Agrifood – Global trends presentation Site / company name and logo here Presenter/s names here This presentation has been produced with the assistance of funding provided by the Commonwealth Government through the Department of Education, Employment and Workplace Relations. The material provided in this presentation has been produced in conjunction with our partner Energetics Pty Ltd. © 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved.

Context – resource use and cost at this site (from Baseline tool)

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. e.g. Summary for FY 2010

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Global trends for the Agrifood sector

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Ecosytem interactions

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Major trends in the Agrifood Sector Population growth – Pressure on agricultural land – Employment in regional areas under stress Environmental changes – Climate change & adaptation – Water availability and security

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Major trends in the Agrifood Sector Import Competition – Decreasing commodity prices – Import / export regulations – Carbon protectionism Sustainability Compliance & Labelling – ISO Energy Management System – Carbon Disclosure Project/ Global Reporting Initiative – Other Customer requirements

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Market dominance by retailers

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Drivers for action by business Cost – Rising for energy, water, emerging for carbon Competitiveness – Tighter margins, ‘green’ differentiation Compliance – Increasing regulatory burden as Governments seek to overcome market failures to act Community expectation – brand reputation Customer – Supply chain pressures

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Redefining Business Success Not just financial measures Engagement of a broader range of stakeholders Mutual understanding of needs Understanding how your business will fit into a new business paradigm Economic Social Environmental

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. e.g. Redefining the value chain

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Timeframe of thinking Compliant Reactive Proactive Innovator Immediat e Long-Term Sophistication of thinking about sustainability impacts LowHigh Denial Industry development is driven by relative impacts of: Government Policy Industry Innovation Social Conscience Organisations will develop at different speeds and early movers will create sustainable competitive advantage Industry & organisational evolution

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Australian trends, policy and legislation

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Australian Energy Trends The cost of energy in Australia has been at a significant discount with respect to the rest of the world for the past decades. This is changing for a range of reasons including: – Water shortages has limited capacity of some large centralized electricity generation stations Tarong & Swanbank in QLD limited to 50% in – LNG exports are causing natural gas prices to rise to world market levels – Underinvestment in electricity networks Significant increases in grid electricity out to 2020 Possibilities for distributed generation? – Increasing scarcity and rising cost of petroleum – Increased renewable energy targets (MRET) Land use decisions Competition by biofuel for arable land

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Energy programs / initiatives Improving Energy Efficiency Reducing Greenhouse Gas & Carbon Emissions Increasing Renewable Energy EEO Energy Efficiency Opportunity Act Voluntary Greenhouse reduction programs NGER National Greenhouse & Energy Reporting Act MRET Mandatory renewable energy targets Voluntary Green Power Carbon Trading Carbon Pollution Reduction Scheme State Energy Efficiency programs e.g. VEET, ESS, EREP, Sustainability Advantage, ESAP, SESP State renewable energy targets

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Efficiency to underpin carbon abatement to 2020 Energy efficiency is forecast by the International Energy Agency to be the major source of carbon reductions out to 2020 in industrialised countries

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. McKinsey’s MAC analysis agrees McKinsey’s analysis shows energy efficiency to be among the most cost effective carbon abatement measures

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Australian Water Trends Cost increasing – across Australia – Melbourne increase by an average of 20% – Sydney Water increase by 25-34% by 2012 – Queensland – 30% increase of bulk water Water - yet to reflect true cost of provision Businesses – Water cost increasing but let’s face it - water cost insignificant – True cost Future trends – Move to scarcity pricing models – Diversity of water supplies and carbon prices will increase cost – Invest into infrastructure - $30 billion dollars over next ten years

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Water programs / initiatives Improving Water Efficiency Water ManagementAlternate Water Supplies EREP Environment and Resource Efficiency Plans Catchment planning Murray-Darling Basin plans Irrigation & water licensing extraction, storage Water re-use / recycling Harvesting Water trading schemes WSAP Water Savings Action Plan WaterMAP Water Efficiency Plans Sustainability Advantage NSW voluntary program Desalination WEMPS Water Efficiency Management Plans National Water Initiative ($12 bn) Water discharge quality e.g. EPA license requirements and/or run-off Stormwater management Flow attenuation, mitigation

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved.

Strategic planning

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Where do you want to be? What is important to you? Where do you want to be? How does the global situation impact you? Are you prepared?

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Strategy development process Current status Program development External trends (environmental scanning) Contextualising: Internal impacts Existing business plans and initiatives Strategic Guidelines Policies Plans Programs Risks and opportunities Business goals Development of strategic questions Potential status

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Identify business initiatives & plans Identify your current initiatives that your business is doing / planning that align with economic, social and environmental performance goals – List business initiatives – Map onto Venn diagram – Where do they fit? – [provides basis for understanding business approach, defining your current approach, and starting to highlight ‘gaps’ in your systems that you may want to close

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Economic Social Environmental For example Water efficiency target TBC EBIT target Production volume increase Master plan process Parental leave policies Recycle packaging Automation of pH sampling of wastewater stream TBC Community clean up campaigns Green skills development TBC

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Economic Social Environmental

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Timeframe of thinking Compliant Reactive Proactive Innovator Immediat e Long-Term Sophistication of thinking about climate change impacts LowHigh Denial Industry development is driven by relative impacts of: Government Policy Industry Innovation Social Conscience Organisations will develop at different speeds and early movers will create sustainable competitive advantage Given these plans, where are you placed on climate / carbon?

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Timeframe of thinking Compliant Reactive Proactive Innovator Immediat e Long-Term Sophistication of thinking about climate change impacts LowHigh Denial Industry development is driven by relative impacts of: Government Policy Industry Innovation Social Conscience Organisations will develop at different speeds and early movers will create sustainable competitive advantage Where do you want to be positioned in the future?

© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Consolidating the trends and your plans and position…. The previous activities define the endpoints for: – Business maturity This defines where you want to be against your competitors – Positioning This defines how you want to achieve your goals – Combining your review of trends, assessment of your plans, position and desired future positioning, you are now in a position to assess your risks and opportunities for getting there, and to develop your vision and guiding principles for your strategy development