Forrest pushes Australia-China 100 year agriculture - food partnership (update 1)

3 August 2014:

Khor Reports: Australia to go for uniform marketing for its agribusiness (mostly meat, dairy, grain, and also sugar) competitive strength. Forrest argues for strength in uniformity under a new set of agreed policies on quality, food safety etc . He compares this approach as being more favourable than what he experienced in the iron ore sector where producers competed against each other. He notes that this resulted in Japan taking a view that Australia iron ore was not so reliable and it subsidized Brazil instead, to Australia's disadvantage. Quality is a major issue for this upcoming China-Australia FTA deal; with a goal to "get it right" by the end of 2014. He notes that China wants food security. He wants Australia agribusiness to collectively come together and market under one Australia brand. Some backlash to this idea, including concern of who comes to control the supply-chain i.e. widespread consolidation and fear of foreign ownership of land. New Zealand has done better on dairy - but some say that Fonterra is regarded as New Zealand "picking a winner" and will the same happen in Australia agribusiness? Forrest reckons that his ASA100 will give Australia farm investors confidence to invest, including in water supply. Forrest argues that foreign investors are more interested in the farm-gate to table / wardrobe supply-chain segment and in any case, you cannot take away land. Australia's goal should be the "prettiest girl on the dance floor" and a "friend to all" in terms of international business.

The China-Australia FTA has been long in discussion and a sticking point has been the agricultural sector and China seeking investment in the dairy sector. "Canberra hopes to replicate the dramatic increase in diary exports to China enjoyed by New Zealand since it signed an FTA with China in 2008. NZ exports, of which one third is diary, have more than doubled since the deal was signed..."

This comes alongside changes under the Abbott administration in Australia that repealed its carbon tax (; putting Australia back in the US and Canada camp and further isolating the EU approach) and is going ahead with projects criticized on environmental grounds: The Great Barrier Reef and the coal mine that could kill it,

Australia agribusiness to market a single brand to improve competitiveness

Agribusiness set to drive Australia's economic future By Ticky Fullerton Updated Fri at 3:15pm; "Australia's agricultural soul is stirring in a way it has not done since the end of the great wool years, and the drive is coming from business. Big business.... Forrest and the Business Council of Australia, which brought together an A-list of food power: Federal Agriculture Minister Barnaby Joyce; state agriculture ministers; top bureaucrats; peak body leaders; and industry chiefs including Wesfarmers' Ian McLeod, Anthony Pratt from JBS, AA Co's Jason Strong and, yes, Harold Mitchell.... What emerged was an agreement that Australian governments and producers will form a single brand to broaden the nation's competitive markets in China.... "That brand is going to be synonymous all over Asia and particularly in China with quality, food safety, reliability, friendliness, adequate quantity, with everything you need if you're sitting looking after a billion-plus people and wondering how to feed them and Australia can give you an answer," said Andrew Forrest...."; Andrew Forrest interview here: Barnaby Joyce interview here (noting the farmer getting less and less of the value-add share):

Herd mentality missing from Australian agribusiness: Forrest, PUBLISHED: 01 Aug 2014 00:05:25  | UPDATED: 01 Aug 2014 04:54:03; "Billionaire Andrew Forrest says Australia’s agricultural businesses need uniform marketing, not increased scale, to be internationally competitive....
Mr Forrest's comments follow the inaugural meeting of his 100-year Australia-China agricultural partnership group (ASA) in Sydney on Thursday, which agreed to market Australian agriculture under one brand.... The meeting was hosted by the BCA and attended by Agriculture Minister Barnaby Joyce and representatives of all state agriculture ministers.... The ASA will comprise 50 members from each country who will initially meet bi­annually and then annually. Members will include state and federal government ministers, business leaders and major food producers and distributors..... Trade and Investment Minister Andrew Robb said he welcomed efforts to promote Australian agriculture and bolster trade ties with China.... "Agriculture is one of our great strengths and we have an enviable and growing reputation for 'clean, green and healthy' produce. We should look to leverage the premium 'brand Australia' at every opportunity," he said....."

List of China FTAs and negotiations:

1 August 2014:

Three of Asia's leading agribusinesses have joined iron ore magnate Andrew Forrest in what he described Thursday as an "unprecedented" 100-year partnership to position Australia as China's food bowl.... Forrest said China's New Hope Group and COFCO Corp., and Singapore-listed Wilmar International, had joined the Australia-Sino 100-Year Agricultural and Food Safety Partnership, known as ASA 100.... "This is an all-of-country response," Forrest, the founder of Fortescue Metals Group who has more recently turned his attention to agribusiness, told The Australian newspaper.... "I would like Australia to be seen as China's friendliest, largest, most reliable, highest quality, most competitive, most efficient food and agricultural products supplier."

Khor Reports comment: This isn't about palm, but it's worth mentioning this interesting move by Australia, led by Andrew Forrest (the mining magnate and writer of radical welfare reform reports). A very senior Australian academic tells me that "Forrest is becoming very important" - so look out for info on the Australia-Sino 100-year agriculture partnership. I had lunch with a senior regional plantation analyst today and we were wondering if this meant off-take agreements and the like. Wilmar is big in sugar processing in Australia. Starting out mostly in palm oil and expanded in 2007 with a merger with Kuok Oils and Grains, it has large processing facilities in China and Indonesia and it is building itself into a diversified global agro-commodity processor.

Some links to news about Andrew Forrest:

    Background info on Australia-China investment and trade
    Australia’s mineral investment boom running out of luck 10 January 2014  Author: Luke Hurst, ANU
    "The Australian minerals boom appears to have peaked, as commodity prices eased back after 2011 and investment has begun to taper. Currently there are 37 mineral resource projects in Australia, worth around A$33 billion in total, which have funding committed. But there are a further 165 mineral resource projects in the publicly announced and feasibility stages, which are yet to finalise their financing. These projects are worth around A$174.5–202.5 billion in total.... Yet Chinese investors have been seared by their experience in investing in Australia. The failure of the Rio Tinto-Chinalco tie-up and the massive cost over-runs of CITIC Pacific’s Sino Iron project—from around US$2.5 billion to US$8 billion—have sent a cautionary message to Chinese investors. These developments also revealed the complex connection between the economics and politics of international investment in Australia. The spill-over from these two big investment failures has been substantial. The delays and cost blow-outs associated with the CITIC Project precipitated the suspension of all Chinese magnetite investments in Western Australia as of 2011.... When Australian Treasurer, Joe Hockey, decided to block the sale of Grain Corp grain distribution business to American company Archer Daniels Midland, he noted that the Foreign Investment Review Board (FIRB), when considering Australia’s ‘national interest’, should ‘specifically have regard to the impact the decision on this proposal would have on broader Australian support for foreign investment and the foreign investment regime into the future’. This creates a dangerous precedent.... If managed properly, Australia’s minerals investment boom has much life left in it yet; and given that value of trade with China is equivalent to nearly A$15,000 to every Australian household, the continuation of its growth is most clearly in Australia’s national interest...."