A major JPN trading company is attracted to the north of Australia for its potential pipeline of stable, efficient food supply.
According to The Australian Financial Review today, a major Japanese trading company, Mitsui, is attracted to the north of Australia for its potential pipeline of stable, efficient food supply, and proximity to expanding Asian markets, Wendy Holdenson, director and executive vice-president at global trading and investment group Mitsui & Co (Australia) Ltd, says.
Mitsui is targeting investment in the meat industry within Australia, having bought a 25 per cent stake in West Australian grain exporter Plum Grove in 2013 as part of a large program of investment in Australia over the past decade.
The global trading house operates out of 65 countries and is the fourth-largest exporter of natural resource and agriculture products out of Australia. It has invested some $15 billion over the past decade, most of which has been in resources and infrastructure.
The region continues to be compelling, says Mitsui's Holdenson, not only for the potential of its significant live cattle export market but also as an export hub for other agricultural products such as fruits, grains and soybean.
"There is big demand for soybean from our near neighbours like Indonesia, where it's consumed as a traditional product called tempeh and provides a stable source of protein for Indonesians. So, if that could be successfully grown in Northern Australia, there could be a freight advantage over competitive suppliers, given the region's proximity to Asia."
Northern Australia accounts for 40 per cent of Australia's land mass, sits at the strategically significant intersection of the tropics and Asia – one of the fastest growing regions in the world – and contains a vast store of untapped agricultural wealth.
Mitsui acknowledges the issue of water and its distribution as a potential impediment to investment, as well as the adequate export infrastructure to support large volumes of produce.
Northern Australia is also an important producer of crops. It accounts for most of Australia's 30 million tonnes of sugar cane produced each year.
The region is prospectively a site for future investment in horticulture and fresh produce such as mangoes and melons, says Mitsui's Holdenson, but is challenged when it comes to transporting produce that is perishable, fragile and seasonal.
"We are keeping an eye on those investment areas for the longer term," she says. "What's most important is to have efficient distribution networks, not just at this end, but also embedded in Asia itself. Without those efficient networks you won't have the confidence that the produce will be transported in a safe and timely manner to the end-user."
Beef exporting is another area that could benefit from more efficient processing and handling, according to CSIRO. Beef is the north's most productive industry, accounting for five per cent of all jobs in the north, and 80 per cent of Australia's $12 billion live cattle market. CSIRO's work recently identified that more than half the cattle travel upwards of 1000 kilometres between production, processing and markets. Given that up to 40 per cent of the final market price of cattle accounts for transport costs, it concluded that setting up two alternative processing plants in the north could save the industry millions."
"With the right bulk handling facilities there is certainly the potential to boost live cattle exports from northern Australia. There is growing demand for the tropical cattle called brahman, which is a tougher meat variety but is readily consumed in Asian markets such as China, Indonesia, Philippines and Vietnam."
It's predicted that by 2060, over one billion people will join the middle classes in Asia alone, contributing to a doubling in global food demand in that timeframe.
"Australia is well-positioned to meet that demand based on its clean, green and safe credentials in food production," says Holdenson. "The free-trade agreements that have been recently finalised and, with more to come, surely will provide advantages for industries such as beef production. It's a good time."
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