A Singaporean investor in several New Zealand agricultural companies says it is doing so because the country will be a future food-producing power house for Asia.
The chief executive of Olam International, Sunny Verghese, told a recent Rabobank advisory board meeting in Sydney that it was investing in New Zealand and Australia because it knew where global supply-chain arbitrage was occurring.
"We see that Australia and New Zealand have a comparative advantage long term, on a sustainable basis, in being one of the most cost-competitive producers in certain agricultural commodities," he said.
Other speakers said exports had to be more than just commodities if New Zealand and Australia were to make the most of Asia's massive potential.
Olam is the majority owner of New Zealand Farming Systems Uruguay after last week taking its shareholding to 61%, and the second-largest shareholder in the country's second-largest dairy company, Open Country Dairy.
In a statement released by Rabobank following the meeting, Mr Verghese said exports from New Zealand and Australia would increasingly head to Asia.
"I don't believe India and China, given their arable land and water constraints, will be able to produce all the food they need and could become significant importers of food," he said.
"As a result, there is great potential and opportunity for countries that have a comparative advantage to produce some of this food better and more cheaply, like New Zealand and Australia."
While demand growth was predictable, questions remained asked about supply.
"The real challenge for Australian producers will be managing the supply side of the growth in Asia and strengthening their competitive position and building a comparative advantage."
Gary Helou, chief executive of the world's largest branded rice food company, SunRice, said the strength of New Zealand and Australian food producers lay in their reputation for producing safe and traceable products, but they had to change.
"Innovation is needed on an ongoing basis to deliver differentiated, value-added food products rather than commodity exports," he said.
Silver Fern Farms chief executive Keith Cooper said differentiating meat to promote its health and wellbeing benefits from its natural attributes was important for success in Asia.
