Key points
- Australia is already a key partner in helping Southeast Asia meet its food security needs, and there is strong potential to develop this trade relationship further towards 2040.
- Technological advances will offer partnership opportunities, while collaborative investments can transform Australian raw commodities into higher-value exports for Southeast Asia.
- Boosting government resourcing to deliver new and improved market access opportunities for business will be key to expanding trade in the region.
Sector overview
Agriculture is critical to sustaining the region's ongoing economic growth, ensuring food security and contributing to livelihoods.66 Southeast Asia is one of the fastest-growing markets for Australian agricultural exports. The year 2022 saw a record value of Australian agricultural exports to ASEAN, worth A$17.5 billion (Figure 3.1).67 This is being driven by strong economic growth, burgeoning processing sectors, and targeted efforts to diversify Australian agricultural exports.68 In 2022, Australia's imports of agricultural products from the region were worth A$5.8 billion.69
Population growth, rapid urbanisation, rising incomes and escalating food security requirements will continue driving Southeast Asian needs for agricultural products to 2040. There will be greater consumption of meat, seafood, eggs, dairy products and manufactured foods as diets diversify and average wages increase. For instance, Indonesia is projected to experience a fourfold increase in food consumption from 2009 to 2050.70
There will be a growing appetite for 'cleaner', sustainable and ethically sourced foods as consumers increasingly prioritise health and food safety in their food choices.71
High demand for Australian agriculture and food production should continue out to 2040. Australia's favourable combination of complementary agriculture seasons and climates, production capabilities, expertise and geographic proximity makes it an ideal partner for Southeast Asia. In its submission to the strategy, Grain Trade Australia noted Australia is well positioned to meet the region's growing demand for high-quality products and to benefit 'from the inherent quality, food safety, and stability of Australia's grain and commercial systems.'72
Australian agriculture and food trade with the region is diverse. It includes Australian agricultural commodities critical to food supply chains in Southeast Asia, such as wheat for bakery items, pasta and noodles and animal feed, raw cotton for textiles, barley for beer, and sugar for confectionery manufacturing. Australian wine, meat and dairy products supply the retail and hospitality sectors.
The 'Made in Australia' brand is well recognised to mean high standards. How Australia markets its agriculture offerings, both through government- and industry-led promotion, will be key to ensuring international consumers can readily identify Australian products in market.
The Australian Government has been active in boosting in-country advocacy for agribusiness, which has brought tangible financial benefits (see example in the AvoFresh case study). Together with leadership from industry groups, these activities will be key to maintaining market share in priority commodities.
Figure 3.1 Australia’s top agricultural imports and exports with Southeast Asia, by value, 2022
Source: DFAT, Standard International Trade Classification pivot table, May 2023.
Case study: AvoFresh – diversifying exports to Southeast Asia
Bundaberg agribusiness AvoFresh is an example of an Australian exporter that has expanded its footprint and diversified its exports in Southeast Asia with support from the Australian Government. It has launched its popular spreads, guacamoles and 'smashes' into Malaysia.
Southeast Asia is an attractive market for Australian exporters, with opportunities in the food and beverage and horticulture sectors. In recent years, avocados have moved from what was considered an 'impulse buy' to being prominently displayed in retail outlets and sought after by consumers.
AvoFresh's successful push into Malaysia comes at a time when Malaysian consumers are seeking healthy alternatives for snacks and lunch. Food service outlets are increasingly using avocado in their recipes, often with a local twist. Austrade and AvoFresh identified Malaysia as a long-term market with enormous potential for growth.
To support AvoFresh's export goals of opening new export markets as a result of the pandemic, Austrade provided tailored export advice, market insights and introductions to importers, distributors and retailers, as well as advice on leveraging marketing strategies through traditional channels and social media. Austrade hosted AvoFresh CEO and Managing Director David De Paoli, Avocados Australia and growers during visits to Malaysia and facilitated business-to-business meetings in Kuala Lumpur. These visits succeeded in building commercial connections and market needs.
The A$85.9 million Agribusiness Expansion Initiative (ABEI) enabled the Australian Government to provide these services intensively to Australian companies looking to manage risk and diversify. ABEI was a response to unprecedented supply chain disruptions and market impediments during the pandemic, and ran to mid-2023.
Through Austrade, the Department of Agriculture, Fisheries and Forestry, and industry efforts under ABEI, Australia drove tangible benefits in the agriculture sector, including:
- securing A$824 million in new and improved commercial outcomes and export opportunities through technical market access negotiation and trade cooperation, including in Southeast Asia
- bolstering in-country technical capability to partners with 'surge' agriculture counsellor diplomatic deployments to key markets (including to Bangkok and Hanoi)
- expanding the Agricultural Trade and Market Access Cooperation grants program for strategic partnerships with industry to help them diversify into new markets
- enhancing market intelligence to exporters to help them navigate new markets faster.
