RIRDC Completed Projects in 1999-2000 & Research in Progress as at June 2000

To Research in Progress



14.1 GLOBAL COMPETITIVENESS COMPLETED PROJECTS
PROJECT No	PROJECT TITLE	RESEARCHER	PHONE	ORGANISATION

New Market Opportunities for the Food Sector
 

US-49A

An economic analysis of the integration of Chinese wholesale food markets: Implications for Australia

A/Prof Fredoun Ahmadi-Esfahani

(02) 9351 3559

The University of Sydney

Domestic Impediments to Industry Performance
 

BLC-1A	A study of the provision and pricing of economic infrastructure to rural and regional Australia under national competition principles	Dr Terry Dwyer	(02) 6286 5900	Bob Lim & Company Ltd
UNE-67A	Where is market power in the Australian food marketing chain?	Prof Roley Piggott	(02) 6773 2313	University of New England

Trade Policy Reform
 

ABA-8A	The dynamics of international agricultural policy reform	Mr Ivan Roberts	(02) 6272 2239	Australian Bureau of Agricultural and Resource Economics
CIE-8A	Enhancing the prospects for agriculture in the next round of trade talks	Dr Andrew Stoeckel	(02) 6248 6699	Centre for International Economics

Markets for Agricultural Products
 

DAQ-209A	Japanese consumer co-operatives - a market entry strategy for horticultural products	Mr Rick Ada	(07) 4688 1388	Department of Primary Industries (Qld)
UA-45A	Anatomy of successful export-led growth: Lessons from the grape and wine industry	Prof Kym Anderson	(08) 8303 4712	The University of Adelaide
US-40A	Impact of quality attributes and trade impediments on Australia's rural exports to Asian markets	A/Prof Fredoun Ahmadi-Esfahani	(02) 9351 3559	The University of Sydney

Supply Chain Linkages
 

GLL-2A	Supply chain management: building partnerships and alliances in international food and agribusiness	Mr Glen Thompson	(08) 9319 8998	Global Linkages Pty Ltd
WHP-3A	The impact of foreign ownership on export orientation of food and fibre firms	Mr David Michael	(02) 9369 2735	Wondu Holdings Pty Limited

Policy and Institutional Analysis
 

GLL-1A

An international comparison of cooperative marketing arrangements between Australia, United States and Europe

Mr Glen Thompson

(08) 9319 8998

Global Linkages Pty Ltd

Communications
 

UMO-19A

Annual awards for excellence in agribusiness

Dr Lawrie Dooley

(03) 9903 2757

Monash University

New Market Opportunities for the Food Sector
 

Project Title	Integration of Wholesale Food Markets in China: An Analysis of the Implications for Australia
RIRDC Project No:	US-49A
Researcher:	A/Prof Fredoun Ahmadi-Esfahani
Organisation:	The University of Sydney Department of Agricultural Economics A04 SYDNEY NSW 2006
Phone:	(02) 9351 3559
Fax:	(02) 9351 4953
Email:	f.ahmadi@agec.usyd.edu.au
Internet:	http://www.unsyd.edu.au/su/agec/
Objective	To examine whether or not wholesale food markets in China are integrated and to explore the implications of findings for Australia.
Background	An earlier RIRDC Project No. US-27A entitled The Wholesale Demand for Food in China: An Economic Analysis of the Implications for Australia highlighted the importance of the research into price integration among the Chinese wholesale food markets. Should markets happen to be fully integrated, the choice of where to introduce products and marketing initiatives would be of comparatively little significance. However, if markets are weakly integrated and move independently, products may not flow through to other regions such that prices will be different, giving rise to arbitrage opportunities for export traders.
Research	Market integration models are used within a cointegration framework to achieve the preceding objectives. The data are from the Vegetable Price Information System in China and the agricultural database from the Chinese Ministry of Agriculture covering the period January 1993 to July 1999. Seven markets, namely Dazhongsi and Xinfadi in Beijing, Beiyunting and Ziginshan in Nanjing, Caoan and Xinchang in Shanghai and Buji in Shenzhen are included in the investigation. The products considered include fruits, vegetables, nuts, beans, grains, meat and eggs.
Outcomes	Of the total 70 market pairs for different products, only 30 per cent are cointegrated, while 49 of the market pairs or 70 per cent are not cointegrated. It appears that there is no such thing as a "single" Chinese wholesale food market; rather, there is a collection of different wholesale food markets in China. This lack of integration may be due to government intervention, poor infrastructure facilities and nature of products.
Implications	The findings imply arbitrage opportunities for both foreign and domestic traders, and promising investment prospects in support facilities. Traders can exploit these opportunities by, among others, selling in large markets, distributing in markets which appear to influence other smaller markets, and targeting markets that are cointegrated. Additional marketing strategies are explored in the study.
Publications	Ahmadi-Esfahani, F., Buetre, B. and Digal, L. (2000), "Integration of China's Wholesale Food Markets", Contributed paper presented at the 44th Annual Conference of the Australian Agricultural and Resource Economics Society, Sydney, 23-25 January 2000.

