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international competitiveness of the australian vegetable production sector

abare eReport 06.5

Stephen Apted, Peter Berry, Christopher Short,Vernon Topp, Kasia Mazur and Thuy Van Mellor

april 2006

abare

australian vegetables production sector abare eReport 06.5

© Commonwealth of Australia 2006

This work is copyright. The Copyright Act 1968 permits fair dealing for study, research, news reporting, criticism or review. Selected passages, tables or diagrams may be reproduced for such purposes provided acknowledgment of the source is included. Major extracts or the entire document may not be reproduced by any process without the written permission of the Executive Director, ABARE.

ISSN 1447-817XISBN 1 920925 55 4

Apted, S., Berry, P., Short, C., Topp, V., Mazur, K., and Mellor, T. 2006, International Competitiveness of the Australian Vegetable Production Sector ABARE eReport 06.5, Canberra, April

Australian Bureau of Agricultural and Resource EconomicsGPO Box 1563 Canberra 2601

Telephone +61 2 6272 2000 Facsimile +61 2 6272 2001Internet www.abareconomics.com

ABARE is a professionally independent government economic research agency.

ABARE project 3071

iii


foreword

Elements of the Australian vegetable growing industry initiated the Fair Dinkum Food campaign in mid-2005. This campaign was the result of vegetable industry concerns about declining terms of trade and competi-tion from overseas growers, and was designed to highlight concerns within the Australian industry regarding the level of international competition that domestic vegetable farmers face.

In response to the concerns highlighted by the vegetable industry, the Minister for Agriculture, Fisheries and Forestry commissioned ABARE to assess the international competitiveness of Australian vegetable growers. The principle objectives of this assessment were to determine the extent of international competition faced by Australian vegetable growers, to deter-mine which (if any) elements of the domestic industry were not competitive with overseas growers, to identify causes for reduced Australian grower competitiveness, and to identify possible avenues by which the industry might restore competitiveness.

The information contained in this report is expected to contribute to policy decisions about the international competitiveness of the vegetable industry. The report may also assist the Australian industry in identifying areas for potential change as it endeavors to raise its competitiveness in domestic and global markets.

BRIAN S FISHER

Executive Director

April 2006

iv


acknowledgments

The authors wish to acknowledge the assistance provided by Horticulture Australia Limited, AUSVEG, and the state vegetable grower associations, especially in relation to the vegetable grower survey. Vegetable growers who participated in the grower survey also provided a substantial contribu-tion to this report, and their support and assistance is gratefully acknowl-edged.

Substantial assistance was provided by staff of the major supermarkets and the major food processors. The contributions from Woolworths, Metcash and Coles are gratefully acknowledged, as are the contributions from Simplot Australia, McCain Foods, and SPC-Ardmona.

Assistance provided by government stakeholders, especially staff of the Australian Government Department of Agriculture, Fisheries and Forestry and the Tasmanian Department of Primary Industries, Water and Environ-ment, is also gratefully acknowledged.

Within ABARE, the authors wish to acknowledge assistance provided by Heidi Rodgers, Phantipa Puangsumalee and Rohan Kendall in preparing data for analysis.

v


contents

Summary 1

1 Introduction 11

2 Australian vegetable market 12Australian vegetable consumption 12Vegetable supply in Australia 18

3 Vegetable processing 26Economics of vegetable processing location 26Australian sector overview 28Imports 30Exports 34

4 Australia’s trade competitiveness 36Exchange rates 36Barriers to Australia’s vegetable exports 37Australia’s barriers to vegetable imports 41Other competitiveness issues 42Free trade agreements 44The competitive landscape 46

5 Economic performance of Australian vegetable growers 48Overview of farm performance 48Costs of production 50Other issues 55

AppendixesA Terms of reference 60B Defi nition of vegetables 62C Harmonised system (HS) codes for vegetables 66D Grower survey results – detailed tables 68

References 78

vi


fi guresA Vegetable products as a share of total consumption,

1998-99 12B Apparent per person consumption of vegetables, Australia 12C Apparent per person consumption of vegetables,

United States 13D Apparent per person consumption of vegetables,

European Union 13E Summary of vegetable pathways to consumers 14F Value of Australian vegetable production 18G Number of vegetable farms and average size of holding 19H Value of Australian vegetable production and trade 20I Major vegetables produced in Australia, 1999–2000 to

2003–04 20J Production and real gross unit value of production for

fresh vegetables 22K Production and real gross unit value of production for

processing vegetables 24L Processed vegetable imports by commodity 30M Processed vegetable imports by source country 30N Processed vegetable imports by process 30O Processed tomato imports 31P Italian processed tomato product prices and exchange

rate 31Q Processed potato product imports by type 32R Processed potato products imports by source country 32S Frozen, prepared potato imports 32T New Zealand frozen prepared potato price and exchange

rate 33U Processed peas, beans and sweet corn imports 33V Frozen pea imports 33W Mixed vegetable imports by type 33X Frozen mixed vegetable imports by source country 34Y Processed vegetable exports by destination 34Z Real vegetable export values and the Australian dollar

exchange rate 37

vii


tables1 Vegetable product lines included in the retail sample 152 Origin of fresh vegetables 153 Origin of frozen vegetables 164 Origin of canned vegetables 165 Origin of supermarket vegetables 166 Vegetable growing establishments by state, June 2004 187 Trends in Australian fresh vegetable production, 1993-94

to 2003-04 218 Trends in Australian processing vegetable production,

1993-94 to 2003-04 239 Annual average growth in packaged food sales 2810 Vegetable processing companies operating in Australia 2911 Average processing potato growing contract sizes 2912 Applied tariffs in Australia’s top vegetable export markets,

by tariff line 3913 Tariffs applied to Australia’s major vegetable imports 4114 EU vegetable production subsidies, marketing year

2001-02 4315 Key fi nancial performance measures for vegetable

growers 4916 Key performance measures for vegetable growers,

by size of output 5017 Vegetable grower costs of production 5118 Variable costs and prices per tonne of vegetable

produced in Australia, New Zealand and China 5119 Distribution of potato-growing costs 5320 Use of computers in vegetable business 5521 Organisation and association membership 5622 Tactics to improve business’ productivity 5623 Importance of government assistance 5724 Education and training sought by vegetable growers 5825 Expectations about the vegetable business 5826 Business and productivity expectations in Tasmania 58

viii


tables – appendixesB1 Vegetable defi nitions 62C1 Commodity classifi cation list 66D1 Vegetable grower characteristics, by state 68D2 Financial performance by size of turnover 70D3 Carrots – costs of production 72D4 Caulifl owers – costs of production 73D5 Onions – costs of production 74D6 Peas – costs of production 75D7 Potatoes – costs of production 76D8 Tomatoes – costs of production 77

1


summary

In recent years, vegetable producers in Australia have been subjected to increasing competition from vegetable suppliers in other countries. Inter-national competition in the vegetable sector has been felt in the Australian domestic market and in export markets in which Australia is active.

As a result of concerns over the increase in international competition in the vegetable sector and the potential ramifi cations for the future of the industry, the Hon. Peter McGauran MP, Minister for Agriculture, Fisheries and Forestry, commissioned ABARE to review the international competitiveness of the Australian vegetable production sector. The principal objective of this review is to determine the extent to which the Australian vegetable produc-tion sector is internationally competitive, and examine factors infl uencing Australian vegetable growers’ competitiveness.

To assess Australian vegetable producers’ international competitiveness, ABARE examined Australian vegetable production and trade, consumption patterns, and trade-related factors — such as exchange rate fl uctuations, and tariff and non tariff barriers — affecting the competitiveness of the Australian vegetable production sector. ABARE also undertook a survey of production costs in the vegetable industry. Discussions with elements of the vegetable processing industry have contributed to a detailed assessment of the competitiveness of the industry. In addition, sample turnover data provided by the major supermarkets was analysed in relation to market share for Australian vegetable products.

An interim report was released for stakeholder comment in December 2005. This fi nal report incorporates comments received and work under-taken since that time.

Industry backgroundThe Australian vegetable production sector is an important supplier of food to the Australian domestic market, supplying most of the vegetables consumed in Australia. The sector is domestically focused — the value of Australian fresh and processed vegetable exports averaged 12 per cent of the gross value of vegetable production between 1999-2000 and 2003-04.

The Australian vegetable production sector is signifi cant in both economic and employment terms. The sector contributed around 6 per cent of the gross value of agricultural production in the period 1999-2000 to 2003-

2


04. This is around one third the size of the beef sector, around the same size as the wool sector, and around three times more valuable than the sugar cane growing sector. At an economy wide level, vegetable produc-tion accounts for around 0.2 per cent of gross domestic product.

According to the 2001 Census of Population and Housing, vegetable production provided employment for a relatively small proportion — around 0.2 per cent (15 620 persons) — of the Australian workforce. Even in those states in which vegetable production is most important in terms of providing direct employment, it does not account for a large proportion of employment. In Tasmania, for example, the state most dependent on vegetable production to provide direct employment, vege-table production accounted for only 0.6 per cent of employment (1017 persons). Despite vegetable production making only a limited contribution to total employment at the state level, as a result of regional concentrations of both growing and processing operations within states, the industry is more signifi cant in some regions, such as the north west coast of Tasmania.

Key conclusionsBased on analysis of production and trade trends, production costs, consumption patterns, and factors affecting international trade competitive-ness, this study has arrived at the following key conclusions.

Domestic consumption■ Although apparent consumption of vegetables per person in Australia

has increased since the 1970s, there has been little increase over the past 10 years. This pattern of vegetable consumption is similar to that reported in other developed countries.

– It is estimated that Australian annual consumption of vegetables is around 160 kilograms a person, with consumption patterns infl uenced by factors including taste, availability, price, nutritional value, convenience and perceptions of food safety.

■ While diffi cult to determine with accuracy, it appears that around half of all vegetables consumed in Australia are fresh, with the remainder being processed.

– The majority of vegetables consumed in Australia are domesti-cally produced. The most recent data from the Australian Bureau of Statistics shows imports accounting for less than 10 per cent of apparent total consumption (ABS 2000).

■ Trends in per person consumption in both Australia and other devel-

3


oped countries suggest that per person consumption of vegetables is unlikely to increase signifi cantly in the short to medium term. This implies that the rate of population growth in Australia will be a major factor infl uencing domestic demand for vegetables.

– Despite the prospect of only small increases in the overall consump-tion of vegetables in Australia, trends observed in the United States showing increased consumption of fresh and frozen vegetables that are high in nutrients and/or packaged for convenience may infl uence the relative consumption of individual vegetables and vegetable products in the future.

Domestic production■ Production of most major vegetables increased between 1993-94 and

2003-04.

– Output of all the main vegetable types, except green peas, has tended to rise. Production increases are of a similar magnitude to Australian population growth, with domestic production increases being driven mainly by domestic demand.

■ The Australian vegetable production sector is domestically focused.

– Trade in fresh and processed vegetables is relatively small compared with the value of domestic production.

Trade fl ows■ Australian producers of fresh market vegetables are generally competi-

tive in both the domestic and overseas markets, although competition from overseas producers is increasing, particularly in Australia’s export markets.

– Australia exports fresh vegetables mainly to markets in Europe, Asia and Oceania. The ongoing nature of these exports indicates that Australian producers are able to compete in a range of export markets. Trends in Australia’s export markets are mixed, however, with exports into some markets growing (for example, carrot exports to the United Arab Emirates have grown steadily since the mid 1990s), while exports to some other markets have declined signifi cantly (for example, caulifl ower exports to Malaysia have declined markedly in 2003 and 2004, with Australian market share being eroded by Chinese growers).

■ International competition in the domestic fresh vegetable market is generally negligible.

4


– In general, Australia imports only small volumes of fresh vegeta-bles. This indicates that Australian producers are mostly producing at a price level that is competitive with the price of potential fresh vegetable imports.

– Imports of fresh vegetables are generally counter seasonal or they supply market segments not well catered for by Australian produc-tion.

– Imports of fresh asparagus, for example, tend to supplement a seasonal shortfall in domestic production. Although Australia is a net exporter of fresh asparagus, production and storage charac-teristics of fresh asparagus mean that domestically produced fresh asparagus is not available from April to July. Imports tend to peak during this period.

■ International competition in the Australian processed vegetable market is increasing.

– Processed vegetable imports have tended to increase in volume, with a corresponding decline in the unit value of imported items, indicating that the degree of price competition in this sector of the vegetable market is increasing.

■ Some segments of the Australian processing vegetable production sector are showing signs of being uncompetitive compared with some international producers.

– Domestic production of green peas for processing declined between 1994 and 2004, with a corresponding increase in imports of frozen green peas from New Zealand and the Euro-pean Union. This suggests that some producers of frozen green peas in Australia were not able to compete successfully with over-seas competitors.

– Imports of preserved tomato products increased between 1994 and 2004. The majority of these imports were from the European Union; mainly from Italy. Current retail data indicate that a large proportion of canned tomato imports are available at a lower price than similar domestic product. This suggests that imported canned tomatoes are price competitive in the Australian market. It is also possible that imported product is differentiated from the domestic product in terms of the variety of tomatoes used for canning, leading to different taste and use characteristics.

5


Domestic retail situation

■ Analysis of sample turnover data provided by the major supermar-kets in Australia (Coles, Woolworths and Metcash) revealed that the majority of vegetables sold were Australian grown, or signifi cantly transformed in Australia. This tends to confi rm the analysis of trade and production data, and the analysis of production costs and fi nancial performance of vegetable growers undertaken in this review.

– Within the sample, 99 per cent of fresh vegetables turned over by the major supermarkets were Australian grown.

– Around one quarter of fresh asparagus was imported. As noted in chapter 2 and above, fresh asparagus imports tend to occur to satisfy counterseasonal demand.

– At least 95 per cent of fresh potatoes, tomatoes, carrots, mush-rooms, capsicums, corn, spinach, peas and beans sold in super-markets were grown in Australia.

– Within the sample, 62 per cent of processed vegetables sold were either a product of Australia or made in Australia. In frozen vegetables, 68 per cent were identifi ed as a product of, or made in, Australia, while 48 per cent of canned vegetables were a product of, or made in, Australia.

– In the frozen vegetable segment, a minority of beans (43 per cent), carrots (38 per cent), peas (30 per cent) and potatoes (9 per cent) were identifi ed as being imported. Conversely, all frozen spinach and two thirds of frozen corn was identifi ed as imported product.

– In the canned vegetable segment, tomatoes (33 per cent) and asparagus (14 per cent) had a minority of Australian product in supermarket turnover. Potatoes (67 per cent), carrots (78 per cent), mushrooms (89 per cent), peas (79 per cent) and corn (76 per cent) all had a majority of product that was a product of, or made in, Australia.

– Aggregating fresh and processed vegetables revealed that 91 per cent of the total volume of vegetables turned over in the major supermarkets was either a product of Australia or made in Australia.

Domestic processing sector■ Imports of processed vegetable mixes and processed minor vegetables

are signifi cant in the context of processed vegetable imports, with volumes increasing between 1994 and 2004. This has placed pres-sure on growers of processing broccoli, caulifl ower, beans and carrots.

6


■ Pressure from international competition in these vegetables is likely to be regionalised, especially in areas such as northern Tasmania.

