Opportunities for Australian grain in South East Asia and … · 2015-03-09 · Opportunities for Australian grain in South East Asia and implications of the ASEAN Free Trade Area

Opportunities for Australian grain in South East Asia and implications of the

ASEAN Free Trade Area

James Campbell Head of Agribusiness, China

March 2015

2

CONTENTS

AUSTRALIA GRAIN INDUSTRY OVERVIEW 3 WHAT IS DRIVING ASIAN DEMAND? 8

ASEAN-AUSTRALIA-NEW ZEALAND FREE TRADE AREA (AANZFTA) 17

OPPORTUNITY FOR AUSTRALIAN AGRICULTURE SECTOR: ASEAN 19 CHINA–AUSTRALIA FREE TRADE AGREEMENT (ChAFTA): IMPACT OF GRAIN INDUSTRY 23 INDIRECT FACTORS AFFECTING AUSTRALIAN GRAIN 25 APPROACH TO ASIAN MARKET: CHANGING MARKET DYNAMICS 24

AUSTRALIA GRAIN INDUSTRY OVERVIEW

Page 4

8.3 5.8 4.6

7.5 6.9 5.1 8.4 7.8 9.0 9.5 9.0

2.4

1.5 1.4

1.8 2.7 5.6

5.6 3.7

4.4 3.5 3.6 4.9

1.1 1.1

5.3 4.9

7.8

10.6

7.1 5.4 4.2 5.7

-

5.0

10.0

15.0

20.0

25.0

30.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

WA SA East Coast Ending Stock - Total

9.1 5.1 5.8

8.3 8.2 5.4

11.2 6.7

10.8 8.8 8.6

3.9

1.4 2.3

2.4 4.2 6.2

4.8

4.1

5.1 4.0 3.9

12.2

4.2 5.4

10.4 9.8

16.9

13.8

11.4

11.7

10.2 11.6

-

5.0

10.0

15.0

20.0

25.0

30.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

WA SA East Coast

>4 >4

HIGH VOLATILITY IN WHEAT PRODUCTION ATTRIBUTABLE TO CHANGING WEATHER CONDITIONS

AUSTRALIA WHEAT PRODUCTION BY REGION (In mt)

AUSTRALIA WHEAT EXPORT BY REGION (In mt)

Source: ANZ Analysis

Page 5

>5

-

4.0

8.0

12.0

16.0

20.0

2006–07 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14

Indonesia China Vietnam Yemen Iraq Malaysia Korea,Rep.of Japan Iran Thailand Philippines

AUSTRALIA EXPORT BY COUNTRY: WHEAT (In mt)

WHEAT

Source: ABARES

Page 6

>6

-

1.3

2.6

3.9

5.2

6.5

2006–07 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14

China SaudiArabia Japan Korea,Rep.of Thailand Vietnam Kuwait UnitedArabEmirates Taiwan Philippines

AUSTRALIA EXPORT BY COUNTRY: BARLEY (In mt)

BARLEY

Source: ABARES

Page 7

>7

-

0.3

0.6

0.9

1.2

1.5

2006–07 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14

China Japan Taiwan New Zealand Papua New Guinea

AUSTRALIA EXPORT BY COUNTRY: SORGHUM (In mt)

SORGHUM

Source: ABARES

WHAT IS DRIVING ASIAN DEMAND?

Page 9

6.8

8.1

>9

CONSUMPTION (In mt) IMPORTS (In mt)

DRIVERS

Noodles

Instant Noodles

Bread

Sponge Cake

AH, APW

APW,AH & ASW

DNS & CWRS

SWW,APW & ASW

INDONESIA

7.1

8.2

2013 2023Source: FAOSTAT, USDA, AEGIC & ANZ Analysis

60% 20% 10%

7.1

8.2 71%

11%

15%

CONSUMPTION MIX (2012-13) IMPORT MIX (2013-14)