Domestic Impediments to Industry Performance

Project Title	A study of the provision and pricing of economic infrastructure to rural and regional Australia under national competition principles
RIRDC Project No:	BLC-1A
Researcher:	Mr Bob Lim and Mr Terry Dwyer
Organisation:	Bob Lim & Co Pty Ltd Level 10, 118 Alfred Street MILSONS POINT NSW 2061
Phone:	(02) 9957 3552
Fax:	(02) 9959 3461
Email:	boblimco@ozemail.com.au
Objective	The study will produce a theoretical and empirical report from the viewpoint of rural and regional Australia of the impact of National Competition Policy on the provision and pricing of economic infrastructure. The study will produce (1) an Issues Paper in April 1999 addressing key theoretical and practical issues at stake for rural and regional Australia. The Issues Paper will be coming out at the same time as the draft report of the Productivity Commission on National Competition Policy and rural and regional Australia.
Background	National competition policy has delivered benefits. There have been price falls and greater efficiency in the use of infrastructure. But it is not clear that major benefits have flowed to rural and regional Australia.
Research	The study examined key assumptions of national competition policies. One is that full cost recovery through user charges (even worse, user charges based on inflated asset values) is efficient. Another key assumption is that secondary beneficiaries from infrastructure do not exist, that there are no external benefits to non-users, and that users in rural and regional Australia should therefore pay for the full cost of regional infrastructure even when benefits accrue elsewhere. A key question hanging over national competition policy is whether NCP and its system of reviews will deliver adequate infrastructure supply. The focus of NCP processes to date has been on demand management and the pricing principles applied to existing infrastructure. Concerns to maximise dividends or privatisation proceeds from asset sales have cut across fundamental NCP reform objectives of reducing infrastructure costs and making Australia internationally competitive. NCP processes and regulatory reviews have been numerous and often opaque. Implications of technical issues such as asset valuation have not been grasped. Areas of infrastructure surveyed (water, electricity, railways) show mixed results. Running side by side with real price falls in some cases have been misplaced uses of concepts of cost, considerable complexity and the use of scarcity pricing as a licence to tax. For example, while caps on electricity prices have been welcomed, farmers surveyed are concerned by cost-price squeezes emerging from rail and water charges.
Outcomes	Unlike more general and passive economic policies, microeconomic reforms and NCP require a vigorous engagement by stakeholders to achieve benefits. The failure of rural and regional Australia to inject itself as a robust player in the NCP process is understandable: NCP processes are complex, time consuming and require extensive professional research and administrative effort. The harder stakeholders work at the NCP process the greater will be the benefits they achieve. Rural and regional Australia have been slow off the mark in pursuing their interests in the NCP process. Accordingly, their benefits have been smaller.
Implications	Adequate financial and professional resources are essential for rural and regional Australia to "lift its game" in the NCP process – and to secure the maximum benefits . The need to engage is serious. Unless national competition policy is refined to deal with issues of appropriate infrastructure provision, there is a danger that the current Indian summer of infrastructure productivity gains may give way to a Siberian winter of failing infrastructure provision. The theoretical assumptions behind national competition policy need further examination in the year 2000 review, especially as they affect rural and regional Australia. Without refinement of national competition policy, there is a danger that infrastructure charges to users will make rural and regional Australia uncompetitive in world markets or, worse, that infrastructure will simply not be provided.
Publications	Infrastructure: Pricing, Provision and Process – Implications for Rural Australia by RKH Lim and TM Dwyer, RIRDC Publication No.99/162.