■ Despite the increase in import competition in the processed vegetable market (as shown by the growth in the value of imported processed vegetables and the general decline in the unit value of those imports), the value of the Australian vegetable processing sector is estimated to have grown at rates similar to growth in the gross value of vegetable production. This suggests that, overall, the sector is successfully adjusting to competitive pressures in the market.

■ This review has identifi ed no reasons to expect that the vegetable processing sector will not remain internationally competitive, as long as the cost of raw vegetable inputs remains internationally competitive.

Vegetable grower survey■ A survey of fi nancial performance and production costs among Austra-

lian vegetable growers revealed that in 2004-05, Australian growers were generally competitive with their international competitors, and achieved returns and levels of profi tability comparable to broadacre (beef, wool and wheat) and dairy enterprises in Australia.

– Comparing average Australian costs of production with costs of production from selected countries showed that Australian growers had production costs for potatoes and carrots that were competi-tive with New Zealand production costs, and processing tomato production costs that were competitive with China. China did have lower production costs than Australia for potatoes, however, and New Zealand produced green peas at a lower cost than Australia.

– While comparison of the average costs of production suggests that Australian growers are generally internationally competitive, there is considerable variability in unit production costs between growers.

– The survey results provide strong empirical evidence to support the view that larger growers tend to have lower costs of production and, consequently, larger growers typically achieve higher rates of return on capital.

■ Surveyed growers identifi ed two important avenues for government activity to be:

– the development of more productive vegetable varieties– the improvement of growers’ business skills, including marketing.

7


■ The survey identifi ed a generally positive outlook among growers. Most growers expected to be still growing vegetables in fi ve years time. In addition, the survey found that:

– most growers use modern technology in the management of their farm businesses

– most growers are members of a relevant grower organisation– many smaller growers believe that increasing scale would be a

useful tactic to improve business productivity– vegetable growers are generally optimistic and have identifi ed

some avenues to improve their business performance and viability.

Other trade related factors■ Analysis of trade related factors affecting competitiveness suggested

that exchange rates have had the most signifi cant impact on Australian vegetable producers in recent years.

– Between 1999 and 2005, fl uctuations in the Australia–United States exchange rate were strongly correlated with changes in the volume and value of fresh vegetable exports from Australia, and moderately correlated with changes in the volume and value of processed vegetable exports. This indicates that macroeconomic conditions infl uencing the relative prices of traded fresh vegetables are a major component of export competitiveness.

– Tariffs are generally not a major factor in relation to competitive-ness in the vegetable sector. Australia and Australia’s vegetable trading partners generally do not have very high tariffs on vege-table imports.

– Changes in tariffs are not a factor in either increases in imports by Australia or Australian exports of vegetables, especially between 2000 and 2005.

– Free trade agreements currently in place do not appear to have a signifi cant effect on Australia’s vegetable exports.

– The China–ASEAN free trade agreement, for example, is not implicated in Australia’s loss of export markets in Singapore and Malaysia, because Australian and Chinese vegetables face the same low tariffs. Free trade agreements do, however, have the potential to provide improved vegetable export opportunities if they result in lower tariffs for vegetable items. If it was possible to secure a reduction in vegetable product tariffs in countries such as Japan and the Republic of Korea, Australian vegetable exporters may be able to develop new export opportunities in those coun-

8


tries. Australia’s ability to benefi t from opportunities created by tariff reductions in export markets would depend critically on the relative cost competitiveness of Australian vegetable producers.

– Export subsidies appear to be a minor factor in countries that export vegetables to Australia.

– The European Union, for example, is a signifi cant exporter of processed vegetables to Australia — especially canned tomatoes. Even if all of the World Trade Organisation-permitted EU funding for export refunds was applied to EU canned tomato exports, this funding would still constitute less than 2 per cent of the total value of EU canned tomato exports.

– Most countries also provide no domestic support for vegetables that are exported to Australia. The main exception is the European Union, which does provide domestic support for canned tomatoes, some of which are exported to Australia.

– Australia’s import of canned tomatoes has increased in recent years, but support paid on tomatoes for processing in the Euro-pean Union has not increased in this period. From 1992 to 2002, Australia maintained countervailing duties on canned tomato imports from Italy (the main EU exporter of canned tomatoes to Australia). While the domestic support arrangements in the Euro-pean Union make these imported canned tomatoes more price competitive in Australia, other factors, such as different taste and cooking characteristics, are also contributing to the increase in imports.

– Any reduction in the amount of domestic support provided for processed tomatoes in the European Union would reduce the competitiveness of EU canned tomatoes in Australia. Proposals have been made in the current World Trade Organisation nego-tiations for some forms of domestic support — including the type made available for EU processing tomatoes — to be reduced.

– It is also possible that production subsidies in Japan may reduce export opportunities for Australian vegetable growers by supporting high cost Japanese production destined for the Japanese domestic market. If it was possible to reduce this support, Australian vege-table growers might be able to develop additional export opportu-nities in the Japanese market.

– Sanitary and phytosanitary measures have not been major factors in the changing levels of vegetable trade involving Australia. SPS measures for vegetables did not change signifi cantly between 1995 and 2004.

9


– SPS measures are important barriers to imports in the potential markets of a small number of countries, such as Japan. The easing of some of the current SPS measures would probably result in better export opportunities for Australian vegetable growers.

Summary of key conclusionsAlthough the Australian vegetable production sector is generally competi-tive, there is evidence of increased international competition in both the domestic market — particularly in processed vegetables — and in many of Australia’s export markets. Competition is generally price related, indi-cating that Australian producers need to reduce the unit price of commodity outputs, or develop markets for higher priced differentiated products.

A number of trade related factors appear to be affecting the competitive-ness of the Australian vegetable production sector. Exchange rate fl uctua-tions are an important factor in determining the price competitiveness of Australian vegetable imports and exports. While they have not posed increasing barriers to Australian vegetable exports in recent years, SPS measures and tariffs in some countries may inhibit the development of export opportunities.

Policy implicationsThe assessment of the international competitiveness of the Australian vegetable production sector highlights a number of implications for policy makers. Price competition is a key element of success in commodity markets. Australian producers involved in the production of vegetables must examine options for reducing the unit cost of their products, while maintaining appropriate product standards. Costs in vegetable production include a range of direct input costs and costs of doing business. Those in the vegetable growing industry have also observed that vegetable producers need to adopt competitive production practices and business models, and need to develop appropriate business skills.

The fi nancial and production costs survey of Australian vegetable growers has revealed the existence of a group of higher cost growers. As is the case with other agricultural industries, normal competitive market dynamics will result in an ongoing process of adjustment in the vegetable production sector, which is likely to result in higher cost producers exiting the industry. It is possible that the exit of higher cost producers will lead to the expansion of more effi cient producers, which, in turn, will improve the competitiveness of the sector as potential scale economies are realised.

Exchange rate fl uctuations have an important impact on the Australian vegetable production sector. The impact of exchange rate changes is

10


felt by exporters, and increasingly by domestically focused producers. Successful vegetable producers must understand the implications of exchange rate fl uctuations for their businesses and adopt business practices to mitigate the negative effects of those fl uctuations.

Some potential export markets are protected by tariff and/or non tariff barriers. Improved market access may increase export opportunities for some growers in export markets such as the Japanese fresh vegetable market. In addition to improving export market access for Australian vegetable growers through trade negotiations to reduce tariffs, government efforts can also overcome some of the trade-restricting SPS measures. Trade negotiations that reduce the level of subsidy available in countries, such as those in the European Union, appear likely to benefi t Australian growers.

11

introduction

In recent years, vegetable producers in Australia have been subjected to increasing competi-tion from vegetable producers in other countries. International competition in the vegetable sector has been felt in the Australian domestic market and in export markets in which Australia is active.

One indication of international competition is the extent of import penetration. The value of imports of fresh and processed vegetables grew signifi cantly in real terms in both 2003 and 2004, following a decade of relatively stable imports. Additionally, cutbacks in processor contracts for vegetable producers in 2005 prompted the formation of the producer-driven Fair Dinkum Food campaign — a campaign intended to increase the consumption of Australian produced vegetables. The reductions in producer contracts were reported to be partly a result of the availability of more cost competitive overseas supplies.

As a result of concerns about increasing international competition in the vegetable sector and the potential ramifi cations for the future of the industry, the Hon. Peter McGauran MP, Minister for Agriculture, Fisheries and Forestry commissioned ABARE to review the international competi-tiveness of the Australian vegetable production sector. This report details the fi ndings of the review. The terms of reference, which provide the framework for the review, are attached at appendix A.

The key objectives in the review are to identify trends in Australian production and trade in vegetables and vegetable products, and to examine the factors infl uencing the competitiveness of the Australian vegetable production industry. The review examines comparative international costs of production, the implications of the geographic structure of the industry, the impacts of international competition on the domestic vegetable industry, and the capacity of the Australian vegetable industry to adjust to the changing environment in which it operates. The review also includes an examination of the origins of vegetables and vegetable products in the Australian retail sector using data provided by major food retailers, and a survey of Australian vegetable growers to determine costs of production in Australia.

1

12

Australian vegetable market

Australian vegetable consumptionVegetables form an important component of a healthy and balanced diet. The consumption of vegetables is infl uenced by factors including relative prices, income, and tastes and preferences (King, Tietyen and Vickner 2000). A recent study, found that the key drivers of food purchase in Australia include taste, availability, price, nutritional value, convenience and safety (McKinna 2005).

Per person consumptionApparent per person consumption of vegeta-bles in Australia was estimated by the Austra-lian Bureau of Statistics (2000) to be 162 kilograms in 1998-99 (the most recent year for which data are available). Potatoes accounted for more than 40 per cent of vegetable consumption in Australia in 1998-99, with leafy and green vegetables accounting for a further 12 per cent (fi gure A).

Although there are no Australian Bureau of Statistics data to support this, there are anec-dotal reports that slightly more than half of all vegetables consumed in Australia are fresh, with the remainder being processed (IBISWorld 2004). This is consistent with US data that indi-cate that fresh vegetables account for between 45 and 50 per cent of apparent per person consumption in that country (ERS 2005b).

The majority of vegetables consumed in Australia are domestically produced. Imports accounted for less than 8 per cent of apparent total consumption in 1998-99 (ABS 2000).

Trends in per person consumption indicate that Australian consumption of vegetables increased from around 120 kilograms in 1976-77 to more than 160 kilograms in 1998-99 (fi gure B). This is likely to refl ect increased concern about health and nutrition, as well as increases

2

A Vegetable products as a share of total consumption, 1998-99

Other vegetables 16%

Leafy and green vegetables 12%

Tomatoes 15%Other root and bulb vegetables 15%

Potatoes 42%

B Apparent per person consumption of vegetables, Australia

75

50

100

125

150

1978-79

1988-89

1983-84

1993-94

1998-99

All vegetables

Potatoes

kg

13


in the variety of vegetables that are available (IBIS World 2004); however, there appears to have been little increase in per person vegetable consumption in more recent years.

Analysis of apparent consumption data indicate that the mix of vegetables being consumed has not changed substantially since the mid 1970s. Potatoes, for example, have remained between 40 and 45 per cent of per person vegetable consumption, and tomatoes have remained between 10 and 15 per cent.

Developed country consumptionData from the United States indicate that apparent per person consumption of vegetables is higher than in Australia, at an estimated 189 kilograms in 2003 (ERS 2005b). Consistent with Australian consumption trends, the data indicate that US consumption of vegetables has increased from around 150 kilograms per person in the early 1970s, although there have not been signifi cant increases in recent years (fi gure C).

Increases in apparent per person vegetable consumption in the United States have been driven largely by increases in the consumption of fresh and frozen vegetables rather than canned vege-tables (King, Tietyen and Vickner 2000). Health and convenience were cited as factors driving the increased consumption of fresh and frozen vegetables in the United States, with increased prepackaging making the consumption of vegetables easier (King, Tietyen and Vickner 2000).

Similar trends in apparent per person consump-tion have also been observed in the European Union, with only small increases in consump-tion over the past 10 to 15 years (fi gure D). It has been estimated that apparent vegetable consumption in the European Union was around 150 kilograms per person in 2003 (EuroStats 2005). Consistent with trends in Australia, potatoes have accounted for between 40 and 50 per cent of per person vegetable consumption over the period. It should be noted that there is a break in the data series at the end of the 1990s — the increase in consumption per person between 1999 and 2000 is the result of statistical changes in the series, rather than actual increases in average consumption levels.

Prospects for total vegetable consumptionThe recent trends in per person consumption in both Australia and other developed coun-tries suggest that per person consumption of vegetables is unlikely to increase signifi cantly in the short to medium term. This implies that the rate of population growth in Australia will be the major factor infl uencing the consumption of vegetables in absolute terms.

Despite the prospect of only small increases in the overall consumption of vegetables in Australia, trends observed in the United States showing increased consumption of fresh and

C Apparent per person consumption of vegetables, United States

50

100

150

1973 1983 1993 2003

Total vegetables

Processed

Fresh

kg

D Apparent per person consumption of vegetables, European Union

75

50

100

125

150

1991 200019971994 2003

All vegetables

Potatoes

change in data serieskg

14


frozen vegetables that are high in nutrients and packaged for convenience may infl uence the relative consumption of individual vegetables and vegetable products.

Pathways to consumersA recent study reports that 65 per cent of vegetables sold in Australia are sold through retail outlets. Restaurants and other food service account for a further 30 per cent of the vegetables sold, with the remainder sold for use in manufacturing (fi gure E, McKinna 2005). It should be noted however, that some industry contacts maintain that both the share attributed to retail and the share of vegetable retail turnover attributed to supermarkets are overstated.

Retail sectorAs depicted in fi gure E, the retail sector for fresh and processed vegetables comprises a variety of retail outlets. Within the retail sector, approximately 70 per cent of vegetables are sold by supermarkets, with around 20 per cent sold in smaller grocery and specialist food outlets, with local and farmers’ markets accounting for 7 per cent and 3 per cent of vegetable retail turnover respectively (McKinna 2005).

Developments in the retail sector can have an impact on growers, and this is refl ected in changes in the quality and/or quantity demanded by consumers. Changes in supply chain dynamics may also affect growers. Retail chains (the large supermarkets) are increasingly sourcing Australian products direct from growers and grower/packer businesses (Spencer 2004). Direct sourcing has the potential to link consumer demand and product specifi cation, and allow better traceability of product sources. This is likely to improve the alignment between product characteristics demanded by consumers and the specifi cations to which growers produce. While wholesale markets and wholesalers remain an important link in the chain from grower to consumer, the importance of the wholesale segment of the vegetable supply chain is reportedly diminishing (McKinna 2005).

Globalisation of the vegetable sector is affecting the structure of the supply chain with global sourcing strategies from major players in the sector increasing the degree of international competition in the domestic market. Globally, supermarkets prefer to deal with larger scale growers, and their sourcing strategies are to secure a reliable supply of vegetables of the speci-fi ed quality at the lowest available price, while minimising transaction costs (McKinna 2005).

The impact of global sourcing strategies in Australia is more likely to be felt in processed vegeta-bles than fresh vegetables because the more perishable nature of fresh vegetables renders trans-port of large volumes of many varieties of fresh vegetables less viable than transport of frozen or shelf stable vegetables.