Page 10

>10


Source: FAOSTAT, USDA, AEGIC & ANZ Analysis

DRIVERS

7.1

8.2

2013 2023

CHINA

121.4

123.0 6.0

2.8 Noodles

Steam Buns

Bread

Sponge Cake

AH, CWHWS & CPSW

APW & ASFT

DNS & CWRS

SWW,APW & ASW

25% 54% 10%

IMPORT MIX (2013-14)

Page 11

>11



DRIVERS

7.1

8.2

2013 2023

VIETNAM

2.4

2.9

1.9

2.9

Dried Noodle

Instant Noodles

Bakery

APW

APW,AH & ASW

APH, AH and APW & high Protein wheat from America


66% 8% 7% 40%-50% 35%-40% 10% Other

Page 12

>12



DRIVERS

7.1

8.2

2013 2023

MALAYSIA


60% 15% 8%

Noodles

Instant Noodles

Bread

AH, APW

APW,AH & ASW

DNS & CWRS

1.2

1.4

1.4

1.6

Page 13

>13



DRIVERS

7.1

8.2

2013 2023

KOREA


Noodles WSN

Ramyon

Bread

Biscuits

ASWN

AH & ASWN

DNS

SWW

5.1

4.8 5.0

4.8

35-40% 35-40% 44% 14% 42% Other

Page 14

>14



DRIVERS

7.1

8.2

2013 2023

JAPAN


Udon

Ramen

Bread

Sponge Cake

ASWN & Domestic

APH,DNS & CWRS

DNS & CWRS

SWW,APW & ASW

6.5 6.7 5.8 5.8

20-25% 57-60%

Page 15

>15



DRIVERS

7.1

8.2

2013 2023

1.8

1.9 2.0

2.1

Noodles

Bread

AH, APW

DNS & CWRS


71% 15% 11%

THAILAND

Page 16

>16



DRIVERS

7.1

8.2

2013 2023

Noodles

Bread

AH, APW

DNS & CWRS

3.3

3.9

3.4

3.9

44% 50% 2% 55%

PHILIPPINES


ASEAN-AUSTRALIA-NEW ZEALAND FREE

TRADE AREA (AANZFTA)

Page 18

>18 >18

TARIFF POST AANZFTA

INDONESIA

Wheat

2005 2015 2025+

Meslin

Barley

Oat

0%

5%

0%

5%

0%

0%

0%

0%

0%

0%

0%

0%

VIETNAM

Wheat

2005 2015 2025+

Meslin

Barley

Oat

5%

0%

3%

3%

5%

0%

3%

3%

0%

0%

0%

0%

MALAYSIA

Wheat

2005 2015 2025+

Meslin

Barley

Oat

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

PHILIPPINES

Wheat

2005 2015 2025+

Meslin

Barley

Oat

3%

3%

7%

7%

0%

0%

0%

0%

0%

0%

0%

0%

THAILAND (In THB/kg)

Wheat

2005 2015 2025+

Meslin

Barley

Oat

0.1

0.1

2.75

2.75

0%

0%

0%

0%

0%

0%

0%

0%

MYANMAR

Wheat

2005 2015 2025+

Meslin

Barley

Oat

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

CAMBODIA1

Wheat

2005 2015 2025+

Meslin

Barley

Oat

7%

7%

7%

7%

U

7%

U

7%

U

0%

U

0%

LAOS

Wheat

2005 2015 2025+

Meslin

Barley

Oat

5%

5%

5%

5%

5%

5%

5%

5%

0%

0%

0%

0%

BRUNEI / SINGAPORE

Wheat

2005 2015 2025+

Meslin

Barley

Oat

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

Source: ASEAN Database & ANZ Analysis

Note 1: ‘U’ stands for Undisclosed

OPPORTUNITY FOR AUSTRALIAN

AGRICULTURE SECTOR:

ASEAN

Page 20

0.9

1.0

1.5

1.9

2.7

3.5

3.8

5.7

10.4

39.7

55.2

Myanmar

Cambodia

Lao PDR

Viet Nam

Philippines

Indonesia

ASEAN

Thailand

Malaysia

Brunei

Singapore

0.4

5.4

6.8

15.1

29.7

53.3

67.0

89.7

98.4

249.9

Brunei

Singapore

Laos

Cambodia

Malaysia

Myanmar

Thailand

Vietnam

Philippines

Indonesia

-

500

1,000

1,500

2,000

2,500

2009 2010 2011 2012 2013Indonesia Thailand Malaysia Singapore Philippines

Viet Nam Myanmar Cambodia Lao PDR

>20 >20

ASEAN HOME FOR 617 MILLION PEOPLE TO DRIVE AGRI DEMAND IN LONG RUN

ASSOCIATION OF SOUTHEAST ASIA NATIONS (ASEAN): KEY STATS

Indonesia

Singapore

Malaysia

Vietnam Cambodia

Myanmar

Thailand

Laos

Philippines

Brunei

GDP (Current Price USD Billion)

POPULATION (In Million) GDP PER CAPITA (Current Price USD 000’)

Source: World Bank & ANZ Analysis

Page 21

44

13

26

34

28

41

40

156

274

249

8

40

33

26

33

40

40

138

220

277

Iron and

Steel

Rubber

Organic

Chemicals

Precious

Metal

Optical

Instruments

Plastics

Vehicles

Nuclear

Reactors

Mineral fuels

Electrical

Machinery

Exports Imports

26

23

13

66

82

92

118

122

198

278

42

46

82

35

53

115

123

124

153

330

India

Australia

Hong

Kong

Taiwan

Korea

USA

Japan

EU-28

China

ASEAN

Exports Imports

3

4

9

12

65

132

187

206

250

373

3

11

9

11

54

133

183

228

229

410

Laos

Brunei

Cambodia

Myanmar

Philippines

Viet Nam

Indonesia

Malaysia

Thailand

Singapore

Exports Imports

>21 >21

ASEAN: TRADE OVERVIEW

ASEAN TRADE

(In USD bn) ASEAN TRADING PARTNERS (In USD bn)

ASEAN TRADE COMMODITY GROUP (In USD bn)

Source: ASEAN Database & ANZ Analysis

Page 22

-

1.5

3.0

4.5

6.0

7.5

IndonesiaPhilippines Thailand Vietnam Malaysia Myanmar Singapore Cambodia Brunei

83%

17%

53% 47% 47%

53% 47%

53%

9,506 8,634

2,905 1,849

RefinedPetroleum

Crudepetroleum

Goodsvehicles

Passengermotor

vehicles

3,193

2,251 2,106

987

Crude… Wheat Gold Aluminium

>22 >22

AUSTRALIA IS WELL POSITIONED TO TAKE ADVANTAGE OF THE ROBUST DEMAND

ASEAN

1967 1992 1997 2005 2007 2008 2008 2009 2010

Birth of ASEAN

ASEAN Free Trade Area

(AFTA)

Vision 2020 China FTA

2010 2010

Korea FTA Japan Economic

Partnership

ASEAN Charter

Road Map 2009-15

Master Plan ASEAN

Connectivity

Australia‐ NZ FTA

India FTA

AUS EXPORT TO ASEAN 2013 (AUD m)

AUS IMPORT FROM ASEAN 2013 (AUD m)

ASEAN IMPORT DEPENDENCE ON AUSTRALIA (2013) WHEAT BARLEY OAT

USD 5.0bn

USD 18.8m

USD 7.3m

ASEAN KEY WHEAT IMPORTERS 2013 (In mt)

Source: ABARES, Trade Map & ANZ Analysis

47% 53%

Australia Other

CHINA–AUSTRALIA FREE TRADE

AGREEMENT (ChAFTA):