Project Title	Where is market power in the Australian food marketing chain?
RIRDC Project No:	UNE-67A
Researcher:	Garry Griffith, John Nightingale and Roley Piggott
Organisation:	University of New England Agricultural and Resource Economics School of Economic Studies ARMIDALE NSW 2351
Phone:	02 6773 2313
Fax:	02 6773 3596
Email:	rpiggott@metz.une.edu.au
Internet:	http://www.une.edu.au/febl/EconStud/piggott.htm
Objective	To identify whether current knowledge allows reliable conclusions to be made about the existence and effects of market power in Australian food markets by undertaking a literature review and holding a workshop to assess the conclusions.
Background	Whether or not market power exists in the food chain has been an issue of concern to farmers and policy makers for most of this century. Significant change has and continues to occur in the food marketing chain and how it is managed.  Once, food was "pushed" off farms into the marketing chain with consumers accepting whatever was on offer. Now retailers "pull" product with appropriate characteristics out of the system in response to consumer preferences. Questions that are being addressed include whether market power is increasing or decreasing as a result of changes in the structure and management of the food chain, and how various parties (farmers and consumers in particular) are affected. Public concern about the issue is evidenced by the Joint Select Committee on the Retailing Sector, which reported recently (see Australian Parliament 1999). The structure of food retailing and the agricultural marketing board system also received attention in the recently-completed Productivity Commission report on the impacts of NCP on rural and regional Australia (Productivity Commission 1999).
Research	Insights about market power gleaned from economic theory are summarised. Empirical studies on market power in the food chain are reviewed. Recent Australian public inquiries having some coverage of food chain market power are discussed. A research agenda is presented. Changes in food chain management are reviewed. A model of marketing margin behaviour under extremes of competition in retailing and input purchasing and some comparative statics relating to the incentive for collusive behaviour in purchasing raw agricultural products are presented. Some preliminary empirical work on market power in the Australian food chain is presented. Finally, some details of the workshop convened to review the research agenda are presented.
Outcomes	This research report is available as the RIRDC Report of the above title.
Implications	Future research into market power issues in the Australian food market should be in the form of intensive case studies. These will allow development of the institutional detail sufficient to reveal the nature and significance of market power in those chains and how and why it ebbs and flows over time. However such resource-hungry analyses cannot be undertaken for every market faced by a merger or deregulation proposal. The implications of the empirical results provided in the Report are that (a) attention should be focused on the supplier side, not on the consumer side of the market (an implication fully supported in the Joint Select Committee report); and (b) the sector providing the most likely payoffs from greater research effort would be the grains and oilseeds processing and distribution sector. Lack of empirical data for many other sectors means that we depend on anecdote and intuition for suggestions that horticulture might be another significant sector.
Publications	Griffith, G.R. (2000), "Competition in the food marketing chain", Presidential Address to the 44th Annual Conference of the Australian Agricultural and Resource Economics Society, Sydney, January, forthcoming in the Australian Journal of Agricultural and Resource Economics 44(3), 333-367.

Trade Policy Reform
 

Project Title	The dynamics of international agricultural policy reform
RIRDC Project No:	ABA-8A
Researcher:	Mr Ivan Roberts
Organisation:	Australian Bureau of Agricultural and Resource Economics (ABARE) Edmund Barton Building Cnr Broughton & Macquarie Streets BARTON ACT 2600
Phone:	(02) 6272 2239
Fax:	(02) 6272 2346
Email:	iroberts@abare.gov.au
Objectives	The outcome will be: · More informed and therefore effective policy development and negotiation positions in Australia and elsewhere in the next WTO agricultural negotiations; · A strengthened Australian negotiating position in the negotiations through increasing the awareness in key countries of the benefits of multilateral trade liberalisation for agriculture. The deliverable’s will be a research report to be released at an international conference before the WTO Ministerial meeting that will set the scene for the upcoming WTO agricultural negotiations which are to commence by the end of 1999 and an ABARE 'current issues' paper on the 'multifunctionality of agriculture'.
Background	The Uruguay Round set the framework for reducing distortions. However, progress in reducing distortions was limited. The coming agricultural trade negotiations provides an opportunity to achieve fundamental reform.
Research	Research focused on several key issues. These included progress in addressing the agricultural protection problem; forms of agricultural protection and implications for market distortions; the ‘multifunctionality’ of agriculture, developing country issues and requirements to achieve benefits from trade.
Outcomes	More informed and effective policy development and negotiation positions in Australia and elsewhere in the next WTO agricultural negotiations;  A strengthened Australian negotiating position through increasing the awareness in key countries of the benefits of multilateral trade liberalisation for agriculture.
Implications	Further reform of international agricultural policies is critical for the long term benefit of Australian farmers. The coming round provides the opportunity for achieving substantial benefits – but only if effective reforms can be achieved. A major test of these negotiations will be the extent to which policy induced distortions are reduced. This will require addressing the limitations of the Uruguay round Agreement on Agriculture as well as making substantial reductions to distorting forms of support. An essential outcome will be a re-orientation of production away from countries with high agricultural support toward countries with low support.
Publications	‘Multifunctionality’: A Pretext for Protection, ABARE Current Issues paper 99.3. Reforming World Agricultural Trade Policies, by ABARE, ABARE Research Report 99.12, RIRDC Publication No. 99/96. Multilateral Agricultural Policy Reform: An Imperative for the New Millennium, ABARE Current Issues paper 99.3.

