This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 7/24/2018

Overview

In 2017, Australia and the United States signed a bilateral Food Safety Recognition Agreement. The agreement is the third the United States has undertaken with a trading partner and allows both countries to recognize one another’s food safety and regulatory systems as comparable. The agreement was signed by the USA’s Food and Drug Administration and the Australian Department of Agriculture and Water Resources and will result in fewer in-country audits; with compliance being managed by the exporting country.

The agreement is expected to greatly simplify US exports to Australia and Australian exports to the United States through greater reliance on Australian food control systems that ensure the production of safe food. Not all foods are included in this agreement, but most canned foods, seafood, dairy products, fresh fruit and vegetables, fruit juices, confectionary and baked goods are in scope. Both Australia and the United States continue to regulate foods such as meat, egg products, shellfish and dietary supplements and more stringent requirements continue to apply.

As educated, affluent consumers, Australians are willing to try new products.  The population has absorbed a growing number of newly arrived immigrants from all over the world who bring with them diverse dietary tastes.  In addition, foreign travel is relatively common, especially by the generation now entering the work force, and these consumers have broadened their culinary horizons. 

Australian demographics are similar to those in the United States, with a large number of two-income families and the consequent need for more processed and consumer-ready foods.  Australian consumers are oriented toward the same factors that many US consumers seek - freshness, wholesomeness and healthy lifestyles.  To a large extent, they are prepared to pay extra for them.

Given Australia's large agricultural base, market prospects for US food products are best in areas drawing on innovative products, economies of scale, and the US position as a counter-seasonal supplier of fresh product (for information on food export restrictions into Australia, see Chapter 5).  According to Global Trade Atlas data, Australian imports of US agricultural, forestry and fishery products in CY 2017were valued at over USD1.64 billion. The nature of agricultural products imported from the United States to Australia consists mainly of consumer-oriented (which includes fresh fruit) and intermediate food products (USD1.14 billion and USD208.5 million respectively in CY 2017).  The US is the second largest supplier of agricultural products to the Australian market.

The United States faces stiff competition in this market from New Zealand, European and Canadian suppliers, as well as from specialty suppliers in Asian countries.  Domestic production is also well established and growing in product lines.  Foreign investment in the Australian food sector is substantial, with many large multinational companies participating.

Australia is among the top five largest markets for American-made agricultural equipment and is considered a high-volume, low-risk market. Like Canada, Australia is heavily exposed to global commodity prices. Equipment for grain, oilseeds and other commodity crops comprise 45% of US exports.  Following a period of decline, the market has picked up again and is anticipated to grow by 2.5% in 2018.  Mowers and other power equipment and equipment for raising livestock have continued to do well.  Demand for smart farming solutions is also anticipated to grow.
 

Agricultural Equipment

 2015201620172018 (Estimated)
Total Local Production2,0731,8061,7071,748
Total Exports311271256261
Total Imports1,7102,0212,1962,251
Imports from the US736649844865
Total Market Size3,4723,5563,6473,738
Exchange Rates0.750.740.770.77
(total market size = (total local production + imports) - exports)
Unit: USD millions

Sources: Industry estimates and the Global Trade Atlas
 

Leading Sub-Sectors

The organic, healthy and natural products market in Australia continues to grow rapidly. Although Australia is a large producer of organic raw products, it does not have the manufacturing capacity to satisfy demand for the processed segment. Prospects are excellent for organic and natural ingredients as well as consumer-ready processed foods and beverages.

Australian consumers are adopting a back-to-basics mindset, focusing on simple ingredients and fewer artificial or processed foods. The top 10 ingredients being avoided by Australian consumers are: Antibiotics/hormones in animal products; MSG; artificial preservatives; artificial flavors; artificial sweeteners; foods with BPA packaging; artificial colors; sugar; GM foods; and, sodium. These ingredients are being avoided primarily because of their perceived impact on health, rather than actual medical conditions.

Australian’s want to eat healthier, but they need help to make it happen. Almost 50% of consumers indicated that they wished there were more ‘all natural’ food products on shelves – they also indicated that they would be willing to pay more for foods and beverages that don’t contain undesirable ingredients.

The types of products consumers want to see more of are: all natural; no artificial colors; low sugar/sugar free; no artificial flavors; and low fat/fat free. US exporters who are able to incorporate ingredients and preparation methods that improve the nutritional profile of products will be strongly positioned to succeed in this market.

It should be noted that although consumers are trying to eat more healthily, they still want to treat themselves occasionally so confectionery is still on their shopping lists!

To view individual commodity reports produced by the Foreign Agricultural Service please go to the following website: Foreign Agricultural Service.

In terms of equipment and technology, leading sub-sectors include combine harvesters, large horse power tractors, balers, irrigation equipment and tillage equipment.

It is estimated that 20 % of farm businesses are engaged in smart farming practices. Factors such as a relatively dry climate, large average farm size, low farm income subsidy and higher labor rates, will continue to drive demand for smart/precison farming solutions.
 

Opportunities

A key avenue for promoting and selling equipment is to exhibit at field days (agricultural machinery shows) events. A listing is available online at: http://afdj.com.au/events/

American exporters should consider attending and preferably exhibiting, where appropriate with an Australian distributor. These range in size from the largest being comparable to Big Iron in Fargo, to smaller specialized or regional events. In general terms, larger shows include events like AgQuip, Henty, Elmore and Farm World.

Northern Australia is being considered for large scale agricultural expansion, requiring major investment in infrastructure including water storage and distribution, as well as on-farm equipment needs.
 

Web Resources

Best prospects report Agricultural Equipment     
Association of Agricultural Field Days of Australasia
Australian Bureau of Agricultural and Resource Economics and Science (ABARES)
Australian Nut Industry Council
Dairy Australia
Department of Agriculture
FarmOnline (rural news)
Irrigation Australia (industry association)
National Farmers Federation (industry association)
Tractor and Machinery Association
 
 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.