a region with two stories……….growing established markets & developing emerging markets...

A region with two stories……….growing established markets & developing emerging markets

Aaron IoriRegional Manager SE Asia/Greater China

Address outline

Overview of markets

Factors underpinning demand

Key issues

Introduction

Region dynamics, characteristic & definition

Emerging markets Established markets

Indonesia, China, Vietnam, Philippines & Thailand

Singapore, Hong Kong, Taiwan & Malaysia

low volume importers

growth opportunities

developing supply chains

sustained volumes

developed retail and foodservice positioning

developed supply chains

Economic growth + Rising population = increase demand

Australian beef exports

Source: DAFF

2000 2001 2002 2003 2004 2005 2006 2007 2008 20090

20

40

60

80

100

120

140'000 tonnes swt

China Hong Kong Taiwan Indonesia Malaysia Philippines

Singapore Thailand Vietnam

Australian beef exports - change from 2000 to 2009

Source: DAFF

SEA & Greater China USA Japan Korea Middle East EU

0

50

100

-50

-100

-150

'000 tonnes swt

NB: SEA & Greater China includes China, Hong Kong, Taiwan, Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam

9%57%

476%59%-29%

82%

Australian beef exports

Source: DAFF

Japan USA Korea SEA & Greater China

Indonesia EU Middle East

0

100

200

300

400

500'000 tonnes sw

2000 2004 2009

NB: SEA & Greater China includes China, Hong Kong, Taiwan, Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam

Australian beef exports

Beef exports to South-East Asia/China by cut

Source:DAFF

Manf19%

Shin/Shank26%Topside

3%Thick Flank

4%Neck6%

Blade10%

Striploin5%

Intercostals8%

Silverside1%

Cube Roll4%

Other13%

Manf36%

Shin/Shank17%

Topside2%

Thick Flank8%

Neck5% Blade

8%Striploin

3%

Intercostals4%

Silverside4%

Cube Roll2%

Other11%

2004Volume: 47,465 tonnes sw

Note: Other includes brisket, rump, short rib, ribs, chuck roll, thin flank, carcase, chuch & blade.

2009Volume: 130,863 tonnes sw

Beef exports by cut

Manufacturing beef exports to South-East Asia/Chinas

Source: DAFF

manf36%

shin/shank17%

thick flank8%

neck5%

blade8%

striploin3%

intercostals4% silverside

4%

other15%

Indonesia49%

Philippines29%

Other SEA/Chinas22%

200946,879 tonnes sw Destinations

Manufacturing beef distribution

2000 2001 2002 2003 2004 2005 2006 2007 2008 20090

10

20

30

40

50

60'000 tonnes sw

0

200

400

600

800'000 head

beef live cattle

Australian beef exports & live cattle to Indonesia

Source: DAFF, ABS

Strong growth in Indonesian demand for both live cattle & beef

Where our product goes…

Outlook positive

So what is underpinning demand for beef across the region?

Concentration of population growth in AsiaDistribution of additional world population (2010 – 20)

9%

29%

0%

58%4%

Rapidly increasing populations

Indonesia(52 million growth - 24%)

Philippines(39 million growth - 45%)

China(150 million growth - 11%)

0

50

100

150

200

250

300millions

0

20

40

60

80

100

120

140millions

0

200

400

600

800

1000

1200

1400

1600millions

Economic growth for key countries

Source: International Monetary Fund, World Economic Update - Jan 2010

World US EU Japan UK Russia China India ASEAN-5

0

5

10

15

-5

-10

year-on-year % change

2009 2010f 2011f

Economic growth

Forecast income growth to 2018

0

2

4

6

8

10PercentAverage annual growth in per capita incomes 2008-18

0

50

100

150

200

-50

millionsGrowth in population 2008-18

Source: IDB Database, USDA Agriculture Long Term Forecasts

Projected beef import growth 2008 to 2018: FAPRI

0

100

200

300

400

500'000 tonnes cw

Heightened food safety concern

Expansion of modern retail & foodservice

But all this is not without a challenge!

Market Access

Food security

Free trade agreements– ASEAN (complete)

– China (underway)

– Indonesia (yet to commence)

Market Access restrictions– China

– Indonesia

Plant accreditation– China

– Malaysia

FMD zoning issue in Indonesia– Brazil & Indian beef

Halal

The global financial crisis

More gloom for US housing markets

In many of these countries we are competing against the “world” for a share of beef $$$

Source: Philippines Central Bureau of Statistics

00 01 02 03 04 05 06 07 08 090

20

40

60

80

100

120

140'000 tonnes sw

India South America

Australia NZ

US Canada

EU Other

Note: Other includes Asia excluding India

Competitor protein source...

Beef consumption low….

Source: FAO (beef, sheepmeat), USDA (pork, poultry)

6.9 7 7.5 8 8.5 8.9 9.3 8.5 8.7 8.5

43 43.9 44.7 46 47.1 49.4 50.5 47.3 51.1 53

13.3 13.4 13.8 14.4 14.2 14.5 14.9 16.216.9 17.2

2.9 3.1 3.4 3.8 4.33.8 3.9 4.1

4.3 4.5

00 01 02 03 04 05 06 07 08 090

20

40

60

80

100Million tonnes cwt

Beef Pork Poultry Sheepmeat

NB: FAO data - 2008 preliminary, 2009 estimate Pork not included in Indonesia and Malaysia

Conclusion

Due to growth of populations and growth of incomes beef markets in developing Asia are likely to grow strongly over coming years – albeit, at times, erratically.

Competition in these markets is fierce, but Australian beef is increasingly well regarded & we are assisted by our proximity.

MLA will continue to invest in these markets to secure our long term future.

Thank you