Milling – Global trends presentation Site / company name and logo here Presenter/s names here This is an AgriFood Skills Australia Ltd project developed in partnership with Energetics Pty Ltd and funded by the Australian Government under the Clean Energy and Other Skills Package

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

Global trends for the Milling sector

Ecosytem interactions © Energetics Pty Ltd, Holt et al

Major trends in the Milling Sector Growth – Modest growth influenced by population growth – Industrial use shows steady consumption to modest decline Market – Changing consumer trends – Continued strong exporter – Consolidation of mills to larger capacity

Major trends in the Milling Sector Health – Increased demand for perceived healthy products = typically lower processing needs to produce multi-grain / wholemeal breads Energy, Sustainability Compliance & Labelling – Energy Efficiency Opportunities, NGER – ISO Energy Management System – Carbon Disclosure Project/ Global Reporting Initiative

Market dominance by retailers

Drivers for action by business Cost – Rising for energy, water, 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

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

e.g. Redefining the value chain

Timeframe of thinking Compliant Reactive Proactive Innovator Now 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 Sustainability maturity model

Australian trends, policy and legislation

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: – Carbon pricing mechanism has pushed energy prices up from July 2012 – Water shortages has limited capacity of some large centralised 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

© 2013 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. SFMCA Energy Survey 2012 Project Report The average electricity use, irrespective of whether manufacturing mash or pellets, was 25.2kwhrs/tonne of feed manufactured. Gas is 0.18GJ/tonne. Mash feed excluded, 0.23GJ/tonne of pelleted feed. The average total energy use is 0.26GJ/tonne of manufactured feed.

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 RET Renewable energy targets (Large RES and Small RES) Voluntary Green Power Carbon Price and Trading State Energy Efficiency programs e.g. VEET, ESS, EREP, Sustainability Advantage, ESAP, SESP State renewable energy targets Clean Energy Future initiatives for Business – e.g. Clean Technology Food and Foundries Investment Program

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

McKinseys MAC analysis agrees McKinseys analysis shows energy efficiency to be among the most cost effective carbon abatement measures

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 lets 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

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

Strategic planning

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?

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

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)

Economic Social Environmental For example Water / energy efficiency target Staff newsletter EBIT target Production volume increase Master plan process Parental leave policies Recycle packaging Automation of pH sampling of wastewater stream Social Committee initiatives Community clean up campaigns Green skills development GHG reporting

Economic Social Environmental

Timeframe of thinking Compliant Reactive Proactive Innovator Now 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?

Timeframe of thinking Compliant Reactive Proactive Innovator Now 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?

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.