Can this plan save our food producers?

Victoria’s state government has outlined a strategy to position its food and agricultural industries as Asia’s food bowl.

According to The Australian, Victorian Agriculture Minister Peter Walsh has setup a task force to help improve market access for agricultural producers in a wide range of industries. The newspaper reports that the task force will comprise leaders from food processing, logistics, branding, investment, exporting and primary production.

They include Bega Cheese (ASX:BGA) chairman Barry Irvin, Visy Industries Anthony Pratt, Costa Group Australia chairman Frank Costa, Kraft Foods Australia and New Zealand president Rebecca Dee-Bradbury as well as Grant Dooley, co-head, Asia, Hastings Fund Management – a former Australian consul-general in Guangzhou, China.

Last week the government hosted its first Super Trade Mission to Malaysia, Indonesia and Singapore, with 85 small-to-medium companies attending, and the largest mission to ever leave Australia. Visy Industries Mr Pratt already has a plan to drive a fourfold increase in food exports to Asia by working more closely with Visy’s customers to reduce their shipping costs. Visy produces packaging including paper, cardboard, glass, plastic, steel and aluminium cans with 70% of the company’s customers in the food and beverage sector.

The news couldn’t come at a better time for Goodman Fielder (ASX:GFF), the largest food company in Australia and New Zealand, which faces intense pressure on its margins from it supermarket customers, as they expand their private label products. Likewise, Warnambool Cheese and Butter Factory (ASX:WBC), which exports milk powder into Asia, including China, but also faces supplying milk into a market where retailers sell a litre of milk to consumers at just $1.

As Coca-Cola Amatil (ASX:CCL) boss Terry Davis recently pointed out, “If a supplier is number one in its industry they are ok, Number 2 might also be Ok, but if you are number 3 in the industry and can’t see a way of getting out, find an investment bank to sell your business.”

Working groups are being set up to report to the taskforce, to find ways of gaining market access to Asian countries for the food and agricultural industry.

Foolish takeaway

With the local automotive sector apparently giving up the ghost and taking manufacturing out of Australia, our food and agriculture industry could be one of Australia’s best shots at ensuring longer-term economic growth.

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Motley Fool writer/analyst Mike King owns shares in Coca-Cola Amatil.

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