RIRDC Completed Projects in 2001-2002 & Research in Progress as at June 2002

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4.1 Global competetiveness - completed projects
PROJECT No	PROJECT TITLE	RESEARCHER	PHONE	ORGANISATION

New Market Opportunities for the Food Sector

ANU-50A	Japan food market study	Dr. Ray Trewin	(02) 6125 0134	Australian National University
DFT-1A	Asia's Food and Agribusiness Revolution Continues: New Opportunities in a Resurgent Asia (Subsistence to Supermarket II)	Mr. Steven Deady/ Ms. Judith Laffan	(02) 6261 2545	Dept of Foreign Affairs and Trade

Domestic Impediments to Industry Performance

AEC-2A

Benchmarking technology on the Australian waterfront

Dr. Bob Hawkins

(02) 6273 1222

Access Economics Pty Ltd

Trade Policy Reform

ABA-11A

Export subsidy measures: important considerations for the WTO agricultural negotiations

Ms. Fran Freeman

(02) 6272 2068

ABARE

Policy and Institutional Analysis

BLC-3A

Efficient equity and credit financing for the rural sector: enhancing competitiveness

Mr. Bob Lim

(02) 9955 0169

Bob Lim & Company Ltd

Project Title	Japan food market study
RIRDC Project No:	ANU-50A
Researcher:	Dr. Ray Trewin
Organisation:	Australian National University Australia-Japan Research Centre (ARJC) Building 13, CANBERRA ACT 0200
Phone:	(02) 6125 0134
Fax:	(02) 6125 0767
Email:	arjc@anu.edu.au
Internet:	www.arjc.edu.au
Objectives	Deliverables were the preparation of research papers by Australian and Japanese authors to be presented in Japan and Australia, analysing the impact of changes and reforms in Japan on its food processing sector, and links between domestic and foreign suppliers of food products through foreign investment into and out of the sector in Japan, as well as Australia implications. These deliverables could be used by STA or its replacement to develop briefs for a possible industry seminar and study mission to Japan aimed at better agribusiness trade and investment decisions by Australian companies and government in respect of international agricultural and investment negotiations. All these outcomes will assist the Australian food processing industry to expand its access to the Japanese market and its market share.
Background	Japan is a driver of economic activity in its region and a large agri-food market – Australia’s largest. It has also extensive investments in agri-foods. Such investment, if in third countries, could mean Australia losing Japanese investment and associated trade with Japan as well as the world. Japan is facing not well understood changes in its fundamental competitiveness, deregulation of financial and other markets, including those affecting food distribution, and the links through FDI between domestic and foreign suppliers of food products. Moreover, there is little detailed information on the extent of agri-food investment and its causes. The World Investment Report provides broad information but there is often a need to track and reconcile investment through industry surveys. Possible factors behind Japanese FDI include the high cost of Japanese production and Japanese companies positioning themselves to better supply the Japanese market (on liberalisation) or the international market on a more competitive basis, the ability to obtain inside information on pricing and technology, and to establish competing suppliers. How should Australia react to these developments that could be one explanation of its declining share of processed foods in the Japanese and other markets? Should globalising Australian companies try to attract more Japanese investment, become involved in Japanese investment in Japan and third countries by contributing various expertise, or gain better access to the countries where Japan is investing? This project takes into account Japanese agri-food in Australia, and prospective Australian investment in Japan, along with comparative data elsewhere. It logically builds on a large portfolio of relevant work such as the earlier RIRDC Japanese agricultural policies project where it was revealed that some Japanese agri-food imports have been driven by Japanese investment, especially in developing countries, and that understanding the investment story is critical to fully understanding the trade story. DFAT has nominated the economic and trade impacts of FDI as an emerging issue but the focus has been on Australian FDI into Asia and Asian FDI into Australia whereas investment by a large economy such as Japan into other Asian countries could have a significant impact on both these aspects.
Research	The research strategy was to produce targeted publications by researchers in both countries and presentations for industry, governments and international agencies in both countries to fully disseminate the research to those best placed to implement the market development and policy reform objectives. A Steering Committee consisting of potential mission participants helped with advice on the conduct, dissemination and uptake of the independent research. Commissioned papers from Japanese researchers for presentations in Japan and Australia over 2000-2, included those from Professors Itoh (Tokyo) and Urata (Waseda), as well as Honma (Seikei) and Godo (Meijigakuin) who were AJRC visitors over 2000-1, working on related studies. Papers produced within the AJRC drew on other work mentioned above for relevant data, literature, and analysis. Additional information was obtained from industry surveys.
Outcomes	An April stakeholders’ meeting reached agreement to a timetable and research report contents. Two students were employed, and under supervision of senior staff, gathered background research material and data which they drew together in draft papers on changes in the Japanese food processing industry, and trends in Japanese FDI and trade in food. Godo visited in April 2001 during which he presented a paper on Japanese agricultural cooperatives that was finalised as a Pacific Economic Paper (PEP). A visit was made mid-year by Itoh and his research assistant to discuss and refine their research on the Japanese food industry (Itoh and Ito) including in a May roundtable with stakeholders on the broader research. Research papers on market share analysis of processed food exports to Japan (Trewin) and Japanese food-related investment (Urata and Kiyota) were presented in August to a project workshop involving Australian and Japanese industry representatives, government officials and academics. An article based on the outcomes from the workshop was reported in the APEC Economies Newsletter. The research on market share analysis was also presented in a special RIRDC session at the Australian Agricultural and Resource Economics Society (AARES) Annual Conference. The research from the project has been refereed and is currently being edited for publication as a PEP and by RIRDC.
Implications	The research showed the Japanese food market is changing in ways that both threaten and offer opportunities to Australian interests. Research by Godo showed the distorting effect of heavily supported Japanese agricultural cooperatives and how they were under pressure from financial reforms given their heavy involvement in financial services. Research by Itoh and Ito highlighted the costs of an inefficient and complicated Japanese food distribution system. Research by Urata and Kiyota showed how FDI has complicated the political economy with Japanese companies increasing investment in food sector overseas and overseas companies investing in food in Japan. Search by Trewin demonstrated Australia’s share of processed food imports into Japan had fallen mainly as a result of low competitiveness due to aspects such as poor management performance and a lack of comparative advantage in some factors such as labour costs. Industry will benefit from the project through increased opportunities for competitive trade and investment access; the opportunity to project its interests; an improved understanding of the trends in and drivers of Japanese related agri-food investment, and the implications for Australia, as well as options and strategies for improving the development of a globally competitive Australian agricultural sector. FDI can increase trade thus Australia would do well to promote trade and investment links in the processed food sector through encouraging joint ventures in both Australia and Japan. The project also identified longer-term research issues.
Publications	‘The changing economic performance and political significance of Japan’s agricultural cooperatives’, Pacific Economic Papers 318 (Y. Godo) ‘Changes in the food economy in Japan’, Pacific Economic Papers 319 (R. Trewin, M. Itoh, Y.Ito, S. Urata and K. Kiyota) ‘The Japanese food market – threats and opportunities’, October 2001 APEC Economies Newsletter (R. Trewin) ‘Japan’s processed food market – an analysis of import market shares’, paper for RIRDC session, 46th Annual AARES Conference, Canberra, January 2002 (R. Trewin)

