Australia Hopes Dairy Industry Can Benefit From Growing Asian Demand

April 11, 2014 Leave a comment

Australia Hopes Dairy Industry Can Benefit From Growing Asian Demand

ISABELLA STEGER

Australia should welcome foreign investment into its dairy sector and aggressively pursue free trade pacts with Asian countries, seeking to boost agricultural exports to feed Asia’s growing middle class, the country’s trade minister said.

Minister for Trade and Investment Andrew Robb said that since New Zealand signed a free trade agreement with China in 2008, its revenue from dairy exports has increased by a total of A$2.2 billion ($2 billion), while Australian dairy exports to China have grown just A$60 million over that time. China is now New Zealand’s main trading partner.

“New Zealand is in a very strong position with dairy,” Mr. Robb said, while in Australia there’s a “need for more consolidation” and capital injection to make the industry more competitive. Mr. Robb spoke to The Wall Street Journal on the sidelines of the Credit Suisse Asian investor conference in Hong Kong.

Mr. Robb said the spate of recent deals by foreigners in Australia’s dairy sector signals growing investor appetite in the industry. Canadian dairy giant Saputo Inc.SAP.T +0.15% bought Australia’s Warrnambool Cheese & Butter Factory Co.WCB.AU -2.33% this year following a protracted bidding war. New Zealand’s Fonterra Co-Operative Group bought yogurt maker Tamar Valley Dairy last year.

Australia’s Liberal-National coalition government has made free trade agreements a major part of its agenda since coming to power last year. Canberra hopes to reach a free-trade deal with China by the end of the year, and also aims to complete deals with Japan and South Korea soon.

Free-trade negotiations with Japan began in 2007, but discussions have stalled over issues such as the 5% tariff Australia imposes on automobile imports and Japanese tariffs on Australian chilled beef. Australia hopes a successful deal could reduce Japanese concerns about U.S.-led efforts to conclude the Trans-Pacific Partnership, a trade pact that would include 12 countries in the region.

Mr. Robb said Australia is “close to concluding” a deal with Japan.

Mr. Robb also emphasized the importance of Australia’s trade relationship with Indonesia. At one time Australia was exporting about 700,000 per year heads of live cattle to Indonesia from the Northern Territories, but the previous Labor governmenttemporarily suspended the trade in 2011 following reports that some cattle were abused in Indonesia. Indonesia then banned live cattle imports from Australia, and – even after resuming imports – lowered its quota.

Indonesia lifted its cap on cattle imports late last year, and Mr. Robb said export of live cattle should be able to return to the 700,000 level.

Australia and Indonesia have “got a long time to live together,” he said. “It’s our most important relationship in the region.”

 

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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