Food and agriculture

ANZ creates new executive role focused on food, drink and agribusiness promotion between antipodean nations and China

Patrick Vizzone given international remit, as China’s buying power and influence on the global food market gains momentum

PUBLISHED : Thursday, 09 November, 2017, 2:12pm
UPDATED : Thursday, 09 November, 2017, 2:12pm

China’s increased influence in the global foodstuffs markets has prompted ANZ (Australia and New Zealand Banking Group) to created a new Hong Kong-based executive post to specifically serve both Australian and New Zealand firms selling to the Asian market, but also, increasingly, companies from China investing in the two antipodean nations.

Patrick Vizzone, its newly appointed international head of food, drink and agribusiness, says growth of demand in Asia and China in particular has already shaped it's home markets [of Australia and New Zealand], “but this is only the beginning”.

To be Hong Kong-based, Vizzone has an international remit but the impact of China on Australian and NZ food producers will be his priority.

There is a reasonably good balance between supply and demand for commodities and foodstuffs around the world. However, China’s increasing buying power is so great, that it can create imbalances very quickly
ANZ’s Patrick Vizzone, its newly appointed international head of food, drink and agribusiness

Chinese firms have become increasingly interested in acquiring agribusiness companies in both nations with a view to selling their produce back to consumers in China, and Asia more broadly.

Investment in Australian agribusiness companies grew from A$375 million (US$287 million) in 2015, but surged to over A$1.2 billion in 2016, according to a joint University of Sydney and KPMG report.

“That 2016 result is a clear sign of flow-on effects from the China Australia Free Trade Agreement and its positive impact on raising the competitiveness of Australian agricultural products in the Chinese market,” the report said.

These investments include not only acquisitions by Chinese companies already operating in the agribusiness industry – for example Fuyuan an inner Mongolia-based dairy producer which bought a 79 per cent stake in Australian dairy firm Burra foods last year – but also non agribusiness firms such as Legend Holdings, the largest stakeholder in computer maker Lenovo, which bought Australian seafood maker Kallis Bros, also last year.

Shanghai-based China’s Bright Food, meanwhile, acquired the New Zealand Dairy Company to boost the operations of Synlait Milk, a New Zealand company it acquired back in 2010.

However, Vizzone said that if regulations were refined further, the potential for greater investment in future could be massive.

If Australia were to strengthen its investment policy and make it more transparent, “it would pay huge dividends” for Canberra, he said.

“Knowing which sectors are open and which sectors may not be so open is a challenge for Chinese investors looking to invest in Australia,” he said.

The opacity of rules from the Chinese side has also hurt outbound investment in many other industry sectors, resulting in dropped first half export figures this year.

But investment in agribusiness was listed among the encouraged sectors by an National Development and Reform Commission (NDRC) policy document in August.

Overseas real estate and soccer clubs in crosshairs as China ramps up investment clampdown

China is almost as important for Australian food producers, not owned by Chinese buyers.

The Middle Kingdom has overtaken the US as the key export destination for Australian wine, for example, amounting to A$607 million in 2017, a 44 per cent annual increase.

Chinese people consume 50 million metric tonnes of pork a year, five times the consumption of the US, but, in recent years, purchases of beef have been on the rise too – both important exports for Australia and New Zealand, particularly the latter.

Because of the sheer size of the market, even a relatively minor shift in habits in China can have a huge effect on global supply chains.

“Generally speaking, there is a reasonably good balance between supply and demand for commodities and foodstuffs around the world,” said Vizzone.

“However, China’s increasing buying power is so great, that it can create imbalances very quickly.”

business-article-page