Australian products sold in the major supermarketsA sample of annual turnover for selected vegetable product lines sold in the major supermarkets (Coles, Woolworths and Metcash) was used to provide an indication of the Australian market share of vegetables — both fresh and processed — sold in Australian supermarkets. Data regarding the share of annual turnover in 2004-05 that was Australian made or produced, or

E Summary of vegetable pathways to consumers

Other grocery

45%

13%30%

Local markets 5%Farmers’ markets 2%

Food service

Ingredients for manufacturing5% Supermarkets

Retail 65%

15


produced or made overseas, were provided by the major supermarkets for the product lines listed in table 1.

Analysis of data from these product lines indicates that most of these vegetables were sold fresh — this accounted for 78 per cent (by volume) of the turnover. Within the fresh vegetable segment of the supermarket sample data, 99 per cent of turnover was in Australian produced vegetables (table 2). The largest import share was for asparagus, with around one quarter of turnover being imported. Trade data shows that imports tend to occur outside the Australian harvest period, when fresh Australian asparagus is unlikely to be available.

Processed vegetables sold in Australian supermarkets are less likely to be produced or made in Australia than are fresh vegetables. According to the sample data provided by supermarkets, 61 per cent of the sales volume of frozen or canned vegetables was produced in Australia. Around a third were produced or made outside Australia, and the origins of 5 per cent were unknown.

The Trade Practices Act defi nes the criteria for making claims about a product’s origin. A claim of ‘Product of …’ can be made when each signifi cant component of the product originates in the country of the claim and all, or virtually all, of the production or manufacturing processes associated with the product occur in that country. A claim of ‘Made in …’ can be made when the product has been substantially transformed in the country of the claim and at least half the costs of production have been incurred in that country (ACCC 2004).

In the frozen vegetable segment, the sample data indicate that Australian frozen potato prod-ucts had a large market share, although imported ingredients were used in a large proportion of Australian made products. Quantifying the volume of imported ingredients was beyond the scope of the supermarket analysis. As illustrated in table 3, 54–66 per cent of frozen peas, beans and carrots were produced or made in Australia, while the majority of frozen corn and frozen spinach was imported. Overall, in terms of volume of product sold, two thirds of frozen vegetables within the scope of the supermarket sample were produced or made in Australia.

1 Vegetable product lines included in the retail sample

Fresh Frozen Canned

Potatoes Potatoes PotatoesTomatoes (including chips and wedges) TomatoesCarrots Carrots CarrotsMushrooms Peas MushroomsPeas and beans Beans PeasAsparagus Corn AsparagusCapsicum Spinach Sweet cornCornSpinach

2 Origin of fresh vegetablesShares, by volume

Australian Imported

% %

Potatoes 100 0Tomatoes 100 0Carrots 100 0Mushrooms 100 0Peas and beans 99 1Asparagus 74 26Capsicums 95 5Corn 99 1Spinach 100 0

Total 99 1

16


3 Origin of frozen vegetables Shares, by volume

Made in Australia local Product of Made in and imported Product Made Australia Australia ingredients of other in other Unknown

% % % % %

Potatoes 35 3 54 9 0 0Carrots 54 0 0 28 10 8Peas 56 0 10 20 10 4Beans 56 0 0 24 19 1Corn 33 0 0 62 2 2Spinach 0 0 0 100 0 0

Total 43 1 24 24 6 2

4 Origin of canned vegetables Shares, by volume


% % % % %

Potatoes 0 31 36 0 20 12Tomatoes 0 31 2 46 8 14Carrots 61 6 11 1 0 21Mushrooms 54 26 9 1 0 11Peas 18 30 31 2 17 1Asparagus 12 2 0 72 5 9Corn 29 38 9 15 2 6

Total 10 31 7 34 7 11

5 Origin of supermarket vegetables Shares, by volume


% % % % %

Potato 89 1 9 1 0 0Tomato 81 6 0 9 1 3Carrot 99 0 0 1 0 0Mushroom 98 1 0 0 0 0Peas/Beans 67 2 6 14 9 2Asparagus 54 1 0 40 1 3Capsicum 95 0 0 5 0 0Corn 59 10 3 25 1 2Spinach 75 0 0 25 0 0

Total 85 2 4 6 1 1

17


Canned vegetables included in the supermarket sample had turnover volume around half that of frozen vegetables. Analysis of the sample showed that around half of the canned vegetables in Australian supermarkets were produced or made in Australia (table 4). While the majority of canned potatoes, carrots, mushrooms, peas and corn were a product of, or made in, Australia, most canned tomatoes were imported, as were most of the canned asparagus. According to the sample, more than half of the canned tomatoes sold in supermarkets were imported.

Analysis of aggregate fresh, frozen and canned data from the supermarket sample revealed that, of the product lines in the sample, 91 per cent of vegetable turnover was either a product of, or made in, Australia, with only 7 per cent being a product of, or made in, another country. As illustrated in table 5, asparagus, corn and spinach were the main vegetables (within the scope of the sample) for which imports formed a signifi cant proportion of supermarket turnover. While imports accounted for a small proportion of total vegetable turnover in supermarkets, it is also notable that imports were a minority of turnover for each individual vegetable type included in the sample.

Food service sectorThe food service sector is a large and important part of the vegetable consumption network in Australia. One recent study suggests that around 30 per cent of vegetable consumption in Australia occurs through the food service sector. That study categorised this sector in three levels, according to the level of service provided, and examined the vegetable use characteristics of each level (McKinna 2004).

The high end of the food service sector comprises restaurants, hotels and some entertainment venues. These outlets tend to use mainly fresh, high quality local vegetables, with around 5 per cent of vegetable use being processed (McKinna 2004).

The medium level of the food service sector comprises pubs and clubs, airlines, and cafes. Airline caterers procure large quantities of mainly fresh vegetables, although they do use frozen peas and canned tomatoes. In Australia, airlines source Australian products, with the exception of canned tomatoes, which are sourced from Italy (McKinna 2004).

The low end of the food service sector comprises institutional caterers. In this food service category 80 per cent of the vegetables procured are fresh (McKinna 2004).

Although the food service sector has a propensity to source local fresh vegetables, the sector is also a major outlet for processed potato products. Approximately one half of the potatoes produced in Australia are processed, with one third of processed potatoes used in food service applications and one third being consumed in quick service restaurants (Spencer 2004). This means that around one third of Australia’s potato crop is consumed away from home as a processed product. Processed potatoes are a traded commodity and this sector of the industry is likely to face a high level of competitive pressure.

The broad conclusion from this analysis of vegetable consumption is that Australian produced vegetables generally hold a large majority domestic market share in both the retail and food service sectors, especially in fresh vegetables. There are exceptions to this observation, with imported canned tomatoes (especially those from Italy) holding a large share of the Australian market.

18


Vegetable supply in Australia

Relative importance of domestic vegetable productionThe vegetable production sector is an important supplier of food to Australian consumers, providing the majority of fresh vegetables consumed by Australians, and also providing the vegetable inputs for a large proportion of the processed vegetable products consumed in Australia.

Despite the sector’s importance in supplying food, in economic terms, the vegetable production sector is relatively small. In the period 1999-2000 to 2003-04, vegetable production contrib-uted around 6 per cent of the gross value of agricultural production in Australia (ABS 2003, 2005c). At an economy wide level, the vegetable production sector accounted for around 0.2 per cent of Australian gross domestic product.

In terms of gross value of production, the vegetable growing sector is around one third the size of the beef sector and around 40 per cent the size of the wheat sector. Vegetable production is approximately the same size as wool production and sheep meat production, and vegetable growing produces primary products that are around three times more valuable than cotton production and sugar cane production (ABS 2005c).

Value of productionThe vegetable sector in Australia produced vegetables with a gross value of $2.3 billion in 2003-04. As depicted in fi gure F, the real gross value of vegetable production in Australia grew at an average rate of around 3 per cent each year between 1993-94 and 2001-02, before declining by 9 per cent in 2002-03. This decline is attributable to unusually dry growing conditions in south east Australia immediately prior to, and during, 2002-03. Preliminary data from the Australian Bureau of Statistics indicated that the gross value of vegetable production in 2003-04 recovered to levels similar to those recorded in 2001-02.

Industry structureThe Australian vegetable growing sector has a signifi cant presence in all states, but comprises only a small number of farms in the Northern Territory, and none in the Australian Capital Terri-tory (table 6). In terms of structure of the agricultural sector in each state, vegetable growing varies in importance. In New South Wales, for example, vegetable growing is the main activity on around 2 per cent of the state’s agricultural establishments, while vegetable growing is undertaken on around 13 per cent of Tasmania’s farms (ABS 2005a).

F Value of Australian vegetable production

1.50

2.00

1.75

1.25

2.25

1993-94

1995-96

1999-2000

1997-98

2001-02

2003-04

A$b2004-05

6 Vegetable growing establishments, by state, June 2004

NSW Vic. Qld SA WA Tas NT ACT

Vegetable growing establishments no. 761 920 1 247 406 445 509 8 0Proportion of farms growing vegetables % 2 3 5 3 4 13 <1 0

Source: ABS 2005a.

19


As shown in fi gure G, the number of establish-ments growing vegetables remained rela-tively stable from 1988 until 1998, before increasing in 1999 and 2000. Between 2001 and 2004 the number of vegetable farms declined. In 2004, 4298 establishments were involved in vegetable growing; around 10 per cent fewer than the average number of vegetable farms recorded between 1988 and 2004. Figure G also depicts an increase in the average size of vegetable farms since 2000, although the average size is still slightly below that of the fi rst half of the 1990s.

EmploymentVegetable growing is typically a labor intensive agricultural activity, however, in Australia it is also a relatively small industry in terms of employ-ment. Australian Bureau of Statistics records show that, in 2001-02, vegetable production directly employed around 23 000 people in Australia — including seasonal employees. This equates to 0.25 per cent of Australian employment.

Although only a small proportion of the Australian labor force is engaged in vegetable produc-tion, its regional importance varies. For example, based on ABS data, ABARE estimates that in 2001-02, vegetable production provided direct employment for around 3000 people in Tasmania — 1.4 per cent of the state labor force. In the northern parts of Tasmania, where the majority of Tasmanian vegetable production occurs, the proportion of the labor force engaged directly in vegetable production is higher still. In the north western rural statistical subdivision in northern Tasmania, for example, the 2001 Census of Population and Housing revealed that 3 per cent of the labor force was directly engaged in vegetable growing. This statistic is likely to understate annual employment in vegetable growing because the timing of the census means that seasonal employment is unlikely to be taken into account. In addition, when employment in vegetable processing is taken into account, the regional importance of the vegetable growing sector is increased further.

Trends in Australian vegetable supply1

Australian vegetable production is destined for numerous markets, which can generally be cate-gorised as having both fresh vegetable and processed vegetable segments. Australian Bureau of Statistics agricultural production data differentiates between vegetables grown for the fresh market and those grown for processing, for only a small number of vegetable types. Where it is possible to do so, this overview will examine trends in vegetable production for both the fresh and processed market segments.

Trade in vegetables is an important, although relatively small, element in the supply of vege-tables to Australian consumers (fi gure H). Australia imports signifi cant amounts of processed vegetables, and also imports some fresh vegetables to meet counterseasonal demand. Exports of particular fresh and processed vegetables are also an important revenue source for Australian vegetable growers.

G Number of vegetable farms and average size of holding

4000

5000

4500

1988 1992 1996 2000 2004

3500 ha

15

20

25

Number of vegetable farms Average size

of vegetablefarms

1 All data referred to in this section are unpublished Australian Bureau of Statistics and United Nations Comtrade data, except those explicitly identifi ed as being from a different source.

20


The most important vegetables in terms of value of Australian production are shown in fi gure I.

Fresh vegetablesThe Australian fresh vegetable market is supplied mainly by Australian producers, with Australian fresh vegetable exports also forming an important revenue source for producers. Production volumes for Australian fresh market vegetables, for the period 1993-94 to 2003-04, have generally trended upwards or remained stable (table 7). The exceptions have been vegetables that contribute a minor proportion of the value of vegetable produc-tion.

The generally stable or increasing trend in production is as expected for a mature market such as Australia’s vegetable market, with production growth typically being of a similar magnitude to that of Australian population growth. That means that signifi cant growth in vegetable produc-tion would require the development of export markets, or signifi cant changes in the dietary patterns of Australian consumers.

Examination of the real gross unit value of production (a proxy for producer prices), reveals that half of the main vegetable types grown in Australia have real producer prices which have tended to decrease in the period 1993-94 to 2003-04 (table 7 and fi gure J). Those vegetables that have declining producer prices, tend to be exposed to international market infl uences, either as a result of Australian exports of fresh vegetables or imports of processed vegetables. For example, Australia exports signifi cant volumes of fresh carrots and caulifl owers, and imports signifi cant quantities of frozen vegetable products containing carrots, caulifl ower and broccoli. It should also be noted that, as a result of ABS only differentiating between fresh and processing markets for tomatoes, and green peas and beans, prices for potatoes, mushrooms, carrots, onions, broccoli, capsicums, caulifl ower and asparagus represent receipts from both fresh market and processing vegetable production.

I Major vegetables produced in Australia

Other vegetables42%

Onions 7% Carrots7%

Mushrooms 10%

Tomatoes 13%

Potatoes 22%

1990-91 to 2003-04

H Value of Australian vegetable production and trade

500

1000

2000

1500

1993-94

1995-96

1997-98

1999-2000

2001-03

2003-04

A$m2004

ProcessedFresh

ExportsProcessed

Imports

Fresh

Production value

21


It is also apparent from fi gure J that since the late 1990s, declining producer prices for carrots, broccoli and caulifl ower have corre-sponded to increases in production volumes. In an environment of relatively stable demand, such as in the Australian domestic market, it would be expected that an increase in supply would create downward pressure on prices. This suggests that both international and domestic supply and demand dynamics are infl uencing Australian producer prices.

The low level of overseas competition in Australia’s fresh vegetable market is borne out by the relatively small volume of fresh vege-tables imported by Australia. In 2004, for example, fresh vegetable imports were valued at around 1.4 per cent of the gross value of Australian vegetable production. Furthermore, Australian fresh vegetable imports tend to be a result of either counterseasonal demand or a domestic supply defi cit.

International competition in the Australian market is in particular vegetables. In the domestic fresh vegetable market, potatoes, mushrooms and carrots have negligible direct international competition. Most fresh vegetable imports are capsicums, tomatoes, garlic, asparagus and onions.

Australia imports fresh capsicums and tomatoes from New Zealand, accounting for 21 per cent and 14 per cent respectively, of the fresh imports value in 2004. New Zealand supplies almost all of the fresh tomatoes imported by Australia, but provides limited competition in this market. In 2003-04, import volume was less than 1 per cent of the volume of domestic fresh market tomatoes.

Garlic imports from China accounted for 16 per cent of the value of fresh vegetable imports in 2004. This trade supplements the relatively small volume of garlic currently produced domesti-cally. Between 1994 and 1998 (the latest period for which Australian Bureau of Statistics garlic production data are available), Australia imported an average of 5000 tonnes of fresh garlic — more than 10 times the annual volume of garlic produced commercially in Australia during that period. In 2004, fresh garlic imports had risen to 9500 tonnes.

