Has Australia fallen behind the strategic alliance contracting trend in the global food industry? If so, is government assistance warranted?

Since the 1970s, there has been a broad shift from arm‘s length to long-term strategic alliance procurement practices across nations and industries. This has happened for sound commercial reasons. Peculiarities of agricultural production have slowed this shift in many food industry sectors, but it is now proceeding apace – driven primarily by rapidly globalising supermarket chains. In most Australian agri-food sectors, few firms have the scale or level of sophistication that would make them attractive strategic alliance partners either for international food retailers or for their category managers. The reasons for this include a combination of past government failures (inappropriate policies) and failures or inefficiencies in a range of information markets. The long-term nature of strategic alliances generates significant first-mover advantages for suppliers. Australian food producers risk being locked out of attractive opportunities if they fail to adapt to the new mode of contracting. For regional economies, the long-term benefits from accelerating strategic alliance adoption are likely to be large. Such benefits will flow on to many who are not usually considered private beneficiaries of that adoption. In other words, there are significant public benefits in prospect. While the results of past government intervention in this field have been mixed, there has been much learnt internationally from such experience. In Australia, many of the inappropriate policies have now been reversed and the prospects for cost-effective government assistance in the relevant information markets are good.