VICTORIA’S dairy industry must lift its game to cash in as the value of food exports to China soars over the coming decades, ANZ Australia chief Phil Chronican says.
Australia will collect about $710 billion in revenue from food exports to the world’s most populous nation over the next 40 years, Mr Chronican says.
Food exports are currently worth $1.7 billion annual.
Speaking in Melbourne on Thursday, Mr Chronican said the growth in exports would be fuelled by demand from Asia’s growing middle class.
A greater focus on safety and high-end organic products is regarded as crucial if Australia is to replicate the success of New Zealand as an agricultural exporter.
In a speech to the Financial Services Institute of Australasia, Mr Chronican said the Victorian dairy industry needed to look externally and stop focusing on domestic issues.
His comments come as Prime Minister Tony Abbott meets with China’s Premier Li Keqiang about a free-trade agreement potentially worth tens of billions to the economy.
China’s upper middle class is forecast to include more than half of the nation’s urban households by 2020 — up from just 14 per cent in 2012.
Australian Food and Grocery Council research shows Australia’s share of food exports to China has more than halved over the past 20 years.
Rival exporters such as France, New Zealand and Indonesia have stolen market share, with Australia’s share sliding from 7.1 per cent in 1994 to just 3.3 per cent in 2012.
High-quality protein-rich foods are seen as the next growth market as mining slows and China’s urban population grows richer.
“This is the sweet spot for Australia. As Asia continues to modernise, the composition of trade flows will change, providing plenty of opportunity for Australian businesses to tap into new markets,” Mr Chronican said.
But he warned New Zealand was ahead and Victorian flamers needed to solidify their reputation as a safe and reliable food source.
“There is a growing population with a growing sophistication for high-quality products,” he said.
“New Zealand has done very well at exploiting that and there is no inherent reason Victoria can’t do that just as successfully.
“We need to focus on getting the right branding and product into the right customers hands.”
Last month, a Hong Kong based private investor paid $70 million for United Dairy Power — Australia’s largest privately-owned dairy processor.
The market for powdered milk and infant milk formula in China is expected to exceed $25 billion in 2017.
ANZ is also tipping China’s foreign direct investment in Australia will be worth up to $200 billion by 2030 — up from $16.7 billion in 2012.
Source: Herald Sun