In 2004, asparagus constituted 14 per cent of the value of fresh vegetables imported into Australia. Around half these imports originated in Thailand, and around one quarter originated in Peru. The majority of this trade was counterseasonal. Fresh asparagus has a relatively short storage life, so fresh market supply is constrained to harvest periods. The main Australian harvest period is from August to December, with a late harvest in some locations from January to March. Trade data showed that imports tend to be low between September and December, increasing between January and April, and tending to peak between May and July.

Australia is a net exporter of onions. Australia imports relatively small volumes of onions, mainly from the United States. Imports are generally counterseasonal and provide only limited competi-tion to domestic growers, with import volumes being around 2 per cent of domestic production

7 Trends in Australian fresh vegetable production, 1993-94 to 2003-04

Production Real producer volume trend price trendVegetablePotatoes ←→ ←→Tomatoes ↑ ↑Mushrooms ↑ ↑Carrots ↑ ↓Onions ←→ ↓Lettuce ↑ ↑Broccoli ↑ ↓Capsicums ↑ ↓Green beans ↓ ↑ ↑Caulifl ower ←→ ↓Asparagus ↑ ↓ ↓Green peas ↓ ↓ ↑

Key: ↑ trending up; ↓ trending down; ←→ steady. Double arrow indicates stronger trend.

22


J Production and real gross unit value of production for fresh vegetables

Potatoes

2003-04

2001-02

1999-2000

1997-98

1995-96

1993-94

Tomatoes

kt

1000

1100

1200

1300

Carrots

2003-04

2001-02

1999-2000

1997-98

1995-96

1993-94

Onions

kt

150

200

250

300

Broccoli

2003-04

2001-02

1999-2000

1997-98

1995-96

1993-94

Cauliflower

kt

20

30

40

50

Asparagus

2003-04

2001-02

1999-2000

1997-98

1995-96

1993-94

French and runner beans

kt

4

8

16

12

20

2003-04

2001-02

1999-2000

1997-98

1995-96

1993-94

ktData not collected for 1993-94 to 1995-96

Data not collected for 1994-95 and 1995-96

$/t

Productionleft axis

Productionleft axis RGUVP

right axis

RGUVPright axis

$/t

360

380

400

420

440

2003-04

2001-02

1999-2000

1997-98

1995-96

1993-94

kt $/t

Productionleft axis

Productionleft axis

RGUVPright axis

RGUVPright axis

$/t

400

500

600

700

800

2003-04

2001-02

1999-2000

1997-98

1995-96

1993-94

kt

70

80

90

$/t

800

60 700

900

1000

Productionleft axis

Productionleft axis

RGUVPright axis

RGUVPright axis

$/t

1400

1600

1800

2000

2003-04

2001-02

1999-2000

1997-98

1995-96

1993-94

kt

16

18

20

$/t

2000

2500

3000

Productionleft axis

Productionleft axis

RGUVPright axisRGUVP

right axis

$/t

4000

5000

7000

6000

8000

180

210

240

270

500

550

600

650

75

100

125

150

175

1250

1300

1350

1400

1450

23


volumes. Onions are a signifi cant export product for Australian vegetable growers, with established markets in the European Union. Typically, almost one third of Australia’s onion crop is exported.

While international competition in Australia’s domestic fresh vegetable market is negligible, competition in some of Australia’s export markets is increasing. Australia exports carrots to a number of countries, with exports to Malaysia, Singapore, and the United Arab Emirates accounting for around 16 per cent of production volume in 2002-03. Exports to the United Arab Emirates have tended to grow steadily since the mid 1990s; export volumes to Singapore have exhibited a relatively fl at trend, despite increasing export volumes from China; and export volumes to Malaysia have declined signifi cantly since 2002, following a number of years of strong growth. Trade data suggest that Chinese growers have signifi cantly increased their carrot exports to Malaysia at the expense of Australian growers.

The share of Australian caulifl ower growers in the Malaysian market has also declined as a result of competition from Chinese producers. Between 1994 and 2002, an average of 45 per cent of Australian fresh caulifl ower exports were destined for Malaysia. The volume of Australian caulifl ower exports to Malaysia increased in that period, from 7000 tonnes in 1994 to a peak of 19 000 tonnes in 2001. In 2003 and 2004, Australian exports of caulifl owers to Malaysia — more than 90 per cent of which were grown in Western Australia — declined signifi cantly to around 5000 tonnes in 2004.

Corresponding to the decline of Australian caulifl ower exports to Malaysia, Chinese exports of caulifl ower to Malaysia increased — with Malaysia importing 23 000 tonnes more caulifl ower from China in 2004 than in 2002.

The main conclusion from the analysis of the fresh vegetable markets is that Australian growers are exposed to limited competition from overseas growers in the domestic fresh vegetable market, but competition in some of Australia’s main export markets is increasing, with a resulting loss of market share for Australian growers. This suggests that transport cost differentials contribute to maintaining Australian product competitiveness in the domestic market.

Processing vegetablesProcessing vegetables grown in Australia are principally potatoes and tomatoes, with green peas and beans, broccoli, caulifl ower, and carrots being relatively minor processing vegetables. In contrast to the growth in production of vegetables for the fresh market, production of vegetables grown for processing has declined or remained steady in the period 1993-94 to 2003-04 (table 8). This analysis does not include potatoes, carrots, broccoli

J Production and real gross unit value of production for fresh vegetables

Lettuce

2003-04

2001-02

1999-2000

1997-98

1995-96

1993-94

kt

50

75

100

$/t

700

800

900Productionleft axis

RGUVPright axis

8 Trends in Australian processing vege-table production, 1993-94 to 2003-04

Production Real producer volume trend price trendVegetableTomatoes ←→ ↓Green beans ←→ ↑Green peas ↓ ↓ ↑

Key: ↑ – trending up; ↓ – trending down; ←→ – steady. Double arrow indicates stronger trend.

24


or caulifl ower grown for processing as ABS data do not differentiate between fresh market and processing market segments for these vegetables.

Production of processing tomatoes and processing green beans was steady in the period 1993-94 to 2003-04, while production of green peas declined signifi cantly.

Producer prices for processing vegetables (table 8, fi gure K) indicate that competi-tion from lower cost producers had an impact, particularly in the processing tomato sector, but that real producer price series for processing green beans and green peas rose slightly in the period 1993-94 to 2002-03.

International competition in the processed vegetable sector is considerably greater than in the fresh vegetable market. In 2004-05, Australian processed vegetable imports were valued at $279 million, which equates to around 16 per cent of estimated total domestic vegetable processing revenue at the wholesale level. The volume of imported processed vegetables grew signifi cantly between 1994 and 2004. Comtrade data shows that increasing Australian import volumes of processed vegetables have been coupled with generally declining real unit values of those imports. This suggests that international competition in the processed vegetables sector in Australia has increased.

The main processed vegetables imported by Australia are preserved tomatoes and tomato sauces, prepared frozen potatoes, frozen green peas, and other vegetables and vegetable mixes, either frozen or preserved, that are not separately identifi ed. While Australian processing tomatoes have exhib-ited a declining real unit value of production, the volume of production has a fl at trend, suggesting that growers have been able to respond effectively to declining prices. The main competition in processed tomatoes is from the European Union (mainly Italy), the source of $44 million in imported preserved tomatoes and tomato sauces in 2003. In addition to importing processed tomato products, Australia exports tomato products. Between 2000 and 2004, Australia exported an annual average of $22 million of preserved tomatoes and tomato sauces, mainly to New Zealand, but also to EU countries. More detail on tomato processing is presented in chapter 3.

K Production and real gross unit value of production for processing vegetables

Tomatoes

2003-04

2001-02

1999-2000

1997-98

2003-04

2001-02

1999-2000

1997-98

2003-04

2001-02

1999-2000

1997-98

kt

250

200

300

350

Green peas

kt

30

25

35

40

French and runner beans

kt

14

12

16

18

$/t

110

100

120

130

Productionleft axis

RGUVPright axis

$/t

160

140

180

200RGUVPright axis

$/t

350

300

400

450

Productionleft axis

RGUVPright axis

Production,shelled weightleft axis

25


Frozen prepared potatoes are mainly imported from New Zealand, and the main recipient of Australian exports of prepared frozen potato products is New Zealand. Between 1994 and 2004, the average trade balance in this product category was around 5000 tonnes in favor of New Zealand, with a relatively fl at trend being evident. Allowing for 50 per cent wastage in processing, this trade defi cit with New Zealand equates to less than 1 per cent of Australian potato production. Chapter 3 contains more detail on potato processing.

Australia imports a signifi cant proportion of its green pea requirements. In 2004, the volume of frozen green pea imports equated to around one quarter of the volume of Australia’s processing green pea production. Given that green peas are also imported in frozen vegetable mixes, more than one quarter of green peas supplied in Australia are imported. Although green peas are a relatively minor vegetable in the context of total Australian vegetable production, the impact of imports is regionally signifi cant. Almost all commercially grown green peas are processed, and more than 95 per cent of Australia’s processing green peas are produced in northern Tasmania. Competition from green pea imports will therefore be felt mainly by producers and processors in northern Tasmania. Additional detail regarding the vegetable processing sector is presented in chapter 3.

The main impacts of increasing competition in the processed vegetable sector are likely to be regionalised. Given that the bulk of processing vegetables (not including tomatoes) are grown in Tasmania, and given that around 75 per cent of vegetables grown in Tasmania are grown for processing, it is evident that the vegetable growing regions of Tasmania are likely to bear the brunt of increasing international competition in the processed vegetable market (DPIWE 2005).

The main conclusion from the analysis of processing vegetable production and trade data is that Australian processing vegetable growers and processors operate in a competitive environment and face increasing competition from overseas suppliers. The impacts from international compe-tition in this sector are likely to be regionalised, with growers in northern Tasmania expected to bear much of the impact.

26

vegetable processing

Vegetable processing predominantly consists of manufacturing canned, bottled, preserved, quick frozen or dried vegetable products. It also includes dehydrated vegetable products, soups, sauces, pickles and mixed meat and vegetable or cereal products. More recently, it has included the production of fresh salads, herbs and pan-ready vegetables.

McKinna (2004) classifi ed processed vegetable products as:

■ shelf stable (cans, jars and tetra brik products)

■ frozen

■ sauces and condiments (pasta and cook-in sauces, dips, condiments, pickles, etc.)

■ fresh salads, herbs and pan-ready vegetables.

In Australia, the bulk of the market consists of the shelf stable, frozen and sauce products. Retail sales of salad mixes and fresh cut vegetables accounted for only 2.5 per cent by volume in 2000 (McKinna 2004).

Economics of vegetable processing locationThe structure of the vegetable processing sector worldwide is dominated by a small number of large fi rms including Unilever, Simplot, McCain Foods, ConAgra and DelMonte. These fi rms operate vegetable processing facilities across countries and are responsible for most of the investment in new processing facilities.

Despite this relatively small concentration in ownership of branded products and production facilities, the existence and location of a vegetable processing industry in any country or region is strongly infl uenced by the costs of both processed vegetable production and distribution to selling centres. The total delivered cost of processed vegetables products to end-consumers includes items such as:

■ capital costs for the processing and distribution facilities

■ raw vegetable costs

■ other operating costs (such as labor, energy, packaging, marketing, etc)

■ transport of raw vegetables to manufacturer

■ transport of fi nished product to fi nal consumer.

The costs of capital associated with the establishment of processing facilities are relatively unaf-fected by geographic location as long as the demand by end consumers is suffi ciently large to

3

27


support an effi cient scale in processing plant size. Producing processed vegetables is a capital intensive process and the labor productivity of available technologies for a variety of processed products can result in relatively low labor costs per unit output; even in relatively high labor cost countries such as Australia.

As a result, the most signifi cant factors determining the geographic location of vegetable processing industries are access to internationally cost competitive vegetables (for any given processing technology) together with transport costs — both before and after processing.

Together, the factors of access to raw vegetables and transport costs lead to the colocation of processing industries with vegetable producing regions in countries around the world. This co-location occurs primarily because vegetables are perishable. The effective cost of the raw input increases rapidly between the time of harvesting and the time of processing due to spoilage associated both with time and the distance traveled (because of increased handling and cold storage logistics). Transport costs are linearly related to the distance between the processing facility and the growing region. However, the impact of spoilage on production costs increases more rapidly, as the ability to convert fresh vegetables to a quality specifi c processed product decreases more and more quickly the longer the time period between harvesting and processing.

At the same time, transport costs of the fi nal product are reduced by locating processing facili-ties in close proximity to large fi nal markets. Overall, production costs of the delivered product are minimised by colocating processing plants where vegetables can be sourced competitively, but as close as possible to large or expanding markets.

The colocation of processing facilities with vegetable production, creating an incentive to locate processing facilities in the countries with the lowest vegetable production costs, is balanced against the incentive to locate production facilities close to the fi nal market. The latter effect increases the dispersion of processing facilities internationally, while the former could lead to a concentration of processing within certain regions.

Although the value of internationally traded fresh and processed vegetable products increased at a rate of 5.2 per cent a year between 1989 and 2001, this trade was highly regionalised — with most trade occurring intraregionally. That is, exports and imports of fresh and processed products occur predominantly within Asia, within the European Union and within the North American Free Trade Area rather than across regions (Huang 2004). These trade fl ow patterns suggest that the desire to locate processing facilities close to fi nal markets is exerting a strong infl uence on the location of vegetable processing industries across countries.

As indicated above, investment in food processing facilities is associated with having suffi ciently large demand that can satisfy the minimum processing plant sizes in order to achieve economi-cally effi cient production outcomes. As a result, the opportunity for investment in new facilities is strongest in countries where food consumption is growing strongly due to several factors such as rising income levels, population and changing lifestyles Refl ecting this dynamic, recent new investment in vegetable processing internationally, has been occurring in developing countries, such as China, India, Philippines and South Africa (Regmi and Gehlmar 2005).

In contrast to the developing countries, growth in food consumption in developed economies is relatively slow. Opportunities to increase value in the food processing sector in these countries primarily occurs in the form of product differentiation and the development of new markets (such as ‘functional foods’ that claim to have health promoting or disease preventing properties) rather than by increasing the volume of food consumed (table 9).

28


Investment in processing facilities in developed economies is usually associated with refurbish-ment and upgrades of existing facilities. These upgrades are often targeted at achieving improved labor productivity due to higher labor costs in developed economies. For example, in 2003, Simplot Australia invested $35 million to upgrade the potato processing plant in Ulverstone, Tasmania. This plant is now considered one of the most effi cient potato processing facilities in the world (Simplot Australia, 2004).

Australian sector overviewThere is a limited number of vegetable processing fi rms operating in Australia, and most of the vegetable processing plants are located in Tasmania, Victoria and New South Wales (see table 10). For the two main processing vegetables produced domestically — potatoes and tomatoes — the number of processors is limited. For frozen processed potatoes, McCain Foods and Simplot account for the entire market for growers of potatoes destined for that market and, for processed tomatoes, SPC Ardmona accounts for the majority of processed tomato product. The large Australian companies in the industry are all subsidiaries of international fi rms competing in the processed food market, such as McCain Foods, Coca-Cola Amatil (SPC Ardmona) and Simplot.

Discussions with people in the industry suggest that, although the size of the major processing plants in Australia could be considered to be at the smaller scale end of the minimum plant size for a greenfi elds processing plant, the plants were considered effi cient and world standard. Several fi rms have undertaken large capital upgrades since 2000 to maintain and enhance onsite productivity. That the plants are smaller than might be considered for new investment, refl ects in part the smaller scale regionalisation of Australian growing conditions, than occurs in some other countries.

