Milling – Global trends presentation

Site / company name and logo here

Presenter/s names hereThis 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)

Energy Cost Tonne CO2 -e

$58,934

$439,058$3,084

$25,161

$755,148$8,317

Financial Year 2012 Energy Usage, Resources Cost and GHG Emissions

Natural Gas Electricity

Boilers (Process heating); 57755.32; 69%

Pressing; 7233.408; 9%Milling; 4151.3472; 5%

Cooling; 3989.6064; 5%

Materials han-dling; 3369.6; 4%

Lighting; 1976.832; 2%

Other (incl ad-min);

1459.54456; 2%

Domestic hot wa-ter; 1178.68; 1%

Air compressor; 1100; 1%

Mixing; 1050.192; 1%

Filtering; 830.26944; 1%

Animal Feed Mill energy balance (GJ/y)

Pressing; 7233.408; 29%

Milling; 4151.3472; 16%

Cooling; 3989.6064; 16%

Materials handling; 3369.6; 13%

Lighting; 1976.832; 8%

Other (incl admin); 1459.54456; 6%

Air compressor; 1100; 4%

Mixing; 1050.192; 4% Filtering; 830.26944; 3%

Electrical Balance (GJ/y)

Domestic hot water; 1178.68; 2%

Boilers (Process heating); 57755.32; 98%

Natural Gas Balance (GJ/y)

Global trends for the Milling sector

Ecosytem interactions

Biophysical limits

The ecosystem

Society

Technology

Encroachment on biophysical limits

Anthropogenic stressors

• Population increases

• Urbanisation increases

Water systems

Energy systems

Service provision / product

Interactionbetween water, energy and waste systems

Environmental stressors

• Climate change

• Resource use

•Land use

Wastesystems

© 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 50001 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

Tim

efra

me

of t

hink

ing

Compliant

Reactive

Proactive

Innovator

Now

Long

-Ter

m

Sophistication of thinking about sustainability impacts

Low High

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 2007-2008

– 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.

http://www.sfmca.com.au/info_centre/documents/464/SFMCA%20Energy%20Survey%20Report%202012.pdf

Energy programs / initiatives

ImprovingEnergy Efficiency

ReducingGreenhouse Gas &Carbon Emissions

IncreasingRenewable Energy

EEOEnergy Efficiency Opportunity Act

Voluntary Greenhouse reduction programs

NGERNational Greenhouse & Energy Reporting Act

RETRenewable energy targets (Large

RES and Small RES)

Voluntary Green Power

Carbon Price and TradingState 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

McKinsey’s MAC analysis agrees

McKinsey’s 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 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

Water programs / initiatives

ImprovingWater Efficiency Water Management Alternate Water Supplies

EREPEnvironment and Resource

Efficiency Plans

Catchment planningMurray-Darling Basin plans

Irrigation & water licensingextraction, storage

Water re-use / recycling

Harvesting

Water trading schemes

WSAPWater Savings Action Plan

WaterMAPWater Efficiency Plans

Sustainability AdvantageNSW voluntary program

Desalination

WEMPSWater Efficiency Management

Plans

National Water Initiative ($12 bn)

Water discharge quality e.g. EPA license requirements and/or run-off

Stormwater managementFlow 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 impactsExisting business plans and initiatives

Strategic GuidelinesPoliciesPlansPrograms

Risks and opportunitiesBusiness goalsDevelopment 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

campaignsGreen skills

developmentGHG reporting

Economic

Social

Environmental

Tim

efra

me

of t

hink

ing

Compliant

Reactive

Proactive

Innovator

Now

Long

-Ter

m

Sophistication of thinking about climate change impacts

Low High

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?

Tim

efra

me

of t

hink

ing

Compliant

Reactive

Proactive

Innovator

Now

Long

-Ter

m

Sophistication of thinking about climate change impacts

Low High

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.