Across Southeast Asia, Austrade provided more than 3,552 services to more than 1,052 Australian agribusiness and food exporters during ABEI. With an input of A$1.49 million for seven additional staff, the Australian Government supported business to achieve 440 commercial outcomes for Australia with a potential value of more than A$282 million. Since the pandemic ended, and travel restrictions were lifted in key export markets, many businesses involved in ABEI – like AvoFresh – have had an ongoing focus on Southeast Asia as a core diversification market.
Beyond trade, Australia's development cooperation program also contributes to the region's food security and agricultural development, with A$393.7 million in expenditure between 2017–18 and 2021–22.73 Through the Australian Centre for International Agricultural Research (ACIAR) and the Commonwealth Scientific and Industrial Research Organisation (CSIRO), Australia has shared its expertise in the agriculture sector to build capability and facilitate collaboration on shared challenges.
“We are excited to be part of this project with ACIAR, which brings together the best research, government and rice industry minds from Vietnam and Australia.” (SunRice)
ACIAR projects have consistently found high returns on investment over the past 40 years. For the period from 1982 to 2022, ACIAR-supported research helped deliver A$14.7 billion of additional value realised in Indonesia, A$11.5 billion in Vietnam, A$4.8 billion in the Philippines and A$1.7 billion in Thailand. ACIAR found that its projects globally over the past 20 years had realised an average benefit–cost ratio of 43:1 (implying that for every A$1 invested, A$43 of benefits are generated). Of this, projects assessed in Indonesia averaged a benefit–cost ratio of over 160:1, 90:1 in Vietnam, over 70:1 in the Philippines, and over 40:1 in Malaysia.74
The Australian Government has developed innovative market-led agriculture programs that generate both private sector profits and development impact. For example, since its inception in 2013, the ODA-funded Australia–Indonesia Partnership for Promoting Rural Incomes through Support for Markets in Agriculture (PRISMA) program has partnered with 264 private and public agriculture companies to leverage A$200 million in investment towards inclusive business models. This has resulted in over 1.2 million smallholder farming households increasing their incomes by A$786 million.75
CSIRO is also exploring growth opportunities presented by the region's growing demand for protein.76 Such partnerships and collaborations are bringing proven commercial gains alongside development impacts. An example of a successful commercial collaboration is outlined in the SunRice and ACIAR case study.
Australia and Southeast Asia have significant opportunities for two-way investment in the agrifood supply chain, including food and beverage manufacturing and value-added services. Collaborations with Southeast Asian partners could establish processing hubs that enhance the value of Australian raw commodities, with premium markets such as Japan or the Republic of Korea as the ultimate destination. Transhipment hubs like Singapore also offer favourable conditions for the movement of Australian products within and beyond the region.
An emerging opportunity also lies in Australian Indigenous food products, opening new avenues for exploration and market engagement, as illustrated in the Indigiearth case study below.77
There is also scope for further capacity building and collaboration for modernisation and digitalisation of the agrifood sector. This includes supporting uptake of rules and standards to facilitate trade and address common interests in relation to digital trade, food and nutrition safety.
Case study: SunRice and ACIAR help establish a sustainable rice value chain in Vietnam
Leading Australian-branded food exporter the SunRice Group has partnered with the Australian Centre for International Agricultural Research (ACIAR) on a A$5 million, four-year project to establish a higher-quality, sustainable value chain for Japonica-style rice in the Mekong Delta region, in collaboration with scientists, growers and government in Vietnam.
In 2018, the SunRice Group acquired its Lap Vo rice processing mill in Dong Thap province, and this direct financial investment was an important step towards establishing a fully vertically integrated and sustainable supply chain in Vietnam. This mill is now a state-of-the-art facility contributing to local employment and the Vietnam rice value chain, while enabling the SunRice Group to strengthen its global supply chains and support its ability to meet demand in over 50 markets it services worldwide.
The SunRice Group drew on the expertise of Australian and multinational organisations from other sectors that have established a presence in Vietnam to better understand the regulatory environment. The company also drew on the Australian embassy for contacts and market insights to support its investment.
'Vietnam was a natural choice for this project. The growing ties between the Australian and Vietnam governments have created a supportive environment, and the Vietnamese people have a great entrepreneurial spirit and rice-growing culture,' said SunRice Group CEO, Mr Rob Gordon.
'We are excited to be part of this project with ACIAR, which brings together the best research, government and rice industry minds from Vietnam and Australia.'
The Australia–Vietnam Mekong Delta Sustainable Rice Value Chain Project connects smallholder rice-growing communities to high-value international markets and gives farmers economic incentives to grow higher-value rice more sustainably. As part of this public-private partnership, a Centre of Excellence in Milling and Post-Harvest Processes has been established at the SunRice Group's Lap Vo mill, where staff and students from An Giang University will develop collaborative learning opportunities within the mill environment.
