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A progress report of
Australia’s agricultural
trade with Asia
David Landers
General Manager
East Asia Growth Markets
AG in the Asian Century,
National Export and Innovation Conference
Toowoomba, QLD
Australia Unlimited
Austrade: an international agency with private
sector focus
• We have 80 offices in 48 countries, with 44 of those offices across Asia.
• 60% of our overseas staff are based in Asia.
• More than 400 of our staff have one or more Asian languages.
• Two-thirds of our overseas staff and senior executives have private sector experience.
Australia Unlimited
Our great strength is our sustained on-the-
ground presence in offshore markets
• We identify opportunities in market
• We can interpret the business climate and local
commercial practice, and provide language support as
well
• We can brief you in-depth on the market and the
companies involved
• We can refer you to potential customers in market
• We can develop a visit/contact program for you
• We can set up, and direct you to your appointments
• We can provide ongoing in market assistance to assist in
establishing your business presence
Australia Unlimited
Australia Week in India 2015
• Major mission led by Andrew Robb the Minister for Trade and Investment and supported by Austrade
• Aims to boost commercial ties in one of the world’s most important economies and follows the success of Australia Week in China (AWIC 2014)
• Includes a week long tailored program for major industries - food and agribusiness a key sector
• Held week commencing 12th January 2015
• To register, please go to www.austrade.gov.au from 2nd October
Australia Unlimited
“As a country we are focused on backing our strengths,
the things we do as well as any and better than most”
Australian Minister for Trade and Investment, Andrew Robb | July | 2014
“Agriculture and agribusiness is one of our great
strengths”
Australian Minister for Trade and Investment, Andrew Robb | Opening Address to the
Australian Dairy Investment Forum | Melbourne | 2014
Australia Unlimited
Heading for a quarter-century with no recession
8
0.0
2.0
4.0
6.0
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014F 2016F 2018F
Australia: Annual GDP growth and outlook, 1992-2019F
% change over previous year
Source: IMF World Economic Outlook, April 2014
Australia Unlimited
. . . and resource sector investment is slowing
10
0
10
20
30
40
50
60
70
80LNG
Iron ore and coal
Other
Australia: Spending on major resources projects
A$ billions
Source: Budget 2014-15 papers
-15
-10
-5
0
5
10
15
20
25
Resources investment
Non-resources investment
Total business investment
Australia: Growth in business investment
Percentage points
Source: Budget 2014-15 papers
Australia Unlimited
Agribusiness is one of Australia’s ‘fantastic 5’ drivers
of future prosperity
Source: Deloitte, Positioning for prosperity
Australia Unlimited
Opportunity dwarfs our capacity…
0
50
100
150
200
250
300
350
2001 2003 2005 2007 2009 2011 2013
Other
Argentina
New Zealand
Malaysia
Canada
Thailand
Indonesia
Australia
China
Brazil
USA
Major Asian economies, food imports from the world
Exporters
US$bn
Source: ITC database 2013, major Asian economies include China, Japan, Korea, India, Hong Kong, Indonesia, Singapore, Malaysia, Taiwan,
Thailand, Vietnam, Philippines
Australia Unlimited
Implication -- focus on adding value, not just
volume to our food exports
• Annual increase of 75 million middle class consumers in Asia – almost double our annual exports
• Our aggregate market share in most product categories, in most markets is small and will continue to decline, even if we increase exports
• There are only a few countries in the world with the potential to be an enduring aspirational choice for food in Asia – Australia is one of them
• Billions of dollars of value to be unlocked if we get it right
Australia Unlimited
Successful strategies will address two powerful
trends
Food security The new Asian
consumer
Australia Unlimited
Australian agribusiness can best optimise returns from its finite
capacity by supplying differentiated food products to the slice of
consumers that are most demanding and willing to pay more for better
Source: IMA Asia, Asia Forecast Update June-July 2014.
Australia Unlimited
Successful exporters will cater to the aspirational
tastes and preferences of the new Asian consumer
Bindaree Beef
• Selling retail ready
beef to China
• Chinese language
premium packaging
• Cut of meat tailored
to local cooking
preferences
• Building on the
success of other
Australian firms for
market access
Australia Unlimited
E-commerce should be a key consideration for any
distribution strategy targeting the new Asian consumer
Australia Unlimited
Imported food is increasingly purchased online
• The new Asian
consumer is
increasingly turning to
the on-line channel.
