Asia the future says Rabobank and ANZ

Some interesting information from ANZ's market focus that relates to the potential for NZ agricultural trade with China, as that country continues to grow.

They believe at this stage China's food supply is mostly balanced with its water situation, however in the next 15 years a food shortage will occur at around 111 million tonnes.

This could prove especially good for NZ as these shortages will be in the high grade agricultural products area, such as dairy and meat.

 Rabobank's Advisory Board  also shared this confidence in Australasia becoming a powerhouse in food and agriculture, and serving Asia as its main market.

This view was reinforced by the CEO of Olam International now a global agricultural business leader with $7.5 billion dollars of revenue, and other food leaders of the world, at this meeting.

Keith Cooper from Silver Fern Farms presented to the board on progress in marketing NZ meat overseas and said that product differentiation is key to success in Asia.

In  the ANZ article, the China Economists Li-Gang Liu and Louis Lam provide an overview of the water situation there and what it implies for imported food demand.  Their analysis shows that at this stage, China’s food supply and demand are mostly balanced.  However, with rapid urbanisation and rising income, it is increasingly less likely that China will maintain a balanced supply and demand picture for food, particularly with a low natural water endowment. 

Using some simple assumptions, they find that over the next 15 years, China’s annual food shortage is likely to be around 111 million tons.  The shortage is likely to be concentrated in high grade agricultural products, dairy, meat and other high protein products.  This simple projection suggests that China will gradually become a major net importer of agricultural products in the next 15 years.  This trend is already occurring but we suspect it will accelerate further.

NZ and Australia will be powerhouses in the global agriculture industry in the long-term, according to a leading international food and agribusiness authority. At a recent Rabobank Advisory Board meeting in Sydney, Mr Sunny Verghese, group managing director and CEO of Olam International, presented his views on the growth opportunities for Australia and NZ's food and agribusiness sectors in the coming decade, with a strong focus on Asia.

 “Going forward, I don’t believe India and China, given their arable land and water constraints, will be able to produce all the food they need and could become significant importers of food,” he said. “As a result, there is great potential and opportunity for countries that have a comparative advantage to produce some of this food better and more cheaply, like NZ and Australia.”

Over the past 20 years, Mr Verghese and his team have grown Olam International from a single product exporter to a global agribusiness leader in supply chain management and processing. Today, the company generates revenues of over USD7.5 billion and operates in 64 countries.