ACIAR has worked with Vietnamese counterparts since 1993, participating in more than 200 agricultural research projects worth A$126 million to date.
A key focus for ACIAR is partnering with the private sector to establish commercial adoption pathways that deliver higher-value returns to farmers. ACIAR Chief Executive Andrew Campbell believes 'this project will have a significant positive impact on partnerships between Australia and Vietnam in science, policy and commercial value chain development'.
Case study: Indigiearth – growing Australian First Nations agrifood exports
Indigiearth is an award-winning, 100 per cent Indigenous-owned and -established business, headquartered in Mudgee, New South Wales. Founded and led by Ngemba Weilwan woman, Sharon Winsor, the company sells premium bush foods made from authentic Australian native products that are ethically sourced and sustainably harvested.
Since its establishment in 2012 with 25 bush food products, Indigiearth now offers more than 200 products, including native foods, candles, diffusers and a range of all-natural skincare products. They also offer services, such as bush tucker catering, masterclasses, cooking demonstrations, cultural education and public engagements.
Indigiearth sources native Australian ingredients from First Nations communities using traditional land management practices. 'Aboriginal growers provide their produce for me to create the products, so it's helping the wider Aboriginal community – it really goes a long way,' explained Ms Winsor.
Premium quality native foods are on-trend in Australia and internationally, with demand increasing from chefs and restaurants looking for an edge. Ms Winsor visited Singapore twice in 2022 to provide a series of dining experiences and masterclasses using native ingredients. She said the Indigiearth brand is as strong as it has ever been and is excited to continue growing her business around Australia and into the region.
Pathways to 2040
In addition to the cross-cutting recommendations outlined in Chapter 2, which will have a broad economic impact, this chapter has additional specific recommendations on agriculture and food.
Raise awareness
A coordinated 'whole-of nation' approach will be key to recognising and capitalising on emerging trends and opportunities. The successful investment and business exposure returns of the Australian Government's ABEI demonstrates the value of targeted, tailored and coordinated advocacy efforts. The Australian Government can expand on these benefits, leading coordination efforts (including at the state and territory level), industry associations, research institutions and businesses to increase awareness of Australia's agricultural opportunities with Southeast Asia.
This effort would also support Australian businesses to better identify and adapt to evolving market conditions, including the rapid adoption of modern, digitally appealing marketing approaches, and providing local digital sales platforms in Southeast Asia. Understanding modern market dynamics and embracing digital transformation will be crucial for staying competitive in the region.
Recommendation
- Pursue a targeted, sustained and modern 'whole-of-nation' agricultural trade and investment advocacy effort to drive growth.
Another critical challenge is promoting awareness of Australia's responsible land management, environmental stewardship, and adherence to environmental, social and governance standards. It will be important to support development of mechanisms for Australian business to provide sustainability credentials. By emphasising these qualities – to customers, businesses and governments – Australian agriculture can build trust and reinforce its reputation in the Southeast Asian market.
Recommendation
- Promote Australia's environmental, social and governance credentials along the agrifood supply chain.
Remove blockages
The Australian Government needs to continue to address trade barrier challenges through multilateral and regional bodies (for example, the WTO, the Cairns Group and ASEAN), while at the same time using bilateral agreements to lift efforts to develop and adopt fair rules and standards. Agriculture is not a standing issue handled in existing ASEAN forums, but would be a valuable topic to take forward given its importance to the broader region.
Recommendations
- Advocate for the establishment of ongoing ministerial and senior officials–level engagement on agriculture through ASEAN mechanisms to provide additional forums to reduce barriers to trade.
- Deepen engagement with Cairns Group Farm Leaders in the region (Indonesia, Malaysia, Vietnam, Thailand and the Philippines).
There are a series of existing and emerging import requirements into Southeast Asian markets, including those that relate to halal and environmental, social and governance standards. Australia can respond by developing regulatory frameworks so Australian business can meet halal and other requirements.
Recommendation
- Expand resources for technical expertise and frameworks to support Australian export businesses to comply with new and existing import requirements (for example, environmental sustainability and halal) in Southeast Asian countries.
Build capability
The agricultural and food sector in Southeast Asia is witnessing a strong interest in the adoption of technology. Technological advancements, such as trade digitisation, drone utilisation in water management, virtual audits and smart farming, all play a pivotal role in building efficient, resilient and sustainable agrifood supply chains. Embracing these innovations addresses food security needs but will also position Southeast Asian countries as core, long-term innovation partners.
Recommendations
- Develop and deepen cooperation on sustainable agrifood systems through existing mechanisms and development programs.
- Expand training programs to support regional farmers on world's best agriculture practices (including water, soil, and broader environment and sustainability practices).
