More than seven million tonnes of food is wasted in Australia every year, costing the country more than $20 billion. Start-up TUI Foods is determined to turn the food chain on its head and rebuild it into an equitable and sustainable model that could be adopted globally. This story was the cover story of our March 2022 edition of Food & Drink Business.
Almost a third of food waste in Australia occurs in primary production and 24 per cent in manufacturing. The Australian food chain has been described as “uniformly bad” and the worst in the OECD.
Tony Cartwright, and Peter Taitoko.
The Upcycling Initiative (TUI) Foods is an example of what major change can look like. Driven by the three directors – Peter Taitoko from RMR Process, seasoned FMCG expert Tony Cartwright, and fifth generation farmer Mike Nagorcka of Waltanna Farms – TUI’s goal is to capture the lost value of food waste at the very beginning of the production cycle and “fix a critical problem in a broken food supply chain in Australia”.
The trio bring their own specialisations to the business; Taitoko’s global food manufacturing process and facility design reputation, Cartwright’s FMCG and global brand building experience including his time as Unilever’s global wholesale director for T2 Tea, and Nagorcka’s background as an engineer as well as an impressive track record of developing and implementing innovative farming methods.
Cartwright, CEO of TUI, tells Food & Drink Business that as much as 30 per cent of farmers’ crops will not make it to market because of appearance or slight colour variance.
“That’s thirty per cent of revenue and good nutrition, gone, just like that,” Cartwrights says.
At the same time, Australian brands are importing processed ingredients to manufacture ‘Australian-made’ food products.
“So, not only do we waste perfectly good Australian produce, we also deny Australian farmers a valuable source of revenue by buying imported ingredients,” he says.
Since labelling laws changed in 2018, requiring companies to list the percentage of locally grown versus imported ingredients, there has been an active shift back to locally grown.
“We had an onslaught of brands coming to us wanting Australian ingredients and it made us look deeper into what we call a ‘basket of problems’ right across the industry. We asked why so many products in our food industry were coming from Asia and Eastern Europe. What we found became the driving force behind TUI,” he says.
“It was a mindset to not do things the conventional way, but to flip it on its head, break it, and then repair it in a new way that ensures clarity and visibility, allowing farmers to play further up the value chain.”
The new food chain
Waltanna Farms is the centre of TUI Foods’ origin story. The farm not only grows the crops but houses its commercial facility and innovation centre TUI Labs.
The Lab will drive industry collaboration in rebuilding a functional food supply chain that benefits all, from the farmer to the consumer.
Waltanna Farms and TUI director Mike Nagorcka tells Food & Drink Business that scientifically backed R&D, combined with regenerative agricultural practices and engineering technology to cost-effectively scale up operations, is the future of Australian food nutrition and farming.
“If farmers don’t embrace innovation, we will be forever stuck in a rut, at the bottom of the value chain, giving more and more margin away, with no negotiation power,” he says.
Put simply, TUI has developed a new food chain model:
- a circular ecosystem providing primary producers with extra income streams,
- food brands with greater ingredient traceability,
- consumers with insights into where their food has come from,
- new local and global markets for Australian ingredients, and
- regenerative agriculture practices.
By-product to profit
The starting point for the trio is the 30 per cent of crops farmers cannot sell because it is the wrong shape or size. Despite its nutritional value, this produce ends up as cattle feed or landfill.
Cartwright says, “We thought, what if we built a facility onsite that could take the by-product and turn it into a product the farmer could sell to brands looking for Australian ingredients. Ultimately it would provide producers with an extra income stream while also reducing the environmental impacts of large amounts of food going to waste.”
At Waltanna, the purpose-built facility features dehydration operations and capacity to produce plant-based drinks.
Historically the farm has grown a lot of cereals, oil seeds, peas, beans, and a little bit of fodder for the organic dairy industry.
For the last 23 years, it has been supplying flaxseed directly to one of Australia’s largest health food companies.
The business is now “stepping outside the square” by growing vegetables and cover crops.
TUI has developed ways to capture 100 per cent of vegetable crops such as broccoli and beetroot. From these, a range of powdered and juiced ingredients can be produced at the farmgate facility.
There’s also a regenerative agriculture component to the business. To build soil health farmers plant a cover crop between the vegetable cropping, which would then be cut and composted.
Taitoko emphasises that for TUI to be successful, it must be globally competitive to make premium Australian ingredients accessible to everyone.
“A key to success is creating world-class manufacturing at the farm for minimal capital and operational costs.
“Our engineers at RMR Process are sourcing locally made process equipment and designing an energy efficient facility by utilising farm assets for heat recovery, cooling systems and energy generation, lowering both conversion costs and carbon footprint,” Taitoko says.
Joint ventures for the future
Taitoko explains that each future farming participant will be set-up as a joint venture (JV).
“The JV buys the crop and cover crop from the farm.
“TUI funds the machinery and fit out and the JV pays an operational fee. The farmer receives rent from the facility and once the product is sold, the profits are split 50:50,” he says.
Cartwright adds, “TUI puts all the machinery and the expertise into the physical factory.
“Then, with our international sales channels, networks, and global brand exposure, we then sell the products from the JV direct to the end brand as an ingredient, with the farmer getting 50 per cent of the on sale.”
TUI looked at the existing flat based model farmers have with a high yield loss and power imbalance, while consumers increasingly want to know where their food comes from.
“We brought it together in an unconventional way ensuring everybody got an equal amount of value through the whole supply chain,” he says.
For Cartwright one of the interesting aspects of the project has been the “too good to be true” response from primary producers.
“It’s very much been one way for a very long time.
“When we meet with producers their response is almost one of incredulity; that we are going to pay them for the produce they’ve been putting back into the ground, help them market and sell it, and do it as a partnership,” he says.
The new right way
The impact TUI Foods’ system could have both here and overseas cannot be overstated.
It is providing primary producers with more revenue streams higher up the supply chain; its regenerative agriculture model is protecting and making topsoil more resilient; and showcasing a processing system with almost zero waste and off grid operations.
The vegetable powders that are produced through TUI Foods’ processing are showing some of the highest nutritional levels of any ingredient powder on the market.
Over the next five years, it expects to establish 15 farming JVs across ANZ, and discussions are already underway with overseas markets looking for premium Australian ingredients for the lucrative pharmaceutical and nutraceutical industries.
TUI Foods was founded on a mission to break the current flawed food chain model and build something better.
It is well on its way.
Growing praise: Local MP backing
TUI Foods hosted Federal Minister for Trade, Tourism, and Investment Dan Tehan at Waltanna to showcase the potential of the TUI model. Waltanna is also in Tehan’s electorate, Wannon.
Tehan was impressed by the innovative food manufacturing solution, saying it not only addresses supply chain risks, but provides locally produced and competitive products that have low environmental impact.
“This venture is an excellent example of businesses working together along the food supply chain to deliver locally produced goods for consumers as well as creating local jobs and protecting our environment,” Tehan says.
