Asian boom limiting agribusiness vision

02 Sep, 2014 04:00 AM
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Ian Perry with ANZ Banking Group’s regional business banking general manager Tania Motton.
There’s no doubt about Asia’s growing wealth and need for food...
Ian Perry with ANZ Banking Group’s regional business banking general manager Tania Motton.

THE recent boom in export meat, grain and dairy sales to Asia threatens to blinker our ability to think ahead about how Australian trade initiatives with the world's emerging economies will keep rewarding farmers in 20 or 30 years.

Farmers, exporters and investors need to think more like Asian businesses, says long-serving agribusiness banker Ian Perry.

Australia had to look seriously at what should be done today to help achieve fulfilling rewards for producers and efficient supply chain goals for the long-term.

Don’t be blinded by the glitter of opportunities opening up right now, particularly in hungry China, or the exciting statistics about the spending power of Asia’s fast growing middle class, Mr Perry warned.

“There’s no doubt about Asia’s growing wealth and need for food, or the opportunities opening up to our farm sector, but we need to look through our 20-year lens at what’s going to be important down the track,” he said.

“There’s also a lot of current Asian interest in Australia which we can take advantage of by directing investment towards strategic infrastructure, trading networks and research.”

The NSW agribusiness executive director with Australia and New Zealand Banking Group (ANZ) said the nation’s generally inadequate infrastructure from farm to port was far from ready to cope with demands of export markets in the next three decades and beyond.

Mr Perry said a big farm sector research revival was also imperative to broaden productivity and ingenuity and better cater for the emerging Asian region’s specific tastes.

He noted, for example, while Australia had an envied reputation as a quality, high protein wheat producer, more profitable market returns in years ahead may be in feed grain and fodder to cater for the region's soaring demand for meat production.

“We can continue to focus production inputs and research on high quality milling wheat and hope to profitably hold our place in world markets, but in future years feed wheat may not have such a poor cousin status as they do today,” he said.

“The expanding livestock feed market offers farmers in some regions an opportunity to perhaps spend less on production and achieve better gross margins, especially if plant research focuses on this area, too.”

Mr Perry was impressed at how investors from across Asia were directing “enormous wealth” into a wide variety of Australian agribusiness opportunities ranging from protein and cotton production, to sugar milling, and produce distribution.

“They seem to recognise and accept the vagaries of farming and agricultural markets,” he said.

“They’re not naively throwing money at any prospect on offer – they are savvy about investments they consider, and patient about the timeframe for their goals.”

He highlighted how Hong Kong-based conglomerate Chevalier Group last year bought 70 per cent of the Moraitis family’s big vertically integrated Australian farming and wholesale fresh produce business.

Its eye appeared to be on a long-term plan for the local company’s role domestically and in wider Asian markets, including replicating Moraitis’s farm management skills and its retail supply chain in China.

“These investors get the need for a 20- to 30-year strategy – they pay attention to what has to be done,” he said.

Apart from also urging agribusinesses to export skills, not just farm products, Mr Perry wants Australian farmers and exporters to pay attention to less high-profile market destinations.

He noted the Greater Mekong region, spanning Cambodia, Laos and Vietnam, Thailand and Myanmar, had a 350 million population with huge long-term trade relationship prospects and it may prove easier to “get a foot in the door” than more obvious markets such as China or even Indonesia.

“I think Mongolia also offers longer term opportunities for the future.”

Understanding the Asian marketplace

IAN Perry admits most farmers don’t have the time or training to get caught up in the frenzied world of export deals and finding marketing partners, but they should make the effort to understand the emerging Asian marketplace.

They should also be sure buyers and processors of their own farm’s output are tuned into the export opportunities and have strategies and the right contacts.

“How’s your cattle buyer or lamb processor or grain trader planning ahead to take advantage of the market in the next three or five or eight years – and will it be more helpful to you?” he asks farmers.

“If I was a producer or stock agent, I’d want to know how much these companies understand Asian markets and the long-term implications locally.

“Plenty of farmers don’t want to deal with end users, but the people you rely on to buy your meat, or grain, or fruit need to reassure you about the relationships and plans they are building.

“Your business should be confident there will be strong, innovative, market opportunities – domestic or export – to reward your production effort.”

Mr Perry, whose career has included 15 years as a national agribusiness banker with responsibility for many of ANZ’s top end farm sector customers, said familiarity with Asia was also important for ANZ’s regional staff across Australia.

The financial institution regularly sent bankers from various domestic backgrounds to Asia on familiarisation tours.

The next group of about 20 leaves in September.

These missions ensured local staff were knowledgeable about the region’s markets – and particularly any specific areas of interest relating to their home base.

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FarmOnline
Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media
Date: Newest first | Oldest first

READER COMMENTS

Freshy
2/09/2014 9:11:38 AM

Interesting article.......just curious as to when ANZ are going to allow farmers to fully take advantage of these opportunities with some modern financing packages instead of the ones currently available - you cant put a round peg into a square hole!!
wtf
2/09/2014 10:16:28 AM

u raise a good point freshy, I think its designed so we (younger) can only lease it, I think they are waiting for their knight in shinning armour (may be china) to swoop in and buy the lot, call it a self defence plan. Problem for the powers that be (TPTB) is they have is the older generation (many of whom have no debt) wont leave the land. Looking on syd tv at a auction on the weekend, everyone was of Asian background, app the reality on who is buying property is quite different from the reporting, nothing new there. As for looking at other markets, I couldn't agree more. over to u bushie

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