Dermott Dowling, founding Director of Creatovate, explains why innovation in the food industry and expansion into the Asian market is essential for Australian food manufactures moving forward.
“Imagine all the food mankind has produced over the past 8,000 years. Now consider that we need to produce that same amount again — but in just the next 40 years if we are to feed our growing and hungry world.”
– Paul Polman, CEO of Unilever, and Daniel Servitje, CEO of Grupo Bimbo
Rio+20 UN Conferences on Sustainable Development, June 2012.
We have been confronted by a myriad of headlines in the media recently around the impending decline in the mining commodity super cycle that has helped sustain the Australian economy in recent years in the face of the global financial crisis. Most recently we are seeing a recurrence of redundancy announcements especially in the manufacturing and auto-industry.
Dig a little deeper and hidden in the headlines there are also some concerning and alarming events occurring in the food industry. It is apparent that Australia is losing competitive advantage to its closest neighbour New Zealand when it comes to value-added food processing, or to Asia due to lower costs of labour and foreign government tax incentives to relocate manufacturing into fast emerging markets.
The Australian food industry as a whole supports 317,000 direct jobs, and a flow through of about 1.6 million jobs. Yet Australian food producing and manufacturing sectors have struggled to receive the recognition and support they deserve. Australia’s food manufacturing exports are still very strong, worth $17 billion a year, more than education and tourism. Australia also sits on the edge of a very fast growing and immense opportunity to feed the booming middle class of Asia which is forecast to grow from 500 million people to 3 billion people in the coming decades .With the inevitable change of diet that increasing affluence brings to our Asian neighbours we can expect to see a shift towards a more protein rich diet and a desire to enjoy the good food, wine and cheer that many of us in Australia enjoy every day.
The purpose of this post is not to be alarmist or pessimistic, but is to point Australian food businesses, their key stakeholders and supporters eyes north to Asia and the enormous potential for us to grow our businesses sustainably with innovation and international business expansion.
Innovation in the food industry is sorely needed to meet the changing lives and needs of today’s consumers, customers and communities. Anthony Pratt at the Global Food Forum held in Melbourne on 18th April 2013 outlined his thoughts on a 6 point plan to continue to grow Australia’s food industry and move from feeding 50 million people outside Australia today to 200 million:
- Accelerated depreciation for new manufacturing investments in food.
- A massive boost in the food and beverage sector innovation. Governments can’t create innovation, but they can help drive it by providing financial incentives, partnerships, and much greater R&D support.
- Australia needs to follow the American example in anti-dumping practice by putting the burden of proof on the offending party to prove that they are not doing it. Rather than the current situation in Australia, where the onus is on “the dumpee” to prove that he is not being dumped on.
- Find a way to suspend, not abolish, payroll tax for food manufacturers.
- Competition policy should be more relaxed to allow food companies to consolidate under certain conditions, thus enabling greater profitability and so encouraging companies to stay in Australia.
- As a matter of urgency, we need to get more young people into agricultural science. We’re only producing 750 graduates a year, and there are over 4,000 vacancies in the food industry. (A. Pratt, 2013)
Whether you agree with Pratt’s 6 point plan or not, you cannot deny the inevitable fact that populations are growing globally and we face an enormous future challenge to feed 9 billion people in the world in 2050.
Business innovation and international business need to be high on your priorities so you can do more with less and learn from the fast emerging mega-markets in our region and their immense demand potential for the Australian Food Industry.
Dermott Dowling is the founding Director of @Creatovate www.creatovate.com.au Innovation & International Consultancy. Creatovate consult to businesses on how to create and embed innovation processes and craft international business strategy, market entry plans and set up or outsource international business services.
This post is an abridged version of a recent guest lecture given to Swinburne University International Business students on “Global Hunger Challenge: Australian International Business Opportunity” available for viewing, downloading and audio cast.
 (2012) http://www.globalharvestinitiative.org/index.php/2012/06/notable-food-security-quotes-from-the-rio20-and-g20-conferences/ viewed on 8th July 2013
 Pratt, Anthony (2013) http://www.theaustralian.com.au/business/in-depth/asia-food-bonanza-our-next-boom-says-anthony-pratt/story-fni2wt8c-1226623037094 April 18, viewed on 9th July 2013.