Trends In Australian Vegetable trade

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Trends In Australian Vegetable trade

• Presentation to TGFA Vegetable Forum

Ian James Chief Economist AUSVEG Ltd.
Ulverstone 9 August 2006
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Compared to other cropping industries vegetable
production is domestically focused
Exports as a of production
Sources Australian Bureau of Statistics and
Australian Bureau of Agriculture and Resource
Economics
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Nonetheless exports of fresh vegetables and
imports of processed vegetables have been
significant
M
Source Australian Bureau of Statistics 2000-01
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In recent years the trade situation has
deteriorated with Australia now a net importer of
vegetable products
M
Source Australian Bureau of Statistics
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Imports have increased across the board and there
has been a sharp decline in fresh exports

• Over the last three years
• Fresh vegetable imports are up 45 albeit off a
  low base.
• Frozen vegetable imports have increased 36 to
  over 100m.
• Processed vegetable imports have increased 20
  although most of the rise occurred in 2002/03 and
  imports have now flattened.
• Fresh vegetable exports have fallen by over 60
  million or 29.
• Exports of cauliflowers and broccoli are now only
  one third of their value thre years ago and there
  has been a substantial fall in exports of
  asparagus and carrots.
• Exports of some processed vegetable products such
  as tomato sauce and fruit juices have also
  experienced declines

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Imports have been sourced from a wide variety of
countries
M
Top Eight Import Source Countries
Source Australian Bureau of Statistics
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And significant export markets have been lost in
Asia
Exports of fresh vegetables into selected Asian
markets
Source Australian Bureau of Statistics
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The deterioration is ongoing with the latest
trade data revealing that
increase 11 months to May 2006 compared to
corresponding period last year

• Total imports are up 7.2 with frozen imports up
  nearly 10.
• There has been an alarming 31 leap in fresh
  imports driven by a 73 rise in garlic imports
  from China.
• However most fresh vegetables have seen an
  increase with strong growth in imports of onions
  (74), asparagus(28), tomatoes (17) and
  capsicum (15).
• Total exports are down 4 and fresh vegetable
  exports have fallen again down 5.7.

Source Australian Bureau of Statistics
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Total imports are up from most source countries
change 11 months to May 2006 compared to
corresponding period last year

• Fresh imports are up 40 from China, 28 from New
  Zealand, 23 from the USA and almost double from
  Peru
• Frozen imports are up almost 10m from NZ or 17
  and continue to rise from China, up 15.
• Processed imports show little change but imports
  from Thailand are up 13 and from Turkey 39,
  largely at the expense of New Zealand and the USA.

Source Australian Bureau of Statistics
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Fresh vegetable exports into the major Asian
markets continue to collapse
decrease 11 months to May 2006 compared to
corresponding period last year
Source Australian Bureau of Statistics
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However it is not all doom and gloom and some
vegetable exports have increased.
increase 11 months to May 2006 compared to
corresponding period last year
Source Australian Bureau of Statistics
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And vegetable growers are diversifying away from
their dependence on markets where Chinese
competition is strong
Examples of smaller markets where growth has been
strong
change July-May 2006 compared July-May 2005
Source Australian Bureau of Statistics
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But Australian vegetable growers face unlevel
playing fields in overseas markets
Tariff rates on selected vegetables
Source Stephen Winter and Associates
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What lessons can be taken from the trends in
Australian vegetable trade?

• Australian vegetable growers competitive position
  is deteriorating.
• Export markets can be won but they are most
  likely to be
• in countries with no tariff barriers to
  Australian imports
• in vegetables where labour harvesting costs are
  low.
• New Zealand is where most of the import threat is
  coming from indicating that scale is an important
  determinant of success.
• China is a potential threat (as are other Asian
  nations e.g. Vietnam) especially in vegetables
  where harvesting costs are high such as
  cauliflowers and broccoli.
• But so far the Chinese impact has been in our
  export markets rather than our domestic market.

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So is there a future for the Australian vegetable
industry in the onslaught from globalization?

• Absolutely.
• But the industry needs to respond positively to
  market realities.
• Being supply focused and ignoring market demand
  undermines returns to growers.
• New technology provides an opportunity to compete
  but will require increasing scale to justify the
  investment required.
• Growers need to concentrate more on the issues
  beyond the farm gate.
• Effective liaison with operatives further along
  the supply chain is critical to success.
• Smart marketing campaigns are required to shore
  up domestic markets and penetrate export markets.