Where's the beef? Shaping Abbott's Indonesian vision

The fact that Tony Abbott's first foreign foray is to Indonesia highlights what an important market it can be for Australian agriculture. Helping shape that strategy is AACo's Donald McGauchie.

Alongside Tony Abbott in Indonesia is a key adviser who helped the Coalition craft its agricultural policy, Australian Agricultural Company chairman Donald McGauchie.

That policy is now part of the closer integration that Tony Abbott plans with Indonesia. And so while all the headlines are about refugees, a much more important dialogue is taking place. Just before he went with the Prime Minister to Indonesia, Donald McGauchie joined the KGB to set his vision for Australian agriculture and Indonesia which is very close to that of the Prime Minister. (KGB: AACo's Donald McGauchie, 30 September)

First the apology

On the ALP government’s decision to ban cattle exports to Indonesia McGauchie says: “I think it was a very unfortunate decision, to say the least. It took very little consideration of almost any of the elements that really were part of it. Certainly to have done that to a neighbour and a trading partner who was such a good customer of ours without giving any consideration to working through it with them disgraced us”.

Now the welcome

McGauchie says: “Australia is open for business: that means selling things, buying things, having people invest, Australians investing offshore. That’s what I think will matter.

Gottliebsen : But as chairman of AACo, does it worry you that the Indonesians might be going to set up a massive operation to grow beef in Australia to rival you? 

McGauchie: Not in the least. The world will not be able to supply enough beef for the demand. Beef is a very land-intensive industry and it’s a very expensive business to be in, and so if the Indonesians want to buy into Australia…

I thought it was amusing that a million hectares – I mean, that’s two medium-sized family farms in the Northern Territory. Let me give you an example. One of our properties, Brunette Downs, is four million acres. That’s one of our 17 properties – and that’s only one company. 

Gottliebsen : Well, maybe they’ll buy Australian Agriculture. That would be a much better way of doing it.

McGauchie: The shares are on the market, but we’ve got some very strong and good shareholders who I’m absolutely certain will want to see this company grow which is why they bought into it.

Now the Vision for Australia

McGauchie: we have a magnificent agricultural base which is grossly underdeveloped. The opportunities are massive. And I think we have the capacity to feed probably a hundred million wealthy people. 

There are two points in that. One is the number, which means we’d have to nearly double our agricultural output to get to that sort of number, but I use the word wealthy because that’s what matters. Now we’re not a low-cost country, but we are a high-quality country. If we produce the right sort of product and feed into this massively growing market, there’ll be in excess of three billion people with a middle-class income by the middle of this century in the countries to the north of us, which is five times the population of the United States and Europe combined. 

Our opportunity is to feed a product in to the top end of that market. We shouldn’t just be selling our Wagyu beef out of AACo in Harrods at £200/kilogram; we need to be selling it in Beijing and Singapore and Seoul and in Tokyo, and many other points.