1. promar
digestFebruary 2015 p r o v i d i n g f o o d f o r t h o u g h t
International retailers -
here, there and everywhere?
Africa’s four pillars of growth
High welfare milk: a niche
opportunity worth pursuing?
Is a renewable energy plant
still a good investment?
Building agricultural
entrepreneurs
Russia’s import ban -
the last thing we need
R&D investment:
how much is enough?
Sophie Hope -
a member of the
Tesco Future
Farmer
Foundation
Change for
the better
the
A Company

2. 2
After 18 months in the role
Christine Tacon - the
Groceries Code Adjudicator -
writes about the progress
she has already made and
calls for more evidence
The New Year marks my first 18 months
in post as the Groceries Code
Adjudicator (GCA) to enforce, monitor
and ensure compliance with the
Groceries Supply Code of Practice.
It has been a hectic and fascinating
period in a complex environment and
I am seeing progress already.
A positive start
I have set my stall out that I will use a
collaborative approach which means
that I will bring issues to the retailers’
Code Compliance Officers (CCOs)
before taking any formal action.
Retailers will be given time to examine
and explain to me their business
practices and to address any
shortcomings they find. In this period
my monitoring function is crucial.
Once I have exhausted informal
methods and have a reasonable
suspicion that a breach of the
Code has occurred, I will weigh up
whether or not to investigate based
on my prioritisation principles –
impact, strategic importance, risks
and benefits and resources.
Working collaboratively with the
retailers’ CCOs ensures that any
necessary action is taken swiftly and it
has already produced significant
progress in one of the top five issues I
identified in my first year. Eight out of
the ten retailers made a voluntary
commitment to restrict forensic audits
from the legal limit of six years to two.
Change for the better
I do hear from suppliers that things
are changing for the better and that
their commercial negotiations improve
when they mention the Code and the
GCA. But to do more depends on
action from suppliers. A key part of
my evidence base must come from
them and I am disappointed that
more suppliers have chosen not to
provide me with hard evidence of
areas where they feel retailers could
be breaking the Code.
I am encouraged to hear that some
suppliers now feel able to challenge
the retailers on certain requests but
individual action does not ensure that
underlying practices have been
stopped. And so I have made my
points over again that if suppliers do
not give me the evidence of where
they believe there are breaches of the
Code then I will not be able to act to
make a positive change in the
behaviour of retailers.
I am working hard to help suppliers
understand that I am legally bound to
protect their anonymity and bringing
information to me will not result in
retailers knowing their identities.
Evidence is needed to get
reform
Without reliable information I cannot
launch an investigation or prove a
Code breach has taken place. The
legislation establishing the GCA makes
it very clear that I can only deal with
issues relating to the 15 specific
practices which are set out in the
Code and which affect direct suppliers
to the retailers. If suppliers want me
to use my powers they have a
responsibility to act. As I travel around
the country meeting suppliers I am
offering private meetings to receive
their evidence. I would encourage
suppliers to sign up to the newsletter
for information on the locations and
arrange to meet me when I am in
their area. Full details of the Code and
newsletter sign-up can be found on
the GCA website (www.gov.uk/gca).
A world leading supply
chain
The UK has a world-leading groceries
supply chain and my role can help
maintain that. I believe that the GCA
can help strengthen the supply chain
and bring further innovation to the
groceries sector, benefiting suppliers,
retailers and customers.
Go to www.gov.uk/gca
Guest comment

3. 3
My name is David Cooke and I
am Director of the Agri-Food
and Projects team at Promar
International. Promar is the UK’s
largest, agriculture and agri-food
consultancy which employs over
100 staff in total with specialists
in farm management, business
accounting and the environment,
as well as agri-food. Our clients
represent the ‘who’s who’ of
private agribusiness, trade
sector organisations and
government agencies.
Our work helps them to identify,
prioritise and develop local and
global market opportunities, better
understand and manage agricultural
commodity costs, set and achieve
improved environmental
sustainability targets and deliver
public policy goals. We are based in
the UK and operate globally.