Project Title	Asia’s Food and Agribusiness Revolution Continues: New Opportunities in a Resurgent Asia (Subsistence to Supermarket II)
RIRDC Project No:	DFT-1A
Researcher:	Mr Stephen Deady/ Ms Judith Laffan
Organisation:	Department of Foreign Affairs and Trade (Office of Trade Negotiations) RG Casey Bldg, John McEwen Crescent BARTON ACT 0221
Phone:	(02) 6261 2545 or (02) 6261 2605
Fax:	(02) 6261 1858
Email:	stephen.deady@dfat.gov.au, judith.laffan@dfat.gov.au
Internet:	www.dfat.gov.au/publications/agrifoodasia
Objectives	To convey clear and useful information, analysis and guidance for Australian companies, agribusiness, farmers, exporters and investors, together with Australian policy makers, about the continuing major changes underway in the pattern of Asian agrifood demand and supply, and about the agrifood supply opportunities in Asia over the coming decade or so, including ways of better accessing Asian markets, and problems to be overcome.
Background	In August 1994, DFAT published an EAAU report, Subsistence to Supermarket: Food and Agricultural Transformation in South-East Asia, written by the Principal Analyst of the current Subsistence to Supermarket II Project. It became clear from feedback from audiences at presentations on the 1994 report around Australia, that many participants in the Australian agrifood sector, from farmers to agrifood processors to investors, were looking for easily accessible and affordable information and analysis about agrifood demand and supply trends in all of Asia, not just South-East Asia. Over 1998-99, DFAT was able to attract 20 public and private sector sponsors, including RIRDC as a major sponsor, in order to undertake a research project which would produce such information and analysis.
Research	Please see previous years’ entries for research methodology. Due to the amount of material and data collected in the first two years of research, it was decided by mid-2001 that the project findings would be released in several volumes, instead of the originally planned single report. So the major work over FY2001/02 was finalising the information and analysis for publication of the first three volumes as indicated below. Considerable research work was also undertaken in compiling profiles for approximately 100 Japanese agrifood companies, including trading houses, food retail and foodservice companies (used in Volume II), and food processing companies (to be used in Volume V).
Outcomes	Publication so far of about half of an extensive database on Asian agrifood demand and supply trends which is easily accessible and affordable for participants in the Australian agrifood sector. Also, some work undertaken to disseminate the findings through seminars, conferences, journals etc, with more to be done in this regard.
Implications	Asian agrifood systems are changing rapidly, not least through the increasing incorporation of Asia into an emerging global agrifood system by the leading agrifood MNC processors, food retailers and foodservice companies. But Asian agrifood players are also working harder to survive amidst the greater competition. Australian agrifood suppliers need to have as comprehensive information as possible about the changing global and Asian agrifood landscape, and hone their strategies accordingly.