In contrast to the international competitiveness of the size of processing plants in Australia, one signifi cant difference between the domestic industry and the operation in other countries is the average contract size between growers and processors across a number of vegetables. For example, for potatoes, average process potato contracts in other countries vary from 2500 tonnes in the United Kingdom to 12 000 tonnes in the United States. This is in contrast to the 800 tonnes to 1500 tonnes average in Tasmania and Victoria (table 11).

There is a stated desire among processors to increase the contract size between proces-sors and growers across a number of vegetables (such as potatoes and broccoli). There are many possible mechanisms for achieving this; for example, it is possible that processors will start offering contracts of a minimum size and growers will take responsibility for meeting that contract — such as aggregating among individual farms to meet contract arrangements.

An examination of the interaction between farm scale and farm profi tability in Australia is discussed in more detail in Chapter 5, along with other factors affecting profi tability in the growing sector.

9 Annual average growth in packaged food sales

GDP per Per person food person a sale growth b

US$ %Income levelHigh >9266 2.5Upper middle 2 996–9 265 6.7Lower middle 756–2 995 28.1Low 755 11.9

a In 2000 US dollars. b 1996–2002.Source: Gehlhar and Regmi 2005.

29


Value of productionDetailed information on the value of vegetable processing has not been published. It has been estimated, however, that the value of the vegetable processing sector accounts for approximately 35 per cent of the processed fruit and vegetable sector on a market share basis (Spencer 2004; IBISworld 2005). On this basis, the vegetable processing sector in Australia generated sales and service income of approximately $1.63 billion in 2002-03 (the latest estimate available from the Austra-lian Bureau of Statistics).

10 Vegetable processing companies operating in Australia

Processor Brand(s) Location Vegetables Type

Berri Ltd Gourmet Garden Victoria Miscellaneous vegetables and herbs, condiments Fresh

Golden Circle Golden Circle Queensland Beans, beetroot, carrots, corn, cucumber, capsicum, peas Canned

Logan Farm Logan Farm Queensland Sweet corn, corn cobs, peas, frozen vegetables spinach, beans, broad beans, mixed vegetables, potatoes, broccoli Frozen

Kraft Dewcrisp Victoria Miscellaneous vegetables Shelf stable

McCain Foods McCains Victoria Peas, corn, carrots, baby beans, Tasmania broccoli, caulifl ower, beans, capsicum, potatoes Frozen

MasterFoods Dolmio New South Wales Chickpeas, beans, potatoes, garlic, Kan Tong onion Shelf stable Masterfoods

Nestle Lean Cuisine New South Wales Eggplant, zucchini, capsicum, onion, beans, peas, broccoli, potato, corn, carrot, mushrooms, asparagus, spinach Frozen

Simplot Edgell, Bird’s Eye Victoria Asparagus, beans, beetroot, capsicum, Canned Country Harvest Tasmania carrots, corn, mushrooms, peas, Frozen Leggo’s, Hy Peak potatoes, cabbage, beans Shelf stable

Coca Cola SPC Ardmona Victoria Tomatoes, beans, beetroot, mushrooms,Amatil chick peas Canned

Unilever Continental, Victoria Onions, potatoes, carrots, corn, capsicum, parsley, leek, zucchini, celery, garlic, tomatoes, eggplant Shelf stable

Source: McKinna (2004).

11 Average processing potato growing contract sizes

Average contract size

tonnes

United States 12 000Canada 4 500United Kingdom 2 500New Zealand 9 000Australia– Victoria 1 500– Tasmania 800– South Australia 4 000

Source: Industry discussions.

30


Imports

Australia is a net importer of processed vege-tables, with the value of imports approximately fi ve times the value of exports. In 2004-05, total imports of processed vegetables (excluding broadacre grains, such as dried shelled peas and beans) totaled $279 million. This represents around 16 per cent of the esti-mated sales of the Australian processing sector at the wholesale level.

Between 1992-93 and 2004-05, imports of processed vegetables have increased at a relatively modest 1.3 per cent yearly. Further, the share and type of imported product has been relatively constant. The main processed vegetables imported into Australia are tomato products; potato products; peas, beans or sweet corn; and mixed vegetables. These products have increased their share of the value of imports from 62 per cent in 1992-93 to 80 per cent in 2004-05 (fi gure L).

Four countries have supplied around two thirds of all processed vegetable imports since 1992-93: New Zealand, Italy, the United States and China (fi gure M). Of these four countries, the US share of Australian processed vegetable imports has been gradu-ally declining, while the other countries’ shares have been increasing.

Processed vegetables can also be classi-fi ed by the method of manufacturing: frozen, preserved (usually associated with canned product) and dried. The value of imported dried product remains almost unchanged since 1992-93, while imports of preserved products have increased at only 0.4 per cent a year.

In contrast, the value of frozen product imports has grown at almost 4 per cent a year, and has accounted for almost 40 per cent of imports in 2004-05 (fi gure N). This change in product mix refl ects the broader movement in consumption away from canned products to fresh and quick frozen products.

L Processed vegetable imports, by commodity

A$m2004-05

1992-93

1995-96

1998-99

2004-05

2001-02

50

100

150

200

250

Mixed vegetables

Other

Tomato products

Potato products

Peas, beans and sweet corn

M Processed imports, by source

A$m2004-05

1992-93

1995-96

1998-99

2004-05

2001-02

50

100

150

200

250

China

United States

Italy

New Zealand

Other

N Processed imports, by type

A$m2004-05

1992-93

1995-96

1998-99

2004-05

2001-02

50

100

150

200

250

Starch

Preserved

Frozen

Dried

Tomato sauce

31


Imports by product

TomatoesProcessed tomato imports have grown at an average rate of 3.3 per cent a year since 1995-96, and totaled $59 million dollars in 2004-05 (fi gure O).

In 1995-96, New Zealand accounted for 36 per cent of all processed tomato imports by value and Italy accounted for 40 per cent. By 2004-05, exports from Italy had almost completely displaced product from both New Zealand and the United States.

Discussions with industry suggest that a large factor contributing to the strong presence of Italian products in the domestic market is that the Roma style tomato is more readily accepted by consumers in the market for canned whole and pieces of tomato. This segment accounts for more than 60 per cent of all processed tomato imports.

There were attempts to grow the Roma style of tomato for processing in Australia. However, the variety is better suited to labor intensive hand picking rather than the capital intensive, mechanised harvesting processes used by the 30–40 domestic producers of processed tomatoes. Substantial crop losses at harvest time have led to the almost complete aban-donment of this variety for processed used in Australia. Niche opportunities in the higher value fresh vegetable sector continue to exist where prices are suffi cient to compensate for the more labor intensive harvesting required.

With Italy having access to relatively low cost labor from both northern Africa and Albania, it has a competitive advantage in producing the Roma style tomato. In addition, subsidies available within the European Union to growers of processed tomatoes also reduce the cost of imported tomato products. Nonetheless, discussions with industry suggest that the lack of Roma style tomato production in Australia is associated more with harvesting techniques (given the high level of mechanisation used here) rather than with the subsidies provided to Italian tomato producers. Subsidies and other international trade issues are discussed in detail in chapter 4.

The unit price of imported tomato (whole or in pieces) has been increasing slowly, at around 1.4 per cent a year since 1992-93, but at a rate of more than 2 per cent a year more recently. This increase is partially explained by the relative depreciation of the Australian dollar against the euro over the same period, but also refl ects increasing real prices of processed product in Italy (fi gure P).

O Processed tomato imports

A$m2004-05

1992-93

1995-96

1998-99

2004-05

2001-02

20

40

60Other

NewZealand

Italy

United States

P Italian processed tomato product prices and exchange rate

A$/kg2004-05

1992-93

1995-96

1998-99

2004-05

2001-02

0.9

1.0

1.1

1.2

1.3

A$/lira

Price

Exchange rate

900

1000

1100

1200

1300

32


PotatoesA number of processed potato products are imported into Australia. These include frozen prepared potatoes, potato starch and preserved potatoes. Together, these three types accounted for 86 per cent of all imported processed potato products in 2004-05 (fi gure Q).

The value of potato product imports, although increasing rapidly since around 2000, has returned to levels observed throughout much of the 1990s. Since 2000, New Zealand production had displaced product from both Canada and the United States — the world’s largest producer and third largest exporter of frozen potato products (USDA 2005) — and now accounts for approximately 60 per cent of processed potato imports (fi gure R).

More than 90 per cent (in value terms) of the imports from New Zealand are frozen prepared potatoes. Further, imports of this New Zealand product account for almost 90 per cent of imports in this market segment (fi gure S).

A factor contributing to the growth of imports from New Zealand is the declining price of the manufactured product. The real landed price of prepared frozen potato products from New Zealand has been declining at a rate of more than 3 per cent a year since the early 1990s; the rate has been almost twice that since 2000 (fi gure T). The fall in New Zealand product prices has been partially offset because the Australian dollar has depre-ciated nearly 14 per cent against the New Zealand dollar since 2000.

A total of 22 300 tonnes of frozen prepared potatoes were imported in 2004-05. Using the industry specifi ed conversion factor of 2:1 for producing frozen french fries from raw potatoes, this level of imports is equivalent to approxi-mately 44 000 tonnes of fresh potatoes. With approximately 600 000 tonnes of potatoes produced in Australia for the processing sector (Rich 2004), imports accounted for around 7 per cent of domestic production.

As discussed in chapter 2, between 1994 and 2004, the average trade balance in this product category was around 5000 tonnes in favor of New Zealand.

Q Processed potato product imports,by type

A$m2004-05

1992-93

1995-96

1998-99

2004-05

2001-02

10

20

30Other

Starch

Preserved

Frozen, prepared

R Processed potato products imports,by source country

A$m2004-05

1992-93

1995-96

1998-99

2004-05

2001-02

10

20

30

Other

New Zealand

European Union

Canada

United States

S Frozen, prepared potato imports

A$m2004-05

1992-93

1995-96

1998-99

2004-05

2001-02

10

10

20

20

30 Other

New Zealand

Canada

United States

33


Peas, beans and sweet cornThe value of frozen sweet corn imports has remained almost unchanged since 1992-93, and the value in real terms of imported frozen beans has increased at 3 per cent a year, from $5.6 million in 1992-93 to $8.7 million 2004-05. In contrast, the real import value of frozen peas has more than doubled over the same period, with most of that growth occur-ring since 1998-99 (fi gure U).

During the 1990s, almost 100 per cent of frozen pea imports were sourced from New Zealand. Belgium entered the market in 2002-03, however, at a time when the price of the New Zealand product was increasing, while. Belgian product prices were decreasing. By 2003-04, imports from Belgium accounted for 25 per cent of all frozen pea imports. Imports from Belgium declined in 2004-05 (fi gure V), and early 2005-06 data show this trend continuing.

Mixed vegetablesThe value of processed mixed vegetable imports has grown at an average annual rate of 5.5 per cent since 1992-93. As with many other products, most of this growth has come from frozen imports which have grown at an annual rate of 13.6 per cent over the same period (fi gure W), increasing more than fi vefold. The value of dried imported product has remained relatively unchanged over this period, and there has been modest growth in preserved product.

T New Zealand frozen prepared potato price and exchange rate

199 1995 1998 20042001

0.5

0

1.0

1.5Price (2004 A$/kg)

New Zealand exchange rate(NZ$/A$)

V Frozen pea imports

A$m2004-05

1992-93

1995-96

1998-99

2004-05

2001-02

5

10

15

Other

Belgium

New Zealand

W Mixed vegetable imports, by type

A$m2004-05

1992-93

1995-96

1998-99

2004-05

2001-02

20

40

60

Preserved

Frozen

Dried

U Processed peas, beans and sweet corn imports

A$m2004-05

1992-93

1995-96

1998-99

2004-05

2001-02

10

20

30

40

50

Sweet corn

Peas

Beans

34


The growth in imports of frozen mixed vegetables has been largely sourced from New Zealand. Since 1998-99, the value of imports from New Zealand has increased at an average annual rate of 23 per cent (fi gure X). This, along with the emergence of imports from China has completely displaced product from the United States, which accounted for 45 per cent of imported frozen mixed vegeta-bles in the mid-1990s.

ExportsIn contrast to imports, the value of processed vegetable exports more than tripled in the ten years to 2002-03, to be $65 million (fi gure Y) — although this represented only 25 per cent of the total volume of imports in the same period. Between 2002-03 and 2004-05, however, the value of exports fell 25 per cent to $48 million because exports of both frozen vegetables and preserved products to countries in Asia, with the exception of China, declined rapidly.

This decline in exports to Asia has coincided with the appreciation of the Australian dollar against currencies in that region leading to an increase in the price paid by importers of Australian produce. The average value of the Australian dollar rose by 17 per cent against the Japanese yen between 2002 and 2004. Issues associated with exchange rates and the impact on exports are discussed in more detail in chapter 4.

Between 1992-93 and 2004-05, the value of processed vegetable product exports to New Zealand grew at an average rate of 16 per cent a year. This refl ects both the consolidation of processing companies into brands within international food processing companies and the rationalisation of production facilities within these companies — which often treat Australia and New Zealand as one market.

There are only two companies manufacturing frozen processed potatoes, for example, in both countries: McCain Foods and Simplot. As discussed above, more than 90 per cent of imports of frozen prepared potatoes are sourced from New Zealand; in 2004-05 they were valued at $20 million. Exports of similar products from Australia to New Zealand during the same period were valued at $9 million. This two way trade in the same products refl ects both contractual commitments to various market segments by these companies, as well as timing issues regarding harvesting and production within Australia and New Zealand.

The main conclusion from this analysis of the Australian vegetable processing sector is that the sector is generally internationally competitive.

X Frozen mixed vegetable imports, by source country

A$m2004-05

1992-93

1995-96

1998-99

2004-05

2001-02

5

10

20

15

25

China

Other

New ZealandUnited States

Y Processed vegetable exports, by destination

A$m2004-05

1992-93

1995-96

1998-99

2004-05

2001-02

20

60

40

Other AsiaJapan

Other

New Zealand

35


The development of a domestic vegetable processing industry is closely associated with access to competitively priced raw vegetable inputs, together with considerations regarding proximity to the fi nal market. As long as vegetables can be sourced domestically at competitive prices, local vegetable processing industries will exist if there is suffi cient demand to meet the scale requirements of an effi cient processing plant. Even in countries with relatively high labor costs, such as Australia, a vegetable processing industry can expect to remain profi table because labor saving technology is employed in processing. As discussed above, the Simplot potato processing plant in Ulverstone is considered to be one of the most effi cient plants in the world, with very low labor costs per unit of output.

The Australian processing industry has been exposed to international competition through imports for some time. Overall, imports constitute less than 20 per cent of the sales revenue of domestic processors, but have been growing at a relatively modest level.

There is no evidence of a sudden increase in import levels or large structural changes affecting the competitiveness of the domestic growing sector. The growth in import value between 1992-93 and 2004-05 is concentrated almost entirely in tomato products, frozen peas and frozen mixed vegetables. Although the value of imports of frozen processed potatoes has increased in recent years, this has been a return to the level observed in the early 1990s. As new plants are located in regions with the capacity to produce low cost vegetables for processing on a large scale outside Australia, however, import pressure may increase over time.