Project Title	Enhancing the prospects for agriculture in the next round of trade talks
RIRDC Project No:	CIE-8A
Researcher:	Dr Andrew Stoeckel
Organisation:	Centre for International Economics GPO Box 2203 CANBERRA ACT 2600
Phone:	(02) 6248 6699
Fax:	(02) 6247 7484
Email:	astoeckel@intecon.com.au
Objective	The focal point of this project would be a high profile public symposium held in the week of the WTO Ministerial in Seattle in December. A RIRDC Research Report comprising papers from a range of international experts will be completed and published prior to the symposium with a two-page media flyer summarising the results of the report. The report will focus on the benefits from reform and the counter arguments to the popular misconceptions about trade raised by protectionists. The strategy is to arm the reform minded ministers with the ammunition and political will to structure for a successful outcome from the ministerial meeting.
Background	Barriers to agricultural trade are among the highest for any goods traded in the world. Vested interests and a lack of political will to reform will keep protection high unless they can be changed. The best way to change political will is to expose the vested interests and carefully rebut the fallacious arguments put forward in defence of protection.
Research	A strategy was prepared to stage a high profile seminar in Seattle to coincide with the WTO Ministerial meeting in November 1999.
Outcomes	A series of papers was collated and presented in a well edited book Reason versus Emotion: Requirement for a Successful WTO Round. This book is on the RIRDC web site and links to it appear on the CIE’s web site and the Cairns Group Farmer Leaders web site. The Cordell Hull Institute is going to re-edit and publish the papers, plus some other recent relevant papers with Cameron May in the UK. The WTO has placed copies of the study in its bookshop for sale. A video clip of the study is being prepared for presentation to the MBA class in the University of Virginia
Implications	The research highlights the need for ongoing transparency of the social benefits and costs of trade policies. It also has shown a new and innovative angle in measuring the benefits from trade reform, viz-a-viz that trade boosts productivity and lowers country risk and both of these effects boost investment.
Publications	Reason vs Emotion - Requirements for a successful WTO Round by A Stoeckel and H Corbet, RIRDC Publication No.99/167

Markets for Agricultural Produce
 

Project Title	Japanese consumer co-operatives - a market entry strategy for horticultural products
RIRDC Project No:	DAQ-209A
Researcher:	Mr Rick Ada
Organisation:	Queensland Department of Primary Industries PO Box 102 TOOWOOMBA QLD 4350
Phone:	(07) 4688 1388
Fax:	(07) 4688 1199
Email:	adar@dpi.qld.gov.au
Objectives	To establish the opportunities for market entry via Japanese Consumer Co-operatives for fresh and value-added horticultural produce by: · Developing a detailed analysis of the product requirements of Japanese Consumer Co-operatives · Identifying potential strategic alliances between Australian producers and the Japanese Consumer Co-operative movement · and providing this information to targeted producers and producer groups through a report and input to producer and Agribusiness seminars aimed at improving marketing skills and the understanding of the import process. The project to be completed by mid 1999.
Background	The consumer co-op movement is one of the largest food retailers in Japan with sales made through co-op stores and direct selling methods. Co-ops are an aggregation of 637 individual co-ops situated throughout the country, operating some 2,690 retail outlets. Co-op membership was 20.628 million in 1999. Turnover continues to expand, with fresh food the main component of retail sales. There is a growing requirement for fresh, safe food to supply both out of season demand and the request from members for imported foods.
Research	Nine agricultural consumer co-ops were studied to identify the philosophy, member involvement in the organisational structure, and the supply chains involved between the producer and the co-op.
Outcomes	The Japanese consumer co-ops present great export opportunities for Australian horticultural producers. The co-ops are a member-directed organisation intent on providing members with regular supply of quality food at reasonable prices. One of the primary assurances the co-op passes onto members is a guarantee of product safety. Using the concept of sanchoku and extending the principles involved to products supplied from foreign sources, the co-op, trading company or the JCCU maintain a direct line of communications with the producer and work towards the maintenance of product safety. In addition to safety, the other key attributes the co-ops seek are freshness, quality, taste and price. The order of importance varied between fruit and vegetables, with safety as the number one priority. Producers must also be able to guarantee supply to meet the demand levels and produce a product or variety specifically for sale to the co-op consumer, a distinctly different practice to growing product to meet traders’ criteria. As a direct result of this research two Queensland companies have successfully negotiated product entry into the Japanese co-op market.
Implications	Traditionally, horticultural producers supply wholesale markets without any knowledge of consumer’ preferences. The Japanese co-op market offers producers the opportunity to produce quality and quantity in accordance with consumer needs, that is, producing directly into a waiting market. The co-ops maintain direct communications with producers in an effort to establish a win-win situation for both producer and consumer.
Publications	Ada R. 1997, The Market for Horticultural Products in Japanese Consumer Co-operatives. Marketing Research Snapshot. Queensland Department of Primary Industries. Japanese Consumer Co-operatives – A market entry strategy for Horticultural Products by Rick Ada, RIRDC Publication No. 00/30 Ada R. 2000, Direct supply relationships with Japanese consumer co-operatives – A market opportunity. Paper presented to Australian Agricultural and Resource Economics Conference, Sydney, January. Ada R. and Kawasaki H. 1996, Sanchoku in Japanese Consumer Co-ops. Miscellaneous Report QM96001. Department of Primary Industries, Queensland.  Ada R. and Kawasaki H. 1997, Japanese Consumer Co-operatives and Direct Transactions Sanchoku. Department of Primary Industries. Queensland Ada R. and Kawasaki H. 1998, Co-operation between Consumer Producer Co-operatives. Paper presented to International Co-operative Alliance Special Workshop on Agriculture Consumer Fisheries Strategic Alliance, Seoul, Korea. 27 October. Ada R., Kawasaki H. and Doolan R. 1998, Sanchoku – Supply Chain Management in Japanese Consumer Co-operatives. Paper presented to International Agribusiness Management Association Congress, Uruguay.

