some experience to navigate that would reduce the psychological barrier in pursuing it.

GETTING that concept of a value-added product from the back shed or front paddock to the supermarket shelf or online shopping warehouse would not be a straightforward process for most people on the land.

State governments are the best placed to identify ideas and work with the people behind them to develop projects and products.

The creation of Value-Adding Officers would help bridge this gap. These officers would be dedicated roles for those preferably with an agribusiness background.

They would be on-call for those who have an idea or a dream to help think through the realities of what it would take to make that happen.

Not all value-adding concepts are going to fly. Just because someone grows potatoes doesn't mean it's feasible to set up a vodka distillery in the corner of the packing shed.

Then again, that sort of outside-the-box thinking could be what's needed to grow that business and inject some extra funds into the region or town.

The VAOs would work in conjunction with the Federal level Value-Adding Partnerships Program (see above), as something of a first level of idea refinement and development.

TWENTY-three years ago, the Commonwealth Department of Agriculture, Fisheries and Forestry put a submission to the House of Representatives Standing Committee on Industry, Science and Resources (September, 1999) looking at "Increasing value-adding to Australia's raw materials".

Part of the conclusion was:

"To achieve this growth, to increase returns to primary producers, to capture emerging market opportunities and to increase global market share, the Government and industry must work together to develop trade opportunities and enhance industry capabilities throughout the value chain, especially through value-adding."

More than two decades on, with plenty of success stories but just not quite that massive surge of momentum, value-adding has returned to the spotlight.

So, from that strange smell coming from the back shed, the product no-one has heard of yet still being perfected behind those corrugated walls, through to the major companies tweaking their recipe to test the waters with a new ingredient, value-adding is alive and well.

That trickle, that ripple of opportunity in the dry creek bed of agriculture industry is very near to forming a flow, perhaps even a raging torrent of business through value-adding, but it will take the cooperation of both industry and government to foster what is often at the heart of so many successful value-added products: Aussie ingenuity.