Trade Minister Mark Vaile today welcomed the release of Volume I of a major new study entitled Agrifood Globalisation and Asia.

 "Over A$10 billion worth of Australia's unprocessed and processed food exports go to Asia, which means any changes in Asian markets have a direct impact on Australia's agrifood sector," Mr Vaile said.  

The report, produced by the Department of Foreign Affairs and Trade, is the first in the Subsistence to Supermarket II series, which examines globalisation in the agrifood sector, especially as it affects Asian markets.

"Asian agrifood markets remain Australia's most important export destinations, taking more than 50 per cent of our total agrifood exports," Mr Vaile said. "To be able to take advantage of them, we need to understand the changes that are occurring there and the forces driving them."

The report, called Agrifood Multinational Corporations in Asia, focuses on one of the key drivers of change in Asian agrifood markets, the strengthening positions of leading agrifood multinational corporations (MNCs).  It identifies the global strategies of leading agrifood MNCs, and reveals their growing expansion  into Asia, particularly during the Asian crisis. 

"Globalisation presents both opportunities and challenges, and it is important that Australian industry understands these changes," said Mr Vaile.  "This government is committed to further enhancing Australia's capacity to exploit these opportunities, but also to manage the adjustment challenges.

"The pursuit of improved market share for Australian suppliers in global agrifood markets was a key objective of our efforts to secure the new WTO Trade Round.  We will be working hard over the next three years to realise the commitments made in the Doha Declaration."

At the same time, Mr Vaile underlined the need for  a complete picture of economic globalisation as it affects Australia's position as an agrifood supplier.

"This new study helps paint that picture. It is a valuable tool for all the players in Australia's agrifood sector, from primary producers to processors to exporters.

"It will also help develop Australia's approaches to improving its position in the fast developing global agrifood system, as part of the National Food Industry Strategy announced by the Prime Minister in September."

Future volumes of the study, to be published in 2002, will cover changing agrifood distribution in Asia, the agrifood demand outlook in Asia to 2010, the agrifood trade framework, Asia's agrifood supply outlook and Asian agrifood companies, and finally an analysis of Australia's performance as an agrifood supplier to Asian markets.

For copies of the report, see www.dfat.gov.au/publications, or telephone: (02) 6261-3114.

Media inquiries: James Baker (Ministerial) 02 6277 7420 / Julie McDonald (Departmental) 02-6261 1555

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DFAT Subsistence to Supermarket II Series*: Agrifood Globalisation and Asia,

Volume I: Agrifood Multinational Corporations in Asia,

Key Findings

Volume I of the study:

• lists the top 100 North American and European agrifood multinational corporations (MNCs), including agribusiness companies, food processors and food retailers;
• analyses their direct investment in Asia's agrifood sector during the Asian economic crisis;
• surveys their current operational presence in Asia;
• provides case studies of several leading MNCs' strategic positioning in Asian markets;
• examines the changes underway in leading agrifood MNCs, and their global strategies;
• looks at the globalisation strategies of some smaller emerging agrifood MNCs.  

Key findings about the leading MNC agrifood processors include:

• The leading North American and European agrifood MNCs quickly grasped the unique opportunity of cheaper asset prices during the Asian crisis, and accelerated their strategies for incorporating Asia into their global operations;
• As a result, between 1995 and 2001, most leading agrifood MNCs near doubled their operational presence in Asia: the majority now have at least one manufacturing operation in China and Thailand, and many in India. Almost all now have substantial distribution arrangements in Japan;
• Agrifood MNCs were also adversely affected in the short term by the Asian downturn, but most found ways to deal with the lower purchasing power and reduced spending by Asian consumers; they also reassured their investors by stressing the importance of Asia in their long-term global strategies;
• Increasing participation of the leading agrifood MNCs is a key driver of change in Asia's agrifood systems. The position of leading agrifood MNCs in Asia has strengthened markedly over the past 5 years, with their influence expected to increase further.
• This influence will loom even larger as further mergers and acquisitions occur in the ranks of the leading agrifood MNCs, with two or three leading global players likely to emerge in each individual agrifood category.
• In order to remain leading players and to maximise profits against strong global competition, the top agrifood MNCs are pursuing a number of common strategies which will affect the development of agrifood systems in Asia and globally. These include:
  • global and regional rationalisation of production facilities, of distribution systems and of sourcing of both raw materials and finished products
  • global rationalisation of business segments, product lines and brands
  • development of global umbrella brands
  • strengthening control of supply chains
  • growth in contract manufacturing
• Asia is clearly a priority region for the leading agrifood MNCs.
• With agrifood globalisation occurring increasingly rapidly, all players in the Australian agrifood sector need to work out strategies to meet these challenges and strategies for growth;
• Key to this success, Australian companies must possess comprehensive information about the changing contours and forces of the global agrifood landscape, and analyse this landscape from their individual enterprises' perspectives.

*A wide range ofpublic and private sector and industry association sponsors helped fund the DFAT agrifood globalisation study. Supermarket to Asia Limited has been the major sponsor, together with the Rural Industries Research and Development Corporation (RIRDC), the Grains Research and Development Corporation (GRDC), and Horticulture Australia. The Commonwealth Department of Agriculture, Fisheries and Forestry (AFFA), the Australian Dairy Corporation (ADC), Meat and Livestock Australia (MLA), the Sugar Research and Development Corporation (SRDC), and the Australian Meat Council (AMC) also provided funding support, together with private sector sponsors Queensland Sugar Limited, Sugar Australia, Berri Limited, Coles Supermarkets, and Elders Limited. In addition, sponsorship support has come from State Government sponsors: the Northern Territory Department of Primary Industry and Fisheries (DPIF), Tasmanian Department of Primary Industries, Water & Environment (DPIWE), Queensland Department of Primary Industries (QDPI), Queensland Department of State Development (QDSD), Victorian Department of Natural Resources & Environment (DNRE), and Western Australian Department of Agriculture.