We are a division of Genus plc (a
FTSE 250 company). We work and
support our colleagues at Genus in
the UK and internationally on
various projects to improve livestock
supply chains.
It is a tough start to the New Year.
Falling milk prices in the second half
of 2014 served as a reminder that
the UK dairy industry is heavily
influenced by the supply and demand
balance on global commodity
markets and by intense competition
in the domestic grocery retail sector.
Inevitably, this adds pressure to
supply chain relationships but, with
positive sustainable pricing initiatives
such as the Tesco Sustainable Dairy
Group and the setting up of the
Groceries Code Adjudicator, suppliers
are in a somewhat better position to
manage troughs in the market than
they had previously been.
Despite the tough backdrop, it is
extremely encouraging to see so
much innovation and positivity in
the many projects we have had the
privilege of being part of throughout
the year.
Whether it’s in the UK, Europe, Asia,
Middle East, Australasia or Americas,
or in the dairy, livestock, fresh
produce and other product sectors,
we see a tremendous appetite for
change at all stages of the supply
chain.
Our role is to be a catalyst for
change, helping your business or
organisation to grow, capture new
opportunities, operate more
efficiently and sustainably and
achieve its objectives.
If you would like to know more
about how we can help you,
please contact me via email at
david.cooke@genusplc.com
Welcome... David Cooke
Director of Agri-Food and Projects team

4. In the last 30 years, the
development of major international
retailers has revolutionised the
food and drink supply chain.
In Europe, major supermarkets
often account between them for
nearly 70% of the overall market,
and in some markets such as
Australia and Scandinavia, the
figure can be even higher. In
contrast, in emerging markets -
India might be the best example
- modern Western style
supermarkets account for less
than 5% of food distribution.
In China it is around 35%.
As population levels, consumer
incomes and rural to urban migration
gathers pace in the developing world,
significant growth in the retail sector is
predicted not just in India and China,
but in Latin America and other Asian
markets – from Myanmar to Malaysia
and back again.
For many of the established leading
retail groups development of
international business will be key for
their future development, as they often
approach reaching saturation point in
their own domestic market. But
getting it right is not easy and some
are more successful than others.
Variable contribution
International sales, as a share of total
revenues, vary from retailer to retailer.
Some European retailers such as
Carrefour, Auchan and Metro already
generate more revenues from foreign
markets than they do in their respective
domestic markets. For others such as
Walmart, Tesco, Costco, Coles and
Kroger, the domestic market still
generates the most revenues.
Whilst maintaining market share in a
wealthy and competitive domestic
market is not unattractive, mid to long
term growth can only really come from
diversification, consolidation or
internationalisation.
Some of the most ambitious growth
plans come from the German based
discounters, who have a business model
that appears to have widespread
appeal. Aldi (who already operate in
almost 20 countries) have stated their
intention to continue their expansion,
not just within the EU, but also the US,
China, Russia and New Zealand. Lidl
are sizing up opportunities in markets
such as the US, Turkey and Russia too.
What are the implications
for suppliers?
• There will be “pull through”
opportunities for suppliers to enter
new international markets with an
existing customer. Entering new
markets with the backing of an
existing supplier greatly reduces risk.
• Products that might be phased out
by the customer in highly competitive
and fast paced domestic markets
could continue to generate
sales in developing markets
where demand is sometimes
less sophisticated.
• Further consolidation of suppliers as
retailers will reduce complexity and
risk in their supply chains. This is
likely to favour larger international
suppliers that can secure volume
supply across multiple
geographies.
• At the same time, we would expect
to see retailers also deploying local
sourcing strategies, favouring small
and medium sized enterprises in the
local market.
• Global retail brands will want to
drive the standardisation of best
practice across all the geographic
markets they operate in (e.g. on ISO,
environment, sustainability). This will
favour large international suppliers
operating to best in class standards.
