Opportunities to expand South Australia’s agribusiness sector are “passing us by” while the State Government stalls on policy and business costs remain high, leading agribusiness owners say.
The heads of Thomas Foods International, Coopers Brewery and industry body Food SA were united in their calls yesterday for action to ensure the “dining boom” doesn’t pass by SA in the way the mining boom stayed west, east and north.
“We are at a fork in the road and there’s a real doubt that we’ll make the wrong decision,” Thomas Foods International’s CEO Darren Thomas told economic think tank CEDA’s national agribusiness series in Adelaide on Monday.
He said that South Australian businesses had heavier government regulation than those in Iran or Zimbabwe, and revealed that his company was building a processing plant in Philadelphia because it was more cost-effective than SA.
There wasn’t a State Government representative in sight – and if there was they wouldn’t have liked what they heard.
Thomas is not only a businessman and leader of one of the state’s biggest international enterprises – he’s also a member of the Economic Development Board and Chairman of Brand South Australia.
He was joined in yesterday’s forum by Glenn Cooper, the Chairman of Coopers Brewery, who has also just been appointed national chairman of the Australian Made, Australian Grown (AMAG) campaign.
Catherine Barnett heads up industry body Food SA which supports a broad cross-section of producers and processors showcasing products and businesses to markets nationally and internationally, through its offices in Adelaide, Japan and China.
Thomas said the opportunities for rapid growth had presented themselves globally.
“By 2025 there will be one billion more people in the world who need to be fed,” he said.
“On top of that there is an emerging and developing middle class in China and India.
“And thirdly, there is rapid change in the market as the Chinese move away from their traditional diet of grains and vegetables.
“Beef exports to China alone rose more than 370 per cent last year.”
Thomas said that while there are huge opportunities, there are challenges for us as we compete with other nations who can see the same opportunities.
“Take a look at New Zealand – they are way ahead of us.
“They have better levels of government regulation and higher labour market efficiency.
“If we don’t step up to their level, the opportunities will pass us by. There’s more government regulation in South Australia than there is in Iran and Zimbabwe.
“The government is trying to promote our state, but places like New Zealand are way ahead of us.
“This opportunity will pass us by if someone doesn’t stand up and develop some policy.”
Thomas revealed that his company, Thomas Foods International, was building a processing plant in Philadelphia.
Formerly known as T&R Pastoral the 100 per cent owned family business has revenue in excess of $1 billion annually.
“The cost of building and operating a processing and value-adding plant in Philadelphia is half what it costs in South Australia,” he told InDaily after the CEDA forum.
“This is not a case of doing something in a developing country on cheap labour – this is the USA where the cost of doing business is so much cheaper.
“The simple cost of doing business is prohibitive.
“The Philadelphia operation will be a value-add and packaging plant, so we’ll ship the meat there and then do the second stage handling.
“It’s costs such as labour, construction, energy.
“You’ve seen it also in the car industry where the USA has been able to regenerate its car making while ours are closing down.
“They do have a lower cost of production there.”
Thoma’s view was supported by Cooper’s boss Glenn Cooper.
The current State Government, he said, had to decide if it was interested in developing the economy or looking after those who keep it in power.
“The unions here and the government need to have a good hard look at themselves.
“Are they interested in the state or just themselves?
“The State Government has to decide if it backs our future development or is just interested in looking after its mates.”
Barnett pointed to the lack of expenditure on research and development in the agribusiness sector, comparing Germany’s 8 per cent of revenue spent on R&D to Australia’s 3 per cent.
Meanwhile, in New South Wales today local producers are celebrating the first shipment of fresh milk to China where it will sell for between $7 and $9 a litre.
Farmer-owned Norco Cooperative in northern NSW announced today the new export market followed a deal negotiated by dairy industry Dairy Connect.
Under previous arrangements the six-day testing and quarantine rules for fresh milk were carried out separately in China and Australia – a total of 12 days.
Officials have agreed to do it simultaneously, improving the fresh milk supply pipeline to keep it within a reasonable shelf life.
It’s the first export contract for Norco and a major boost to local farmers whose only previous market was domestic, where supermarkets Coles and Woolworths have squeezed their prices.
Food for thought.
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