36

Australia’s trade competitiveness

Trade in vegetables has been one of the most rapidly growing and highly dynamic sectors of international food trade over the past few years. Vegetable trade has been stimulated by rising incomes in many countries and growing consumer demand for greater variety, freshness, conve-nience and year round availability of vegetable produce. Advances in production, post harvest handling, processing, transport and storage, together with increased investment, have aided this growth and diversifi cation. As detailed in previous chapters, Australia exports only a rela-tively small proportion of total vegetable production. This chapter examines the key international trade issues that have shaped international vegetable trade and that affect the competitiveness of Australian vegetable exports.

One of the key factors shaping international vegetable trade has been the perishable nature of fresh vegetables — this means that the bulk of the world vegetable trade has been relatively local, with most trade occurring between regions and countries that share common borders or well developed and relatively cheap regional transport links. A signifi cant amount of vegetable trade now occurs over much greater distances, however, with growth in vegetable trade between regions benefi ting from improved technology for the transport, processing and storage of vegetables. This has made it feasible to preserve perishable vegetables for longer periods and to export them to more distant markets.

Rising incomes have also helped shape the pattern of trade and led to increased demand for a wider variety of vegetables in many countries. Where this increased demand cannot be met from within the consuming country, for example, because of climatic limitations, product is often sourced from countries in other regions. An important feature is the growth of counterseasonal trade, with countries in the southern hemisphere, for example, supplying out of season produce to the northern hemisphere. As a result, many of the world’s largest vegetable exporters are large importers of the same vegetables when local supplies are not available.

The pattern of vegetable trade is also shaped by the presence of signifi cant trade barriers in some countries, which can affect the market access and the price competitiveness of vegetable exports. As a result, where they exist, trade barriers can distort world vegetable trade and disadvantage effi cient producers.

Exchange ratesMovements in the exchange rate have been a major factor affecting the competitiveness of Australian vegetable exports for two decades. The exchange rate is an important macroeco-nomic variable that signifi cantly infl uences the performance of Australian export industries via its impacts on export earnings and international price competitiveness. As with other Australian exports, a rising Australian dollar will make vegetable exports less price competitive on interna-tional markets and reduce returns to producers in Australian dollars.

4

37


However, depending on the mix of exports and domestic sales, a rising exchange rate can reduce some costs of production. For example, a higher Australian dollar exchange rate that makes Australian vegetable exports more expensive on world markets would also decrease the cost of imported inputs such as fuel, fertiliser and machinery. Depending on the level of imported inputs being used in domestic vegetable production, total production costs may fall, although the net effect of a rise in the exchange rate on profi t margins is likely to be negative as a result of lower export incomes in Australian dollars.

The higher Australian exchange rate is likely to have had a signifi cant effect on Australia’s balance of trade in vegetables. Since the late 1990s, a strengthening of the Australian currency against currencies, of both export destinations and competitor countries, has coincided with a reduction in Australian vegetable export value and reduced exports to some markets. This decline has been most notable in the markets of Malaysia and Singapore, which have been sourcing more vegetable imports from China.

More recently, between 2002 and 2004, the average value of the Australian dollar rose by 35 per cent against the US dollar and by 17 per cent against the Japanese yen. In comparison, the nominal value of Australian vegetable exports fell by 27 per cent from a high of $293 million in 2002 to $230 million in 2004, while vegetable imports rose by 24 per cent to $325 million over the same period (fi gure Z).

The effect of movements in the Australian dollar exchange rate can vary between export markets and the type of vegetable products exported. For example, fl uctuations in the Australian dollar have been somewhat less important to the competitiveness of fresh vegetable exports to the northern hemisphere, where Australia has been able to benefi t from being a counterseasonal supplier. In contrast, a higher exchange rate has had a greater effect on the competitiveness of Australia’s exports of processed vegetables given the storability of these products. This means that Australia’s exports of processed vegetables face much greater competition from other exporters and are, therefore, more price sensitive. Price sensitivity is also a major factor in major markets in Asia, particularly Malaysia and Singapore, where the movement in the exchange rate has reduced the price competitiveness of Australia’s vegetable exports relative to supplies from China.

Barriers to Australia’s vegetable exports

Tariff rates applied to Australian exportsTariff barriers can be an important determinant of the price competitiveness of Australian prod-ucts on overseas markets — and almost all of Australia’s largest vegetable export destinations maintain tariff barriers against Australian vegetable exports. With the exception of the European Union, however, tariff barriers to vegetable imports in Australia’s top six export markets are rela-tively low, with most tariffs on Australia’s vegetable exports in these countries being less than 10 per cent (table 12). In the European Union (Australia’s fi fth largest market for vegetables) most

Z Real vegetable export values and the Australian dollar exchange rate

A$m2004-05

2004200320022000 2001

100

0

300

200

0.3

0.7

0.5Export valueleft axis

US$/A$ exchange rate right axis

38


tariffs on Australia’s main vegetable exports are in the range 10–20 per cent (WTO 2005).

Tariffs on Australia’s main vegetable exports are much higher in Chinese Taipei, the Republic of Korea and the Philippines, with most tariffs over 20 per cent — and exceeding 300 per cent for some items in the Republic of Korea (table 12). Given that these relatively high tariffs are on products that Australia is exporting successfully to other countries, it is likely that the relatively high tariff barriers in Chinese Taipei, the Republic of Korea and the Philippines have been restricting Australian vegetable exports to these countries.

In other major vegetable export markets, Australian growers face virtually no tariff barriers; Australia receives tariff free access to the New Zealand market via the Closer Economic Rela-tions agreement, while Singapore and Hong Kong (Australia’s fourth and sixth largest markets respectively) have effectively eliminated tariff barriers to vegetable imports. Among Australia’s top 10 export markets for vegetables, processed vegetable products often face higher tariffs than do fresh vegetables (table 12).

Among countries that have the potential to signifi cantly increase imports of Australian vegetable produce is the United States, which has maintained signifi cant tariffs on many of Australia’s major vegetable exports. The Australia–United States Free Trade Agreement (effective from 1 January 2005) will result in a reduction of tariff barriers to Australian vegetable products, however, and is expected to lead to increased vegetable trade between the two countries, particularly preserved tomato products which make up around half of the value of Australia’s vegetable exports to the United States (DFAT 2005; ABS 2005b).

A number of other countries outside Australia’s top 10 markets for vegetables also maintain signifi cant tariff barriers against Australian vegetable produce. These countries include China and Mexico (tariffs of around 13 per cent on Australia’s major vegetable exports), Egypt (tariffs of 20–30 per cent) and India (tariffs of around 30 per cent) (WTO 2005). Reductions in these barriers could result in increased Australian vegetable exports to these countries.

Despite some countries’ tariff barriers being a signifi cant determinant of vegetable trade, it should be noted that there has been relatively little change in tariff barriers between the major trading nations over the past fi ve years. As a result, changes in tariff rates in destination coun-tries have had minimal impact on recent trends in Australia’s vegetable exports or on changes in the competitiveness of Australia’s vegetable industry competitiveness over the period.

Sanitary and phytosanitary barriersSanitary and phytosanitary (SPS) barriers are measures necessary to protect human, animal or plant health. These measures include procedures to test, diagnose, isolate, control or eradicate diseases and pests (AQIS 1998). SPS barriers have the potential to be signifi cant obstacles to Australia’s vegetable trade (SPS arrangements under the World Trade Organisation are outlined in box 1). Generally, compliance with export market SPS regulations is not diffi cult for Australian producers, however, SPS issues can be a problem for some vegetables and in some countries, such as Japan and Korea, as a result of pest and disease issues. This is partly because these countries have adopted restrictive SPS and quarantine arrangements that can make it diffi cult, or even impossible, to export some vegetable products to them. With many fresh vegetable exports having a very limited shelf life, restrictive quarantine arrangements can lead to excessive delays in reaching the consumer and result in high rates of spoilage.

SPS barriers to trade – access to export marketsSPS access arrangements are constantly evolving in response to new scientifi c research, joint technical work and disease threats. Access arrangements between countries, for example, can

39


12 Applied tariffs in Australia’s top vegetable export markets, by tariff line a

Tariff line/ New Euro- Republicapplied Ma- Zea- Singa pean Hong Chinese of Philip-tariff Vegetable Japan laysia land pore Union Kong Taipei Korea pines

% % % % % % % % %

070610 Fresh or chilled carrots and turnips 3 0 0 0 13.6 0 20 30 20–40070410 Fresh or chilled caulifl owers and broccoli 3 0 0 0 0 0 20 27.3 25070310 Fresh or chilled asparagus 3–8.5 0 0 0 9.6 0 20–25 0–27.3 40070920 Fresh or chilled onions and shallots 3 0 0 0 10.2 0 5 27.3 10200410 Potatoes, prepared or preserved, frozen 9–13.6 0–8 0–5 0 14–25.3 0 12.5–18 18–20.4 10070190 Fresh or chilled potatoes (excl. seed) 4.3 0 0 0 0–11.5 0 20 307.4 40070110 Seed potatoes 3 0 0 0 4.5 0 0 307.4 1210320 Tomato ketchup and sauces 17–21.3 20 6.5 0 10.2 0 12.5 8 7200210 Tomatoes, prepared or preserved, whole or in pieces 9 0–8 0 0 14.4 0 14 8 7070990 Fresh/chilled vegetables (excl. potatoes and tomatoes) 3–6 0 0 0 0–12.8 0 10–25 27.3 15070200 Tomatoes, fresh or chilled 3 0 0 0 0 0 10 45.5 10200290 Tomatoes, prepared or preserved (excl. whole and pieces) 9–16 0–8 0 0 14.4 0 14 5–8 3–15200190 Other vegetables, fruits, nuts, etc. 6–16.8 6–8 0–7 0 0–16 0 20–25.5 30 10–15070490 Fresh or chilled cabbages, kohlrabi, kale, etc. 3 0 0 0 0–12 0 20 27.3 40200490 Vegetable mixtures: prepared, preserved or frozen 8–23.8 0–20 0–7 0 13–19.2 0 25–38.2 30 3–10

Average exports to partner b $m $49.5 $38.1 $35.0 $33.9 20.3 $14.1 $8.3 $7.6 $6.7Percentage of total Australian vegetable exports b % 19.6 15.1 13.8 13.4 8.0 5.6 3.3 3.0 2.6

a Order is based on the average value between 2000 and 2004. Countries are ranked by value of trade. The United Arab Emirates was the ninth largest importer of Australian vegetables between 2000 and 2004, but data on applied tariff rates is unavailable. Tariffs quoted as a range cover more than one tariff line with differing tariff rates. MFN rates. New Zealand tariffs against Australian vegetable products are zero under the Closer Economic Relations agreement. b Average value of exports from 2000 to 2004.Source: ABS (2005b); WTO (2005); UN Comtrade (2005).

40


change in response to a changing incidence of disease — an outbreak in one country may lead to a removal of market access for that country, while eradication of disease may result in access being granted where it was not available before. Negotiations between countries for the recognition of certifi cation and scientifi c studies to clarify disease risk can also result in a reduction in SPS and quarantine barriers.

SPS arrangements governing Australia’s access to export markets are typically determined on a case by case basis, with most countries having their own SPS standards and certifi cation procedures that determine market access to these countries. Australian vegetable exporters are required to meet the standards applicable in each country, on an individual basis. The majority of SPS requirements are relatively easy to meet, however, some countries maintain more stringent regulations which can result in higher compliance costs for Australian exporters. Fresh potatoes, for example, can be a diffi cult product for Australian growers to export due to SPS concerns — fresh potatoes can have soil attached to them, and can suffer nematode infestation, requiring washing and treatment. Fresh potatoes can also be used as nursery stock, given that they can be planted directly in the ground. As a result, fresh potatoes can represent a higher disease risk than other vegetables that are only for human consumption (DAFF 2005).

Other vegetables that are for human consumption can also face import restrictions as a result of SPS concerns, with tomatoes, cucumbers and capsicums subject to concerns over fruit fl y. New Zealand is an important market for these vegetables that was developed through a program to control these pests. More recently, the United States granted access to Australian tomatoes that were grown in glass houses and meet other SPS requirements (DAFF 2005).

While SPS issues remain a signifi cant barrier to vegetable trade with some countries, it should be noted that changes in SPS barriers in major importing countries have had minimal impact on recent trends in world vegetable trade or changes in the relative competitiveness of the Austra-lian vegetable industry.

Box 1: SPS arrangements under the World Trade Organisation

Many of the world’s major trading countries are members of the World Trade Organisation and, as a result, are bound by the World Trade Organisation’s Agreement on the Application of Sanitary and Phytosanitary Measures (SPS agreement), which provides a basis for quarantine arrangements (WTO 1995). Countries that are not members of the World Trade Organisation are not bound by the SPS agreement, but it is likely that countries seeking to join the World Trade Organisation would endeavour to meet SPS requirements in order to develop trade.

The World Trade Organisation’s SPS agreement was developed in the mid-1990s to promote transparency of food standards and develop trade. The agreement defi nes SPS measures as restrictions applied to protect against the entry and spread of pests and diseases and health risks associated with additives, contaminants and toxins in beverages and foodstuffs. The measures are not to be applied as disguised trade barriers, nor arbitrarily or unjustifi ably discriminate between countries where similar conditions prevail. The agreement aims to develop trade without overriding a country’s right to determine the level of protection it maintains from imported pests and diseases.

Quarantine and SPS arrangements have some potential to be used as trade barriers for vege-table products in some countries. Despite the diffi culties that quarantine and SPS arrangements create for world vegetable trade, however, the trend has been towards greater market access — with the World Trade Organisation’s codifi cation of SPS arrangements greatly increasing regulatory transparency.

41


Australia’s barriers to vegetable imports

Australia’s tariff barriersAustralia’s tariff barriers on imported vegetable products are relatively low compared with many of our major trading partners. Australia’s tariffs on vegetable products do not represent signifi -cant barriers to vegetable imports — most vegetables imported into Australia are subject to a maximum bound tariff of 5 per cent (table 13).

Australia has also reduced or removed its tariff barriers for countries with which it has concluded free trade agreements. These countries include New Zealand (where tariff barriers to imports from that country have been zero for some time) and the United States and Thailand (where Australia’s trade barriers are set to reduce over time). Australia is currently negotiating free trade agreements with other countries including China and the ASEAN group, which may reduce bilateral barriers to vegetable trade (DFAT 2005).

With Australia’s applied tariffs remaining unchanged over the past fi ve years, increased vegetable imports over this period are unrelated to changes in Australia’s tariffs on vegetable imports. With applied tariff rates already at low levels, scheduled or potential reductions in bilateral tariffs under free trade agreements are expected to have minimal impact on Australian vegetable imports.

Australian quarantine and sanitary and phytosanitary arrangementsAll foods imported into Australia must meet quarantine criteria designed to reduce the risk of exotic pests and diseases from entering Australia. Under the World Trade Organisation SPS agreement, member countries maintain the right to determine their appropriate level of protec-tion (WTO 1995; Wilson 2000). Australia’s appropriate level of protection is determined via scientifi c import risk assessments conducted by Biosecurity Australia (Goodchap 2005; Wilson 2000).