We anticipate the next era of grocery
retail will be defined by the expansion
of modern grocery retail businesses
outside of their mature domestic
markets in North America and Europe.
Asia - in particular China and India -
will be key growth markets. But it is in
sub-Saharan Africa in countries, such
as Nigeria, Botswana, Angola and Ivory
Coast, to name a few, where we also
expect to see significant transformational
change of the grocery retail sector for
reasons explained later in our ‘Africa’s
four pillars of growth’ article.
John can be contacted at
john.giles@genusplc.com
4
Figure 1 –
Domestic and Foreign Revenues for Selected Leading Retailers, US$ billions
International
retailers -
here, there and everywhere
John Giles
Divisional Director
John Giles reports

5. For the last 10 - 15 years the
BRIC countries (Brazil, Russia,
India and China) have have
been the focus of the
international agri food sector.
Yet Africa is now the fastest
growing regional market in
the world. What is driving
these developments? We see
what we call “four pillars of
growth” fundamentally
underpinning this.
1. Political Stability
African countries have made
substantial gains in political stability
over the last decade, resulting in fewer
wars and greater political certainty for
many countries.
Political stability has often been
accompanied by economic reform
from which a ‘consumer class’ has
emerged. These are people with
incomes of around US$14 - 20 a day,
with regular jobs and have the
purchasing power to afford, for
example, mobile phones, fridges etc.,
and packaged food products.
This view is supported by the World
Bank which suggests there is between
150 and 180 million middle-class
consumers in Africa. To put these good
news headlines in perspective, however,
the report also suggested that 60% of
the population of Africa still lives
below the $2-a-day poverty line.
2. Population Growth and
Urbanisation
Many people still associate high levels
of population growth with China,
when in fact it is Africa that will have
the highest growth rate of any region
to 2040 and beyond.
UN data projections suggest that
Africa already has more than 500
million people of working age (16 -
64) and that by 2030, the number will
have grown to 1,100 million (1.1
billion) - more than India or China.
Africa already has more than 50 cities
with more than one million people.
This is more than North America (48)
and nearly as many as Europe (52).
3. Commodities
African countries have been famous
for commodities like Nigerian oil and
Angolan diamonds for many years,
but the rise in commodity prices over
the last decade has boosted company
and government revenues
considerably.
Strong international prices have
increased the volume and value of
exports for a wide range of African
commodities from cocoa to palm oil.
Although there are debates about
how much of these higher prices have
actually ‘trickled down’ to the average
citizen, there is certainly more wealth
in Africa as a result.
4. Agricultural Potential
With projected demand for food to
increase as the world’s population
becomes richer and more focussed on
Western diets, access to farmland and
increasing productivity of existing
farmland is very much on the agenda.
Organisations such as the World Bank
now suggest that Africa may hold the
key to balancing future global food
demand with production.
One of the other most common
indicators we use to assess the level of
country and particularly food market
development is the number and type
of food retailers present.
Large international food retailers are
starting to take an interest in Africa.
Spar already has over 100 stores across
6 countries (excluding South Africa).
Mass Mart (based in South Africa and
part of the Walmart Chain) has plans
for food stores in Nigeria and Angola.
In 2013. The French retailer Carrefour
announced that it planned to open
stores in eight African countries,
starting with the Ivory Coast in 2015.
We believe that all organisations will
begin to feel the impact of what is
happening in Africa – as a potential
source of food supply, as a consumer
market and as an investment
opportunity. Even if you do not directly
operate in Africa the knock-on impacts
of what is happening there will begin
to be felt around the world and right
across the global supply chain in the
same way that the BRICs did 10-15
years ago.
Andrew can be contacted at
andrew.mclay@genusplc.com
Africa’s four
pillars of growth
5
Andrew Mclay
Senior Consultant
Andrew Mclay reports

6. 6
Do consumers believe that farmers
take good care of their cows?
