Recently ABARE released a report in food consumption covering the period 1988-2017. It makes interesting high level reading.
Food exports from Australia have had a resurgence this current decade, following on from the current global food boom but coming off a drought-affected millennial decade.
We still have not returned to our peak food exports in annual volume that was in 1999 when we exported $28 billion, having throttled back to $15 billion and are now back up to $25 billion.
Unsurprisingly our food exports are dominated by grains at $13bn and livestock at $12bn respectively. Population growth drives our domestic market but there is trend in domestic consumption heading for higher value food groups.
Meanwhile in China a recent report into food and food tech commissioned by Agfunder saw that the most active category in that investment market is downstream or closer to the consumer, specifically in premium branding food and innovative restaurant offerings.
This space saw 60 deals worth $1.7 billion USD in 2017 and most are looking to transform the local Chinese restaurant experience into new and previously unseen formats.
Is this emerging “eGrocery” space and especially the ‘premiumisation’ of food a perfect storm for the Australian ag sector?
Fours years on from President Xi’s historic visit to Canberra (and more memorably he and his wife’s visit to Tassie – surely a milestone for that food and tourism economy) how have Australian food exports progressed?
What has the capacity utilisation been for perishables out of Wellcamp airport’s weekly Cathay Pacific flight?
I think the hardware such as airports built at your doorstep is far ahead of the software, ie the ability to develop a sustainable relationship into these markets.
Maybe the delay in the food boom is a product of time. The Wellcamp runway and terminal took about 19 months to build.
The profitable sale of a few containers of red meat or an AKE of broccolini can take years to develop. Literally years and plenty of kicked tyres and long haul flights in between.
Alibaba has had an Australian presence for some years now and along with their nemesis, Tencent, their combined 2017 acquisitions and refinancing of ele.me and Dianping now control 90pc of the online food delivery market.
That’s one helluva a lot of noodles.
And what about Amazon Fresh? Is it coming to Australia?
After much heraldry with the acquisition of Whole Foods in the US a few years back, the new world titan has been scarily quiet on its Australian market entry strategy and the opportunity to disrupt the longstanding grocery duopoly.
Would Amazon buy the newly independent Coles perhaps, to fast track its presence here in bricks and mortar retail, supply chains and consumers?
They are not short of the cash to do so or would they even bother with the hassle of all that real estate?
How far away is the reality of their consumer promise for two hour delivery?
How far away is their voice or video-activated interface from our grocery experience? (How that technological innovation deals with an Augathella via Glenmorgan and Shanghai accent I’m yet to see ... hey.)
It is surely an interesting time for the agri and food sectors. The challenges for Australian producers are in capturing value in the “value chain”.
There are many admirable attempts at this going on around the country.
Five years on, are dairy co-op NORCO and others exporting fresh milk getting any more at the factory gate for their Shanghai $15 litre cartons?
In many ways the Australian ag sector is lucky – geography, climate and systems all play a part in this fortune.
Look at disruption in the music industry where physical sales have declined enormously, piracy ballooned but new services like Spotify and the like are re-establishing a solid footing for their “producers” i.e. the artists.
The process of so-called disruption is more about adaptation and that remains the never-ending Darwinian challenge – not the fastest but the most willing to change.
What will ABARE write in 2048 about this next three decades?
– Ass Prof Ben Lyons, director, Rural Economies Centre of Excellence, USQ