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17-11-2014, 10:58 PM
China FTA to lead to closer ties in dairy, beef sectors
THE AUSTRALIAN NOVEMBER 18, 2014 12:00AM
Rowan Callick
Asia Pacific Editor
Melbourne
China FTA: What it means
Closer ties in food sector on the menuChina’s President Xi Jinping and Prime Minister Tony Abbott leave the House of Representatives at Parliament House in Canberra yesterday. Source: AFP
China FTA: What it meansCloser ties in food sector on the menu
THE chief executive of one of China’s top dairy companies said yesterday that what Chinese consumers wanted above everything is safe food.
Xi Gang, chief executive of privately owned New Hope Dairy, told the Australia China Economic and Trade Forum in Canberra yesterday that they wanted to know “the true origins” of what they were eating.
He said New Hope, China’s fourth-largest and fastest-growing dairy corporation, looked now — especially following the liberalisation driven by the free-trade agreement — to boost its involvements in Australia, through “cooperation — I don’t like the word acquisition”.
INTERACTIVE: Australia's bilateral FTA agreements
“We wish to make full use of our Australian partners,” he said. “They have the land ownership and the technology and know the relevant rules and regulations.
“Our comparative advantage is in knowing how to sell high-quality goods, we know the consumers, and we have efficient distribution channels” in more than half China’s provinces.
He said that with the FTA, agriculture and food would become as important as resources and energy in the relationship between the countries.
Simon Talbot, chief executive of the National Farmers Federation, said “the only way to increase farm good prices is to increase demand”.
He thus applauded the China deal, and said it would take a further decade to reap its full benefits.
FTA: The key industries affected
Andrew Gill, an agribusiness specialist at Minter Ellison, said the FTA “plays to our strengths — it’s not about propping up our weaknesses. It sets the priorities where the effort should go.”
Patrick Vizzone, National Australia Bank’s Hong Kong-based Asia head of agribusiness and food, said “Australia is well placed as a niche provider for high-end foodstuffs, but has lacked a fundamental understanding of how China consumes”.
Mr Talbot said the FTA was “slightly better than we expected”. It would substantially advance Australia’s push to become not the food bowl but the “deli of Asia”.
Now, he said, Australian farmers needed to stop looking inwards and fighting each other. It was also important, he said, to “work on Brand Australia as a mandatory requirement”.
And additional investment was needed, he said, “or we will never realise our dream”. He did not expect much help in this from Australia’s superannuation fund industry.
The principal alternative, Chinese and other foreign investment, needed above all transparency and registration, he said. “And no closed systems” that would take the benefits beyond Australian sovereignty.
Yin Jianzhong, chief executive of Shanghai Zhongfu Group, which is developing the largest farming project yet in the Ord River scheme in Western Australia, said that after 18 months, the project was firmly on track — and praised the Australian staff there for their commitment and energy.
Even so, Australian cattle exporter Elders was cautiously optimistic, arguing that there was a long way to go before it could see any benefit from the free trade agreement.
The FTA should mean higher sales of feeder and slaughter cattle to China, but clarity was needed on the protocols governing live cattle shipments, capacity and sourcing, Elders chief Mark Allison said.
“The outlook is more positive — I don’t think there is any doubt of that.” Mr Allison said Elders’ approach to China’s potential market would be measured, methodical and based on capital return imperatives.
Industry expert Lin Rongquan said while Australian beef made up just 10 per cent of China’s total consumption, demand for the product was growing. “Australia is the biggest beef exporter to China and if the tariff for beef is sharply reduced then the price is going to fall and that will put pressure on Chinese producers,” he said.
“The demand for beef, especially high-quality beef, is increasing very quickly. The Chinese industry is attempting to improve the quality of its beef but it is moving very slowly. I think this is a good chance for domestic producers to improve their production and competition is going to help encourage their development in terms of price and quality.”
Additional reporting: Scott Murdoch
THE AUSTRALIAN NOVEMBER 18, 2014 12:00AM
Rowan Callick
Asia Pacific Editor
Melbourne
China FTA: What it means
Closer ties in food sector on the menuChina’s President Xi Jinping and Prime Minister Tony Abbott leave the House of Representatives at Parliament House in Canberra yesterday. Source: AFP
China FTA: What it meansCloser ties in food sector on the menu
THE chief executive of one of China’s top dairy companies said yesterday that what Chinese consumers wanted above everything is safe food.
Xi Gang, chief executive of privately owned New Hope Dairy, told the Australia China Economic and Trade Forum in Canberra yesterday that they wanted to know “the true origins” of what they were eating.
He said New Hope, China’s fourth-largest and fastest-growing dairy corporation, looked now — especially following the liberalisation driven by the free-trade agreement — to boost its involvements in Australia, through “cooperation — I don’t like the word acquisition”.
INTERACTIVE: Australia's bilateral FTA agreements
“We wish to make full use of our Australian partners,” he said. “They have the land ownership and the technology and know the relevant rules and regulations.
“Our comparative advantage is in knowing how to sell high-quality goods, we know the consumers, and we have efficient distribution channels” in more than half China’s provinces.
He said that with the FTA, agriculture and food would become as important as resources and energy in the relationship between the countries.
Simon Talbot, chief executive of the National Farmers Federation, said “the only way to increase farm good prices is to increase demand”.
He thus applauded the China deal, and said it would take a further decade to reap its full benefits.
FTA: The key industries affected
Andrew Gill, an agribusiness specialist at Minter Ellison, said the FTA “plays to our strengths — it’s not about propping up our weaknesses. It sets the priorities where the effort should go.”
Patrick Vizzone, National Australia Bank’s Hong Kong-based Asia head of agribusiness and food, said “Australia is well placed as a niche provider for high-end foodstuffs, but has lacked a fundamental understanding of how China consumes”.
Mr Talbot said the FTA was “slightly better than we expected”. It would substantially advance Australia’s push to become not the food bowl but the “deli of Asia”.
Now, he said, Australian farmers needed to stop looking inwards and fighting each other. It was also important, he said, to “work on Brand Australia as a mandatory requirement”.
And additional investment was needed, he said, “or we will never realise our dream”. He did not expect much help in this from Australia’s superannuation fund industry.
The principal alternative, Chinese and other foreign investment, needed above all transparency and registration, he said. “And no closed systems” that would take the benefits beyond Australian sovereignty.
Yin Jianzhong, chief executive of Shanghai Zhongfu Group, which is developing the largest farming project yet in the Ord River scheme in Western Australia, said that after 18 months, the project was firmly on track — and praised the Australian staff there for their commitment and energy.
Even so, Australian cattle exporter Elders was cautiously optimistic, arguing that there was a long way to go before it could see any benefit from the free trade agreement.
The FTA should mean higher sales of feeder and slaughter cattle to China, but clarity was needed on the protocols governing live cattle shipments, capacity and sourcing, Elders chief Mark Allison said.
“The outlook is more positive — I don’t think there is any doubt of that.” Mr Allison said Elders’ approach to China’s potential market would be measured, methodical and based on capital return imperatives.
Industry expert Lin Rongquan said while Australian beef made up just 10 per cent of China’s total consumption, demand for the product was growing. “Australia is the biggest beef exporter to China and if the tariff for beef is sharply reduced then the price is going to fall and that will put pressure on Chinese producers,” he said.
“The demand for beef, especially high-quality beef, is increasing very quickly. The Chinese industry is attempting to improve the quality of its beef but it is moving very slowly. I think this is a good chance for domestic producers to improve their production and competition is going to help encourage their development in terms of price and quality.”
Additional reporting: Scott Murdoch