Agrifood precincts can drive export growth
The rising consumer class in Asia is driving massive new demand for verified premium fresh foods (meats, sea food and gourmet products). Contributing to this demand is the 'health and wellbeing' mega trend. High value categories in this regard include organic and “free from foods” and products tailored to personalised eating regimes. All these products must be consumer packed in the country of origin as a guarantee of authenticity, ideally with labels that can be scanned by smart phone for detailed provenance information.
Australia has an enviable reputation for fine, safe, healthy food but our comparative advantage in these booming and demanding markets is far from given. Landing persishable goods in premium export markets such as China at scale, consumer packed and within commercial time frames demands radical supply chain transformation - our existing infrastructure is simply not up to scratch.
In a recent NSWs Farmers project we investigated the potential for beef producers to directly market branded chilled beef in China using blockchain based provenance solutions and the advanced marketing and distribution solutions provided by the Chinese ecommerce giants, Alibaba's T Mall Fresh and Yiguo. These firms have invested billions establishing integrated cold chain distribution solutions and are eager to market what they call 'food with a story'.
Our analysis of cost structures for hypothetical small volume, traceable premium product lines marketed on the T Mall Fresh B2C platform showed that it could be highly profitable channel and, further, one that circumvents the risks of dealing with Chinese agents and wholesalers. The deal breakers were in the Australian supply chain: primarily, the difficulty of engaging a suitable contract processor and packer, and the unreliable and inefficient nature of our cold chain and domestic freight infrastructure.
Meat is one of the most demanding segments but the same basic challenge faces producers in all premium categories. To develop their own brands in Asia, producers need access to advanced processing, packing and logistics solutions on a contract basis, coupled with blockchain solutions that provide supply chain and consumer analytics.
Individual SMEs cannot realisitcally expect to fund their own free standing processing, logistics and digital infrastructure. It follows that new, more agile approaches to value adding and supply chain services are needed that accomodate the needs of small volume niche exporters.
Innovation in this space can present significant opportunities to regional NSW.
For example, bringing complementary firms together in master-planned urban fresh food precincts could enable both a step change in the farm profitability and a new ecosystem of ancilllary services.
Such precincts could handle food produced on site using advanced indoor solutions and food brought in from the surrounding catchment in a spoke and hub model. Located close to airports, they could also be integrated with bonded warehouse and smart trade solutions.
With the right collaborative public/private investment, urban centres such as Western Sydney, Port Macquarie, Tamworth and Albury could become agrifood food dynamos, creating massive socio-economic cobenefits for surrounding urban and rural stakeholders.
While this kind of thinking may seem fanciful in Australia, nations such as the Netherlands, Singapore, Israel and USA are successfully applying advanced manufacturing, logistics and digital solutions to their premium food industries.
Whatever Australia's agrifood future looks like, business as usual is not an option. Slowly but surely lower cost producers in South America and Russia are eroding Australian share of bulk food markets. Our farmers produce superb goods - it is no longer sustainable to export the majority of these goods as low margin commodities.