1. The Government’s Innovation Policy – How can Agriculture and Our Profession make it happen and Benefit? A Food Industry Perspective
Mark Laucke:
Laucke Flour Mills,
AFGC Agribusiness Forum
Ag Institute Australia Conference 27 May 2016

2. I see from the AIA web site that:
Ag Institute Australia is committed to
promoting the advancement of Australian Agriculture and Natural Resource Management in accord with sound scientific developments and
represents professionals involved in these areas.
As such, I perceive that AIA is very much agriculture & farm focussed.

3. Why is Laucke Flour Mills unique?
Laucke is a sole survivor within a food industry sector that has been mature for 140 years.
60 years ago, Australia was the world largest flour exporter. Our flour exports are now insignificant.
40 years ago, multinationals arrived in Australia. This hastened the demise of most Millers and Bakers.
My business has not only survived, it has thrived.
I focussed on consumers, and innovated, and marketed.

4. Innovation and Technology
Technology: While new Technology is a tool, it has also become a Driver of Innovation.
The web and electronic media and social media are great Enablers, and by their very presence, are both an Opportunity and a Threat with respect to Marketing. Each must be managed.

5. Innovation & the use of Marketing
Marketing: creating within the minds of people a perception about something.
Is that important? It is EVERYTHING. What people perceive is fact to them. It directly affects their decision making processes now, and very importantly, in the future. Effective Marketing creates “Pull-through” value chains of value-added product, rather than “Push-through” supply chains of commodity product.
Effective Marketing makes people prefer and seek Value-added rather than Commodity

6. Fundamental weakness of the Ag Sector?
A critical inability to adapt, where Marketing and Industry control and Industry Standards has been and may be effected by “industry Others” such as Publicly- funded Entities and Marketing Boards. The 6 “W’s” of Consumers & Markets has been lost or is lacking.
There is an increasing Commodity focus within Australia where Australian product was once value- added by now-defunct industry marketing Boards.
There is a socialistic aspect to Agriculture where farmers feel “entitled” to benefits that they feel is “their right”.

7. Innovation and Technology
Innovation is not just about new Technology or even Science.
Both can be a distraction.

8. Innovation
What IS Innovation? Innovation is best considered in reverse – the antonym of innovation is Stagnation! Innovation is about new ideas, new approaches – just something that is perceived to be Different!
Why does business innovate? Simply, if it does not, it dies. But Innovation by itself is no guarantee of success.

9. A new perspective is required
In Australia, we have to stop thinking of and referring to and marketing our products as Commodities.
If we no longer wish to be “price takers”, we have to seek and create Differentiation so as to be “price makers”.
We must use Innovation so as to create Differentiation or to further Differentiate so as to create and add value.
We must use Marketing to convince customers and create consumer pull-through, and then provide what we promise.

10. Innovation Australia is a high cost producer.
Beware of the Commodity Trap, especially with agricultural products, because the only people that can have enduring success with commodities are those who are to maintain the lowest cost to market. We cannot.
With the Commodity Trap, we are led to overly focus on cutting costs as being the solution, when adding Value will provide both earnings and loyal clients.

11. Innovation
Beware also of over-reliance on Government Initiatives, support, and funding. Any Business that relies on Government Funding WILL INEVITABLY FAIL.
Think of car manufacturing in Australia – the more it was propped-up, the less efficient it inevitably became because it relied on Government handouts.
Think of Australia as a National Park, and of Australian businesses as the animals within it.

12. We need to always consider the customer AND the ultimate consumer
We need to always consider the customer AND the ultimate consumer. No push-through.
We need to ensure that this customer-focus occurs at every level and especially on-farm, where a commodity-focus is becoming entrenched.
We need to ensure that Marketing is actually communicating to the Consumer the benefits of what we Innovate, and the Consumer perceives additional value.
We need to ensure that the consumer, consequent to Innovation, actually receives additional value.

13. Some examples from my Experience:
I ALWAYS consider what Consumers do, or may, want.
Consumers concerned about chemicals and additives in food processing: “Unbleached” flour. Simple, effective, readily Marketed - a success.
Consumers concerned about Health and Nutrition: “I want to save lives” – Bio-Fort Selenium. Nominated by the NCEFF as the world’s first truly Functional Food. Failed to achieve its Potential because a Government- funded research partner (CSIRO) failed to honour its commitments to provide product Marketing support.

14. Consumers concerned about the Provenance of Food: Single origin products based on the Provenance of Kangaroo Island. The “3 Amigos” now 4, plus PIRSA. Work in Progress. Almost ready to Launch with the Marketing support of, and benefit to, the SA Government.
Consumers concerned about Food Safety in East Asia: Australian Standard for Food Safety (grains foods). To protect current value and add further value to Aussie products. Work in Progress. Government must institute an Australian Export Standard and mandate compliance. Business must then set up - Systems and - Certification, and - Market the value of food so certified.

15. Consumers concerned about Health & Coeliac Disease: The Wheat Protein and Coeliac Consortium (WPCC) is progressing a Science-based project that is in its gestation stage, based on recent mapping of the wheat genome, and recognition that increased incidence of Coeliac Disease is associated with increased consumption of grain-based foods where fermentation has been reduced or eliminated. To boost consumer confidence in wheat-based foods, and to protect the value of wheat for Australian farmers. A classic National Innovation and Science project which requires involvement of public sectors, public funding, cooperation, and coordination of private and public entities. And it will fail without effective product Marketing.

16. Summary – the key elements
Customer & Consumer Focus
+ Innovation
+ Marketing
+ providing Value to Consumers
= SUCCESS

17. Thank you.