Interview with Anna Vidot on ABC Country Hour - India Delegation

20 JANUARY, 2015


VIDOT: Prime Minister Tony Abbott and Indian Prime Minister Narendra Modi have indicated that they would like to see a free trade deal done this year, was that enthusiasm shared by importers and local Indian agricultural industries on the ground? Would they also support that increased trade with Australia?

COLBECK: Well they were certainly very aware of particularly Prime Minister Modi's comments, which he reinforced in meetings with Andrew Robb again last week. He reinforced his view that he wanted the free trade agreement completed this year and it certainly had an influence on the way that Indian business were viewing Australia versus some of their more traditional customers, so they were looking towards Australia. Their Prime Minister has said they should, that was part of his direction, and so they were actively looking at the business opportunities here in Australia.

VIDOT: Does that mean that such an agreement would be welcomed? If we compare for example the experience that Australia had in Japan, where Australia came up against very concerned protectionist agricultural lobby in that country, are we seeing that kind of push back in India?

COLBECK: It's not something that I observed, but the industries are in a very different place in those two countries. If you look at the dairy industry for example, in India it's a very small localised industry where you've got a number of fairly large cooperatives but also some private businesses in there operating. The cooperatives are made up of hundreds or thousands of farmers milking one or two animals. They've got a very mixed herd and they're very low in productivity. A dairy cow in India will produce about 5 litres a day whereas on average here in Australia its 25 litres a day.

So they've got a very low output industry but they are the largest dairy producers in the world in the largest dairy consuming country in the world. But they are very keen to lift their industry and lift their productivity and that's where there is some opportunity for us, because they've got a rapidly growing middle class and they're looking to supply that with dairy product, so they've got a country that's already very closely associated with dairy as a product and demand that's rising as well.

VIDOT: What exactly is the nature of that demand? I suppose as far as Australia is concerned in the context as you say, while we're talking about a very different type of dairy industry, India is the biggest producer, they have plenty of milk. So what is the opportunity for Australia?

COLBECK: Well there issue is meeting their demand in the medium to longer term and so there's an opportunity for us in there in premium markets, there's no question about that. I did see some Australian cheese in the supermarket shelves in India while I was there at a number of the shops that I was looking at. So there are opportunities for us in that particular market. There are also opportunities for us in horticulture I think too with counter seasonal product, particularly from Northern Hemisphere.

They are very much seeking technologies and services and I think we need to look at the Indian market as a very different one to start with. We can actually help them with the process of starting to lift their market and that relationship will then allow us to be part of the growth of the market, so I think we need to approach it a little bit differently to the way we do some of the more mature markets and that's what they're asking from us as well.

VIDOT: That's certainly a message that's been echoed by Dairy Australia as well in the past week, to build up that demand for high end Australian products as the Indian middle class continues to become more wealthy. How can Australia go about creating, developing and building on its brand in India?

COLBECK: Well look, India's not much different to a lot of markets in that it's about relationships and it's about developing relationships. One thing that I really picked up is that everything has a story in India and part of the process of developing a relationship is sitting down and hearing the story and listening to the story and I think that particularly in our premium food and beverage areas that is one of the things that we have to offer. We have great quality, we have great systems - all the things that they're looking for but we also have a good story in the way that a lot of our family businesses have developed and we can then transfer that into other markets. We need to take advantage of that as well as there is a significant demand for those premium products.

They are very responsive to the words of their Prime Minister and that surprised me a little bit, the strength of that focus on what Prime Minister Modi said, and that seems to be a way that the country works. So there's a real opportunity for us here to strengthen what is already a very strong relationship and there was a real affinity for us all while we were there. But also a recognition I think that we perhaps neglected the relationship over the last 10 or 15 years, but a willingness to pick that up and run with again.

VIDOT: Given what you say about the rates of production in India being very low, for example for dairy, is there also an opportunity for Australia here not just in simply exporting produce of products, but in agricultural services as well and maybe getting involved in that end of the market?

COLBECK: Look I think that's the way that we build the relationship to start with and there's certainly a demand for that but a number of businesses on the delegation that were in agricultural services and it was really interesting to see the interaction between the players on both sides when they found something that was of interest to either party.

There's a real interest in genetics but there was a lack of understanding of the fact that Australian genetics might fit with Indian conditions. Because they're very sensitive to the fact that they have very hot conditions over there and they didn't understand the range of our dairy industry here and the opportunities that might exist for the use of Australian genetics. They were looking to other locations and we were able to reinforce to them that we actually had the sorts of genetics that they might be looking for in terms of productivity, but also climatic. So there are certainly opportunities in services and there's also opportunities in around things like fodder. There's one reason that they're so low in their productivity is how they're actually feeding their animals. Some of them are fed a lot of agricultural waste products that we would use for completely different purposes, but it's about volume for them it's not about producing milk. So there's a whole range of services and assistance in animal husbandry, veterinary services, education, all of those sorts of things that I think form a foundation of the relationship but then can transfer and build into broader trade.

VIDOT: Just finally, in terms of the way Australia is approaching these negotiations, you mentioned horticulture and the opportunities there. Certainly the horticulture industry in Australia is very excited about the prospect of increasing its market in India. But of course in that context of access and reducing tariffs that's all part of the equation, but Australia has been losing markets in Asia as Asian countries are tightening their quarantine regulations. So to what extent is quarantine access for Australian produce negotiations about that going to happen, and about reducing tariffs in India?

COLBECK: I think that you'll see more and more countries moving to being protocol markets as far as quarantine is concerned and that's been evident for a period of time. So there's some work that we need to be doing around the way that we structure and organise our access asks, and also the way that we manage our relationships with each of those countries, so that's going to be a feature of market access I think into the future.

The one thing that we do have though is some pretty good systems down here and we need to be able to reinforce the efficacy of those. We are generally recognised as having good systems and India is a very interesting market that say for example, its food safety systems don't align with anything else in the world. So we're doing some work with them at the moment to try and assist them to align that process because that then helps the relationship and the opportunities, so there are a lot of things that are slightly different about the market in India and there are some huge opportunists.

Someone said to me last week that there's one statistic that you need to remember about India and that's that it has 1.3 billion people - and that indicates the scale of the market. We're not going to be a huge commodity player in the market and the same we're not going to be a huge commodity player in any of the other Asian markets. If we double our food production by 2050 we will be able to feed Australia plus 1.3 per cent of all of Asia. So we need to be focussed on a premium market, working in those areas, select our markets carefully, and then make sure that we have good relationships to ensure the markets are maintained, and be consistent in our supply.


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