Thursday’s 11th annual Global Food Forum in Melbourne, hosted by The Australian with the support of packaging company Visy, comes as agribusiness in Australia is a lot better off than it has been for some time.
Years of drought have been replaced by years of extensive rains (in some cases too much), Covid-19 restrictions have ended and world trade has picked up, commodity prices are high and the war in Ukraine – once a major food producer – has put upward pressure on prices.
With consumers more concerned about the quality of their food and its traceability, the factors once thought to disadvantage Australia – because of its insistence on higher food and production standards – are working in our favour.
One of the keys to the recent success of the sector has been the big increase in exports.
As Visy executive chairman Anthony Pratt will note in his speech to open the Global Food Forum, one of the most important shifts since the forum began in 2013 has been the dramatic growth of the export business. The total value of Australian food exports has skyrocketed from $29bn in 2013 to $70bn today.
Pratt cites three factors behind this: what he calls a “constancy of focus” by Australian farmers, food producers and government on food “as an engine for economic growth”; an increased push for exports with Australian governments negotiating 11 free-trade agreements with a broad range of countries across period; and Australia’s reputation for safe, quality food “in a world increasingly suspicious of food substitution and dubious food quality”.
The conference comes amid increasing focus on the potential for Australia’s future trading relationship with India, now the most populous country in the world.
Indian Prime Minister Narendra Modi received a rock-star welcome in Sydney this week, amid many televised hugs between him and Anthony Albanese. The Australian Prime Minister has been able to negotiate a trade agreement with India, a country that has been notoriously protectionist in the past and is being hailed as the next big export market for Australia.
But in the short to medium term, when it comes to agricultural and food products, the outlook for India as a market is limited. India already has its own extensive agricultural industry and a strong preference for local products.
The latest figures from the UN Comtrade Database show Australia’s total goods exports to India last year was just more than $US19bn. The biggest single item of food export was vegetables at $US220m, followed by fruits and nuts at $US47m, cereals at $US19m, wheat at $US15m, oil and other grains $US11m, beverages at $US10m, and fats and oils at $US1.4m.
When it comes to the law of large numbers and the sheer scale of the demand for Australian agriculture products, China continues to be the standout by a country mile – despite political tensions between Australia and China and the two very different political systems. As Pratt will point out, one of the factors behind the big increase in Australian agricultural exports across the past decade has been demand from China, which has doubled across the past decade to $13bn.
According to the UN database, Australia’s goods exports to China last year came in at more than $US102bn – more than five times the total exports to India.
While iron ore is Australia’s biggest single export to China, focusing on specific agricultural products highlights the sheer size of demand from the country whose population growth is static but whose income per head is growing.
Australia’s exports of cereals to China are worth $US2.74bn, meat came in at $US2.16bn (despite Chinese bans on several major Australian abattoirs), dairy, honey and egg products were worth more than $US780m, fruits $US580m, “edible products” $US319m, live animals at $US327m, oil seeds at $US263m, fish at $US225m (despite the ban on Australian lobsters) and vegetables came in at $US136.9m. In short, when it comes to food and agricultural products and the potential demand for Australian products from both countries, there is no comparison.
Despite Covid and political tensions and differences, the fact is that China still has a large and increasingly affluent population that likes Australian food and agricultural products.
The complementarity is a clear and powerful market force.
China has an agricultural industry that has nowhere near the capacity to meet its increasingly discerning domestic needs.
The message of the clean, green nature of Australian food has been reinforced by the mainland Chinese diaspora in Australia – first students and then the more than one million tourists a year – who have become unpaid ambassadors for Australian products through social media channels such as WeChat. The students are coming back, and once global airfares come down from their current too high levels the Chinese tourists will return, too.
Australia’s food exports were affected by the official and unofficial trade bans imposed by the Chinese government making a point as a result of political tensions, affecting an estimated export trade worth $20bn.
Some of those are now being unwound, as political ties improve under the Albanese government, but there is still a way to go with market-killing tariffs on Australian wine and barley now under discussion.
But, despite all that, a robust trade in many agribusiness sectors has continued. Talk to any Australian exporter of minerals or food or other products, and there is story upon story of strong and long-term personal relationships that are all too ready to resume once politics gets out of the way.
In the early days of the Global Food Forum there was much discussion about the potential of the Chinese market for Australian agricultural products.
Thursday’s forum will hear first-hand from people who have just returned from a reopened China about how the market has changed and what opportunities there may be in the future.
The Chinese economy is not as robust as it was before the pandemic and there is still some way to go before the outstanding trade issues between Australia and China are resolved.
The importance of diversification has been driven home to Australian exporters during the past few years, but the sheer scale of the market in China and the keenness of Chinese buyers for Australian food and agricultural products remain a powerful combination.
Thursday’s forum will bring valuable up-to-date insights into the new Chinese consumer and future opportunities as one of the world’s largest food buyers reopens its doors.
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