Project Title	Anatomy of successful export-led growth: Lessons from the grape and wine industry
RIRDC Project No:	UA-45A
Researcher:	Prof Kym Anderson
Organisation:	Centre for International Economic Studies University of Adelaide ADELAIDE SA 5005
Phone:	(08) 8303 4712
Fax:	(08) 8223 1460
Email:	kanderson@economics.adelaide.edu.au
Objective	The key outcome of the project will be an in-depth understanding of the relative importance of the various factors contributing to the export-led growth success of the Australian wine industry and its lessons for other small rural industries seeking to expand via export sales.
Background	The real value of production has increased six times faster for winegrapes than for rural products in aggregate over the past decade. Other small rural industries seeking to expand have much to learn from the phenomenal success of the grape and wine industry, including the extent to which the benefits of that growth are being shared between farmers and processors over time.
Research	The research has involved a mixture of (i) descriptive analysis based in informed views and detailed primary statistics of the industry and (ii) formal quantitative modelling using the FEDSA-WINE model of the Australian economy to obtain more-precise information on the relative importance of the key quantifiable factors contributing to the wine industry’s recent growth.
Outcomes	The key outcomes are the insights provided in the March 2000 report to RIRDC entitled 'Export-led Success: Lessons from Australia's Wine Industry'. In addition, an analytical background paper, ‘Accounting for Growth in Australia’s Grape and Wine Industries, 1986 to 2003’, has been submitted to a journal. Other papers generated as part of this and closely related projects are listed below.
Implications	The clearest implication of the research is that dramatic export-led expansion by small rural industries is possible, but not without substantial hard work and large synergistic investments of time, effort and money in all three stages of the production process (primary production, processing, and marketing/ distribution). More specifically, a more-precise market niche has to be identified than simply aiming broadly at import replacement; a long-term vision for sustainable growth, based on sound and detailed statistics, would help attract investment funds; training courses and research need to accompany or preferably precede investments in primary production, processing plants and promotion; and where vertical integration is not complete, good relations between primary producers and processors/ marketers need to be developed.
Publications	Anderson, K. (1999), ‘Australia’s Grape and Wine Industry into the 21st Century’, CIES Discussion Paper No. 24, University of Adelaide, November. Anderson, K. and N. Berger (1999), ‘Australia's Re-Emergence as a Wine Exporter: The First Decade in International Perspective’, Australian and New Zealand Wine Industry Journal 14 (6), Dec. Osmond, R. and K. Anderson (1998), Trends and Cycles in the Australian Wine Industry, 1850 to 2000, Adelaide: Centre for International Economic Studies. Wittwer, G. and K. Anderson (1999), ‘Accounting for Growth in Australia’s Grape and Wine Industries, 1986 to 2003’, CIES Seminar Paper 99-02, University of Adelaide, March. Export Led Growth – Lessons from Australia’s Wine Industry by Kym Anderson, RIRDC Publication No. 00/52

