INGREDIENTS
Adding value to our raw materials – why it makes sense Food & Beverage Industry News looks at why adding value to raw materials has long-term benefits for Australian produce.
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ustralia is fortunate that it is home to some of the best soil, an array of (some would say pedantic) regulations, and an agricultural industry that has world-class infrastructure. It is therefore not surprising, that overall it has a great reputation for producing ingredients that are wanted around the world. And if you are a manufacturer of said ingredients, then the world could be your oyster in terms of finding overseas markets. But there is a conundrum. There are many examples of countries exporting raw materials only to have them returned as finished goods and having a negative effect on a country’s balance of trade. The same can be said for some agricultural goods. At the Global Food Forum earlier this year, Visy chair Anthony Pratt praised Australian farmers and food processors for growing food exports
to $40 billion, despite drought. But he also wondered why we were exporting so many raw materials without adding value to them. “Value adding drives Australian investment and jobs,” he said at the time. “For example, wheat sells for a $100 a tonne. If you turn it into flour it sells for $500 a tonne, and if you turn that flour into bread it sells for $5000 a tonne. Adding value through further processing, or adding value at horticulture, is better than selling bulk commodities like wheat, which undersells the value of our farmer’s expertise.” Brookfarm and Cape Byron Distillery were born out of one family’s vision to take the humble macadamia nut and turn it into a diet staple for the products it created. The company, run by Martin and Pam Brook, was started when they bought a rundown farm in the Byron Bay hinterland in 1988. “We were going to move our
Macadamia trees can take up to 10 years to come to fruition. 36 Food&Beverage Industry News | September 2019 | www.foodmag.com.au
two very small boys up from Melbourne and we were going to become farmers,” said Martin Brook. “Then the crunch happened, so we almost went broke. It took us almost 10 years to get out of the financial issues, and we moved up permanently in 1999. “In those days we couldn’t see a lot of sense growing a nut if you were getting $2.50, if you were lucky a kilo for a macadamia nut. It takes 10 years to grow a nut. I think it is one of the world’s most delicious nuts and one of the worlds’ healthiest nuts. And we thought ‘right, let’s take this nut and let’s put it in premium products for people to eat every day’. We started with two products and now we have about 72 SKUs.” DD Saxena is the founder and promoter director of Riverina Oils and Bio Energy and is responsible for setting up the company’s $150 million canola oilseed crushing and
refining plant in Wagga Wagga. It has the potential to produce more than 200 tonnes of refined vegetable oil for the food industry. Saxena’s company is at the other end of the spectrum. It is an ingredient supplier to both Australian and overseas companies. Why aren’t more Australian companies setting up processing plants like his? “I think the retail market is very limited, and therefore with branded goods there is a monopoly on distribution,” he said. “If you sell a product in most Asian countries, you are selling to 10,000 decisionmakers. When you are selling something in Australia you are selling to five decisionmakers. “I think we haven’t focussed when selling to the manufacturing industry globally. Because if we make good quality raw materials logically we should be the supplier of many ingredients that are value added
