Paving the Way for Food Exporters

By Paul Bourke, Paper 3, Australian Agribusiness Review (Vol.5, 1997), ISSN 1442-6951

(Selected Sections)

Introduction

The Prime Minister's Supermarket to Asia Council (STAC) was established in September 1996 to provide the leadership and drive necessary to achieve success in export markets with a clear focus on Asia, where the opportunities are considerable.

The food industry and Asian markets are a vital part of Australia's future economic wealth. The total value of the food industry is estimated at around A$64 billion. It is conservatively estimated that Asian food consumption is growing at the rate of A$20 billion per year as a result of increasing income and population levels and changing tastes towards meat and dairy products, and fresh and convenience foods. Typical import growth rates in individual countries are around 10 per cent a year or higher.

The STAC is a facilitation body whose primary role is to provide the strategic direction and priority setting for the agri-food industry, allowing the difficult impediments to growth to be effectively addressed both domestically and in export markets. This is being achieved by harnessing the skills, energy and commitment of industry and government to improving competitiveness and effectively promoting the quality of Australian food in overseas markets.

The mission of the STAC is:

• To remove the barriers to export, to develop a much more aggressive export culture, and to promote the benefits of Australian agri-food products in Asian markets.
• To focus on the task of building exports of food products to Asia.
• To this end all of the STAC activities and programs are classified under one of the following headings:
  • Impediments
  • Culture
  • Promotion in Asia

Agri-Food Exports

Over the period 1991/92 to 1995/96 Australian food exports to Asia grew at an annual rate of 19 per cent, more than doubling from A$4.9 billion to A$10.3 billion in the last five years. The major market is Japan, taking 38 per cent of food exports, with China emerging as the second largest market, taking just over 10 per cent of food exports in 1995/96. The other eight markets all have between 5 and 10 per cent of our exports and are experiencing strong growth. Asian markets have become increasingly important to Australian food exporters during this period. The share of food exports going to Asia has grown from 49 per cent to 64 per cent.

Advice from the agri-food industry sectors indicates that food exports to Asia could be expected to reach A$16 billion by the year 2001, given normal seasons and price expectations. This projection is based on the industry's expectation that market barriers will continue to fall steadily, and agricultural and horticultural production continuing to expand at 1 to 2 per cent per annum. Over this period however, grain production is projected to fall modestly and beef and dairy to expand.

A particular challenge for all of us will be the possibility of continuing El Nino effects. While irrigation will help protect the more intensive crop and animal production systems from droughts, competition for water will be intense, and how the irrigation system copes with this is somewhat unpredictable.

However, given the intensive focus on exports to Asia driven by the Council we are confident that these possible offsets will be overcome by the introduction of thousands of new food enterprises focusing on export.

Supermarket to Asia Ltd.

To service the working groups and the Council, an independent company called Supermarket to Asia Ltd. (STA) has been established, which has a contract with the Government to supply support services to the Prime Minister's Supermarket to Asia Council.

The company has a board of directors comprising seven industry members of the Council. The staff includes the CEO and five others. While the organization is lean, its strength comes from its independence and the ability to draw resources from across the agri-food industry. Getting a good cross-section from all sectors of the agri-food industry is critical if consensus is to be achieved on the big issues.

The Board is continually evaluating the structure of the Council's networks to ensure that we are reaching the broad cross-section of our agri-food constituencies. Also a key challenge for the directors is to have the Council predominantly funded by industry within three years.

Export Culture

To promote the Council and its work, a broad range communications program has been put in place, which includes regular press releases and media interviews with Council members and the STA Ltd. secretariat. A quarterly magazine, Supermarket to Asia, which has over 120 pages of profiles, case studies, export events and news was recently launched, and has been distributed broadly throughout Australia and Asia.

A series of ten Asian Market Country Profiles have been developed which are a resource document for use by rural producers and processors interested in getting more actively involved in Asian export markets. The market profiles provide a snapshot of the economy, the agricultural sector and domestic food production, food imports, and tariff and non-tariff barriers. All eight sectors of agri-food are covered in the profiles.

The Supermarket to Asia Council has established its own web site on the Internet which enables it to distribute and exchange information with the working groups and also provide data to exporters on a range of ics, including forthcoming events and statistics on Asian markets.

Regional Export Forums

These are held in conjunction with federal members of parliament, state government food authorities, regional economic development boards, and Austrade. A total of 32 forums are planned over the next few months covering all States and Territories. The aim is to take STA to regional areas and promote the concept of exporting agri-food products to Asia. The forums bring together existing exporters with potential exporters, highlighting local initiatives and enabling the Council to get first hand knowledge of impediments to export. A detailed report is being prepared on each regional forum, by RIRDC, which will be released at the completion of this phase of the program later in the year.

At this stage it is anticipated that phase two of the regional export forums program will commence in the middle of 1998. By then we can tailor the program to the particular needs of each area. Also, local export groups are being established amongst exporting companies as a consequence of some forums.

Promotion in Asia

In addition to the Quality Food Australia logo program, there are a number of other initiatives, which are planned to assist exporters to develop their businesses within the Asian region.

Asia Market Bridge

This program has been designed to deliver a hands-on, market informed, export support to promising Australian food exporters. Initially targeting two countries, Taiwan and Indonesia, up to 15 companies per market, which are willing to work intensively on getting it right, which are prepared to change their approach, and which have a high potential to succeed, will be invited to join the program.

The key elements are:

• Corporate strategic planning;
• Focused market research (matching corporate core capability directly with real market openings);
• Visits/introductions in targeted markets;
• Fine-tuning of product/market fit;
• Quality assurance accreditation;
• Reinforcing interface with other exporters sharing the challenge;
• Participation in a leading food show to seal the strategy.

This program will be spread over 12 to 18 months and will be conducted on behalf of STA by professional agencies. "Asia Market Bridge" will be rolled out to other countries in the region on a demand basis.

Negotiating with Asian Buyers

This is a three-phased program, which is designed to assist Australian export companies to enhance their market knowledge and business skills in the Asian market.

Key elements of the program are as follows:

Stage One: Preparation

• Relationship selling: Covering culture, language and developing patience.
• Negotiation: Including fit with sales; what is important to an Asian buyer; and where a supplier can add value.
• Presentation content: Covering new product launches, promotional programs, business reviews, and space management.
• Planning to negotiate: Identifying negotiation issues, anticipating the buyers’ agenda, and creating the right climate.
• Presentation design: Covering key retailer benefits, building on your company's strengths, and presentation structure.

Stage Two: Making the Presentation

• Managing the environment: Modifying your style to best suit the customer, feedback.
• Negotiating your proposal: Trading concessions, use of tactics, obtaining agreement and commitment.

Stage Three: Understanding the Asian Response

• Negotiating with Asian buyers: All of these elements are to be conducted by professionals on behalf of STA Ltd. and to be run in two or three capital cities commencing later this year.

Networking Missions

STA Ltd. is in the process of becoming affiliated with the various Australia-Asia Business Councils and Chambers of Commerce around the region. To assist Australian exporters to develop their Asian networks, a series of missions are planned which will be linked with either a major Australia-Asia business council forum or a major Asian food show.

The first networking mission will be conducted in September in Taiwan, to coincide with the Taiwan-Australia Business Council Forum in Taipei. A key theme during this mission will be the development of joint venture opportunities for Australia food companies. At this stage the second networking mission for 1997/98 is planned for Japan and Korea in March 1998 to coincide with Foodex and the Food and Hotel show hosted by Austrade in Seoul.