The result is an overwhelming yes as
80% of consumers believe that British
dairy farmers take either good (60%)
or extremely good (20%) care of their
cows. So what are the views of the
remaining 20% of consumers? Most of
them (14%) stated that they did not
know whether farmers kept good care
of their animals or not. Only a minority
of consumers, just 6%, believed that
farmers took bad care (5%) or very bad
care (1%) of their cows.
These results are good news for an
industry that prides itself on its high
welfare standards and has gone to
great lengths to improve
communication with the general
public. But it also highlights more can
be done to inform the 14% of
consumers that have no view and to
address the concerns of the 6% of
consumers that believe welfare
standards are below par.
Not high priority
Where does welfare rank in terms of
consumer priorities? Unsurprisingly, for
the majority of us freshness, pack size
and price are the highest priority
factors. Other factors, such as brand,
provenance, animal welfare, health
benefits and organics heavily influence
a small percentage of us, typically
about 5%.
That freshness, pack size and price are
the most influential factors driving
purchase behaviour is not a surprise.
Milk is a staple item for almost all
households and most purchases are
made automatically; i.e. they are made
without much conscious thought or
deliberation.
However, this is not to say welfare is
not important. Indeed, many of us
assume high welfare standards are a
taken-for-granted assumption in the
products we buy, whether milk, eggs,
meat or other types of products of
animal origin. As consumers, we place
trust in the belief that the products we
buy are produced to high welfare
standards and are reassured by the
presence of kite marks such as Red
Tractor and Freedom Foods, as well as
the faith we place in the brand
reputations retailers and manufacturers
seek to uphold.
Would consumers pay more?
So whilst a mandatory level of animal
welfare is assumed, would milk
produced to an even higher animal
welfare standard be seen as a benefit
that we as consumers would be
prepared to pay for?
Our survey concluded that 1 in 5
consumers would not pay any more
for higher welfare and most (45%)
would only pay a little more, i.e. up to
5% more, meaning that (in the current
climate) a 4 pint bottle of ‘high
welfare’ milk would have a retail sales
price of £1.05. Given the intense price
pressure the dairy supply chain is
currently facing, to add cost to the
chain for this level of return would
need serious and careful consideration.
However, a small percentage of
consumers (6% according to our
survey) would be prepared to pay a lot
more (i.e. 25% or more) for higher
welfare milk. Whether this is enough
to offset the extra costs of producing
to a higher welfare standard remains
to be seen. Getting this equation right
will be vital to understanding the
potential profitability of this
opportunity. Lisa Williams can be contacted at
lisa.williams@genusplc.com
As consumers, what do we think of animal welfare standards when it comes to milk production?
And in the current environment, where the retail sales price of a 4 pint bottle of milk can be
£1, are we prepared to pay any more for higher welfare standards? If so, how much?
These are questions we sought to answer in a recent on-line survey of 400 consumers.
This article highlights some of the results.
What is your perception of
how British dairy cows are
kept? (n=400)
Would you consider paying
more for your milk if the
welfare of the animals was
improved? (n=400)
High welfare milk:
a niche opportunity
worth pursuing?
I don’t know
14%
I think farmers
take bad care
of their cows
5%
I think farmers
take very bad care
of their cows
1%
I think farmers
take extremely
good care of
their cows
20%
I think farmers
take fairly good
care of their cows
60%
No, I wouldn't
pay any more
24%
Yes, I would pay more
than 25% more
6%
Yes, I would pay
up to 25% more
4%
Yes, I would pay
up to 5% more
46%
Yes, I would pay
up to 10% more
24%
Lisa Williams
Senior Consultant
Lisa Williams reports

7. 7
Renewable energy continues to
be high on the agenda for many
farmers and landowners as one
mechanism to minimise exposure
of farm businesses to external
shocks and price rises in the
utilities market.
Despite continuing changes in
Government policy, the
commitment to renewable
energy is still there with the
aim to provide cost-effective
energy to meet 90% of the
commitment under the 2020
Renewable Energy Directive.
