Export Development Barriers Bernadette Eggington Assistant State Director Darwin Trade Advisor - Agribusiness Austrade Food Futures Conference Wednesday 5 th November 2014
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
The new Asian consumer and where Australia s Horticulture sits
The Inner Circle
Successful strategies will address two powerful trends The new Asian consumer Food security
The shift in Asian markets FROM Short-term Price-driven TO Integrated supply chains Long-term relationships Differentiation between suppliers and countries of origin What does Australia need to do to adapt?
Market update 2012, 2013 Vegetable statistics (USD, CIF, #07 edible vegetable) Market Total imports AU market share # AU value share Overall key imports AU key exports China $2.54b 16 0.04% Cassava, sweet corn, mushrooms Peas Japan $2.51b 12 0.9% Malaysia $826m 3 4.7% Singapore $784m 3 6.9% Onion, leguminous, cabbages, pumpkins, Mushrooms, Leeks, Onions, cabbages & cauliflowers, potatoes, carrots Cabbage, tomatoes, capsicum, mushrooms, onions, cauliflowers, Asparagus, Onions, carrots, mushrooms Carrots, potatoes, onions, cauliflowers, celery, lettuce, Carrots, broccoli, potatoes, lettuce, pumpkin, asparagus Korea $723m 7 1.2% Cassava, carrots, beetroot, onions, mushrooms Potatoes, asparagus, carrots, mushrooms Hong Kong $443m 4 2.2% Cabbages, mushrooms, lettuce, tomatoes, potatoes, onions, sweet corn, celery, carrots, spinach, asparagus Carrots, lettuce, potatoes, onions, cauliflowers, cabbage, asparagus Taiwan $175m 10 3% Onions, cabbages, cauliflowers, potatoes, beetroot, asparagus, Onions, potatoes, carrots, asparagus 7
Opportunity dwarfs our capacity Major Asian economies, food imports from the world US$bn 350 300 250 200 150 100 50 Exporters Other Argentina New Zealand Malaysia Canada Thailand Indonesia Australia China Brazil USA 0 2001 2003 2005 2007 2009 2011 2013 Source: ITC database 2013, major Asian economies include China, Japan, Korea, India, Hong Kong, Indonesia, Singapore, Malaysia, Taiwan, Thailand, Vietnam, Philippines
Australian horticulture exports, Major Asian markets, 2007-2012, A$million - II 180 160 140 120 100 80 60 40 China + HK Japan India Singapore Indonesia Thailand Malaysia Vietnam Taiwan Korea South 20 0 2007 2008 2009 2010 2011 2012 Source: ABS/UN COMTRADE 9
Asian horticulture imports from all sources selected Asian markets - US$billion 4.0 3.5 3.0 2.5 2.0 1.5 1.0 China China, Hong Kong SAR India Indonesia Japan Malaysia Rep. of Korea Singapore Thailand Viet Nam 0.5 0.0 2007 2008 2009 2010 2011 2012 Source: ABS/UN COMTRADE 10
Top horticulture exporters to Asia, 2008-2012, US$m Exporters 2008 2012 4 year growth 1 United States of America 2,620 5,852 123% 2 China 1,359 2,838 109% 3 Hong Kong, China 581 1,797 209% 4 Thailand 368 1,121 205% 5 Chile 470 1,083 131% 6 Philippines 504 805 60% 7 New Zealand 410 711 73% 8 South Africa 327 708 116% 9 India 480 675 41% 10 Turkey 223 594 166% 11 Australia 303 505 67% 12 Egypt 273 470 72% 13 Indonesia 263 329 25% 14 Pakistan 105 259 146% 15 Ecuador 55 173 216% Source: ABS/UN COMTRADE 11
Overall Australian vegetable exports To all markets in the year to December 2013, versus prior year 8% value growth y.oy. 2012: $150.5 milllion 2013: 162.4 million Big exports (carrots, potatoes, onions) flat. Lots of increases in smaller categories (< $5 million) Lettuce up 20% Cabbage up 30% Pumpkin up 10% Celery up 40% Beetroot / radish up 30% Mixed veg up 100% (fresh & frozen) Source: ABS/UN COMTRADE 12
Challenges Access Currency Quality Price Branding Distribution Grey channel Market development Diversification Info and intelligence R&D Credit: pma.com 13
Challenges of competing on quality and differentiation How well do we know the tastes, preferences and aesthetic of key consumers these markets? How well do we know our most successful direct competitors? An export-first approach may be necessary to provide sufficient value and consistency to key customers Product development Packaging and marketing Supply consistency 14
Key message # 1: Packaging for the premium end 15