Publications

DFAT, Subsistence to Supermarket II: Agrifood Globalisation and Asia Volume I: Agrifood Multinational Corporations in Asia (December 2001; 226 pp) RIRDC Pub # 01/124 Volume II: Changing Agrifood Distribution in Asia (August 2002; 338 pp) RIRDC Pub # 02/049 Volume IV: Asia and the Agrifood Trade Framework (August 2002; 274 pp) RIRDC Pub # 02/050 and three volumes to come: Volume III: Asia’s Agrifood Demand Trends and Outlook 2001-2010 RIRDC Pub# (forthcoming) Volume V: Asia’s Agrifood Supply Trends, and Asian Agrifood Companies RIRDC Pub# (forthcoming) Volume VI: Australia’s Outlook and Opportunities as an Agrifood Supplier to Asia RIRDC Pub# (forthcoming)

Project Title	Benchmarking Technology on the Australian Waterfront: Implications for Agricultural Exports
RIRDC Project No:	AEC-2A
Researcher:	Dr Bob Hawkins & Bill Bowen, Access Economics, & Richard Rawnsley, Maunsell Australia.
Organisation:	Access Economics, 39 Brisbane Avenue, Barton, ACT 2600. Maunsell Australia, 12 Cribb Street, Milton, QLD 4064.
Phone:	02 6273 1222 (Access Economics) 07 3858 6700 (Maunsell Australia)
Fax:	02 6273 1223 (Access Economics) 07 3858 6705 (Maunsell Australia)
Email:	Bill.Bowen@AccessEconomics.com.au Richard.Rawnsley@maunsell.com.au
Internet:	www.AccessEconomics.com.au
Objectives	To assess the uptake of container-related technology and management systems within stevedoring and its ship and shore-side interfaces in three Australian ports and to benchmark that performance against comparable international ports.
Background	This study assesses the uptake of container-related technology and management systems within stevedoring and its ship and shore-side interfaces in three Australian ports (Melbourne, Sydney and Brisbane) and compares that performance with selected international ports. The focus is on wool, meat, dairy and cotton.
Research	Consultations were undertaken with major companies involved in each of the four commodities, stevedores, port authorities and others involved in the supply chain Key Commonwealth Government agencies introducing new technology were also consulted. International benchmarking was achieved by contacting the comparator ports.
Outcomes	On virtually all measures of productivity used the three Australian ports stand up very well vis a vis the benchmarked international ports. In some respects their performance is more advanced. Exporters are generally satisfied with the service provided at the port, but there has not been the same level of investment in technology further back up the supply chain. It cannot be assumed that international shipping companies will introduce new technologies that are necessarily compatible with those already in use in Australia.
Implications	Very considerable progress has been achieved, and the three Australian ports compare favourably with their international competitors. Continued Commonwealth Government leadership in encouraging systemic improvements in technologies is appropriate. There is scope to secure further gains.
Publications	Benchmarking Technology on the Australian Waterfront: Implications for Agricultural Exports, RIRDC Publication No.02/116.

