Benchmarking Australia-Asean food, agriculture trade
Australia is well known as an efficient agricultural producer. It is strong in cattle, beef, dairy, sugar, wheat, fruits and wine. The growing Asean middle class augurs well for Australian food exporters.
Australia is also an important market with a population of 24 million and a high income per capita of US$65,000—among the highest in the world. Among full-time workers, the median wage is about $4,000 a month. The country is one of the largest agri-trade partners of Asean.
In agri-food products, total two-way trade in 2013 was $9.6 billion—$6.1 billion of exports and $3.4 billion of imports—with Australia seeing a trade surplus of $2.7 billion.
This article benchmarks the trade performance of six Asean countries with Australia in terms of growth in exports as well as trade balances between 2003 and 2013. It also identifies the major exports and imports.
Between 2003 and 2013, Australian exports to Asean-6 grew 4.2 times from $1.5 billion to $6.1 billion, while its imports also expanded 3.7 times from $0.9 billion to $3.4 billion. Overall, Australia’s trade surplus rose 4.5 times from $0.6 billion to $2.7 billion during the period.
Who are the Asean winners and losers? What are their main Australian exports and imports?
Indonesia
Australia exported $2.1 billion worth of goods to Indonesia in 2013, up from $0.35 billion in 2003. By contrast, it imported $0.36 billion in 2013 compared to $0.12 billion in 2003. Australia had a trade surplus of about $1.74 billion in 2013, a significant increase from only $0.23 billion in 2003.
Main exports: Live cattle, beef, milk and cream, meat and bone meal (for feeds) and fruits.
Main imports: Natural rubber tires, frozen fish and shrimps, coconut, cocoa butter, pasta and biscuits, and other food preparations.
Malaysia
Australia shipped $0.83 billion worth of products in 2013 from $0.31 billion in 2003. Its imports reached $0.64 billion from almost $0.22 billion during the same period. Its trade deficit with Malaysia totaled $0.19 billion in 2013 from $0.09 billion in 2003.
Main exports: Wheat, meat (goat, sheep and beef), milk and cream, cheese and curd, and malt extract.
Main imports: Palm oil and fractions, margarine, coconut oil and fractions, articles of rubber, tires, shrimps, and food preparations
Philippines
Australia’s exports to the Philippines rose from $0.25 billion in 2003 to $0.44 billion in 2013. Its imports were a measly $0.07 billion from $0.03 billion during the period. It had a trade surplus of $0.37 billion in 2013, as against the $0.1 billion deficit in 2003.
The Philippines is an insignificant player in the Australian market. This was also confirmed by a Davao exporter who visited Sydney supermarkets in October.
Main exports: Wheat, beef, milk and cream, buttermilk, cheese, and malt.
Main Imports: Coconut, rubber tires.
Singapore
Australia’s agri-food shipments to Singapore, a nonagricultural country, increased to $1.02 billion in 2013 from $0.36 billion in 2003. Likewise, its imports moved up to $0.82 billion from $0.11 billion during the period. Australia posted a trade surplus $0.20 billion in 2013, down from $0.24 billion in 2003.
Main exports: Animal fat (tallow), milk and cream, cheese and curd, butter, meat (sheep, goat, beef and pork), refined sugar.
Main imports: Food preparations (for making non-alcoholic beverages), cocoa products and malt extract.
Thailand
Australia exported $0.58 billion in 2013, a substantial increase from $0.12 billion in 2003. During the same period, its imports reached $1.18 billion from only $0.35 billion. Australia posted a trade deficit of $0.60 billion from $0.23 billion during the past 10 years. Thailand has the most diversified supplies to Australia and the only country with a trade surplus.
The Thailand-Australia Free Trade Agreement was signed in 2005. For one, Thailand provided immediate additional quota for sugar, expanding annually by 10 percent, with tariff and quota free access in 2020. Australia reduced its tariff of 5 percent on canned tuna to 2.5 percent on entry into force of the agreement for goods of Thai origin, and eliminated the tariff in 2007. There was also a comprehensive agreement on majority ownership of Australian investments from 49.9 percent.
Main exports: Wheat, milk and cream, cheese and curd, malt and malt extract.
Main imports: Preserved fish (tuna), rubber tires, rice, sauces and condiments, miscellaneous food preparations, pet food, flour and baked goods, preserved fruits and vegetables.
Vietnam
Australia’s exports reached $1.16 billion in 2013, up from a small base of $0.08 billion in 2003. Its imports also more than tripled to some $0.38 billion from $0.11 billion during the comparable period. Its trade balance was a positive $0.78 billion in 2013, up from a small deficit $0.03 billion in 2003.
Main exports: Wheat, rock lobster, malt, and live cattle.
Main Imports: Frozen fish and shrimp, cashew nuts, prepared shrimps.
Comparison
Meat, wheat, dairy goods and live cattle are the main exports of Australia. Vietnam ranks first as Australian market, closely followed by Indonesia.
Australia’s main imports are food preparations, rubber products, palm oil, and shrimps.
Thailand, Singapore and Malaysia are the largest Australian suppliers. The Philippines is an insignificant player.
Thailand and Singapore have the widest variety of exports.
Australia has trade surpluses with all countries, except Thailand.
The Philippines has the smallest two-way trade among the Asean countries.
Uphill climb
Australian imports from the Philippines remains insignificant, and the Philippines faces an uphill climb in the Australian market. For a while, the country was too focused on penetrating the protected (non-tariff barrier) Australian banana industry. Other fresh and processed products were neglected.
Export is a strategic avenue to expand markets and, therefore, rural incomes and jobs. But export is not a “walk in the park” if competitiveness factors, such as cost, scale, quality and supply reliability, are addressed. Export is the game of businessmen and entrepreneurs. But the government can help open up markets and improve goods logistics. Local governments can help by being enablers, rather than rent-seekers.
Time to study the market and roll our sleeves. Rome was not built in a day.
(The author is vice chair of MAP agribusiness and countryside development committee, and executive director of Center for Food and AgriBusiness of the University of Asia & the Pacific. Feedback at <[email protected]> and < [email protected]>. For previous articles, visit <map.org.ph>.)
