In 2009, four disgruntled grain farmers on Kangaroo Island, frustrated by the high costs associated with its geographic isolation and at not being able to control the freight, storage, handling and marketing of their own produce, banded together with a mission to secure premium returns for local grain growers.
Sitting just off the coast of mainland South Australia, the island is seven times the size of Singapore and has a population of less than 5,000. For such a small operation in this remote location, the challenge of taking on international markets seemed daunting.
But the timing of their move was good. In a world increasingly concerned by food safety, the island, which has long been recognised for its pristine, unpolluted environment, turned out to be just what many consumers were looking for.
Kangaroo Island Pure Grain has established a close relationship with Japanese consumers. They place great value on the region’s high-quality produce, which meets their food safety standards by virtue of being free of any genetically modified content, segregated, safe and traceable.
"With a food self-sufficiency ratio of below 50%, Japan is heavily reliant on food imports,'' explains Steven Fairbrother, general manager of the Australian office of Japanese trading house Kanematsu.
"Japanese consumers have been burned by repeated food scares, especially from China, and they are happy to pay more for quality.”
Contact with Japanese customers was established with the help of Austrade, and with exploratory trips to Japan to meet potential buyers and their end consumers.
“We sat with a group of mothers and listened to what they want,” KIPG chairman Neil Pontifex says, “and it was all about minimal chemicals, GM free, food safety.”
Kanematsu was the first Japanese business ever to set up office in Australia and is this year celebrating 125 years of operations here. It originally came in search of Australian wool, but these days it imports a wide range of goods, including KIPG's premium food products.
These include some 4,000 tonnes tons of KIPG-branded canola a year. In Japan, the grain is processed into oil, where it is valued for cooking tempura-style recipes.
The premium that KIPG earns on the seed is no obstacle for cashed-up Tokyo households, and more than covers the high costs of transport off the island that have bedevilled local producers for so long.
What makes KIPG's brand so prized is its “paddock to plate” control system, which enables it to monitor grain production - from seeding to harvest and storage - with repeated quality testing.
It guarantees that each shipment can be traced back to the individual farm where it was harvested, contains no genetically modified material and has been grown with minimum chemical inputs. Buyers are given regular updates on the status of crop progress, storage and shipping.
"If the island could double production tomorrow, we could sell it,'' said Fairbrother.
In recent years, broad beans have proved to be a remarkable growth opportunity for the company. The beans flourish in the island's often-waterlogged clay soils, and are in high demand across Asia and increasingly in Europe. This year some 6000 tonnes will be exported, and more of the island’s sheep farmers are being encouraged to plant beans and help meet a demand that far exceeds supply.
The beans are much more labour intensive than canola, requiring cleaning, sorting and packing. In February KIPG's new $1.4 million bean processing plant came online, enabling it to meet the high specifications of demanding customers in Malaysia and elsewhere.
Kangaroo Island also produces a range of premium raw, organic eucalyptus and canola honeys, which KIPG markets alongside its grain products in Japan on behalf of the island's apiarists.
The mutual trust that has been established between the island and its customers is now carefully nurtured. Every year a delegation from the companies that make up the Japanese distribution chain are hosted on the island, where they tour farms and KIPG's processing facilities.
In turn, KIPG visits Japan to keep its finger on the pulse of its key market.
KIPG has grown to the extent that it now represents almost all grain growers on the island, farming approximately 35,000 hectares of land. Total output exceeds 15,000 tonnes of grains a year, including high-quality wheat largely sold to local customers such as Arnott’s for premium biscuits, including Tim Tams.
Already the recipient of several agri and business awards, KIPG was a finalist for the Brand South Australia Regional Awards in 2013 and 2014. The company’s achievements point the way for other Australian exporters seeking to add value to agricultural commodities and to establish footholds in the markets of Asia and the world.