14 – Economic changes affecting grain consumption in South-East Asia

27 September, 2017

by Professor Ross Kingwell – AEGIC Chief Economist.

It’s well known that South East Asia is likely to be the main source of demand for Australian grain exports over the next decade. Projected economic development in the region will see a continuing rise in incomes, higher populations and more people moving to urban areas. Less well known is that consumer buying habits in the region are likely to change. A previous blog mentioned that as incomes rise there is a gradual shift from staples like cereals to protein-based diets.

In South East Asia, this shift is already underway, with a fall in the relative importance of rice in diets. The OECD found that this phenomenon is most pronounced in Thailand and Malaysia, which unsurprisingly, have the highest per capita incomes in the region (see Table 1). Household consumption data in five Southeast Asian countries (Indonesia, Myanmar, Philippines, Thailand and Vietnam) reveal an income effect whereby wealthy households consume less rice than poorer households. Hence, as individual wealth increases there is a shift away from the central role that rice has traditionally played in this part of the world.

Table 1: Key economic and population statistics for South East Asian countries (Source: World Bank (2017). Note: GDP is measured in current 2015 USD.)

However, offsetting this income effect is population growth, which will ensure the total demand for rice and many other grains will actually increase over the next decade in these countries. But as this growth in population slows, income growth will become more important, playing an increasingly pivotal role in determining the composition of each nation’s diet. The widespread urbanisation of the region will continue to be an important contributing factor underpinning the growth of incomes and population over the coming years. By 2020, the region’s urban population will exceed its rural population for the first time.

Already underway in most South East Asian countries (see Chart 1) is a trend towards non-agricultural sectors growing more rapidly than agriculture, thereby reducing agriculture’s share of employment and GDP in each country. Greater employment opportunities will continue to draw people out of the rural areas, further supporting the shift towards urbanisation.

Chart 1: The changing economic importance of agriculture in South East Asian countries (Source: Source: World Bank (2017), World Development Indicators, http://databank.worldbank.org/data/.)

However, although farm production is likely to play an increasingly less important part in the economies of many South East Asian countries, nonetheless, food manufacturing and food product export will play more important roles. The region is becoming a net food exporter, with around USD$139 billion in exports in 2014, compared to USD$90 billion worth of food imports.

Hence, a likely future for Australia’s grains industry is that it will be an exporter of grains to many South East Asian countries, where those imported grains will then be processed to produce foodstuffs for a growing, urbanised local market as well as markets in nearby countries and beyond.

More News

05 May, 2021

The world of noodles

Australian wheat is highly valued for noodles across Asia. The Asian noodle market represents over one-third of Australia’s wheat exports! Why Australian wheat? Flour millers across Asia prefer to buy Australian wheat for noodles. The combination of excellent noodle texture and colour attributes is unique to Australian wheat. White Australian wheat results in high milling yield […]

28 April, 2021

AEGIC IS HIRING

This post is current as of April/May 2021.  AEGIC is Australia’s leading organisation for market insight, innovation and applied solutions for the grains industry. We leverage our technical know-how, market insight and innovation capabilities to find and deliver practical solutions that create value for the Australian grains industry. We are currently building our technical capacity […]

27 April, 2021

AEGIC behind the scenes: Australian wheat for Asian bread

Asian diets are changing amid strong economic growth and increasing wealth. More and more consumers are recognising the benefits and convenience of baked products. Australia is well-placed to play a positive role in this change by understanding industry requirements. AEGIC’s bread research lab helps assess Australian wheat for Asian baking to get more of it into […]

21 April, 2021

AEGIC behind the scenes: Australian wheat for Asian noodles

The Japanese udon noodle market is Australia’s most stable premium wheat market. Japanese noodle lovers know what they like when they’re tucking into a delicious bowl of udon or ramen noodles. AEGIC runs a highly-trained udon noodle sensory evaluation program with the Japanese Flour Millers Association (JFMA) to ensure new Australian wheat varieties meet Japan’s strict requirements. […]

15 April, 2021

Enhancing noodle texture and colour

Asian flour millers prefer to buy Australian wheat for noodles because of its bright, stable colour and good texture. Thanks to a landmark AEGIC research project*, we know that noodle colour, colour stability, and texture are among the most important factors that flour millers look for when buying wheat for noodles. The research found that […]

13 April, 2021

50 – The Rise of the Middle Class

02 March, 2021

Whole grain for better health

Increasing whole grain consumption represents a major opportunity and challenge for the food industry. Extensive evidence now shows the connection between whole grain consumption and reduced risk of several chronic diet-related diseases. Greater intake of whole grains in the diet leads to reduced incidence of cardiovascular diseases, gastrointestinal diseases, cancer, and diabetes. To address this […]

26 February, 2021

AGIC Asia 2021 to reach Asian feed and whole grain buyers

The Australian Grain Industry Conference 2021 will feature a special session led by AEGIC on the benefits of Australian grains for animal feed, and the health benefits of whole grains for human consumption. AGIC Asia, which will be held virtually this year on Wednesday 3 March 2021, is a key date on the grain industry […]

05 February, 2021

Stimulating Australian feed grain demand in the Philippines and Thailand

Feed grain buyers in the Philippines and Thailand learned the compelling benefits of using Australian feed grains for swine following two well-attended AEGIC webinars this week. The webinars, presented in conjunction with Austrade, featured experienced Australian feed nutrition expert Tony Edwards as keynote speaker. The Philippines event attracted 150 representatives of the grain and animal […]

Slider