Farmers ready for food boom

''BEEF sales to China and the US are booming, the live cattle trade is set for its biggest year ever after Indonesia ordered a record 264,000 head in the next three months, sheep are selling for $200 a head and dairy companies are struggling to keep up with demand for milk and dairy products from Asia.''

For Australia’s $53 billion farm sector, it appears the long-awaited impact of rising wealth and population in Asia — and with it demand for more and better quality food and protein - has arrived.

Brent Finlay, president of the National Farmers Federation, had no hesitation last week in declaring that agriculture, and its associated processed food products, was in export terms akin to a sleeping giant about to awake.

Australia exports 58 per cent of all food and fibre produced by the nation’s 134,000 farmers, according to figures from the Australian Bureau of Agricultural and Resource Economics and Sciences. The bureau forecasts agricultural exports to be worth $38bn in 2014-15, down from $41bn last year.

But Mr Finlay, fresh from a trip to China with federal Agriculture Minister Barnaby Joyce, is upbeat about prospects for food and agriculture. He believes the future lies in Australia increasing its food production with the aim of doubling production volume — and an even greater increase by value - by 2050.

To do this, Mr Finlay is adamant research and development spending in areas such as crop breeding and production must be maintained, with cuts to CSIRO funding not in the nation’s best interests.

“But we also should be targeting to export 90 per cent of all food and fibre we produce,” Mr Finlay said, citing the impending free trade agreement with China as likely to provide a major boost to export demand. “Domestic markets should see nothing to fear in a target like that.”

Fortunately, the debate about where the opportunities lie for Australia in the Asian food boom - where an affluent middle class of three billion will be looking to buy more meat and dairy products and better-quality food by 2030 - has matured in the past year.

No longer are politicians talking about Australia being Asia’s chief food bowl. At most now, annual agricultural production feeds 25 million Australians (93 per cent of all food eaten in Australia is home-grown) and another 35-40 million people overseas.

Even doubling local food production - still a big ask, with productivity growing at a maximum 2.8 per cent annually - would only allow farmers and food processors to meet the needs of 100-150 million of Asia’s burgeoning middle class, at most.

Significantly, Mr Joyce has started repeatedly discussing Australia’s future as being “a” food bowl to Asia, not “the” food bowl.

The focus has shifted to Australia positioning itself as a food bowl - or “delicatessen” as those in government call it - supplying Asia’s most wealthy, discerning buyers with premium, high-value, safe and traceable food.

Besides better representing the limited volumes this nation can produce - even with the touted new dams, irrigation and northern development planned - the new rhetoric also recognises Australia’s biggest drawback as being a high-cost food producer.

With labour being so expensive in Australia, most food products exported will be unaffordable to all but the wealthiest consumers in China, Korea and Indonesia. An example is the $10-a-litre fresh milk being flown to China by NSW dairy cop-op Norco and snapped up online even before it lands.

Keenly targeting this wealthy growth market is where the biggest opportunities lie in Australian agriculture. But it will not be a free ride, with this segment attractive to most other exporting nations too, particularly New Zealand, the US and Europe.

The key - and where success stories are starting to be seen - is producing premium, clean and green high-value niche products tailored to Asian markets, rather than bulk commodities.

Traceability, or identifiable supply chain custody, back to the originating farm or even the animal is another opportunity where Australia has to excel. It is no coincidence that the new $91 million AACo abattoir about to open in Darwin has been designed to process beef into boxes of thinly sliced lower-grade cuts, specifically tailored for use in Asian hot pot or stir- fry cooking.

It is also labelling every beef product - be it prime cuts or offal - so it is traceable back to a mob of 10 cattle born and grown at a single outback station.

Clear labels and proven traceability are regarded by Asian buyers as an essential criteria for top-quality, high-priced food, both in case of any biosecurity, disease or food contamination event, and to give the consumer confidence that the meat has not been tampered with or substituted.

“Customers are demanding more rigorous traceability and biosecurity certification and, if they aren’t already now, they will be in the near future,” AACo director David Crombie says. “If you are building a new abattoir in northern Australia, close to Asia, you are all about providing a premium quality product that meets their needs, because we will never be able to compete on price with (low-cost, low-quality) producers like India and, frankly, that’s not a market we want to be in.”

Another hot field of opportunity - especially from China where food safety is paramount and chemical contamination so rife - is for food products that are officially certified organic.

Just last week, Australia’s major organic certifier, the National Association for Sustainable Agriculture Australia, signed a deal with global logistics company 20cube to provide greater transparency and speed for the organic supply chain to China.

The deal, backed by Chinese organic certifier Beijing WuYue HuaXia Management and Technique Centre (CHC) and the Chinese Chamber of International Commerce, is NASAA’s next step in boosting domestic and export opportunities for organic produce.

NASAA general manager Ben Copeman said with the 20cube deal, NASAA now streamlined exports and had the whole supply chain covered to offer organic producers complete product integrity from paddock to retail shelf.

“NASAA certified operators can now have all their certifications including NASAA, Japanese, Chinese and Korean completed in one annual inspection by one inspector at the one time,” Mr Copeman said.

“We can offer the distribution and outlets in China via our partnerships with CHC and the Chinese Chamber of International Commerce, and deliver real supply chain visibility. This will enhance Australia’s reputation for clean and green production with China’s rising middle class, who are demanding more Western-style, luxury food.”

Please visit http://www.theaustralian.com.au/business/powering-australia/farmers-ready-for-food-boom/story-fnnnpqpy-1227075569326

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