Project Title	Export Subsidy Measures: Important Considerations for the WTO Agricultural Negotiations
RIRDC Project No:	ABA-11A
Researcher:	Troy Podbury, Ivan Roberts, Apelu Tielu and Ben Buetre
Organisation:	ABARE PO Box 1563, Canberra ACT 2601
Phone:	(02) 6272 2244
Fax:	(02) 6272 2320
Email:	tpodbury@abare.gov.au
Internet:	www.abareconomics.com
Objectives	The objectives in this study are: To provide information and analysis resulting in more informed and effective policy development in Australia and elsewhere on export measures for the current multilateral agricultural trade negotiations;  To better inform the Australian community concerning export measures pursued in other countries and their links to trade policies that will affect the competitiveness of Australian agricultural industries.
Background	WTO negotiations on agriculture commenced in early 2000. These negotiations are taking place in a period of drastically reduced explicit export subsidy use. However, overall agricultural support has remained high, with major countries expanding the use of domestic support and de facto forms of export subsidies. As these policies are to a degree interchangeable, it is important that these interactions are understood. Australian negotiating positions will benefit from having the key areas of distorting support identified, and the linkages between them clearly outlined. Such information will potentially provide for a more advantageous negotiated outcome.
Research	Some of the key findings in the report are that; the EU is the largest user of export subsidies, and now accounts for almost 90 per cent of export subsidies globally; the benefits from eliminating export subsidies are small in comparison to the potential benefits from reforming other areas of agricultural support; countries have reoriented support toward measures with less stringent rules, but the resulting outcome is still effectively subsidised export competition. To overcome the weaknesses through the current negotiations in order to ensure actual reductions in market distortions would require: all forms of distorting support to be subject to commitments; a large initial reduction in explicit export subsidies to reduce the potential for countries to increase their use of this harmful type of support; measures such as export credits and the misuse of food aid need to be addressed in conjunction to explicit export subsidies.
Outcomes	The outcomes from this study should be more informed Australian and other negotiators who should be better placed to reach agreement in WTO negotiations that will reduce distortions in agricultural markets due to agricultural protection around the world and enhance the competitiveness of Australian agriculture. The Australian community should also be better informed about important issues affecting the competitiveness of Australian agricultural industries.
Implications	The findings of this report provide material that needs to be considered in the formation of Australian and Cairns Group negotiating positions and strategies in the current WTO negotiations on agriculture. It is also being actively used in the preparation of Australia’s position in international discussions on food aid.
Publications	Agricultural Export Measures in WTO Negotiations, ABARE Research Report 01.12, RIRDC Publication No.01/134. Export subsidies in the current WTO agricultural negotiations, ABARE Current Issues 01.5.

Project Title	Efficient Equity And Credit Financing For The Rural Sector: New Direction in Rural and Agribusiness Finance
RIRDC Project No:	BLC-3A
Researcher:	Mr. T M Dwyer and Mr. RKH Lim
Organisation:	Australian National University Bob Lim & Company Pty Ltd
Phone:	02 6249 5111 02 9955 0169
Fax:	02 6286 4981 02 9955 2275
Email:	terry.dwyer.phd@post.harvard.edu boblimco@ozemail.com.au
Objectives	The research project will provide: An issues paper to facilitate discussion and issues to be considered at a major conference with the Committee for Economic Development of Australia (CEDA), bringing key stakeholders with invited papers from sector participants so that perceived problems of rural equity and credit financing in an era of increasingly wholesale financing can be discussed and solutions explored within Australia's rapidly deregulating financial sector framework, Organisations of a CEDA/NFF conference and guidance to speakers, A post-conference publication bringing together the invited papers with discussants' and editorial comments, including a distillation of options and future directions to enhance rural industry competitiveness
Background	As Australia’s rural industries in 2001 move into a new era of prosperity, and with agribusiness increasing in scope, a unique opportunity arises for the sophisticated and highly internationalised Australian financial sector to integrate more efficiently with Australian agriculture. More effective integration would result in productively gains and further enhance Australia’s international competitiveness.
Research	An Issues Paper was prepared and distributed to participants at a major conference held by the Committee for Economic Development of Australia (CEDA) on 14 June 2001, to discuss the problems of rural equity and credit financing and the future directions in developing more efficient financing instruments. Obstacles to rural financing (including securitisation) and whether related to business structures, tax, securities or superannuation regulation were discussed. The Conference, which was co-sponsored by RIRDC and the Agribusiness Association of Australia, attracted over 130 participants from the financial sector and the rural.
Outcomes	A Conference Proceedings report has been published and released by Senator Troeth, Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry. Research outcomes were presented to the Agriculture Finance Forum. Copies of the report have been distributed to conference participants.
Implications	This report provides the essential requirements for a model on which markets for agricultural securities can be developed.
Publications	T M Dwyer and R K H Lim, Efficient Equity And Credit Financing For The Rural Sector: New Direction in Rural and Agribusiness Finance RIRDC Publication 01/117