Processors need Asia re-think

12 May, 2014 04:00 AM
Market strategist David Thomason.
The future for food manufacturing for Asia will be within Asia
Market strategist David Thomason.

AUSTRALIAN food processors are unlikely to be significant players in the booming Asian Century marketplace unless their processing operations are actually in Asia says market strategist David Thomason.

They will also need to become much bigger businesses - probably as joint ventures with Asian companies.

In fact, Mr Thomason said Australian competition policy needed to encourage bigger locally-based companies to merge and grow to take on our global food supply role, just as New Zealand had pushed its dairy co-operative Fonterra to evolve into an international-scale giant.

The former marketing wizzard at Meat and Livestock Australia said while Australia might have abundant supplies of commodity ingredients for food emerging markets, "the future for food manufacturing for Asia will be within Asia".

"We have to be part of the world food scene, not just local manufacturers making products for the domestic market and looking to export some surplus," Mr Thomason said.

He argued numerous factors already worked against Australia being a significant processing base, including the high cost of Australian labour and our continuing high dollar.

A lack of local manufacturing scale and the freight and logistical problems associated with centralising enough processing production in Australia before it was then shipped to overseas buyers were other challenges.

"Australian businesses must invest wiesly in the Asian dining boom to gain capital growth, scale and profits," he told the CSIRO's recent Mining boom to dining boom food industry seminar.

"Safe and efficient food processing can now be undertaken at low-cost stable, centrally located Asian centres servicing billions of consumers, rather than just 20 million Australians."

Joint venture processing opportunities would combine

Australian access to food production with the opportunity to have value-adding scale in locations where food was needed.

The Australian food sector should also partner with Asian supermarkets, as they were no different in their strategies and needs to local retail chains, who the seminar heard now had powerful control over what food products were available and marketed.

Mr Thomason, now a director of the Seafood Co-operative Research Centre and the Fisheries Research and Development Corporation, noted Australian waters produced significant stocks of sardines which could potentially sell in Asia in competition with Norwegian exports.

Australian sardines are currently primarily used as a source of fishmeal, fed to locally farmed tuna.

Yet a cannery to service the global market would need to be so big and efficient that even the smallest factory currently operating overseas would produce Australia's domestic shopper requirements within a matter of weeks.

"Having food plants based in Australia has a nice feeling about it, but we really need to think of Australia as part of the world scene," he said.

Mr Thomason also warned that not only had the past five years of supermarket price wars gouged local food manufacturers marketing and innovation budgets, Australia food manufacturing was becoming "a branch office in the innovation stakes compared with the highly sophisticated development centres emerging in the northern hemisphere".

"Yet Australia, as one of the most multi-cultural communities on earth, is an outstanding microcosm in which to develop and trial new food initiatives for the world," he said.

"But it's not enough to do this on its own.

"We need to partner product innovation with processing innovation and market understanding."

To be winners in the food market's next golden age Australian businesses had to see themselves no longer as Australians exporting to Asia, but Asians participating in the Asian food industry.

NOTE: David Thomason died unexpectedly from heart troubles, late in 2014.

Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media
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John Hine
19/05/2014 3:04:58 PM

It may well be, given our fading competitiveness in shelf stable food, that a way forward for our food manufacturers is to develop short shelf life products for the Australian market and get them made in Asia for the middle class by investing off-shore.


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