IMPACT OF GRAIN INDUSTRY

Page 24

>24

-

100

200

300

400

500

600

700

800

'03/'04 '05/'06 '07/'08 '09/'10 '11/'12 '13/'14

Begg. Stocks Dom. Production Imports

-

8%

16%

24%

32%

40%

'03/'04 '05/'06 '07/'08 '09/'10 '11/'12 '13/'14

End. Stock as % of Consumption

CHINA GRAIN1 SUPPLY (In mt) GRAIN1 ENDING STOCK AS % OF CONSUMPTION

Source: USDA

Note: Grain includes Barley, Corn, Wheat, Rice, Sorghum

CHINA’S GRAIN IMPORT IS LIKELY TO CONTINUE, WITH THE CURRENT ENDING STOCK RECOVERED TO 38% OF ANNUAL CONSUMPTION

Imports form ~3.4% of the China’s grain1 supply in 2013-14. Wheat account for 29.3% of the grain1 imports

THE INDIRECT FACTORS AFFECTING

AUSTRALIAN GRAIN

Page 26

55%

12%

10%

8%

5%

4%2%

4%

Indonesia Vietnam Israel China

Malaysia Russia Philippines Other

~18% of Australian beef exports are grain fed and China accounts for 6% of total grain fed beef exports. With China Australia FTA in place that gradually reduces the tariffs, Australia exports to China will increase. However, recent fall in total beef exports to china highlight the 2013 export levels are not sustainable, which implies limited affect on grain fed beef exports

… AUSTRALIA NEEDS TO LOOK INTO ALTERNATIVE FEEDING SYSTEMS TO LIFT LIVESTOCK PRODUCTIVITY… >26

Australia Beef Exports – 2014 (In Shipped weight tonnes)

LIVE CATTLE EXPORTS – 2014

Grass fed beef 82%

Grain fed beef 18%

Source: Australian Feedlot Association & ANZ Analysis

Page 27

9,200 486 9,686

2013 Additional 2030

5,525345 5,870

2013 Additional 2030

Chinaforecasted

Importsfrom

Australia

China'sforecasted

DairyImports

China

Imports from

Australia

China's

Dairy

Imports

… AUSTRALIA NEEDS TO LOOK INTO ALTERNATIVE FEEDING SYSTEMS TO LIFT MILK PRODUCTION… >27

DAIRY IMPORTS IN CHINA FROM AUSTRALIA -2013 (In million litres)

7% X

9,365

655.5

DAIRY IMPORTS IN CHINA FROM AUSTRALIA – 2030 (In million litres)

16,300

1,141.3

INCREASE IN AUSTRALIA’S EXPORT POTENTIAL TO CHINA (In million litres)

7% X

INCREASE CATTLE YIELD (In litres/cow/year)

Sources: OECD, ANZ Analysis, NDSU: Extension Service

Herd size Share Litres (m)

Milk solids

Feed (mt)

Base case 7% 1,141 75 1.0

Upside 12% 1,956 128 1.7

Aggressive 15% 2,445 161 2.1

INCREASE HERD SIZE (In million)

CURRENT HERD SIZE 1.65 million

EXPECTED HERD SIZE 1.75 million

APPROACH TO ASIAN MARKET: CHANGING

MARKET DYNAMICS

Page 29

38%

24%

22%

9%

3% 3%

Canada

USA

Singapore

UK

Thailand

Other

0.70

0.77

0.84

0.91

0.98

1.05

Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

(50.0)(45.0)

(8.3) (7.1)

18.3

46.0 46.2

Asia

Pacific

Africa Other Latin

AmericaCaribben

Oceania Europe North

America

>29 >29

APPROACH TO ASIAN MARKET: CHANGING MARKET DYNAMICS

JV WITH ASIAN FOOD PROCESSORS

AUD DEPRECIATION: INWARD INVESTMENT

OPPORTUNITY1

FOCUS ON REDUCING TRANSPORTATION

INEFFICIENCY

AUD – USD EXCHANGE RATE 2023 ESTIMATED WHEAT TRADE SUMMARY (In mt)

Australia Asia Rail Port

Sources: OECD, ANZ Analysis, NDSU: Extension Service Note 1: Acquisition analysis over 2005-2015 highlight key Acquirer countries

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Opportunities for Australian grain in South East Asia and … · 2015-03-09 · Opportunities for Australian grain in South East Asia and implications of the ASEAN Free Trade Area