Article – Northern Australian food bowl dream a risky fantasy: John Foss

13 April 2015
Damon Kitney
The Australian

One of the nation’s most successful international agricultural entrepreneurs, the New York-based John Foss, has warned that the development of broadacre commodity crops in northern Australia to feed booming Asian demand is doomed to failure.

Mr Foss, whose Chia Company sells its products to some of the biggest food retailers in the world and is on track to turn over more than $100 million this year, said he was bullish on the future of northern Australia as a region to produce agricultural products.
But speaking ahead of this week’s Global Food Forum in Melbourne hosted by The Australian and Visy, where he is a panellist, he warned that traditional commodity crops such as sugar and cotton that were exposed to “vagaries of pricing’’ were not the ­answer.
“Everyone has the same pitch: that they are going to grow all this product for China,” Mr Foss said, referring to other nations in the world keen to supply soaring Asian demand.
“I see the future in higher-value functional crops that meet a specific market requirement … I am less convinced that sugar or others that have been grown in the north traditionally will work.’’
A company chaired by Queensland businessman Keith De Lacy, Integrated Food and Energy Developments (IFED), wants to build one of the country’s biggest irrigation schemes in north Queensland by siphoning 555,000 megalitres of water per year from Queensland’s Gilbert River catchment to irrigate a huge sugar cane plantation.
The $2 billion proposal also includes plans for a sugarcane mill in Georgetown, along with ethanol production facilities and an abattoir. Chinese investment is also backing the Ord irrigation project in the East Kimberley region of Western Australia and the clearing of land for irrigated sugarcane cropping.
The federal government has identified Ord stage three as one of its top 30 national new dam and irrigation projects, ahead of the release of the government’s Northern Australia white paper, which has been delayed by internal party politics.
But a report released last year by ANZ entitled “Molehill to Mountain: Agriculture in Northern Australia’’ warned that agricultural development in the north, most notably expensive new irrigated cropping schemes, was at worst an immediate loss-making venture and at best a long-term risky project.
Chia Company itself has begun producing chia seeds on a small scale in the Northern Territory and Mr Foss is eyeing the second stage of the Ord River irrigation project for further production.
He said crops that had specific end-use applications such as beans, chick peas and guar seed had the potential to expand with good marketing.
“As we look to grow more functional food-type crops, marketing will be fundamental,’’ he said.
“Australia has a good name globally, but it has to be co-ordinated. It is a different mindset to being a commodity producer.’’
Chia recently appointed world champion surfer Kelly Slater as a brand ambassador.
Slater, who visited the company’s farms in the Kimberley region, came to Mr Foss’s attention after posting a message on social media about how chia seeds were part of his daily breakfast routine.
Chia has been one of the nation’s most successful agricultural export stories as it has capitalised on soaring demand for healthier food products, especially those that are gluten and dairy-free.
Chia seeds are high in omega-3 acids, dietary fibre and protein, and the seeds are often added to food and drinks to boost their nutritional value. Chia’s US market has grown from about $21m in revenues in 2011 to an estimated $370m this year.
Mr Foss revealed that the group was poised to announce a supply deal with one of the biggest convenience chains in the world.
It already has deals with the likes of Wal-Mart to sell packaged breakfast foods with chia, coconut milk and fruit, which are known as Chia Pods and sold in small plastic bowls.
In the US the company markets breakfast food products including Chia Pod oats and Chia Pod bircher muesli and Mr Foss said he could see the Chia Pod product range expanding.
He said food companies were also increasingly interested in chia as an ingredient.
Bakers Delight chia bread was the first product to include chia as a volume ingredient.
“Other bakery companies are now using chia to get Omega 3 into their product. We now do a range of higher value-add products and are getting good traction with food companies,’’ Mr Foss said.
“We are providing stability and a consistent Omega 3 profile. We have complete traceability back to the farm. Our biggest growth is in the most discerning customer sets like Japan, Korea and Scandinavia.’’
He said while the ingredients business currently represented about one-third of chia’s revenues, it could “certainly grow a lot more’’.
Courtesy of The Australian