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Comments: 1

AGRIBUSINESS: AUSTRALIA AND ASIA

16 Apr 2014 4:43 PM - An article written by Ian Joseph

Please take the time to read the latest Robinson Sewell Partners’ latest report written by Ian Joseph on how the current political armada in Asia is opening more doors to Australian Agribusiness.  Creating the trading bridge to Asia is just the introduction.  It’s the trading traffic to follow that creates the most financial and social excitement.  

The recent visit by our Prime Minister Mr Tony Abbott and 600 leading business leaders across all industries shows just how important trade is to Australia, as well as with a population of just 23 million, how outward focussed our economy and thinking needs to be. Comparing this to China (1354M), Japan (127.6M) and Republic of Korea (50M) we begin to see just how great the opportunities are to all segments of our economy.  This is especially so for our own agricultural industries with other more neighbouring populous countries prioritising their food security, food supply and food quality as part of an urgent necessity feeding into a policy mandate that is critically important to their own viability.

In terms of relative populations, Australia punches well above its weight in terms of productive capacity.  Our 135,000 farmers produce most of what we consume domestically and the rest is exported to countries right around the world.  I believe that if we take advantage of the opportunities which are now before us, then we will participate in and contribute to world stability as it relates to food security and the social, environmental and economic dimensions of sustainability.

The recent delegation was a way for Australia to highlight many of the wonderful things we produce and the services we are able to offer our near neighbours and political friends. It also highlighted the growing awareness by our political and business leaders that if we can collaborate more, coordinate better and have a national approach and vision, then we will be able to participate in and benefit from the opportunities the Asian Century will bring.

We as a nation, are in a once in a life time position with the rest of the world wanting and needing our goods and services. We must, if we wish to participate, work closely with each other and with our trading partners.  It is becoming increasingly clear that as other countries see the value of our natural and economic resources, they will begin to move quickly and decisively to secure their own food supplies and future.  So some suggested actions and thoughts:

  • We must be able to demonstrate an understanding of the key motivators of our near neighbours and be nimble enough to continually adjust to expectations. (theirs and ours)

  • Our value proposition regarding quality, accessibility and responsiveness to critical issues must never be underestimated.

  • Industry must not wait for things to happen but must prepare for change, we know there is an insatiable demand for all we can produce, it is Australia’s responsibility to make and create the linkages.

  • Australia must better “cross-fertilise” ideas, activities and networks working towards an industry wide and national solution.

  • We must get our own “financial house” in order, understanding our capacity and capability to compete, participate and contribute to opportunities (a financial health check).

All who contribute to and benefit from our farming and agricultural endeavours must demand from government and business, a solutions based roadmap to achieve national coordinated solutions across all industries, with clear objectives, defined strategies and timely actions.

The role of trade cannot be underestimated in terms of local and global food security and Australia must in the “national interest” be open to more inventive ways to take advantage of the opportunities which are now presenting themselves.

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Asian Century

28 Apr 2014,5:41 PM - Jan Davis
The federal government discovered Asia as a trade destination a couple of years ago; and quickly capitalised by releasing a White Paper on the Asian Century. Hot on their heels, Tasmania jumped on the bandwagon, with a discussion paper saying that these new markets open up “huge opportunities for Tasmania in areas such as agriculture, wine, dairy, tourism, education and high value manufacturing”.
Well, fancy that. Thank goodness we have been given a nudge to dislodge us from our slumbers beneath the haystack.
Seriously, this is just another example of the widespread contagion of government ‘statements of the bleeding obvious’. However, none of these reports seem to acknowledge the fact that many businesses here and elsewhere have been trading successfully with Asia for decades.
Australian farmers have a long history of trade with Asian countries. Many of our farmers do not need to be told that the future of trade for Tasmanian agriculture is in Asia. We are already exporting produce worth more than $120 million a year to Asian markets from Tasmania alone - that’s a quarter of all exports from the state to ASEAN countries. Dairy alone accounts for $43 million of that.
However, Asian markets are complex. Like Europe, they seek to be self-sufficient in staples. We believe that Tasmanian farmers are already wisely concentrating on high quality, high value products to deliver to specific markets in these countries.
At the time, the TFGA told the state government that Asia has more degraded forest land than anywhere else in the world and there was little spare land for agriculture. This creates opportunities for both agricultural and forestry products into those markets. What was the response? Try to shut down our forests to appease a blinkered local environmental lobby; and continue to restrict farmers’ ability to produce cost effectively. Clever stuff, isn’t it?
We also told the government that the effect of rising incomes in Asia will be improved diets and higher food consumption; that consumption of livestock products, vegetable oils and, to a lesser extent, sugar, was expected to form an increasing proportion of food consumption.
The precedent was set in Japan, South Korea and Taiwan in the 1960s and 70s. However, the population concentration in China, India and Indonesia (40 per cent of the world’s population) suggests that the impact of demographic and social changes from these three nations on global agricultural demand over the next two decades could well be 13 times as great as was the impact of the economic transition of Japan, South Korea and Taiwan.
Trade opportunities do not happen by accident. We have long argued that Tasmania needs a strategic approach to identifying and developing new high value and high growth export markets. So it is pleasing to see the government recognising (even if belatedly) the importance of this approach.
Having said that, the proposed actions outlined in either of the White Papers will not of themselves result in huge trade increases. If they wants to make a difference, governments needs to focus on the things that really inhibit our ability to increase export activities.
Tasmania has to work with other states and territories to press the federal government for consistent market access regulations across Asian countries; and to address the burgeoning regulatory costs coming from federal regulation.
We desperately need a different operating regime here as well. Tasmania has the most stringent regulatory requirements of any Australian state and our farmers are regulated almost out of business. That places us at a great disadvantage.
Regulation equals cost. If we are to maximise our potential in the Asian century, the government must reduce regulation; it must reduce our costs; it must increase investment in research and development, and help us to achieve what is says it cannot do without us.
There are obviously market opportunities in the emerging Asian countries. If the stars align, Australian farmers are clearly well positioned to take advantage of these opportunities. However, we all need to clearly understand that there is much to do; that we don’t hold any special place in those marketplaces; and our competitors are certainly not waiting for us to get our acts together.