• Online is growing in
popularity as a
trusted source of safe
and quality products
Source: JD.COM; CNNIC (China Internet Network Information Centre, 2007 & 2014), iResearch
Australia Unlimited
Food security is an urgent and important concern to
many of our largest trading partners
• Food availability
• Food safety, quality and nutrition
• Containment of supply shocks and price volatility
• Building domestic production capability to reduce reliance on imports
Australia Unlimited
Asia is anxious about food security
Source: The Economist Intelligence Unit 2014
Australia Unlimited
Pressure is building for change
• Food safety arises from the tension between over investment on the front end and under investment on the back end
• China is witnessing unprecedented enforcement of food safety laws
• Rapid rationalization occurring across China’s dairy sector to create a few better regulated domestic players with scale and eliminate the weak
• The acquisition of ‘operating competence’ was a key driver behind Shuanghui International Holdings (China’s largest pork producer) USD$4.7B purchase of Smithfield Foods
Australia Unlimited
Asian anxiety over food security presents a timely
opportunity for Australia to position itself
strategically as a credible, long-term partner
• Historically Australia has responded to food security in a narrow way through bulk commodity export and value add processed food
• This is a partial solution to food security anxiety
• We can export much more than products without impacting demand for those products
Australia Unlimited
The missing piece – partnership in production
• Quality inputs into value-added
agricultural production
• Systems, services, Intellectual
property and technology that
improve production efficiency
and quality
• Education and skills
Turn our diversity and our comparatively small
scale into an advantage.
Australia Unlimited
Natural advantages matched by Asian opportunity
do not guarantee success
• Build sticky relationships
• Team up
Australia Unlimited
Deep commercial relationships secure repeat
business and are difficult to disrupt
Short-term supplier Long-term partner
Australia Unlimited
Dairy: China today, India tomorrow
• Contribute to Chinese and Indian domestic dairy capability
• Herd improvement through Genetics and genomics
• Improved productivity and quality through feeds, supplements, animal rearing
• Reinforce Australia’s reputation for production expertise and quality assurance systems
• Delivers differentiation for our dairy product exports
• Market access incentives
• From opportunistic sellers to long-term partners
Australia Unlimited
Oysters to Japan
• March 2011 Tsunami devastated Tohoku Oyster Industry
• Rehabilitated using Australian single shell variants
• Aligned Australian and Japanese industry systems and created demand for our services and technology
• Demand for Australian style oysters is building
• Opportunity for counter seasonal supply to Japan
Australia Unlimited
US wheat to the Philippines – the competition
• US Wheat provides trade and technical assistance to international buyers
• In-country consultants and seminars
• Hosts trade delegations and provides educational short courses
• Technical expertise focus areas of milling, storage, handling and baking
• Personalised consulting
Australia Unlimited
Beyond the supply of food Australia can build sticky
relationships by providing opportunities to invest in
Australian production
• Predictions that up to A$600 billion will
be needed by 2050 for Australia to
maintain its current share of global
output.
• To meet this demand alone, Australia
needs to attract investment that:
• boosts productivity,
• advances R&D
• improves the efficiency of
transport and processing
infrastructure,
• maximises the sustainable use of
our finite resources
Source: ANZ
Australia Unlimited
Why team up?
• Our diversity has led to a fragmented domestic agricultural industry
• Coordination and cooperation can lend to scale…
• ..and secure a sustained advantage in international markets through a targeted and united positioning of Australian agribusiness at government, industry and firm levels
• If we do not act, we run the risk of the price premium we command being eroded over time
10
15
20
25
30
35
15 25 35 45 55 65
42
Australia enjoys a global reputation for provenance…
Importance
High Low
High
Au
str
alia
perf
orm
ance
I can trust it to be free
of contaminants or
harmful ingredients
The
processes
used to
produce it
make it safe
to eat
It is good value for money
It comes from
somewhere with a clean
or unpolluted
environment
It contains only natural ingredients
It is produced in an
environmentally responsible
way
It contains ingredients
from a country that
produces high quality
food
It contains only the
highest quality
ingredients
It comes from a
place, country or a
company that uses
research and
innovation to
improve quality
The
place/country it
comes from
produces food
that looks good
The
place/country it
comes from
produces food
that tastes
good
Australia Unlimited
…but we do not own that reputation exclusively…
…opportunity exists to consolidate on our positive
food image but we need to ‘team up’ to do it