Globalisation boosting Australian food industry

By Dominique Patton

- Last updated on GMT

Related tags Food exports Cent International trade Trade Food

Globalisation is creating a challenging environment for Australia's
food industry but has also opened up new markets with strong
potential, finds a new report.

The country has seen its food exports grow from just A$4 billion between 1995-96 to A$24 billion in 2004-05, according to the report from the Australian Bureau of Agricultural and Resource Economics (ABARE), a government research agency.

This is despite one of the worst droughts on record and intense competition from multinational food processors.

"In an increasingly globalised trading environment, competitive pressures on food producers have sharpened significantly, driven by large multinational food manufacturers and supermarket chains," Philip Glyde, ABARE's executive director said when releasing the report last month.

In 2003, about 75 per cent of industry revenue was generated by 50 companies, more than half of which were foreign owned or publicly listed, shows the report.

"However, globalisation has also created new opportunities for Australia's food trade, opening markets not only in the Asia Pacific region, but also in more distant countries and regions, and expansion in existing markets," he added.

In 2004, Asia was Australia's biggest food export market, accounting for A$8.9 billion in sales.

The European export market was worth only A$1.9 billion in total but it was the largest export market for Australian wines.

Significantly, the report found more than 75 per cent of the value of Australia's food exports were in products in which Australia's share of export markets was growing.

"In addition … 35 per cent of Australian food product exports are being shipped to growing world markets and are increasing their share of world trade at the same time," Glyde said.

According to ABARE's data, the 159 product lines in which Australia had a comparative advantage made up 95 per cent of the value of Australia's food exports in 2004.

These included meat, seafood, dairy products, sugar, and fruit and nuts.

Specific foods ranged from tuna to almonds, durum wheat, various meat cuts, grains, cheese and whey.

The ABARE report , titled 'Australian food industry - performance and competitiveness' , also found that since the late 1970s, manufacturing had declined from 17 per cent to 11 per cent of gross domestic product.

But food manufacturing remained 19 per cent of the sector and was still very important.

It had grown by an average 2 per cent a year over the past decade, slightly above manufacturing as a whole.

The biggest growth in the past five years had come from wine, beer and malt, soft drinks, cordial and syrup.

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