13 Tariffs applied to Australia’s major vegetable imports a

Import Tariff line/ Fresh/rank applied tariff Vegetable processed Applied tariff

1 200210 Tomatoes, prepared Processed 52 200590 Vegetable mixes Processed 53 071290 Vegetables, nse Fresh 0–54 071021 Peas, frozen Fresh 05 200290 Tomatoes, nse, prepared Processed 56 071040 Sweet corn, frozen Fresh 57 200410 Potatoes, prepared, frozen Processed 58 071090 Vegetable mixes, frozen Fresh 59 200560 Asparagus, prepared Processed 510 071220 Onions, dried Fresh 511 200310 Mushrooms, prepared Processed 512 071080 Vegetables, nse, frozen Fresh 513 210320 Tomato ketchup, sauce Processed 014 090420 Capsicums, pimentos, dried Processed 015 070320 Garlic Fresh 0

a Ranked by import value, fi ve year average, 2000–2004. nse Not specifi ed elsewhere.Source: ABS (2005b); WTO (2005).

42


Once the risks have been determined, the Australian Quarantine Inspection Service enforces the Australian and New Zealand Food Standards Code on imported goods under the Imported Food Control Act 1992 by carrying out inspections of food imports to ensure compliance. Horticultural products imported into Australia are randomly inspected and tested at a rate of 5 per cent, but should a consignment fail inspection, the rate of testing for future consignments from that source increases to 100 per cent. State and territory governments are responsible for ensuring that domestically produced food adheres to the Food Standards Code at the point of sale (Goodchap 2005; FSANZ 2003).

Food safetyAll food for sale in Australia — whether locally produced or imported — is required to comply with the Food Standards Code as defi ned in The Foods Standards Australia New Zealand Act 1991. Ensuring compliance with the Food Standards Code is the joint responsibility of state and territory governments, Food Standards Australia New Zealand, and the Australian Quar-antine and Inspection Service. Generally, state and territory governments are responsible for monitoring food sold in their jurisdiction; Food Standards Australia New Zealand administers the scientifi c risk assessments that underpin the Food Standards Code, while the Australian Quarantine and Inspection Service ensures imported food complies with the Food Standards Code (Goodchap 2005, AQIS 2000).

The Food Standards Code safeguards human health by setting regulations on food labelling and defi nitions and allowable food additives, together with restrictions on maximum residue limits for the presence of agricultural or veterinary chemicals. All maximum residue limits are based primarily on safe levels of human consumption as well as good agricultural practice in chemical application. Under the World Trade Organisation’s SPS agreement, any differences between nationally set maximum residue limits and international standards must be justifi ed on a scientifi c basis (DAFF 2005).

The Australian Pesticides and Veterinary Medicines Authority and Food Standards Australia New Zealand jointly determine the maximum residue limits applicable to goods produced and sold in Australia (FSANZ 2003). These maximum residue limits are matched as closely as possible to the international levels set by the Codex Alimentarius Commission, although Codex maximum residue limits are not currently recognised in Australia. If exporting countries have domestically set maximum residue limits in line with Codex, exporters must ensure that any residue levels on food sold in Australia also complies with the Food Standards Code (Good-chap 2005). Collectively, these regulations ensure that imported food complies with the same standards as food produced in Australia.

Other competitiveness issues

Subsidised production in other countriesAgricultural support in the form of production subsidies, price support and export assistance programs in some of the world’s wealthiest economies distorts trade and can affect the competi-tiveness of Australian vegetable exports, particularly in the markets of those wealthy economies. The European Union is the major user of production and export subsidies for vegetables, while signifi cant subsidies are also provided for vegetable production in Japan.

The competitiveness of the Australian vegetable industry is affected in a number of ways by these measures. Price supports (typically used together with tariffs and/or quotas), for example, raise the price of vegetables in the supported market. This reduces domestic demand while

43


encouraging increased domestic vegetable production, and can result in a production surplus. The price competitiveness of imports and opportunities for other producers to export into this market are reduced, while surplus production is often exported to third countries. These policies can reduce export opportunities for Australian producers and adversely affect the price competi-tiveness of exports.

Vegetable production under the European Union’s common agricultural policy is not as highly supported as other EU agricultural industries such as sugar, dairy, beef, grains or oilseeds. EU support for vegetable production is high, however, compared with other producing coun-tries, and could potentially apply to a large proportion of vegetable production. Under CAP regulations, most producer organisations are eligible to receive support, with the general EU budgetary contribution capped at 4.1 per cent of the value of marketed production for each vegetable type (EC 2000). However, while the European Union’s CAP regulations permit support to be provided for the production of most vegetables, generally only a small proportion of vegetables are actually supported (WTO 2004). Other European Union agricultural support paid to producer organisations consists of funds for promotional activities and industry restruc-turing as well as environmental issues..

Vegetable production under the CAP is also supported through the withdrawal of excess production from the market that would otherwise depress prices. The European Union’s domestic support notifi cation to the WTO for 2001-02 indicates that small levels of market with-drawal support were paid to caulifl ower and aubergine producers (Huang et al. 2004).

In addition to the support mechanisms note above, the European Union provides direct payment support to producers of some specifi c vegetable types. Data from the European Union’s most recent WTO domestic support notifi cation (for the marketing year 2001-02) indicates that fresh tomatoes received the largest direct production subsidies, estimated at 1.94 billion euros, while processing toma-toes received a further 366.9 million euros (table 14). Among other vegetable products that benefi ted from production subsidies were cucumbers, artichokes and courgettes (UN Comtrade 2005; WTO 2004).

Direct payments for processing tomatoes are currently paid to growers who are contracted to supply processing tomatoes to approved processors. In 2004, long variety canning tomatoes grown in south east Italy were contracted to be supplied at a price equivalent to A$109 a tonne delivered, and growers were able to access the equivalent of a further A$56 a tonne in domestic support payments. Domestic support payments to Italian processing tomato growers are scheduled to fall by 11.8 per cent in the 2006-07 season. At a 2005 average exchange rate, the level of domestic support to Italian processing tomato growers will be around A$49 a tonne, or 31 per cent of their estimated returns in 2006-07 (FAS 2005).

The European Union has also historically provided export subsidies for some vegetable prod-ucts to facilitate exports in the cases where internal prices are maintained above world price levels. Canned tomatoes are the only processed vegetable products currently receiving EU export subsidies (Agra Informa Ltd 2005). In general, the European Union’s export subsidies are

14 EU vegetable production subsidies, marketing year 2001-02

Value of Direct subsidy production

billion euros billion euros

Fresh tomatoes 1.94 8.75Processed tomatoes 0.37 0.6Cucumbers 0.54 naArtichokes 0.20 naCourgettes 0.17 na

Sources: UN Comtrade (2005); WTO (2004).

44


expected to be eliminated by 2013 (subject to conclusion of the round) in line with the agree-ment reached in the Hong Kong WTO ministerial meeting in December 2005.

Under the European Union’s current World Trade Organisation obligations, the value of export subsidies provided for processed fruits and vegetables (including processed tomatoes) can not exceed 8.3 million euro in any year, which is roughly equivalent to $13.5 million (WTO 2004). The European Union is also limited to exporting no more than 143 300 tonnes of processed fruits and vegetables that have export subsidies. The European Union exported 607 000 tonnes of canned tomatoes (not including intra-EU trade) in 2004, with a value equivalent to $702 million. Even if all the export subsidies available for processed vegetables were used for canned tomatoes, the value of the subsidy would represent less than 2 per cent of the value of canned tomato exports in 2004. These exports are supplied to Australia and other countries — Australia accounted for around 6 per cent of EU canned tomato exports in 2004 (UN Comtrade 2005).

While export refunds for processed fruit and vegetables are constrained to a total of $13.5 million, according to offi cial EU notifi cations to the World Trade Organisation, for 2001-02, they have been signifi cantly smaller. This indicates that EU export subsidies for canned tomatoes are a minor factor in the competitiveness of canned tomato exports, compared with domestic support.

While subsidies continue to distortion to world vegetable trade and affect the long term compet-itiveness of effi cient producers, there has been little change in Europe’s vegetable subsidies over the past fi ve years. Over that period, the increased canned tomato imports from the EU to Australia have been largely a result of changing commercial factors and the removal of coun-tervailing duties in 2002, rather than changes in EU domestic support. Australia has not levied countervailing duties on imports of canned tomatoes from the European Union since 2002.

Price support provided by other countries for vegetables also impacts on the competitiveness of Australia’s vegetable exports. Japan, for example, also provides support for domestic vegetable production — minimum prices for Japan’s vegetable produce are set through the Vegetable Supply Stabilisation Fund, which provides price support during times of low prices or poor harvests. Price support also occurs through limiting the area planted to a number of key crops such as onions, cabbage, Chinese cabbage and radishes, which limits supplies and results in higher prices. The Japanese Government generally provides subsidies to help cover input costs of vegetable production and some infrastructure development (Dyck and Ito 2004).

Free trade agreementsFree or preferential trade agreements can boost the price competitiveness of a country’s exports to its free trade partner, compared with exports from other countries. Preferential trade agree-ments typically involve two or more countries agreeing to reduce or remove tariffs or other trade barriers on goods imported from each other, while leaving barriers to imports from other countries unchanged. This changes relative prices in favor of imports from partner countries in the agreement, thereby infl uencing production and trade patterns, both within the group and with other countries. To gain improved market access and price competitiveness for Australia’s exports with its main markets, Australia has sought to negotiate several new preferential trade agreements with its major trading partners.

45


Australia’s preferential trade agreements

Until recently, Australia’s principal free trade agreement was with New Zealand under the Australia–New Zealand Closer Economic Relations trade agreement, which came into effect in 1983. In recent years, Australia has negotiated other preferential trade agreements including the Singapore–Australia Free Trade Agreement, which became operational on 28 July 2003; the Thailand–Australia Free Trade Agreement; and the Australia–United States Free Trade Agree-ment, both of which came into force on 1 January 2005.

Australia commenced negotiations on a further four preferential trade agreements in 2005. These comprise: the Australia–ASEAN–New Zealand Free Trade Agreement; the Australia–China Free Trade Agreement; the Australia–Malaysia Free Trade Agreement; and the Australia–United Arab Emirates Free Trade Agreement. In addition, Australia and Japan (Australia’s biggest trading partner and largest export market) have also agreed to commence a joint feasibility study into the prospect of a bilateral trade agreement as part of measures to advance economic relations between the two countries.

Once completed, these free trade agreements would be expected to provide Australia with greater market access and to enhance the price competitiveness of a range of exports (poten-tially including vegetable exports) to these countries; however, preferential trade agreements will only deliver these benefi ts in cases where existing trade barriers are restricting trade and the agreement results in a reduction or elimination of these barriers. For countries with which Australia has either concluded, or is negotiating, preferential trade agreements, the main tariff barriers facing Australian vegetables are in the Philippines (covered by the Australia–ASEAN–New Zealand negotiations) and the United States. While these free trade agreements would be expected to increase Australia’s price competitiveness in partner countries, the extent of overall gains to Australian industries will largely depend on the extent of any increases in produc-tion and total exports of the product. If there are only minor increases in production and total exports, any increase in Australian exports to the partner country is likely to be largely the result of switching away from existing markets in other countries.

With Australia’s tariff barriers to vegetable imports being relatively low, at around 5 per cent or less (many are zero), any negotiated reduction in tariffs under a free trade agreement is unlikely to have large impacts on Australia’s vegetable industry. Competitive pressure on Australia’s vegetable industry from emerging producers, such as China (which exported US$30.5 million in vegetables to Australia in 2004), is expected to result in increased vegetable imports from those countries and increased competition in export markets, regardless of free trade agreement status.

The impact of free trade agreements between third countriesWhile Australia’s bilateral free trade agreements can provide increased price competitiveness and market access for a range of products, including vegetables, the conclusion of free trade agreements between Australia’s trade partners and competing vegetable exporters could have adverse impacts on vegetable exports from Australia. Under third country preferential trade agreements that exclude Australia, the exports of competing countries would affect the price competitiveness of Australia’s exports. As a result, importing countries may switch away from Australian exports and towards exports from countries with preferential trade access.

A number of regional free trade agreement negotiations that are currently underway, or being implemented, could potentially affect the competitiveness of Australian vegetable exports in some major markets. These free trade agreement negotiations include China–India, China–

46


New Zealand, China–Thailand, and Japan–Thailand. A free trade agreement recently came into force between New Zealand and Thailand, and a China–ASEAN free trade agreement is currently being implemented. With nine of Australia’s top ten trading partners being in the Asia–Pacifi c region, these free trade agreements could increase competitive pressure on Austra-lian vegetable exports and lead to reductions in shipments to these countries; however, Australia is also negotiating, or discussing the possibility of, free trade agreements with these countries. To limit the effect of any adverse impacts on the competitiveness of Australian exports, it will be crucial for Australia to negotiate access arrangements that are at least equivalent to the condi-tions that are ultimately agreed to in these other free trade arrangements.

The competitive landscape

Emerging markets and competitorsSeveral countries are increasing their share of world vegetable trade. Some countries are emerging as major suppliers as a result of their increasing competitiveness in production, while other countries hold promise as rising markets. Two countries — China and India — are expected to become increasingly infl uential in global vegetable trade as a result of their large populations, rising incomes, land and water endowments and increasing investment in the sector. Both China and India are expected to increase their competitiveness as vegetable producers and exporters and compete directly with Australia in some markets. These coun-tries also have strong potential to develop as major consumers of many vegetable products, however, which holds considerable potential for Australian producers to export vegetable to these countries.

ChinaChina is an increasingly large producer and exporter of fresh and processed vegetables as a result of a number of factors. These include changes in China’s agriculture that have allowed the cultivation of higher value vegetables, the wider use of high quality seed, improved produc-tion technologies and increased investment. As a result, China’s vegetable exports have risen strongly over the past decade, with exports valued at US$ 3.4 billion in 2004. China’s top fi ve vegetable exports by value were preserved mixed vegetables (accounting for almost 13 per cent in value of exports), fresh garlic (12 per cent), dried vegetables not specifi ed else-where (10 per cent), preserved or prepared mushrooms (9 per cent) and frozen vegetables not specifi ed elsewhere (7 per cent). Collectively, these products accounted for more than half of China’s total vegetable exports in 2004 (UN Comtrade 2005). China’s vegetable production is expected to continue to increase as a result of strong investment in the sector.

The bulk of China’s vegetable export trade is with countries in Asia, which receive around 80 per cent of China’s fresh vegetable exports and 70 per cent of its processed vegetable exports. Japan is China’s largest export market, accounting for around half of China’s fresh vegetable exports. Hong Kong is China’s second largest market with around 10 per cent of exports. Other major trading partners include the United States, the Republic of Korea, the European Union and the Russian Federation. The strong rise in China’s vegetable exports to these markets is largely a result of its low cost production and geographic proximity to its markets, which allows for fast and relatively cheap freight (US Department of Agriculture 2004).

China’s emergence as a large scale exporter has increased competition among vegetable markets in Asia, particularly in Japan. However, US Department of Agriculture (2003) indi-cated there are some factors that may restrict China’s competitive position. Chief among these is China’s agricultural policy, which gives the highest priority to feeding the Chinese popula-

47


tion, rather than boosting export incomes. Phytosanitary issues are likely to be of concern for importers, due to China’s production methods and heavy use of agricultural chemicals. In addi-tion, China’s infrastructure for the production and handling of vegetables is still underdeveloped, limiting its ability to export to overseas markets.