Project Title	Australia in East Asian Food Markets: The Impact of Trade Impediments, Quality Attributes and Multinational Strategies
RIRDC Project No:	US-40A
Researcher:	Associate Professor Fredoun Ahmadi-Esfahani
Organisation:	The University of Sydney Department of Agricultural Economics A04 NSW 2006
Phone:	02 9351 3559
Fax:	02 9351 4953
Email:	f.ahmadi@agec.usyd.edu.au
Internet:	http://www.usyd.edu.au/su/agec/
Objective	To evaluate the impact of trade barriers, quality attributes and multinational strategies on the performance of, and opportunities for, Australian exporters of food to East Asia.
Background	A broadening of strategies from the traditional concern for cost competitiveness to quality is apparent in the policies of Australia's major food industry bodies and government. This reflects the changing market both in scope, as technology breaks down the physical barriers to entry, and composition, as markets develop and deepen. The rapid growth in markets for processed foods allows for product differentiation and alters the dynamics of market entry and access. The growth of multinationals has the potential of globalising market strategies.
Research	The study uses a set of empirical models based on constant market shares analysis and general equilibrium model, GTAP, in combination with more heuristic approaches to assess Australia's competitive performance, trade and investment strategies, price and non-price competition and impact of multi-national strategies. The analysis is largely based on data for beef, dairy and grain products for the period 1962 to 1997 focusing on Japan, Malaysia, Indonesia, Singapore and the Philippines.
Outcomes	It is found that relative price and real expenditures can account for 75 per cent of the variation in import share of Australian beef in Japan, Malaysia and Indonesia. For Singapore and the Philippines, the figure is less than a third. In the case of milk, relative price is only found to play a statistically significant role in Malaysia, while relative price is a significant determinant of import share in cheese for all key markets except the Philippines. Product differentiation, in terms of country of origin, was also found to play a significant role in all key markets for beef and dairy products. The results include general equilibrium estimates of the effects of trade barriers.
Implications	The project results imply that Australian producers need to broaden their strategies to encompass investment abroad and collaborative supply and marketing arrangements. However, the advantages of first entry, including a stronger bargaining position, need to be weighted against the disadvantages in terms of possible lengthy gestation periods and risk.
Publications	Ahmadi-Esfahani, F. and Anderson, G. (1999), "Trade Elasticities: The Significance of Trade Barriers, Multinationals and Market Structure", Contributed paper presented at the 43rd Annual Conference of the Australian Agricultural and Resource Economics Society (AARES), Christchurch (New Zealand), 20-22 January 1999. Ahmadi-Esfahani, F. and Anderson, G. (1999), "Constant Market Shares Analysis: Uses, Limitations and Prospects", Contributed paper presented at the 43rd Annual Conference of the AARES, Christchurch (New Zealand), 20-22 January 1999. Anderson, G. and Ahmadi-Esfahani, F. (2000), "Australia's Food Export Performance in East Asia", Paper presented at the 44th Annual Conference of the AARES, Sydney, 23-25 January 2000.

