Australian farm exports are becoming increasingly reliant on five key markets – China, Japan, the USA, European Union and Middle East.
Despite particularly strong demand growth for food and nutritional products throughout nearby Asia, sales to many promising Asian destinations slipped in 2017-18.
Our top five farm product buyers, spread globally, accounted for more than half of all export sales in 2017-18.
Although drought has started undermining crop product sales overseas, Australian agri-food exports topped $50 billion for the first time last financial year.
Victoria led the charge, according to research by Rural Bank, with an 11.7 per cent increase in exports to $13.4b, thanks largely to more dairy product sales and booming wool demand.
South Australian, Tasmanian and Northern Territorian sales also grew.
Grain sales downturn
National export figures could have been significantly stronger if broadacre crop exports had not slipped $3.5b last year after the record 2016-17 harvest.
Our top five overseas markets accounted for 53.3pc of Australian farm export value, up from about 48pc in 2016-17, according to Rural Bank’s AgAnswers analysis.
China was by far the largest growth market increasing by 16pc, or $1.6b, to consume almost a quarter of all agricultural exports.
Despite China’s wheat and barley purchases from Australia falling by $635m, significant growth in wool, sheepmeat, beef, wine and seafood sales lifted its export orders from $10.2b to $11.9b in 2016-17.
Chinese wool imports alone were worth almost $3b, while beef just topped $1b.
Exports to Japan – our second biggest ag market – grew $286m to $4.7b, thanks largely to its $2.1b appetite for our beef, and cheese worth $460m, plus improving overall trade access.
US exports grew 6pc to be worth $3.8b, with beef again a major earner ($1.7b) and lamb ($650m) in second place.
Exports to the EU actually fell a significant 14pc to $3.3b, largely because of a $750m drop in the value of canola sales, but canola remained our biggest seller worth $1.1b.
Rising wool and wine sales helped keep Europe far more valuable to Australia than many of our much-discussed near Asian markets.
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Sales to the Middle East and North Africa also dipped 5.3pc to about $3b, with wheat sales down to $622m after a $345m drop in grain crop product trade to the region and the $804m sheepmeat trade topping the list.
Other important markets, South Korea, Indonesia, Vietnam and Hong Kong, declined in value, too, by as much as 15pc.
NZ demand gains momentum
However, New Zealand grew almost 10pc to be ninth placed, taking $1.65b in Australian farm products – led by wheat ($167m) and, interestingly, chocolate ($116m).
India’s curbed appetite for Australian wheat and grain legume crops contributed largely to a whopping $1.7b (56pc) fall in its export orders, knocking it out of the top 10 buyers’ table.
Despite the drought affecting parts of the country, Australia is well positioned for continued export growth in the coming year
Rural Bank sales and distribution general manager, Simon Dundon, said producers could take heart from Australia’s continued export growth trend, which should be further helped by recent drops in the exchange rate and improving overseas market access, notably last month’s free trade agreement with Indonesia.
“Despite the drought affecting parts of the country, Australia is well positioned for continued export growth in the coming year,’ he said.
“The global appetite for Australian produce continues to rise and we expect further competition among processors, and increased upward pressure on farm gate prices.”
He said it was promising to see most sectors continuing to capitalise on strong Asian demand.
Health issues in Asia
In fact, growth prospects, market conditions and the health profile of the Association of South East Asian Nations (ASEAN) region offers even greater export opportunities for food sector innovators.
A CSIRO and KPMG report on food for health trends in ASEAN countries, which coincided with Rural Bank’s latest export analysis, highlighted sharply rising chronic health conditions such as obesity, diabetes, cardiovascular disease and cancer.
“The role food and diet can play to prevent these illnesses becomes crucial,” said deputy director of CSIRO Agriculture and Food, Professor Martin Cole.
ASEAN was already a key growth market for “health and wellness” food and beverage products – one of the world’s fastest growing food segments now accounting for 20pc of the $3b global packaged food market.
The KPMG-CSIRO study noted since the late 1980s daily protein consumption in ASEAN had risen 50pc and now more than 30pc of its consumers demanded personalised nutrition solutions.
The market for probiotics in ASEAN was growing 7.1pc annually.
Australian researchers had already created new food technologies and solutions ready to meet the needs of the ASEAN market, Professor Cole said.
Strong functional food options
“Using emerging science and innovation in areas such as functional foods, alternative protein, and CSIRO’s capabilities in digestive testing means, Australia has a compelling offer to meet the ASEAN market needs,” he said.
Collaboration was underway with Singapore’s Nanyang University and CSIRO recently signed a joint research project to focus on the importance of gut health and exercise in healthy ageing.
KPMG agtech leader, Ben van Delden, said Australian businesses and researchers were known for strengths in meeting complex ASEAN consumption needs, but there was work to be done to finesse market entry approaches and align with the dynamic consumer base.
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The story Ag’s five best export markets get hungrier for lion’s share first appeared on Farm Online.