Opportunity ASEAN: Australian Dairy Exports

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Jul. 11 – Growing demand in ASEAN for dairy products presents an immense opportunity for dairy product exporters, a void which many Australian dairy producers have been trying to fill.

Notably, demand has grown fastest among the ASEAN-6 – which is comprised of Indonesia, Thailand, Malaysia, Singapore, the Philippines and Vietnam – thanks to their strong economic conditions that are complemented by their favorable demographics (high birth rates, young populations, rising economies and an increasingly health-conscious emerging middle class).

As demand in the region grows rapidly, domestic production has been unable to keep pace which has caused a milk deficit throughout these six countries. As a result, Australian dairy producers are poised to fill this void due to their competitive advantage in this market.

A recent industry report from Rabobank, an Australia-based food and agribusiness bank, highlighted this opportunity by identifying ASEAN as one of the last unexplored markets for dairy exporters.

“The region presents a significant trade opportunity now and in the future,” noted Michael Harvey, Rabobank senior dairy analyst. “The ASEAN-6 countries will exhibit annual growth rates in dairy consumption that are well above the world average… Within the ASEAN region, the fastest rate of growth is expected in Indonesia and Vietnam.”

Over the past decade the total volume of dairy products imported to ASEAN has grown at about 4 percent annually with no signs of slowing down. In 2012, dairy trade flows to the ASEAN-6 region surpassed 1.6 million tons, with an export value of over US$5.5 billion.

Last year, the ASEAN-6 collectively imported about 11 billion liters of milk. This figure is estimated to grow to 14 billion liters a year by 2020.

Currently, Malaysians have the highest consumption rates of dairy in the region, consuming 51 kilograms annually per person on average. In contrast, Indonesians consume just eight kilograms a year on average.

Singapore-based consulting firm Stanton Emms Consultants have forecasted that Indonesia will need an estimated 900 million liters of milk annually by 2017 – over double the capabilities of domestic dairy providers. The report also noted that an increase of Australia’s dairy exports to Indonesia could bring in an additional US$200-US$270 million annually in foreign trade between the countries.

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