We can, and must, influence demand, trade guru tells beef producers

Speaking at the Northern Territory Cattlemen’s Association annual conference in Darwin, former trade and investment minister Andrew Robb said the spectacular period of opportunity currently knocking on our door was not fully appreciated by Australians.

Mr Robb, who has also had leadership roles with Cattle Council of Australia and the National Farmers Federation, said the belief had always been we can’t influence demand but “it is my observation that we can, and we must.”

That means getting to know the people driving that demand in the Asian countries on our doorstep, he said.

Knowing and appreciating the cultural differences, understanding the way they do business, investing in their countries - none of this was currently being done adequately, he argued.

“Forty per cent of world’s population is in the tropics. By 2050, that will be 50pc,” he said.

“Sixty per cent of the world’s middle class will be living in the region by 2050.

“Australia has the biggest land mass in the tropics and 60pc of all water that falls in Australia is in the north.

“So you can see the opportunity.

“As a first world country we have a capacity to grasp that opportunity.”

Mr Robb believes there is a complacency in Australia due to the 25 years of uninterrupted economic growth we have experienced.

“We’re the only developed country in that situation - 3.3pc growth for 26 years - and there is a sense that is just the way it is,” he said.

For the past 30 years,  Australia’s biggest market “by a country mile”  has been China.

Eight out of our top ten markets are in the Asian region.

That has been a remarkable change.

“Countries like Europe and the US, which are 12000 miles away and were the cornerstone of our development for 170 years are no longer our future,” Mr Robb said.

“Now, our cornerstone is in our backyard, in our same time zone.

“Yet we hardly have a cent invested in these countries.”

Seventy per cent of the world’s growth was being driven out of Asia - at the moment 30 to 40pc of that out of China alone, Mr Robb said.

“For the rest of this century, this region will drive most of the world's growth and in the course of that we will see not only China but India share global power with the US,” he said.

“We're a small country and we're not a threat to anyone but we have to play a part in ensuring that as that evolution of power happens, we have no tensions.

“Agriculture can play a big part in that.”

PRICES, seasons and profitability in the beef sector have been very good “for about three minutes in the context of the past 50 years” but there is no reason the current state of play can’t be sustainable, according to prominent beef industry commentator Andrew Robb.

Mr Robb, who has a degree in agricultural science and a first class honours degree in economics, said the next few decades could be extraordinary for the beef industry if the cards are played correctly.

The trends are all in place.

“In 2013, food was a poor cousin to iron ore for Australia. We exported $27b worth of food next to $60m from iron ore,” he said.

“Food has now grown to $44m, while iron ore has stayed the same.”

While most of that demand was coming out of key beef markets like China, Korea and Japan, emerging markets like Indonesia stood ready to make a big impact in the coming decade.

At the turn of century, Indonesia had a middle class population of four million. By last year, it was  50m, he pointed out.

“In the past 15 years, their economy has grown the size of the Turkish economy,” he said.

“Within 10 to 15 years, it will be the fourth biggest economy in world.

“And you can throw a stone from here to there.”

Still, we have more companies in Dubai than we do in Indonesia.

“If it wasn’t for the live cattle job, there wouldn’t be a connection between Indonesia and us,” Mr Robb said.

We need to keep a far keener eye on engaging with Indonesia, Mr Robb urged.

India, also.

Thirty people every minute are moving from rural areas to cities in India  and that is forecast to continue for 20 years, he said.

“Six new major cities are currently under construction,” he said.

“This is a phenomena. There are whole lot of opportunities for us, and again, we are simply not engaged.”

AUSTRALIA’S clean, green, healthy image is such a powerful brand in Asia, according to agricultural scientist Andrew Robb.

“We are gold standard,” he said.

“China has 20pc of the world’s population but only 7pc of the world's water and most of that water is badly polluted.

“We have enormous opportunity to provide food for them.

“The first thing people want when they become more prosperous is protein and they like the taste of our beef and our lamb and that it is clean, green product.”

But - contrary to popular belief - it is not only the premium end of the market we should be eyeing off.

“Yes we are a high cost country and we need the higher margins but it doesn’t mean that’s all there is in Asia,” Mr Robb said.

“I equate it to the BMW example - it’s the clean, green equivalent of the motor business.

“BMW now have an option in the $30,000 range and people think it’s superior to all other models in that range because the brand has been established.

“It’s hard to establish a brand but it’s hard also to change it.”

The message to Australian beef?

Don’t obsess about the premium end.