The “Future trade opportunities for Australian agriculture” conference held in Canberra this week involved a lot of discussion about the future role that Australian agriculture should play in global agricultural markets. Given Australia’s limited production capacity relative to future global food and fibre demand projections, there is general agreement about the need to transition from a commodity exporter to a consumer product exporter, but exactly what role a national brand should play in that transition is still unclear.
Over the last fifty years, the Australian agriculture sector has always been a globally significant exporter of largely undifferentiated agricultural commodities. These were commodities such as wheat, beef and wool that were marketed to overseas processors, which were part of a chain that eventually resulted in the manufacture of finished products suitable for purchase by consumers. Along the way, these commodities largely lost their ‘Australian’ identity.
The growing wealth of consumers in developing nations, coupled with the rapid globalisation of agriculture that has occurred over the past two decades, is necessitating major changes in order for Australian agriculture to remain profitable and competitive. Australia is now one of the highest cost nations in the world, meaning that it is very difficult for Australian agricultural produce to compete purely on price against products from major competitors such as Brazil, Argentina, Thailand, New Zealand and even the USA.
Fortunately, Australia has managed to develop well recognised and respected national systems to provide assurance about the food safety, chemical residue, and pest and disease status of exported agricultural products. While the farm level requirements associated with these are often considered to be ‘just another cost’ for farmers, there is no doubt they have provided major benefits in export markets.
Australia’s uninterrupted access to the Japanese and Korean beef markets over the past decade, while competitors such as the USA, Canada and Brazil have been denied access due to disease and biosecurity risks is a very stark reminder of the value of these systems, and the potential risk associated with their failure. ABARES has recently estimated that Australia’s biosecurity system is worth between $12,000 and $17,500 per year to the average broadacre farmer, or 12-17% of annual broadacre farm profits.
The safety and quality of Australian meat, dairy and horticultural products has meant they are preferred in higher value markets, serving wealthier consumers. These include the hotel, restaurant and food service markets of major cities across Asia and the Middle East, as well as the discerning markets of wealthy nations including Japan, Korea, the USA and Europe.
While grains, oilseed and fibre products undergo significant transformation before they get to consumers, there is evidence that the quality and safety of Australian products means they are preferred by processors, even if the end consumers are less aware of the origins of these products.
The key challenge for Australian agriculture is to find ways to maximise the value of the sector’s reputation, and also to consolidate and enhance that reputation in the future without incurring excessive costs.
Many of the speakers at the conference made reference to the need for a national ‘brand’ that could be utilised for this purpose, although it was evident that exactly what this means or how it would be implemented is a subject requiring some debate.
There is a tendency by some to simplistically “stick a logo” on any produce grown in Australia, on the assumption that the product will be preferred because it’s Australian. This is essentially what is already in place with the “Australian Made” green kangaroo logo, and it is hard to see why simply replacing the logo will make any difference.
In many ways, this approach is actually counter-productive, because it does nothing to explain to consumers, either in Australia or internationally, why they should preference Australian produce. Worse, it is likely to lead to complacency by encouraging the view that the logo is all that is needed, when in fact the logo is probably the last thing that is needed.
It was also evident at the conference that some of Australia’s biggest agricultural producers and exporters are intent on developing and promoting their own brands (as they should) and have no intention of cluttering their product packaging real estate with a national logo that is available to anyone, irrespective of the quality or safety of their product.
Despite the resistance of major exporters, and especially consumer product exporters, to the notion of a national logo, most are happy to acknowledge that the international reputation of Australian produce – and especially the food safety and biosecurity reputation – is an important component of their ability to market their products in higher value markets.
This leads to the conclusion that the critical first step should be development of an information campaign explaining why Australian agricultural produce should be preferred and trusted by international and Australian consumers.
A “Why Australian” campaign that brings together information about the underlying food safety, biosecurity and environmental standards associated with Australian agricultural produce would provide a focus for all Australian efforts – be they by State Governments, individual companies, industry organisations or the Australian Government – to enhance the appeal of Australian products for consumers.
It would do a lot more to enhance the focus of both farmers and consumers on what are the important factors that differentiate Australian agricultural products from those produced elsewhere than any logo will, would reinforce to the agriculture sector why these systems are important, and importantly would avoid the smug complacency and jingoism inherent in a simplistic logo.
This article was first publised on the Australian Farm Institute website. To view original article click here