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Processed Asian Foods Commercial Outcomes of Projects

by Suku Bhaskaran
October 2002
RIRDC Publication No 02/129 RIRDC Project No AFM- 4A

Executive Summary

Background

 
In 1993 the RIRDC launched its Asian foods Research and Development (R&D) program. The program was developed on the basis of extensive consultations with producers, processors and the Asian community in Australia. Factors such as the growing numbers of Asian Australians, increasing numbers of Asian tourists in Australia and changing dietary habits of Australians (because of travel, and exposure through media and the growing population diversity to non-traditional cuisine) were perceived to be generating substantial growth in demand for Asian foods in Australia. A RIRDC-commissioned study reported that Australia imported about $800 million of Asian foods annually and that there were opportunities to increase the production of Asian-style noodles, sauces, pastes, ready-made meals and processed fresh foods in Australia. As a result, substantial public funds and effort have been directed to develop the Asian foods industry in Australia.

Also, it seemed that rapid economic development, fast pace of urbanisation, population growth and growth in disposable incomes were fostering increasing demand in several Asian countries for better quality and more hygienically cultivated crops and processed food products. However, shortage of land suitable for farming, increasing conversion of farm land for other uses such as industrial sites and housing development and population growth constrained the capability of many of these countries to increase food production.

In summary, it seemed that Australia could, with appropriate R&D, develop a viable import-replacing and export-oriented Asian foods industry in the country. This report reviews the commercialisation of RIRDC-funded Asian foods R&D projects and evaluates the factors that could have contributed to the progress or lack of progress in the commercialisation of RIRDC-supported Asian foods R&D projects.

We believe that the findings of the study will be of value in developing priorities and strategies for the next phase of RIRDC’s Asian foods projects.

Methodology

The study was completed through in-depth review of RIRDC-funded Asian foods project reports, review of trade literature, government reports, retail shop audits, postal survey of key informants in companies that manufacture processed Asian foods and telephone interviews with the Chief Investigators of RIRDC -funded Asian foods projects.

Findings

The findings of the study suggest that in most instances RIRDC funded Asian foods projects were not conceptualised with a strong commercialisation focus. Many projects are still in relatively early phases of R&D and therefore, at this stage, it is difficult to assess whether the projects would generate commercial outcomes. In addition, notwithstanding that some projects (for example, projects focussing on developing production protocols and extending the shelf life of leafy vegetables) have delivered substantial knowledge to the industry, it is difficult to clearly demonstrate how farmers have used the knowledge from the R&D projects to achieve commercial outcomes.

The study identified seven projects that are in early stages of adoption as commercial ventures. Five of these projects are processed food projects. Therefore, measured in terms of number of projects that have progressed to commercialisation, at this stage, processed food projects have achieved higher industry adoption than food crop projects. The greater commercialisation of processed food projects can be attributed to the stronger commercial focus of the projects, active participation by industry partners, cross-disciplinary nature of the projects and the linkages between these projects and related R&D projects in Australia and abroad.

 Generally, high costs of production have constrained the commercialisation of several Asian food crop projects and this, in turn, has constrained the development of the processed Asian foods industry that could have emerged if a sufficient quantity of competitively priced raw materials was available. Without competitively priced and sufficient quantities of raw materials it would be difficult to establish a commercially viable processing sector. Current low production volumes of Asian food crops and the high cost of these crops constrain opportunities to increase downstream processing and the development of a viable processed Asian foods industry. Further R&D is required to develop mechanised planting, harvesting and product handling processes that would help minimise production costs and increase production volumes and, therefore, make available larger volumes and competitively priced raw materials.

It seems that commercialisation of Asian foods R&D projects could have progressed more quickly if the projects were pursued as multi-disciplinary projects with strong collaboration with industry and linkages with related R&D projects in Australia and overseas. The projects reviewed in this study were, generally, undertaken by small project teams (often with two investigators) and focussed on narrow discipline strengths. It also seemed that the projects had not established any significant linkages to related R&D projects, particularly with such projects being pursued overseas. Obviously, it would be difficult to track R&D projects being pursued overseas, and in some cases it may also be difficult to establish collaborative linkages with overseas R&D organisations. However, in our view such linkages would have substantially accelerated the R&D activities and commercialisation of the projects. The study indicates that in the course of pursuing their projects some investigators identified and established linkages with overseas R&D projects and that this partnership helped accelerate R&D and commercialisation. It also seems that several projects did not demonstrate significant and sustainable collaboration with industry partners. In many instances the industry partners were small-scale enterprises with neither the financial nor technical resources to support the project. The study indicates that many industry partners ceased business even prior to completion of the R&D project in which they were participating. Perhaps, there is greater need to evaluate the capacity of the industry partner to participate and contribute to the proposed R&D project.

However, because many of the projects are predicated on the opportunity to develop niche industries, the projects are likely to only attract the interest of small-to-medium scale enterprises. Thus, the size of the industry partner may impact on its capacity to provide sustainable and long-term cash and in-kind support for the project, and strategies have to be developed to overcome this difficulty.

Recommendations

Based on the findings of the study we recommend that RIRDC should encourage:
 

• Cross-disciplinary and larger-scale projects that are pursued on a phased basis. For example, projects which encompass R&D issues pertaining to business challenges (markets, competitor analysis, market intelligence on R&D initiatives abroad etc) feeding on to R&D projects on production issues and then on to R&D projects on food processing issues.
• Processed food R&D projects based on imported raw materials. There could be opportunities to develop export-oriented processing industries that use imported raw materials. It is probable that processed food projects predicated on using imported raw materials have better potential for generating collaboration with overseas researchers, R&D organisations and industry partners as it can be demonstrated that there is mutual benefit in the inter-country collaboration.
• Larger-scale projects that foster active and sustainable linkages between several research organisations and industry partners across the entire food value-chain. The more successful projects demonstrate close collaboration between farmers, processors, research organisations and industry partners in Australia and overseas. It seems that there is opportunity and the need to foster greater collaboration between different research organisations so as to complement research specialisation and skills that exist in different organisations.
• Linkages and collaborative initiatives with related R&D programs in Australia and abroad. We believe that there should be a mechanism to identify Asian foods research projects that are in progress in different countries.
• More processed Asian food projects using traditional agricultural and animal products such as dairy and wheat. It seems that R&D Corporations that focus on traditional sectors have pre-eminently adopted a mass market and big industry focus. As Australia is a large-scale producer of dairy, wheat, beef and other traditional food crops and animal products and as the country has established a cost-leadership position in some of these sectors, the development of Asian processed food products using these raw materials seems tenable. We believe that RIRDC can facilitate R&D on small-scale niche industries in traditional agricultural and animal products through encouraging projects that are jointly supported by RIRDC and R&D corporations that focus on traditional sectors.
 


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Last updated: 9 October 2002
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