Key Contents and Findings of Volume III: Asian Agrifood Demand Trends and Outlook to 2010

DFAT Subsistence to Supermarket II Series: Agrifood Globalisation and Asia

Enormous change has taken place in Asian agrifood consumption patterns in the past 30 or 40 years, driven in particular by the effects of economic growth and rises in per capita incomes, combined with population growth and urbanisation. But even greater change is likely to occur in coming decades. Volume III of the SSII Series analyses the key factors that will drive further change in Asian agrifood consumption patterns, and based on some modelling work, looks at the possible scale of Asian agrifood demand by 2010 across 22 major agrifood categories.

Key drivers of continued growth and change in Asian agrifood demand patterns include:

an increasing share of Asia's over US$1 trillion in annual food & beverage expenditure will take place through formal channels, with continued urbanisation, and modernisation of Asia's food retailing and foodservice sectors;
continued population growth, though at a decelerating pace - by 2010, Asia's population will reach approximately 3.8 billion, still almost 56 per cent of the world's projected total of 6.8 billion;
demographic change - an increasing share of population is aged 65 and over, especially in higher income Asian economies; older people require smaller quantities of food but with more specific nutritional characteristics, and more attention to food quality;
accelerating urbanisation - by 2000, Asia already had at least 25 cities with population of four million or more, including at least five with population over 10 million - the number and scale of Asia's large cities is projected to continue to grow remarkably; Asia's cities are increasingly becoming the region's main hubs of agrifood demand growth;
continued per capita income growth - despite the disruptions during the 1990s of the Asian financial crisis and Japan's decade-long slowdown, in general robust economic growth has resumed in most Asian economies; with resumed per capita income growth has come renewed expansion of Asian agrifood demand;
among higher income Asian consumers, growing interest in food safety, food integrity, food quality, and health and nutrition issues, with growing expectations that supply chains will deliver these requirements;
changing consumer lifestyles (eg more women in formal workforce, smaller households) means growing consumer demand for convenience in food & beverage expenditure, including more eating away from home, and more purchases of prepared foods and meals;
modernisation of Asian food and beverage processing, retailing and foodservice, and consolidation of corporate agrifood players within each Asian market, is translating into larger-scale sourcing of agrifood products and materials from fewer, bigger agrifood companies, both Asian and foreign, operating in Asian markets.

To gain a reasonably credible picture of the possible future scale of Asian agrifood demand, some modelling work was commissioned from the Washington-based International Food Policy Research Institute (IFPRI), part of the Consultative Group on Agricultural Research (CGIAR) international network, supplemented by some work by a team from the Australian National University (ANU). The IFPRI IMPACT Model was used to project the likely scale of total annual Asian demand (plus domestic supply and net trade) by 2010 for 22 agrifood products, using a base year of 1997 (average of three years 1996-1998), arising from per capita income growth based on three scenarios of GDP growth (low, medium and high) for each major Asian economy.

Key results of the modelling include:

Over the period 1997-2010, Asia's total annual demand for grains could expand from 806 million tonnes to a range of 996 - 1,040 million tonnes. This could mean an increase of 190 (low scenario), 211 (medium) or 234 (high) million tonnes, and annual net imports rising from about 58 million tonnes in 1997 to perhaps 107 -119 million tonnes by 2010;
- total annual wheat demand could rise from 232 million tonnes in 1997 to between 285 and 300 million tonnes by 2010, an increase of 53-67 million tonnes, and with annual net imports rising from 28 million tonnes to 48-55 million tonnes;
Asia's total annual demand for meat could expand from 79 million tonnes to a range of 108 - 129 million tonnes, an increase of between 29 - 49 million tonnes, and annual net imports of 2.1 (low scenario), 5.7 (medium) or 9.3 (high) million tonnes by 2010;
- annual demand for beef (& buffalo meat) could rise from 11.7 million tonnes in 1997 to a range of 17 (low scenario), 19.3 (medium) or 21.5 (high) million tonnes, with net imports in range of 1.24 (low), 2.3 (medium) and 3.1 (high) million tonnes;
Total annual demand for milk & milk products (expressed in raw milk equivalent) is projected to rise from 130 million tonnes in 1997 to between 171 (low scenario), 187 (medium) or 207 (high) million tonnes by 2010, an increase in demand in range of 41-78 million tonnes, and with annual net imports in range of 7 million tonnes (low scenario), or 13 (medium) or 21 (high) million tonnes; the proportion of processed dairy products consumed is likely to expand further;
Total annual demand in Asia for edible oils is projected to rise from 40 million tonnes in 1997 to perhaps 55 (low scenario), 60 (medium) or 65 (high) million tonnes by 2010, with North-East Asia and South Asia continuing to have large net imports, and South-East Asia continuing its large net exports (mainly of palm oil); with rises in per capita income, Asian consumers are looking for more diversified and healthier types of edible oils, including more canola oil and olive oil;
Total annual demand for potatoes is projected to expand from 90 million tonnes in 1997 to a range of 114 - 136 million tonnes by 2010, an increase of 25 - 47 million tonnes;
Total annual demand for other temperate vegetables is projected to grow from 349 million tonnes in 1997 to a range of 447 (low), 474 (medium) or 500 (high) million tonnes by 2010; this represents an increase of 97 - 151 million tonnes; a key consumption change with rising incomes is the shift from coarser, cheaper, higher volume vegetables by more varied, better quality, more expensive and often lower volume vegetables;
Total annual demand for fruit, both tropical/sub-tropical and temperate, is projected to continue expanding - an additional 23 - 29 million tonnes per annum of tropical/sub-tropical fruit by 2010, and an additional 15 - 25 million tonnes of temperate fruit; there is also growing demand for 100 per cent pure fruit (and vegetable) juice, to replace low quality diluted juice drinks;
Asia's total annual demand for sugar (centrifugal sugar derived from cane and beet) is projected to continue expanding, from 39 million tonnes in 1997 to 51 (low scenario), 55 (medium) or 61 (high) million tonnes by 2010, with annual net imports rising from 3.3 million tonnes in 1997 to either 5.8 (low), 7.9 (medium) or 10.4 (high) million tonnes.
Though not included in the modelling, it is clear that Asia's demand for fish & seafood will continue to expand, as will its demand for non-alcoholic and alcoholic beverages alike (especially, bottled water, fruit juice, tea & coffee, beer and wine).

A wide range of public and private sector and industry association sponsors helped fund the DFAT Agrifood Globalisation and Asia study. The National Food Industry Strategy (NFIS - formerly Supermarket to Asia Ltd) 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 (DAFF), 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 Victorian Department of Primary Industries (VDPI), Northern Territory Department of Business, Industry and Resource Development (DBIRD), Tasmanian Department of Primary Industries, Water & Environment (DPIWE), Queensland Department of Primary Industries (QDPI), Queensland Department of State Development (QDSD), and Western Australian Department of Agriculture.

(www.dfat.gov.au/publications/agrifoodasia)

Contact: Ursula Carolyn (Ministerial) 02 6277 7420 or Nicole Guihot (Departmental) 02 6261 1555