India may have surrendered the Cricket Emperor crown to the boys down under, but Senator Richard Colbeck, Parliamentary Secretary to the Minister for Agriculture, tells Nupur Chakraborty partnerships between Indian and Australian food businesses can deliver new win-win situations.
What range of business partnerships are you considering with India?
We are looking at a broader level of engagement with specific responsibilities around agriculture and food. We are also looking at different elements of agriculture and as to how we might build relationships. Dairy is one category we are focusing more intensely on. We visited the Amul factory in New Delhi and also met an innovative dairy farmer who is providing organic products in the market as a niche producer with around 50 cows of his own. We’ve also had conversations around productivity and what services and opportunities there might be for Australia to off er information around logistics, cold chain, systems and animal husbandry, to lift the productivity of the dairy industry in India. We have a team of about 60 delegates from the agricultural and food sectors with us who all are either already conducting business here or have an interest in beginning some form of partnerhips with India – from lamb to wine. For some, it is a fi rst visit and is all about how they might grow as the market enlarges.
The Indian government is pushing a strong Make-in-India campaign. Are you looking at both knowledge and financial investments?
Yes, absolutely. Australia has, for instance, a very robust system of research and development. There is lot of knowledge that can be used as part of the relationship. We had conversations with your government here on wool and cotton, for instance. So, the use of Australian products here as input for the textile industry is very much part of the thought. We’ve had talks on how the two countries can work together, how reducing barriers to the entry of our products as input for your manufacturing sector, actually makes your end products more competitive in the global market.
Both Prime Ministers Modi and Abbott have said they’d like to develop a free trade agreement between our countries by the end of this year. And I have to say that the influence of Prime Minister Modi is evident in how Indian businesses are now viewing investment from other countries.
How does Australia gain from such partnerships?
Well, any genuine relationship has to deliver benefits for both partices. Australia too gains as a result of this association, with Indian businesses also investing in Australia. We’d like to see two-way investments. Th is could take the form of Indian businesses investing in Australia and bringing products back to India. Or could be by way of Australian businesses coming here to partner with Indian companies and developing two-way trading relationships. The responsibility of governments is to make the frameworks for these things to happen. I know that Prime Minister Modi’s vision is to lift Indians into a higher standard of living; a strong and open trading relationship is part of lifting the affl uence of an entire country, by creating products that are more aff ordable. I’m told that the percentage of income that an Indian on average spends on food is much higher than is other countries like the United States. As opposed to about 20 per cent in the latter, in India that figure is approaching 30 per cent.
What is your initial impression of food retail in India?
Well, I’ve been to Foodhall at Palladium Mall and Nature’s Basket so far. On first impression, of course, they were very impressive businesses; both had a signifi cant proportion of imported foods in their ranges. Compared to back home in Australia, however, the range is smaller, as are the stores themselves. Some of the product packaging and presentions were differentiated – I imagine as a result of the influences from the trading countries where they’re coming from. One of the things that struck in the last few days here is the extreme popularity of Masterchef. And one opportunity that I see is for us to tell our food stories here. I think given Masterchef’s success, that would very much resonate in India – the conversations and the stories behind food products.
Technology is rapidly changing consumer behaviour in India. How are supermarkets in Australia leveraging the digital age?
When I talk to retailers back home, they tell me that their customer loyalty is about five per cent. The other 95 per cent will shop anywhere; it’s all about getting a good deal. It’s a very price-competitive market, and now we’re seeing tne entry of some other players from overseas who are bringing in a new level of competitiveness. It’s a very dynamic space in Australia, at least on the East coast, currently.
Given the technology explosions, the Australian supermarket industry is very active online. One supplier that I have spoken to sells 60 per cent of their products in China online. I guess in a certain way the food business is bypassing the traditional structures.
Where are the specific opportunities in India for Australian businesses?
When I look at India, I see the dairy segment and a miracle at work! Here is the biggest dairy producing nation in the world and the biggest dairy consumer base in the world, but all this with little input and output based on small farmers with a couple of cows hauling milk to a central distribution point. Th ere are major issues of spoilage and wastage. So how do we use technology and systems to improve that? We want to be part of improving the entire value chain from animal feed to end-product.
In Australia, the farmers feeds cows with the intention of boosting productivity. Here, cows are typically fed waste, and that shows up in lower productivity. Farmers here possibly do not have access to, or cannot aff ord, the inputs needed to raise productivity. Th ere’s a whole range of issues that our businesses can help with. It’s not up to either governments to make that happen, certainly. However, they can open up the frameworks so that businesses in both countries can get together.
Is India investment-friendly, say, compared to China?
We have a signifi cant trade relationship with China. We export more to China than we import in food. A couple of years ago, our exports to China were at about Australian 2.1 billion dollars and imports were at about 670 million dollars. We export 60 per cent of what we produce; we are an export trading nation in agriculture. We are also a high-cost manufacturing country, and therefore need to target specific segments and offer products for those sectors, and which are also price-competitive. Typically, these would be premium brands, because we’re not going to be competitive at the commodity
level. The offering could be in foodservice or an entire range of things. We also need to understand the scale of some of the markets here; a niche here is a big market at home, for instance. A major Indian city is actually the market size of two or three cities in Australia. So we need to ensure that we can actually service markets here.
There’s work to do here in the investment and trading environments. The food standards, in India, for instance, don’t align globally. We can offer assistance and support to look at your systems. We already share our food safety systems with New Zealand; it’s a single system for two countries. Indian and Australian businesses have been telling me that this also what they want. The trading environment needs to be as easy as possible. Unlike in China, in India, it is not a single government that imposes legislation. You have multiple state governments, and all of those complications also need to be understood by foreign businesses.
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