Where is the next "China"?
Technology transfer seems to be the key to open new markets around the world as capacities for animal husbandry in the developed markets are limited due to environmental concern and overproduction.
Lately, big players in the food tech industry or even governmental agencies have increased their efforts to develop and boost the food industry in different regions in order to gain access to those markets.
In search of the market of the future
At this point, US meat and poultry producers are targeting markets that are going to show (eventually) their potential in the next 20 or 30 years. Many of the states that have been eyed by the US Meat Export Federation and US Poultry and Egg Export Council are located in regions such as Africa, East Asia, South Asia and the Middle East. Scarce resources and lagging industrialization may look like obstacles now but some experts are convinced that these countries have a real potential to become the next big future markets for export, wheater we are talking about food technology export or meat and meat products.
The main word in most of the cases is „proper investment” when is regarding developing a industry such as poultry in Tanzania, East Africa, where US Poultry and Egg Export Council is spending time and resources to transfer the knowledge to local farmers.
„We need to convince the local industry that they can benefit by importing raw materials, whether it be poultry houses, refrigeration or feed grains in order for their industry to grow”, explained Kurt Schultz, US Grains Council Director of Global Strategy, who has worked along with his colleagues US Poultry and Egg Export Council to open the Tanzanian market for American imports.
India is also targeted as „the next China”, even if the country’s onerous tariff and non-tariff barriers, as well as extensive subsidies aimed at propping up domestic producers, will make it nearly impossible for expanded trade in many farm goods in the near future.
„Where are we going to find the next big bump? India’s a great place to look. There’s a billion people in India. They have real production constraints in agriculture”, believes USDA Trade Counsel Jason Hafemeister.
A rising middle class and westernization of the food consumption patterns in India are creating the perfect environment to open this market, according to experts from USDA.
In the Middle East region, scarce water resources in Turkey, Iran, Iraq and Egypt producing higher-value products for human consumption than growing cereals may result in a diversification of agricultural sector and food industry in the next decade, according to Mr Schulz.
Asian poultry sector to slow down
In South East Asia, the poultry sector will continue to grow over the 2019-2023 period, but momentum will slow compared to strong growth recorded over 2014-2018. Poultry production and feed consumption rose spectacularly in Vietnam, Thailand, the Philippines, and Malaysia during that period. Lagging industrialisation in Vietnam, overcapacity issues in Thailand, and high production costs in Malaysia will limit production growth going forward, says a Fitch analysis.
Indonesia to benefit from Dutch know how
Nevertheless, companies such as Marel Poultry, Van Aarsen, Trouw Nutrition, Pas Reform, Moba, Mavitec, Kanters, DSM, De Heus and Aeres have joined forces to support and enhance the strengthening of the Indonesian poultry sector as shows the largest potential of growth in the region. The Indonesian poultry sector is expected to have an annual growth of 7% in the coming ten years. The Dutch FoodTechIndonesia consortium seeks to support Indonesian poultry companies in this development.
Indonesia is the largest country and economy of South East Asia, with an increasingly urban and fast-growing population of over 266 million people. Per capita annual poultry meat consumption is expected to increase from 10.9 kg to approximately 15 kg in 2023. The growing middle class – with increasing buying power – is conscious about food quality & safety and is changing preferences towards protein-rich and value-added products.
Matthias Brienen, Director of Larive International and coordinator of the FoodTechIndonesia consortium, which includes the mentioned companies and some knowledge institutes says: “Historically, investments in the poultry sector have been strongly concentrated in West Java. Recently, we have noticed an increased interest in Indonesia’s emerging regions, such as North & South Sumatra, Bali, Central Java, Central & South Sulawesi and South and East Kalimantan. Companies investing in these regions form an interesting target group for the FoodTechIndonesia consortium. By introducing more knowledge-intensive production systems, Indonesia can improve its competitive position in the region. Our full value chain approach applies to both integrated companies and independent parties.”
The complementary parties of the consortium represent all steps in the poultry value chain. FoodTechIndonesia is therefore capable of providing Indonesian companies with integrated solutions. The consortium will establish demo chicken farms and provide training, to demonstrate that this Dutch approach is commercially profitable and meeting Indonesian demands.
Multivac opens plant in China
Earlier this year, Multivac signed an investment agreement to establish a new production company in Taicang in China. The new production facility will enable Multivac in future to react to the requirements of customers in China with even greater speed and focus. The production of packaging machines and their peripheral components is planned for the new site. In addition to manufacturing, the Taicang facility will also have development and design departments.
“China is a significant market for us. This makes the establishment of a local production facility a logical step for us and a further stage in expanding our global production and sales network. Our objective is to achieve shorter delivery times for our customers and to be able to respond even more rapidly to the needs of local customers,” explained Guido Spix, Director and Group COO/CTO.
The moves come at a moment when China’s pig herd is going to a massive liquidation process due to the ASF situation in the country. Even if the Chinese pig inventory is to decrease by 200 million head this year and probably more in the next years the need of packaging machines in this market will be high as China is going to increase imports of meat from all over the world.
Thermoforming packaging machines, traysealers, chamber machines, peripheral components and spare parts are all due to be manufactured in Multivac’s new factory for the Chinese market. The start of production is planned for the end of 2019. In addition to this, a local R&D department will be set up on the site, so that it will be possible to react in a more targeted way to the development needs of regional customers. Multivac has entered the Chinese market since 2018 but this is the first production unit opened in this country.
Polish businesses are migrating east
Even Poland has some plans to relocate some of its agribusiness investments in neighbouring Belarus, as the former USSR republic has managed to open the Chinese and Iranian market for beef and is directly linked on the railway to China.
Negotiations for Polish investments in agriculture, animal farming and food sectors are underway with first conclusions to be announced this month. Most probably, the investments will not consider pig farming in the beginning, as both countries are affected by ASF outbreaks.
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