Supply Chain Linkages
 

Project Title	Supply chain management: building partnerships and alliances in international food and agribusiness
RIRDC Project No:	GLL-2A
Researcher:	Mr Glen Thompson
Organisation:	Global Linkages Pty Ltd PO Box 466 CALREMONT WA 6010
Phone:	(08) 9319 8998
Fax:	(08) 9319 8998
Email:	robglen@wantree.com.au
Internet:	www.global-linkages.com
Objective	To provide a thorough understanding of international perspective’s in supply chain management, including retail and manufacturing trends, quality management, genetically modified foods, and brand building and strategy development.
Background	There are some fundamental changes occurring to our traditional relationships between retailer, manufacturer, distributor and farmer. The most recent of these is the movement towards partnerships and alliances. What does all this mean? Do these linkages improve efficiency in the production and marketing of food products? What qualities among staff and organisational structures are required to make and retain a successful alliance or partner? How are the benefits of partnerships shared out and in particular, what are the gains to all along the chain – do alliances and partnerships help reduce prices, improve availability, increase choice and raise quality? To fully appreciate the international perspectives of supply chain management, a research report detailing a number of issues crucial to SCM has been compiled. It provides an analysis of the food and agribusiness sector in Asia, USA and Europe, consumer retail patterns, manufacturer responses, quality management issues and the linkages in the chain to increase overall efficiency.
Research	This research report has been compiled based upon the findings of a four-day professional development program focussing on supply chain management. The program incorporated views and case studies from a number of the worlds leading academics and company representatives.
Outcomes	The food chains have long faced the challenge of coordinating different sectors from production through to consumer. The often fragmented nature of the food industry has led in many cases to a lack of coordination which in turn affects commercial returns, equity of distribution and how efficiently we use our natural resources. There are a number of influences impacting on our agricultural sector. These are global issues and if not sufficiently understood and communicated to our industry could significantly restrict our capacity to grow. These issues include: (1) The globalisation and rationalisation of retailers and manufacturers (It is predicted by some in the retail sector that within the next five to ten years there will inly be four to five major retailers left in the world). (2) The development of intellectual property rights. (3) The increasing awareness of consumers as to how and where our food is grown and treated (4) Food as a fashion item rather than a subsistence item.
Implications	These factors a have a number of significant implications for our industry. Unfortunately our industry is not preparing itself to meet these challenges. Our production sector in particular can be characterised still as commodity driven/reliant. Focussing on broad acre production with little room for value adding and a general lack of understanding of issues past the farm gate. There are some significant exceptions. It is quite clear however that organisations must develop far closer links along the supply chain and with international partners to ensure continued market access and growth.

Project Title	The impact of foreign ownership on export orientation of food and fibre firms
RIRDC Project No:	WHP-3A
Researcher:	Mr David Michael
Organisation:	Wondu Holdings Pty Limited PO Box 1217 BONDI JUNCTION NSW 1355
Phone:	(02) 9369 2735
Fax:	(02) 9369 2737
Email:	Wonduhdgs@yahoo.co.uk
Objective	The study aim was to examine the effect of foreign ownership on exports and outbound foreign direct investment [FDI] by food and fibre industrial enterprises in Australia. The hypothesis was that there is no significant difference in the export orientation of foreign and locally owned firms. An early examination of foreign investment flows and trade prompted more attention to food manufacturing and to add food retailing, whilst giving less attention to TCF and Leather which attracts little inbound FDI or outbound FDI.
Background	Globally, FDI is growing faster than exports. FDI has been a significant source of capital for development of the Australian food industry and, with a current book value in excess of $11billion, it accounts for almost 25% of total asset values for the sector and over 50% of the estimated net worth of the sector. (Australian Bureau of Statistics [Cat. 8225] estimates the net worth of the Australian food, beverage and tobacco manufacturing industry to be $21.5billion and the inward stock of FDI in this industry to be $11.1billion). Outbound FDI in the food industry is around $5b.Foreign investment policy and strategy for both governments and companies has emerged as a key issue in the context of increasingly competitive and globalised markets.
Research	The data for this study was extracted from the 1995 Australian Workplace Industrial Relations database, which was compiled from a cross sectional survey of Australian firms. The data contains the responses of 40 food manufacturers [17 foreign owned], 45 TCF manufacturers [19 foreign ] and 83 food retailers [8 foreign]. Binary logistics regression and generalised linear model regression was used to analyse the data
Outcomes	The studyfound that foreign owned firms [with more than 50% foreign ownership] are more likely to be export oriented than wholly or predominantly owned Australian firms. Food manufacturers that have more than 50% foreign ownership are 4 times more likely to have some export sales than Australian owned firms. Textile, clothing and footwear manufacturers that have more than 50% foreign ownership are 9 times more likely to have some export sales than Australian owned firms. Although foreign ownership is associated with increased export orientation it is also associated with decreased outbound foreign investment. Less than 20% of foreign owned food manufacturers have overseas subsidiaries or workplaces controlled by them compared to nearly 60% of Australian owned food manufacturers. The superior export performance of foreign owned firms is associated with higher labour productivity, regular introduction of new technology and restructuring.
Implications	1. Restrictions on foreign ownership would have a negative effect on exports. 2. Foreign owned firms should be eligible to receive the same benefits as Australian firms in trade development programs.3. Encourage foreign owned firms to invest offshore.

