Integrating Australian agriculture with global value chains and Asian customers

Integrating Australian agriculture with global value chains and Asian customers

Australian agriculture has an opportunity to rise again to prominence in the Australian economy, as the world’s population climbs to 9 billion in 2050, there is a rapid growth in demand for food. But Australia faces a major economic and cultural challenge as Asia’s middle class grows in size and sophistication to about three billion by 2030, or about 60 per cent of the global total. (OECD Observer).

Can we simply continue to be one of the world’s most efficient producers and exporters of bulk agricultural commodities or do we need to be much more integrated with the changing food tastes of Asian consumers by investing in the delivery of premium fresh and branded food products?

This paper argues for the latter option but identifies different approaches to investment to enter Asian supply chains. The value of the “clean and green” Australian-made label for many Asian consumers means that shifting to offshore production is more complicated for food producers than for some other manufacturers. Australian business may have to think more about investment in the services side of the supply chains and aligning with the many recent Asian investors in Australian agriculture and processing. It is also important to think about the agriculture supply chain as being more than just production, processing and logistics. Value adding includes all the transport infrastructure, people training and quality control systems, and all the restaurants, hotels, supermarkets and other product customers. So, Australian investment in delivering agriculture and food products to Asia could extend to investment in the region by large retailers, premium delicatessens, hotel chains, logistics and packaging companies.

We discuss the opportunities and challenges for Australian agri-businesses to expand into Asia and connect with the emerging urban Asian consumer. We discuss the challenge of transitioning from a commodity export focus to a branded product focus and why Australia is well positioned to invest in cold chain food distribution and food services.