Agro-Food Trade in Practice

Confidential to Fonterra Co-operative Group

The Impacts of Mutual Recognition and Joint Standards

- A Dairy Trade Perspective

4th ASEAN-CER Integration Partnership Forum, Thursday 22nd May 2014

Page 2 Confidential to Fonterra Co-operative Group

Dairy Farming in New Zealand

• Total number of cows – 4.8

million

• Pasture grazing farm model

• Fertile soils

• High rainfall and moderate

temperatures

• Less than 3% of global milk

production

• No Government subsidies

• Regulatory environment aimed

at facilitating competition and

innovation, as well as

compliance with New Zealand’s

strong food safety system

Page 3 Confidential to Fonterra Co-operative Group

Fonterra at a Glance

17 billion litres in NZ

2.6 million metric tonnes ex NZ

5 billion litres outside NZ

76 processing plants

74,000+ delivered orders p/a

100+ countries

Farmer owned coop

17,500 staff globally

10,500 shareholders

Page 4 Confidential to Fonterra Co-operative Group

Exporting New Zealand milk…

Page 5 Confidential to Fonterra Co-operative Group

Non-Tariff Measures (NTMs)

Tariffs

progressively reduced,

although dairy still relatively

protected

Non-Tariff Measures

of increasing significance to

dairy trade

Page 6 Confidential to Fonterra Co-operative Group

Benefits of Australia-New Zealand

Harmonisation of Food Standards

Facilitation of dairy trade

Trade is supported by world class regulatory systems

Public and private sector engagement and consultation

Simplify and minimise costs of compliance

Page 7 Confidential to Fonterra Co-operative Group

NZ Dairy Trade with Australia

• High level of open and freely

flowing dairy trade between

Australia and New Zealand

• Australia plays a key role in

NZ dairy trade:

- New Zealand’s largest

source of dairy imports by

value

- New Zealand’s second

largest dairy export

market

• NZ plays a similar role of

significance in Australian dairy

trade

-

50

100

150

200

250

300

1995 1998 2001 2004 2007 2010 2013

US

Dm

Value of Dairy Imports into NZ from Australia

-

100

200

300

400

500

600

700

800

1995 1998 2001 2004 2007 2010 2013

US

Dm

Value of NZ Dairy Exports to Australia

Page 8 Confidential to Fonterra Co-operative Group

Trade is Supported by World Class

Regulatory Systems

New Zealand and Australia regulatory

systems considered

among the best in the

world

• Scientific basis

• Internationally recognised standards

• Codex cooperation

Page 9 Confidential to Fonterra Co-operative Group

National diversity in food standards and

regulations present challenges elsewhere in the

global dairy trade scene

+ Costs

+ Complexity

Reduced Complexity and Trading Costs

.

• Global variances in labelling standards

• Product registration requirements across South

East Asia

Page 10 Confidential to Fonterra Co-operative Group

Active Public & Private Sector Engagement

Across Australia & NZ

Interpreting

regulations

Cooperation &

transparency with

Government

Industry input in

forming regulations

Page 11 Confidential to Fonterra Co-operative Group

Opportunities for ASEAN Through

Regulatory Convergence: Increased Trade

• Facilitate trade, particularly

intra-regional ASEAN trade

• Opportunity for ASEAN as a

hub for value-add dairy

processing

0

1

2

3

4

5

2008 2009 2010 2011

Sh

are

of

To

tal E

xp

ort

s %

ASEAN Agro-Food Share of Total ASEAN Exports

Intra-ASEAN Trade

Extra-ASEAN Trade

Source: AFBA, ASEAN Trade Statistics Database as of October 2013

Page 12 Confidential to Fonterra Co-operative Group

Opportunities for ASEAN In Regulatory

Convergence: Mutual Recognition

Mutual

recognition: a step towards

harmonisation

• Five principles of good

regulations in support of

the ASEAN harmonisation

process

Page 13 Confidential to Fonterra Co-operative Group

Opportunities for ASEAN In Regulatory

Convergence: Food Industry Engagement

• Importance of public

& private sector

engagement already

underway in ASEAN

ASEAN Food and Beverage Alliance

• Believes there is an opportunity for the

private sector to help meet the goals of the

ASEAN Roadmap 2015

• Provides its collective knowledge and

expertise

Page 14 Confidential to Fonterra Co-operative Group

In Summary

• Harmonisation of food standards will increase the opportunity for investment and development of

value-added food manufacturing within ASEAN

• Regulatory barriers to trade are of increasing significance to global dairy trade

• The impacts of the Australia New Zealand Food Standards Code and Trans-Tasman Mutual

Recognition Agreement have been beneficial for the dairy industry

• We have seen:

– Freely flowing trans-Tasman dairy trade

– Trade supported by world class regulatory systems

– Opportunities for public and private sector engagement

– Reduced complexity and minimised costs

• We see opportunities for ASEAN to:

– Facilitate intra-regional trade

– Consider mutual recognition

– Benefit from public and private sector engagement