A range of technologies is still available
for farmers who are looking to invest
in renewable energy sources. The most
popular continue to be solar PV (SPV)
which converts sunlight into electricity,
and wind.
However, attempts continue to be
made to limit the scale to which
farmers and land owners can invest in
this technology. For example, reductions
and changes to the Feed-in Tariff (FIT)
as well as influencing the planning
agenda to make securing permissions
more difficult.
It is therefore anticipated that other
technologies such as anaerobic
digestion (AD) or hydro power should
have a greater say in the UK’s energy
mix. However, we continue to see a
number of challenges limiting the
extent to which AD is taken seriously
by farmers.
These challenges include:
• The level of both capital and running
costs. The key element in investment
appraisals is the FIT as this
determines the income that can be
generated.
• Availability of land and/or access to
land in order to obtain permissions
to make a scheme viable.
• Costs of the technology. Small-scale
AD (sub 250kW) continues to be
impeded by high capital expenditure.
• Navigating the challenging world of
environmental permitting, planning
permission and grid connection.
• Security of feedstocks and the need
to limit the diversion of productive
land away from food production.
• Ability to maximise the use of heat
generated by an AD plant.
It is important that farmers and land
managers take the opportunity to
independently consider the feasibility
of a planned scheme. Changing the
FIT structure means that farmers must
carefully review investment plans to
assess the payback period and the
likely return once capital has been
repaid. Schemes can still be a sound
financial and environmental investment
but will never be for everyone.
Long term plan
The vital aspect is not to consider
investment in renewable energy in
isolation. It has to be considered
within the context of a 3, 5 or 10 year
business plan. How will renewable
energy fit within the objectives and
requirements of the whole business?
At the current levels of FIT, it is vital
an investment in AD can incorporate
the use of heat to maximise the
opportunity presented by the
Renewable Heat Incentive (RHI). Even
small scale AD plants come with a
high capital outlay c.£700,000 and
this can heavily impact the payback
period and the ROI of 11%.
In many cases, the acid test will be the
economics surrounding the amount of
energy that can be produced and how
this can insulate the business against
rising fuel prices, with any environmental
benefit being a secondary rather than
primary benefit. We always advise
completing an audit of existing energy
and resource consumption and demands
as a key component of any business
assessment and investment plan.
Vicki can be contacted at
vicki.halliwell@genusplc.com
Is a renewable
energy plant
still a good investment?
Vicki Halliwell reports
Vicki Halliwell
Environmental Consultant

8. Senior Consultant
Rebecca Lewis describes a
major initiative to help
develop the entrepreneurial
farmers of the future.
Increased globalisation, greater use of
technology, more closely defined
supply chains and increasingly
sophisticated management systems
means the skill set required by farmers
is evolving rapidly.
Launched during 2014, the Future
Farmer Foundation, which is managed on
behalf of Tesco by Promar International,
was established to help bright,
talented, determined young people
make their own start in the world of
agriculture, whether that’s taking over
the family farm, embarking on a new
business venture, or entering the
industry for the first time.
So far, two intakes totalling 98 young
people from a wide variety of
backgrounds have joined
the programme with a
third intake planned
for later in 2015.
It is a 12 month
programme open
to anyone aged
from 20-35.
It has already proved popular with
people from a wide range of
backgrounds and with hugely differing
experience. While some of the
participants are farmer’s sons and
daughters, nearly 30% have come
from outside the industry. It is open to
all enthusiastic young people in the
industry, regardless of whether they
are Tesco suppliers, providing they
have drive and a passion to succeed in
UK agriculture.
The programme supports talented,
enthusiastic and determined young
people who want to take the industry
to the next level, by providing a unique
programme of training and insights,
helping equip them to be successful in
a rapidly evolving industry.
