Business AdvisoryAgriBusiness

China still burns brightly for New Zealand agribusiness

Hayden Dillon
22 March 2019
3 min read

“China is far from finished as a key driver of growth for the New Zealand agribusiness sector,” says Hayden Dillon, head of corporate agribusiness for Findex.

Despite recent negative market commentary coming out of China, Dillon, who recently toured our largest trading partner with the BNZ’s Port to Plate tour, was optimistic for the future of New Zealand agribusiness, while acknowledging the challenges that go with doing business in China.

“China is large, complex and changing faster than we can possibly understand. There is no simple headline or strategy to sum up this market, but there is also no doubt it is still the most valuable opportunity to New Zealand agribusiness,” said Dillon.

In reference to reported drops in Chinese import numbers, Dillon points out it’s important to read between the lines and focus on the key numbers for New Zealand exporters.

“While Chinese imports did drop year-on-year to August 2015 by 13.8%, food imports grew by up to 25%. This might be bad news for the likes of Prada, Audi and other luxury brands, but the story for New Zealand, who is exporting food and food technology, is very strong,” said Dillon.

Dillon does not see this trend of rising food imports changing anytime soon. “It’s about feeding the dragon. China has a rapidly growing population with rising incomes and is far from reaching its satisfaction point in regards to food demand,” he said.

The changing diets in China were explained to Dillon and his tour party of New Zealand agribusiness specialists by the Agricultural Development Bank of China. The Bank indicated growing demand for edible oil, meat and dairy will continue to increase, while rice consumption per captia will decrease.

Dillon notes that China is also beginning to see demand increase for what it calls “green” products, which are essentially organic or highly certified food. This could provide further niche opportunities for New Zealand businesses.

Dillon believes the real risk is not the short-term macro headlines coming out of China, but the risk that New Zealand does not position itself to ensure it is part of the equation beyond meeting China’s immediate food demands.

“The opportunities in China are almost limitless. Our products continue to be sought as being safe, but that will not last. The challenges are the complexities of China, which mean that our simple approach of producing and shipping a commodity to the port will simply not suffice once China starts addressing the immediate demand shortfalls through growth in its industrial farming practices,” says Dillon.

A desire to manage the productivity and quality of the supply chain has seen the Chinese government supporting the development of large-scale farms with over 15,000 cows. “China produces half the world’s apples, so they know about industrial farming,” Dillon says.

Dillon points to Fonterra investing in producing supply locally in China, using New Zealand expertise and farming technology as a smart strategic move given the above mentioned trends.

He also believes that to ensure future success, New Zealand agribusiness companies need to get their head around the development of successful brands in China.

“The consumers are far savvier than we give them credit for – they do not trust lightly, and will do their homework on the traceability and social feedback before buying,” said Dillon.

Author: Hayden Dillon | Managing Partner - Agribusiness

Hayden is the Managing Partner for Waikato. Hayden’s background and experience provides him a unique perspective as an adviser, in developing strategies, managing risk, and identifying new opportunities for companies. This allows him to fulfill his passion of working with great people to build and grow businesses successfully. He holds various leadership roles in one of New Zealand’s largest economic regions being Waikato, and has strong banking, risk management and financial skills. This, coupled with extensive experience in agribusiness from the farm gate to developing international distribution channels means Hayden has a sound understanding of the role and responsibilities of value adding governance. Hayden has held key roles in corporate banking within the food and fibre sector of the Bank of New Zealand and National Australia Bank, as well as his involvement directly in the Australian milk processing industry. Hayden grew up on his families station in Central Otago, and has been involved in agribusiness throughout his career. Hayden is still involved in farming with his Bloodstock farm in Waikato. He holds a Bachelor of Commerce in Agriculture majoring in Farm Management and a Graduate Diploma in Applied Finance and Investment majoring in Treasury. He is a Fellow of the Financial Securities Institute of Australasia, a member of the IOD, and holds various directorships.