Following the significant US$90 million investment made by Nestlé Purina PetCare in April to upgrade its pet food manufacturing in Blayney, New South Wales, the Australian government now wants investors to consider another prime area for pet food business: Western Australia (WA).
Australia's Department of Primary Industries and Regional Development (DPIRD) recently issued specific investment outlines for 15 business types in WA, pet food included, to help them grow their presence in Asia and other strategic export markets.
As a pet food business hub, the department said WA, which is the size of Western Europe, has vast areas of high-quality land suitable for premium meat and arable crop production. This makes WA an excellent source of all kinds of ingredients and raw materials for premium pet food from wheat, grains, oilseeds and pulses to all types of farm and poultry meat.
WA’s unique advantages from farms to factories
WA is the Southern Hemisphere's second largest producer of oats and wheat, producing at least half of Australia's total wheat exports. The region is the world's largest producer and exporter of lupins which are often used for animal feed. WA is also a major source of chia which can be used in pet food and treats.
When it comes to meat, WA pet food investors are guaranteed a highly safe, in fact one of the world's cleanest processing environments for all types of eco-friendly and ethically produced meat products. The department said WA, which ranks as second best lamb producing state in Australia, is well placed to provide all these ingredients for use in pet foods.
At present, WA's meat processing industry consists of 22 plants processing cattle, sheep, pigs, goats, poultry and other specialty meats like kangaroo. All have significant throughput and produce pet suitable by-products, the department said. As a result, WA now counts 24 pet and animal food manufacturers, with three being large operations and 21 small and medium sized businesses.
WA pet food industry presents unique opportunities for further investment
Potential WA pet food investors can start small with five to 10 people or a full force of at least 120. They can scale their investments from AU$2 million to AU$80 million and expect highly attractive operating margins (30-60%) and access to high-value markets, DPIRD said.
Geographically, WA is very close to Asia and so it is very accessible to trading partners and pet food factories particularly from East Asia and South East Asia. Pet food exporters from WA can ship within five days to Indonesia, six days to Singapore and 8 days to Southern China.
“Multiple firms have already invested in pet food processing facilities and additional capacity is planned. There is significant further potential for growth and we can facilitate further pet food processing operations at significant scale,” the department said.
Opportunities for growth and investment exist across multiple production forms, such as premium canned food, premium air-dried kibble (with high meat inclusions), freeze-dried complete meals and treats.
New pet food operations could be either developed adjacent to existing meat processing facilities or established as green-fields operations. Investment in WA’s pet food processing would suit a wide range of investors, including joint ventures with existing meat firms, global multinationals focused on pet foods, investors with access to new markets, domestic pet food companies and start-ups.
The DPIRD said WA is enjoying a solid long-term growth in pet food exports. The state's pet food exports experienced a 19-year compound annual growth rate (CAGR) of 18% from 2002-2021. Last financial year, WA's pet food export value was AU$24.54 million. The Philippines is its biggest pet food export market ($21.79 million), followed by Japan ($1.11 million), Taiwan ($0.91 million) and South Korea ($0.25 million).
The government body promises to provide a range of investment concierge services to reduce the risk and to support investment to WA pet food industry. They will act as the central point of contact for information to support investment decisions and assist in securing regulatory approval.