Broad skills
The programme covers a diverse range
of subjects, but the emphasis is on
developing broader business and
marketing skills. At the end of the
programme, participants will have
developed their business and financial
planning skills, have an in depth
understanding of the supply chain
across their own and other farming
sectors, and will have gained the
confidence to prepare a robust
business plan to take their business
concepts forward. This will be based
on greater appreciation of what
happens to products beyond the farm
gate and the requirements of
specific customers and supply
chains.
A central part of the programme is
supply chain visits which have so far
included trips to Adams Foods,
Müller Wiseman, Noble Foods,
Cranswick Country Foods, Bayer Crop
Science and Toyota. By exposing
participants to all parts of the industry
and supply chain, the Foundation will
help develop customer-focussed
entrepreneurs able to thrive in a faster
moving and more global industry.
Since joining the Future Farmers
Foundation, Sophie Hope is
developing a clearer vision for the
pig and poultry enterprises on the
family farm.
“I want to run a farm that demonstrates
that indoor production systems are high
welfare and a commercially viable
sustainable option. At the same time
differentiation from the commodity
market is important. I joined the Future
Farmer Foundation as I thought it could
help me achieve these objectives.
“The business planning, decision
making, management and leadership
sections are improving my overall
understanding. The Foundation has
clarified the importance of
understanding my supply chains and
meeting their requirements. I want to
increase productivity but need to ensure
that there is a secure market. There is
no point planning and investing without
first making sure the extra produce will
have a market.”
“My horizons are now much broader
and I have a better feel for what I need
to do to move the business forward.”
Rebecca can be contacted at
rebecca.lewis@genusplc.com
www.tescofuturefarmerfoundation.com
Building agricultural
entrepreneurs
8
Rebecca Lewis
Senior Consultant
Sophie Hope
Rebecca Lewis reports

9. For the EU, the impact of the
ban on the import of all fruit,
meat, vegetables, fish, milk and
dairy products from the US, EU,
Canada, Australia and Norway,
has serious consequences. In
2012/3, the EU supplied Russia
with 60% of its apples (some
700,000 tonnes in all), 30% of its
capsicums (around 40,000 tonnes),
25% of its carrots (some 48,000
tonnes) and 20% of its tomatoes
(some 150,000 tonnes) as well as
around 30,000 tonnes of oranges.
The ban created an oversupply
situation, depressing prices.
Of course, many suppliers to Russia are
left unaffected by the ban. For example,
Russia imports about 1 million tonnes
of bananas per annum from Ecuador,
Colombia and the Philippines. Trade
between these countries has carried on
as normal.
Moreover, for a limited period, Turkey
became an unintended beneficiary of
the import ban acting as a regional
hub for EU suppliers wishing to side-
step the Russian authorities.
The cruel irony is that whilst Russia
implemented the ban to hurt its
political opponents, it has come at
substantial cost to Russian consumers
too. Short supply of foodstuffs has led
to a sharp increase in food prices,
particularly for items such as fresh
produce, meat, fish and dairy.
Initial plans to source foodstuffs from
regions of the world unaffected by the
ban (e.g. South America and New
Zealand) have taken longer to implement
than first thought, so Russian consumers
must bear the pain a while longer.
A major risk to incumbent EU suppliers
is that, during the ban, new trading
relationships are being formed and/or
strengthened and when the ban is
lifted it may not be back to “business
as usual”.
Prudent suppliers will no doubt invest
in managing the customer relationship
whilst the ban is in place; but when
the ban is lifted (whenever that is)
suppliers may need to battle against
new found competitors and loyalties to
regain the business they once had.
At government policy level, Russia may
look to other parts of the world with
which it is more politically aligned, in
order to secure future food supplies
(for example through trade enhancing
policies, such as Free Trade Agreements).
Countries that are politically aligned to
Russia (or at least neutral), such as
Turkey and China may benefit, whilst
countries that are increasingly viewed
as political enemies such as the US and
EU countries, may lose out.
Russia’s politics are a major risk to
its economy which, according
to the World Bank, is
stagnating; but it also
comes at a time when
there are many political
and economic
vulnerabilities in other
parts of the world.