Key message #2: Consistency and commitment Quality Quality + Supply consistency = customer loyalty Supply Australian presence in the market 16
Key message #3: buying drivers and education Food safety, traceability and healthy diet drive buying decisions What product innovation, packaging, promotion, education are required for our target consumers? 17
Australia s challenge - how do we: Find a differentiated position with trading partners and consumers Maintain competitiveness against emerging good enough rivals Stay relevant despite a small market share, spread across a diversified sector Sharp focus Niche strategies
We have work to do Packaged too cheaply for price point Underpromoted Inconsistent, confusing or absent brand for Australian food Slow to innovate or respond to trends What we hear from overseas about Australian foods Not tailored to local tastes Slow to innovate or respond to trends What about online? Not consistently available
Risks of a short-term approach Chasing buyers and prices No long-term guarantees Not aligned with trading partners strategic food security interests
Food security
Safe food is prioritised above all else
Asia is anxious about food security Source: The Economist Intelligence Unit 2014
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
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
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.
The role of investment
Why investment in Australian agribusiness? Build connections to market Enable production growth Fund research and development Support innovation and adaptation to the needs of new consumers Achieve cost efficiencies Allow the sector to be (and remain) competitive
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
A world of opportunities Enormous growth in demand in coming decades How can we claim our share? Our reputation is strong But the market has shifted and we need to adapt We need A lasting source of differentiation from new and old competitors A clear focus on where we are going to succeed and strategies for getting there
How Austrade is positioning itself around these areas of opportunity
Austrade s national network AUSTRADE S NATIONAL NETWORK Darwin Austrade Location TradeStart Location Cairns NORTHERN TERRITORY Townsville WESTERN AUSTRALIA QUEENSLAND Mackay Rockhampton Sunshine Coast Perth Bunbury SOUTH AUSTRALIA Port Augusta Riverland Adelaide Mt Gambier NEW SOUTH WALES VICTORIA Melbourne Toowoomba Tamworth Orange Wagga Wagga Canberra Albury Geelong ACT Brisbane Gold Coast Port Macquarie Newcastle Gosford Sydney Wollongong Nowra Miranda TASMANIA Hobart
Austrade s great strength is our sustained onthe-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
Austrade: an international agency with private sector focus We have 80 offices in 48 countries, with 44 of those offices in 15 markets in 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.
What we re doing Working with industry and government towards a national brand and a unified voice for the sector internationally Helping coordinate industry and government overseas to improve our collective impact and messages Through our international network, understanding our trading partners specific needs and identifying trade and investment opportunities Bringing together agricultural services, technology and skills providers in an industry body
What else does Austrade do? Help Australian companies grow their business in international markets, including through administration of the Export Market Development Grants (EMDG) scheme and the TradeStart program Provide coordinated government assistance to attract and facilitate productive foreign direct investment (FDI) into Australia Promote the Australian education sector in international markets and assist Australian education providers with market information Provide advice to the Australian Government on its trade, tourism and investment policy agenda
Contact Austrade Call 13 28 78 and speak to one of our advisers Email info@austrade.gov.au Visit www.austrade.gov.au www.exportawards.gov.au www.australiaunlimited.com Bernadette.eggington@austrade.gov.au mobile 0417827991
Thank You