Focus on agriculture to China - Smith
(18 June 2013 – Australia) Australia should follow New Zealand’s lead and sign a free trade agreement with China to make the most of the growing demand for agricultural goods, according to ANZ chief executive Mike Smith.
Smith said insufficient attention had been paid to the potential surge in Chinese demand for soft commodities, such as grain and meat, while there was too much speculation over the end of the minerals boom – which he disagrees with.
'People just don't get the soft resources story at all,' Smith said this month on the sidelines of the Fortune Global Forum in Chengdu, a city in China's southwest where ANZ set up an operations centre and plans to open its next retail branch.
'Demand for protein is just growing exponentially in this part of the world and, as this middle class develops, the amount of income which is available for choice in terms of what people wear, where they live and what they eat is going to have a significant impact on that demand.'
Smith said countries like Australia and New Zealand are at an 'extraordinary advantage' because the logistics costs of supplying to China are so much less than anywhere else.
New Zealand's free trade agreement is 'quite narrow' but 'has been very effective in creating the impetus for trade and investment', he said.
The comments followed the release of the Food and Agriculture Organisation's closely watched outlook report, which predicted production constraints and rising demand would result in big jumps in China's imports of beef, dairy and coarse grains, used for animal feed.
Demand from China's growing middle class would support prices and ensure that more deals were done in the agribusiness sector, which is one of the target areas for ANZ, Smith said.
'The Chinese government has made it very clear the economy would change over the next 30 years from an export-driven economy to a consumer-based economy,' Smith said.
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