The economy in
Europe is struggling
to recover from recession
and with it exposing cracks
in political relationships
between key Member
States.
Africa is struggling with Ebola, which
although present only in three countries,
creates an image problem for all other
African countries. Political conflict in the
Middle East places enormous strain on
other countries in the region and China,
which has been the powerhouse of the
global economy for the last decade, is
slowing.
With so much going on in the world,
it seems that the Russian import ban is
the last thing we need.
Elizabeth Bonsall can be contacted
at elizabeth.bonsall@genusplc.com
9
Elizabeth Bonsall
Consultant
Elizabeth Bonsall reports
Russia’s
import ban
- the last thing we need

10. r&dTop 10 pharmaceutical companies
0%
Source: EU Industrial R&D Scoreboard, 2013
2% 4% 6% 8% 10% 12% 14%
Top 10 software & computer companies
Top 10 aerospace companies
Top 10 automobiles & parts
“Global 2000” average
Top 10 food & drink companies
Figure 1: R&D Intensity, by industry sector
Every year approximately US$20 billion is
invested in research and development (R&D)
by private agri-food companies1.
It is a lot of money, but is it enough?
Is it meaningless to assign an absolute number to how much the agri-food sector
should spend on R&D? After all, spending money on R&D is a means to an end,
not an end in itself. A better way to look at R&D spend is as a percentage of
business turnover.
Figure 1 highlights the significant variations in R&D intensity (R&D expenditure as
a percentage of sales) across different industries. The data is from an R&D
Investment Scoreboard carried out by the European Commission, which surveys
the world’s top 2,000 companies by their investments in R&D.
On average, the companies surveyed spend 3.2% of sales turnover on R&D.
Many industry sectors rank above this average, such as pharmaceuticals
companies (13.8% of turnover), software and computer companies (7.0%),
aerospace (4.6%) and automobiles and parts (4%).
By contrast, food and drink invests just 1.1% of business turnover in R&D.
Not only is this a long way behind ‘high-tech’ industry sectors such as
pharmaceuticals, but it is also below average.
Needless to say there can be significant differences on a business-by-business
case. For example, our corporate parent, Genus plc, spends approx. 7.5% of its
revenues on R&D activities (source: FY2014 Annual Report), reflecting the
importance of genetic improvement to sustainable competitive advantage.
In some respects, it is not fair to make
comparisons to other industry sectors.
After all, different industries compete
in different ways and therefore have
different R&D requirements.
That said, comparisons to other
industry sectors is what is needed.
The agriculture, food and drink
industry is increasingly expected to
operate in the same way as other
companies in other industries.
For example:
• The development of new functional
health products demands skills and
resources akin to that of the
pharmaceuticals industry.
• The innovation cycle is shortening
and agriculture, food and drink
companies must respond at a pace
that is comparable to software and
computer companies.
• Lean management and waste
reduction is as relevant to the
agri-food industry as it is to car
manufacturing.
Whilst agri-food faces similar
challenges to other industries it is
operating on a fraction of the R&D
budget typically allocated by
companies in these other industries.
This is not realistic or sustainable.
To answer the question “how much is
enough?” At company level, the
amount of money invested in R&D
activities should be proportionate to
the expected return on that investment.
To invest less than is necessary risks
not achieving business objectives, and
to invest more than is necessary risks
profits. However, taken at an aggregate
level, it seems hard to think that R&D
investment by private companies
should do anything other than
increase, particularly if we are to be
serious about meeting the long-term
challenges facing global food
production.
Matt can be contacted at
matthew.incles@genusplc.com
R&D investment:
how much is
enough?
1 Source: USDA (excludes R&D investment made by farmers)
Published by: Promar International • Tel 01270 616800 • www.promar-international.com
Farming • Food & Drink • Environment • Public sector • Trade associations and levy boards • Private agri business
Matt Incles
Senior Consultant
Matthew Incles reports