Policy and International Analysis
 

Project Title	An international comparison of cooperative marketing arrangements between Australia, United States and Europe
RIRDC Project No:	GLL-1A
Researcher:	Mr Glen Thompson
Organisation:	Global Linkages Pty Ltd PO Box 466 CALREMONT WA 6010
Phone:	(08) 9319 8998
Fax:	(08) 9319 8998
Email:	robglen@wantree.com.au
Internet:	www.global-linkages.com
Objective	To provide a thorough understanding of the alternate cooperative structures in Australia, USA and Europe concentrating on the financial, legal and management aspects.
Background	The rural sector in Australia is going through a number of organisational and structural changes in terms of internationalisation, relationships and concentration. Agricultural production is becoming more specialised and farms are getting bigger. Traditional marketing structures such as statutory marketing authorities and conventional agricultural cooperatives are breaking down leaving farmers with the need to investigate other structures to influence and develop marketing strategies and economic efficiency. This within the context of major changes at the food and agribusiness level with globalisation in the food manufacturing and retail sectors. Many becoming active in supply chain management and forming alliances with manufacturers and farmers and farmer groups. At the political level, changes are taking place with reform of Common Agricultural Policy, the lowering of tariffs worldwide and the introduction of National Competition Policy. What is pervading the economies is a change in emphasis from producer to consumer and protection to competition.
Research	This project is to be combined with project IMS-2A - ‘International trends in the structure of agricultural cooperatives’. Therefore the research for the final report combines the findings of a four-day cooperative marketing leaders program and a study tour examining the international trends in the structure of agricultural cooperatives. These two research projects involve obtaining a thorough understanding of the alternate cooperative structures in the world, in particular the manner in which they are structured and organised and their effectiveness as a commercial competitor in the food industry.
Outcomes	Cooperatives across the world are moving to differing structures. Traditional style cooperatives are losing favour particularly in the US where a new style of cooperative is emerging, the New Generation Cooperative. These have the characteristics of tradeable delivery rights; substantial capital contribution from farmer members; a closed membership and a shareholding representing a contractual commitment to deliver a quantity and quality of product. In Europe, agriculture is dominated by cooperatives. Major cooperatives have merged to create mega-cooperatives. Mergers have primarily been within countries however future merger activity is likely to be cross-border. In Australia, the trend is to move away from the cooperative to more of a company structure. The reason for this is the desire for capital to finance future growth. This is a movement away from a reliance on members for capital contributions.
Implications	Cooperatives across the world are expecting more from their boards and management teams. Current structures have to cater not only for the expectation from their members of increasing producer prices but also a return on their capital investment over time. Greater accountability and scrutiny by members is resulting in a more professional approach to business strategies.

Communications
 

Project Title:	Annual awards for excellence in agribusiness
RIRDC Project No:	UMO-19A
Researcher:	Dr Lawrie Dooley and Keran Fegan
Organisation:	Monash University Faculty of Business and Economics Department of Marketing PO Box 197 Caulfield East VIC 3145
Phone:	03 9903 2757
Fax:	03 9903 1558
Email:	lawrence.dooley@buseco.monash.edu.au, keran.fegan@buseco.monash.edu.au
Objective	The Agribusiness Awards for Excellence were established to recognise and reward companies and individuals with outstanding achievements in Australia’s Agribusiness industry.
Background	In 1996 the Department of Marketing, Faculty of Business and Economics, Monash University combined with Rabobank Australia Group, part of the international Dutch agribusiness bank, Rabobank, to present the Agribusiness Awards for Excellence. Initially five award categories were established and sponsorship was obtained from another three companies.
Research	Members of the business community are invited to nominate organisations or individuals for awards in the various categories. We currently have a mailing list of 3,000 companies and conduct mass marketing via advertisements in selected media. Telemarketing is conducted to invite companies to consider applying for the awards. Leads for applicants are obtained from sponsors and articles of interest collected from BRW, Financial Review, Age and The Australian Newspaper.
Outcomes	This year Monash University is proud to present the 5th Annual Agribusiness Awards for Excellence. There are now eight award categories and this year we obtained media sponsorship from The Australian newspaper. In 1996 the Gala dinner in had 180 people in attendance. Last year attendance had increased to 440 people. This trend reinforces the growing awareness of the importance of the awards in the Agribusiness community.
Implications	The awards provide sponsors with an opportunity to promote their corporate image and show support for the Australian Agribusiness industry. The Gala dinner and awards presentation provide individuals in the industry with an opportunity to network and interchange ideas. Sponsors can promote their corporate values to the Agribusiness industry
Publications	Over the past five year’s the RIRDC "Agribusiness Value Adding Award" has received recognition in publications such as the Financial Review, Australian Farm Journal, Rural Business, Food Australia, The Age, Beef Improvement News, Australian Institute of Agricultural Science and Technology, (AIAST) and The Australian.

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Last updated: 3 August 2000
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