Increased importing-country biosecurity requirements and sustainability-related regulations necessitate preparedness by Australian and Southeast Asian agrifood businesses. Proactive management of infectious plant and animal disease outbreaks is crucial given frequent travel, growing interconnectedness, climate change, and variability. Strengthening Southeast Asian trading partners' capability to implement international biosecurity standards can yield mutual benefits.
Supporting precision agriculture, farmer service platforms and livestock health improvement, and combating illegal logging and illegal, unreported and unregulated fishing will present further opportunities for collaboration.78
Recommendation
- Provide long-term support for Southeast Asian trading partners' capacity to address biosecurity threats, including by in-country deployments of specialist technical capabilities.
Deepen investment
Investment in agriculture technology presents significant potential for mutual benefit in countries such as the Philippines, Malaysia, Thailand, Singapore and Vietnam.79 For example, Vietnam aims to double the amount of foreign investment in agriculture to US$34 billion by 2030.80 Digitised agriculture practices, precision farming, and advancements in post-farm technology will all be areas of growth.
In mature markets like Malaysia and Brunei, Australia's competitive advantage lies in supplying raw commodities that undergo value-added processing before re-export. To stimulate demand and trade for these raw commodities, Australia should encourage strategic commercial relationships, joint venture partnerships, and two-way investments in supply chains.
Establishing an Australian Agriculture Partnership, which would operate in a similar fashion to the successful Australian Water Partnership, could bring expertise from across Australia to lead cooperation in support of agricultural trade and development in Southeast Asia. This could target the key cross-cutting areas of growth identified above. The Australian Agriculture Partnership would work in collaboration with government, private and non-government organisation partners.
Recommendation
- Establish an Australian Agriculture Partnership to bring together public and private sector expertise to support agricultural trade cooperation and development in Southeast Asia.
66 Economist Impact, The PRISMA approach, The Economist, 2023, accessed 20 February 2023.
67 World Bank, Agriculture, Forestry, and fishing-value add (GDP) [dataset], n.d., accessed 14 February 2023.
68 Department of Agriculture, Fisheries and Forestry (DAFF), 'Growing demand for agricultural produce in South-East Asia', DAFF, Australian Government, 2023, accessed 1 March 2023
69 Department of Agriculture, Fisheries and Forestry (DAFF), Data analysis provided to DFAT, DAFF, Australian Government, unpublished.
70 C Gunning-Trant, Y Sheng, P Hamshere, T Gleeson and B Moir, What Indonesia wants: Analysis of Indonesia's food demand to 2050, ABARES Research Report 15.9, 2015, accessed February 2023.
71 E Lehmann, A Green and Gold Standard for Aussie-grown food, CSIRO, 2021, accessed 20 February 2023.
72 Submission from Grain Trade Australia.
73 Department of Foreign Affairs and Trade (DFAT), Bespoke data analysis – Agricultural Development and Food Security, DFAT, Australian Government, unpublished.
74 Centre for International Economics, The impact of ACIAR work in agricultural research for development 1982–2022. Volume 1: Quantifying returns on investment, Australian Centre International Agricultural Research (ACIAR), Impact Assessment Series Report No.100, 2022, accessed 17 February 2023.
75 Economist Intelligence Unit, Fintech, smallholders and sustainable agriculture in Southeast Asia, United States Agency for International Development Green Investment Asia, 2021, accessed 15 February 2023.
76 B Witte, P Obloj, S Koktenturk, B Morach, M Brigl, J Rogg, U Schulze, D Walker, E Von Koeller, N Dehnert and F Gross-Holz, Food for Thought: The Protein Transformation, Boston Consulting Group and blue horizon, 2021, accessed 14 February 2023
77 i2i Global, Inclusive Trade: Unlocking the Export Potential of Australia's Indigenous SMEs, Report to DFAT, 2021, accessed 15 February 2023
78 Department of Agriculture, Fisheries and Forestry (DAFF), Targeted capacity building support, DAFF website, 2022, accessed 14 February 2023.
79 See for example, Prime Minister's Department, Twelfth Malaysia Plan – 2021–2025, Government of Malaysia, 2021, accessed 14 February 2023. Royal Thai Embassy to the United States of America, 'Thailand 4.0', 2021, accessed 14 February 2023; KPMG Singapore, 'Singapore Fintech takes market share in 2022 global fun' [media release], KPMG Singapore, 14 July 2022, accessed February 2023. VNA, 'Vietnam eyes double investment in agriculture to $34 billion by 2030', VietnamPlus, 14 December 2022, accessed 15 February 2023.
80 Australian Centre for International Agricultural Research (ACIAR), 'Investigating and developing interventions to mitigate food borne parasitic disease in production animals in Lao PDR', ACIAR website, 2022, accessed 14 February 2023.