Export Development Barriers

Bernadette EggingtonAssistant State Director Darwin Trade Advisor - Agribusiness Austrade

Food Futures Conference Wednesday 5th November 2014

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“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

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The Inner Circle

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Successful strategies will address two powerful trends

Food securityThe new Asian consumer

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Short-termPrice-drivenShort-term

Price-driven

Integrated supply chainsLong-term relationshipsDifferentiation between

suppliers and countries of origin

Integrated supply chainsLong-term relationshipsDifferentiation between

suppliers and countries of origin

The shift in Asian markets

FROM TO

What does Australia need to do to adapt?

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Market update – 2012, 2013 Vegetable statistics (USD, CIF, #07 edible vegetable)

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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% Onion, leguminous, cabbages,pumpkins, Mushrooms, Leeks,

Asparagus, Onions, carrots, mushrooms

Malaysia $826m 3 4.7% Onions, cabbages & cauliflowers, potatoes, carrots

Carrots, potatoes, onions, cauliflowers, celery, lettuce,

Singapore $784m 3 6.9% Cabbage, tomatoes, capsicum, mushrooms, onions, cauliflowers,

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

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Opportunity dwarfs our capacity…

0

50

100

150

200

250

300

350

2001 2003 2005 2007 2009 2011 2013

Other

Argentina

New Zealand

Malaysia

Canada

Thailand

Indonesia

Australia

China

Brazil

USA

Major Asian economies, food imports from the world

Exporters

US$bn

Source: ITC database 2013, major Asian economies include China, Japan, Korea, India, Hong Kong, Indonesia, Singapore, Malaysia, Taiwan, Thailand, Vietnam, Philippines

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Australian horticulture exports, Major Asian markets, 2007-2012, A$million - II

Source: ABS/UN COMTRADE9

0

20

40

60

80

100

120

140

160

180

2007 2008 2009 2010 2011 2012

China + HK

Japan

India

Singapore

Indonesia

Thailand

Malaysia

Vietnam

Taiwan

Korea South

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Asian horticulture imports from all sourcesselected Asian markets - US$billion

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2007 2008 2009 2010 2011 2012

China

China, Hong Kong SAR

India

Indonesia

Japan

Malaysia

Rep. of Korea

Singapore

Thailand

Viet Nam

Source: ABS/UN COMTRADE10

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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 COMTRADE11

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Overall Australian vegetable exportsTo all markets in the year to December 2013, versus prior year

Source: ABS/UN COMTRADE12

• 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)

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Challenges

• Access• Currency• Quality• Price• Branding• Distribution • Grey channel• Market development• Diversification• Info and intelligence• R&D

Credit: pma.com 13

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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

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Key message # 1: Packaging for the premium end

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Key message #2: Consistency and commitment

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Australian presence

in the market

Supply

QualityQuality + Supply consistency= customer loyalty

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Food safety, traceability and healthy diet drive buying decisions

What product innovation, packaging, promotion, education are required for our target consumers?

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Key message #3: buying drivers and education

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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

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We have work to do

UnderpromotedPackaged too cheaply for price point

Inconsistent, confusing or

absent brand for Australian food

Not consistently available

Slow to innovate or respond to trends

What we hear from overseas about

Australian foodsSlow to innovate or respond to trends

Not tailored to local tastes

What about online?

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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

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Safe food is prioritised above all else

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Asia is anxious about food security

Source: The Economist Intelligence Unit 2014

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…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

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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 withoutimpacting demand for those products

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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

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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

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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

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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

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Austrade’s national network

ACTVICTORIA

WESTERN AUSTRALIA

NORTHERNTERRITORY

QUEENSLAND

SOUTH AUSTRALIA

TASMANIA

NEW SOUTH WALES

Perth

Darwin

Townsville

Newcastle

Hobart

SydneyWollongong

Adelaide

Melbourne

Canberra

Bunbury

Rockhampton

Cairns

Nowra

GosfordOrangeWaggaWagga

Mt Gambier

Tamworth

Brisbane

Port Augusta

Geelong

Albury

Sunshine Coast

Gold Coast

TradeStart LocationAustrade Location

AUSTRADE’S NATIONAL NETWORK

Mackay

Riverland

Toowoomba

Port Macquarie

Miranda

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Austrade’s great strength is our sustained on-the-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

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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.

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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

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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

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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