China’s vegetable imports were valued at US$585 million in 2004. China’s top fi ve vegetable imports accounted for almost 96 per cent of all vegetable imports, with cassava making up 59 per cent of imports, cassava starch 24 per cent, processed potatoes 9 per cent, frozen sweet corn 2 per cent, and potato starch 2 per cent (UN Comtrade 2005). China’s import demand for vegetables may grow somewhat as a result of rising incomes, that result in a shift towards the consumption of higher quality vegetables and shortcomings in China’s marketing and distri-bution systems. Increased import demand is also more likely in the event of further reductions in China’s tariff barriers (Huang 2004; LEI 2004). China’s low cost vegetable production and high level of exports will provide strong competition for Australian producers in domestic markets and is expected to increasingly out-compete Australian vegetable produce in some export markets, particularly those Asian markets close to China (DFAT 2005).

IndiaIndia is Asia’s third largest economy, after Japan and China, and the world’s second fastest growing economy, after China. India has a large and diverse agricultural sector, accounting for about 25 per cent of gross domestic product and 14 per cent of export earnings. India’s irri-gated crop area is the largest in the world, and India is among the top three global producers of vegetables, mainly grown on small farms, with the bulk of this production consumed domesti-cally (ERS 2005a).

Economic and agricultural reforms over the past decade have improved the effi ciency of India’s agriculture and boosted production of many crops, allowing for increased agricultural exports. India’s total vegetable exports were valued at US$394 million in 2004. Fresh onions and shallots, processed capsicums and pimentos, pickled cucumbers and gherkins, and preserved mushrooms were the principal exports, collectively accounting for 74 per cent of India’s total vegetable exports by value. India’s other vegetable exports include okra, tomato, baby corn, chillies, french beans, bitter gourd, bottle gourd and potatoes (UN Comtrade 2005).

Despite India’s large and increasingly effi cient production of vegetables and increased export competitiveness, however, India’s vegetable exports are not expected to rise to high levels in the foreseeable future. This is largely a result of India’s primary policy goal of food self suffi ciency and the small scale nature of much of India’s vegetable production. Strong domestic demand for vegetables is also an important factor. In addition, a lack of well developed transport, processing and storage infrastructure for vegetable produce is a major impediment to increased vegetable exports.

India’s total vegetable imports were valued at US$16 million in 2004. The top three imports were fresh garlic, processed potatoes and preserved tomatoes, which collectively accounted for 62 per cent of India’s vegetable imports (UN Comtrade 2005). Trade liberalisation in India has resulted in signifi cant bound tariff reductions for many products, although India maintains relatively high applied tariffs on many vegetable products such as potatoes, tomatoes, onions and shallots (WTO 2005).

48

economic performance of Australian vegetable growers As part of this review ABARE undertook a survey of vegetable growers in order to gather statistical information on the general physical and fi nancial characteristics of vegetable grower businesses in key production regions and their costs of production. The surveys were conducted in October and November 2005 and were supported by industry groups and bodies including AUSVEG, Horticulture Australia Limited, and state grower associations.

The target populations for the surveys were growers of any of the following vegetables: carrots, caulifl owers, onions, peas, potatoes and tomatoes. Individual growers were interviewed on their properties by ABARE fi eld offi cers, with the information collected being used to generate industry or regional results. Information was collected for the 2004-05 fi nancial year.

Vegetable growers in the following four regions were surveyed:

■ northern Tasmania

■ Victoria

■ south east Queensland

■ Western Australia.

The regions chosen and the vegetables targeted were part of a deliberate strategy to gather suffi cient information to separately review and compare the costs and characteristics of vege-table growers in Australia who predominantly produce for the fresh market with those who predominantly produce vegetables for the processing sector. In general, the vegetable growers surveyed by ABARE in northern Tasmania and Victoria were predominantly growing vegetables for the processing sector, while the growers surveyed by ABARE in south east Queensland and Western Australia were predominantly growing vegetables for the fresh vegetables sector.

Overview of farm performanceOn balance, the economic performance of vegetable growers in 2004-05 in the regions surveyed by ABARE was generally superior to that of broadacre farms (wool, beef and crop-ping farms) in that year (table 15). For example, the average rate of return to capital (excluding capital appreciation) among vegetable growers in the regions surveyed was 3.1 per cent in 2004-05, compared with 0.7 per cent on broadacre farms. In addition, vegetable growers experienced growth in land values during the year, leading to an average return to capital including capital appreciation of 5.1 per cent. However growth in land values was higher, on average, among broadacre farms in 2004-05.

5

49


State level differencesIn terms of average physical characteristics (total land area, total area irrigated, total area of vegetables grown etc), survey results were similar across the four regions (table D1 in appendix D). However, the survey results did indicate that there was substantially more grower to grower variability within some states compared with others. In particular, the results suggest that vege-table growers in northern Tasmania were more homogeneous — at least in terms of measures such as area cropped and revenue earned — compared with growers in the other three regions.

Vegetable growers in south east Queensland and Western Australia typically generated higher revenues, on average, compared with growers in northern Tasmania and Victoria, despite growers in the four regions having roughly the same area cropped. This was primarily the result of growers in the former states earning signifi cantly higher prices for the vegetables they sold. However, production costs were also higher in south east Queensland and Western Australia, meaning that the differences between the states in terms of net income (profi t) were not as great.

Size and concentrationA relative common fi nding when reviewing the economic performance of broadacre and dairy farms in Australia is that larger farms (in terms of the value of production) typically earn higher rates of return to capital than smaller farms. This is not to say that all large farms record high rates of return, and that all small farms perform poorly, but that a general positive relationship between size and economic performance holds true. For vegetable growers, the results of the recent survey show a similar, positive relationship between size and rates of return (table 16 and table D2 in appendix D).

15 Key fi nancial performance measures for vegetable growersAverage per farm

Vegetable growers

All Wool, beef, Northern Western south east vegetable cropping Victoria Tasmania Australia Queensland growers farms

Total cash receipts $’000 582 483 807 1 120 673 285less total cash costs $’000 444 381 638 1 015 549 231Farm cash income $’000 138 102 168 105 123 55plus buildup in trading stocks $’000 3 - 1 0 -1 1 6less depreciation $’000 39 31 39 50 38 26less operator/manager and family labor $’000 55 45 61 53 51 42Farm business profi t $’000 46 25 69 2 35 - 8Rate of return– excluding capital appreciation % 3.4 2.9 3.5 2 3.1 0.7– including capital appreciation % 4.8 5.8 5.3 5 5.1 7.2Rate of return excl. capital appreciation plus operator and family labor % 5.5 5.1 5.5 4.2 5.2 0.0Total farm capital at 30 June $’000 2 659 2 134 3 103 2 477 2 495 2 741Farm debt at 30 June $’000 368 369 380 225 334 243Equity ratio at 30 June % 86 83 88 91 87 81

50


An assessment of performance by size category was carried out by ranking all of the vegetable growers surveyed by ABARE by the size of their output, and dividing them into three equal sized groups — ‘small’, ‘medium’ and ‘large’.

The size distribution of growers may have important implications for the future of vegetable growing in Australia. For example, the information in table 16 indicates that ‘small’ growers accounted for just 6 per cent of the value of production in 2004-05, compared with 74 per cent by the ‘large’ growers. This is despite the fact that there are equal numbers of growers in each group. The ‘medium’ sized group accounted for the remaining 20 per cent of the value of production in 2004-05. This concentration of output is a common feature of agricultural indus-tries in developed countries.

The economic performance across the three output groups also varied signifi cantly, and there was a strong positive relationship between size (value of output) and economic performance. For example, the average rate of return to capital (including capital appreciation) was 0.7 per cent among small sized vegetable growers, and 7.5 per cent among large sized vegetable growers. Again, this is not to say that the only way for growers to improve their economic performance is to increase in size, but the survey results provide strong empirical evidence to support the view that larger growers typically achieve higher rates of return to capital.

Costs of productionA primary objective of the survey of vegetable growers undertaken by ABARE was to measure costs of production. In order to do this, individual growers participating in the survey were asked to provide information on their total operating costs by major cost component, and were then asked to apportion each of their variable cost components across individual vegetable outputs and any other outputs they may have produced in 2004-05. This enabled estimates of variable costs of production to be made for each major vegetable line produced. The results of the analysis are reported in table 17, with more detailed information contained in tables D3-D8 in Appendix D.

For growers in northern Tasmania and Victoria, who mainly supply vegetables to the processing sector, costs of production (on a dollars per tonne basis) are generally lower compared with the

16 Key performance measures for vegetable growers, by size of output a

Small Medium Large 2004-05 2004-05 2004-05

Area of land operated 30 June ha 62 139 362Area irrigated ha 12 34 99Total cash receipts $ 127 500 408 330 1 504 180less total cash costs $ 115 270 350 650 1 198 480Farm cash income $ 12 230 57 690 305 700Rate of return– excluding capital appreciation % –3.7 0.4 5.9– including capital appreciation % 0.7 2.2 7.5Farm debt at 30 June $ 103 800 281 160 637 880Equity ratio at 30 June % 91 86 85Liquid assets $ 54 540 58 080 118 980Share of turnover % 6 20 74

a Size categories are based on grower ‘turnover’, defi ned as total cash receipts plus the net change in stocks on hand.

51


other two regions. It should be noted that growers in northern Tasmania and Victoria supplying their vegetables to the processing sector may receive some production inputs from processors as part of their supply arrangements, with the costs of these inputs ‘netted’ out by processors in their payments to growers. To the extent that this occurs, both revenues and costs for growers in Victoria and northern Tasmania may be underestimated.

Suppliers to fresh vegetable markets typically receive higher prices for their produce, but have concomitantly higher costs, including for packing and handling, marketing, and freight. Hence when making comparisons between states and internationally, it may be more important to focus on differences in ‘net returns’ rather than levels of costs or revenues. In general, there is much less difference between the four regions considered in the margin earned (that is, revenue minus cost) per unit of vegetables sold.

17 Vegetable grower costs of production a

All Northern Western South east vegetable Victoria Tasmania Australia Queensland growers

$/t $/t $/t $/t $/t

Carrots Total cost per tonne sold 88 184 189 Gross receipts per tonne sold 121 211 207

Caulifl owers Total cost per tonne sold 470 455 1 301 632 525 Gross receipts per tonne sold 399 508 1 144 483 502

Onions Total cost per tonne sold 129 428 337 274 Gross receipts per tonne sold 141 384 461 306

Peas Total cost per tonne sold 377 2 013 809 Gross receipts per tonne sold 411 2 111 889

Potatoes Total cost per tonne sold 179 207 447 408 239 Gross receipts per tonne sold 226 248 455 575 291

Tomatoes Total cost per tonne sold 86 759 1 910 261 Gross receipts per tonne sold 121 1 176 1 719 275

a Costs include fi xed plus variables costs.

18 Variable costs and prices per tonne of vegetable produced in Australia, New Zealand and China

Australia New Zealand a China b

South east Average Northern Western Queens- North South of Victoria Tasmania Australia land Island Island regionsPotatoesFresh– price 455 575 268 221– cost 314 307 217 239– gross margin 141 268 51 –18Processed– price 226 248 207 160 89– cost 99 131 108 68– gross margin 127 117 52 21

continued …

52


18 Variable costs and prices per tonne of vegetable produced in Australia, New Zealand and China continued

Australia New Zealand a China b

South east Average Northern Western Queens- North South of Victoria Tasmania Australia land Island Island regionsCarrotsFresh– price 211 330– cost 138 275– gross margin 73 55Processed– price 121– cost 58– gross margin 63

Caulifl owersFresh– price 399 1 144 483– cost 387 944 521– gross margin 12 200 –38Processed– price 508– cost 328– gross margin 180

OnionsFresh– price 384 461 200– cost 319 285 236– gross margin 65 176 –36Processed– price 141– cost 88– gross margin 53

PeasFresh– price 2 111– cost 1 517– gross margin 594Processed– price 411 242– cost 238 120– gross margin 173 122

TomatoesFresh– price 1 206 1 209– cost 641 1 506– gross margin 565 198Processed– price 121 202– cost 57 123– gross margin 64 79

a Source: (www.maf.govt.nz/mafnet/rural-nz/statistics-and-forecasts/farm-monitoring/2005/horticulture/hort-2005-05.htm) and Barber, A. (2004) AgriLINK NZ Ltd (www.agrilink.co.nz). b Selling method of vegetable crops in China is unknown. Source: compiled using data collected from Yellow River Basion surveys by Chinese Centre for Agricultural Policy.

53


Comparison with international benchmarksAs noted earlier in the report, two important sources of international competition for Australian vegetable growers are currently New Zealand and China. The information on production costs in these countries, although limited, nevertheless suggests that there will be continued competi-tion to supply processed vegetables to Australia into the future (table 18). For example, for pota-toes, Australian growers targeting fresh vegetable markets have growing costs that are generally comparable to those in New Zealand. Similarly, for growers selling potatoes for processing, growing costs in 2004-05 were estimated to be slightly higher in Tasmania and slightly lower in Victoria compared with costs in New Zealand. However, the information for China suggests that growers in that country can produce potatoes for processing at average variable costs that are below or well below average costs in Australia.

Distribution of costs of productionWhile estimates of the average cost of growing vegetables in different regions of Australia suggest that growers are generally competitive with international standards, there is substantial variability in production costs from grower to grower. For example information on the distribution of potato growing costs, on a dollar per tonne basis, in each state is presented in table 19. The information in the table was derived by grouping potato growers in each state by their variable production cost, using three groups: low cost, moderate cost and high cost. There are equal numbers of growers in each cost category. Average characteristics of growers in each category were calculated to determine whether production costs were related to other factors.

A common theme that emerges from this analysis is that there is a substantial difference between unit production costs across growers, even in states where vegetable growers are relatively uniform in size, such as in northern Tasmania. Perhaps more importantly, the analysis shows a strong positive correlation between unit costs of production and size of output. For example, the group of low cost potato growers in northern Tasmania are estimated to have produced just over half the total quantity of potatoes sold in that state in 2004-05, while the same number of high cost growers accounted for just 15 per cent of aggregate sales. In Victoria this effect was even more pronounced, with low cost potato growers accounting for 64 per cent of total sales, and high cost growers accounting for just 14 per cent.

19 Distribution of total variable potato growing costs

Low cost Moderate cost High costNorthern TasmaniaPrice per tonne of potatoes sold $/t 232 (5) 243 (3) 332 (10)

Total potato costs per tonne a $/t 80 (11) 154 (3) 277 (7)

Total potatoes sold t 1430 (13) 917 (11) 407 (11)

Share of total potatoes sold % 52 33 15Area of land operated 30 June ha 296 (19) 182 (10) 194 (30)

Area irrigated ha 76 (7) 58 (8) 33 (14)

Total cash receipts $ 677 233 (7) 519 921 (8) 359 498 (9)

Total cash costs $ 535 859 (8) 431 569 (10) 273 511 (9)

Farm cash income $ 141 375 (18) 88 352 (18) 85 987 (18)

Profi t at full equity $ 99 881 (29) 51 542 (31) 39 215 (40)

Rate of return– excluding capital appreciation % 4. 1 (28) 2. 5 (42) 2. 2 (49)

– including capital appreciation % 6. 5 (34) 7. 0 (27) 4. 8 (25)

Total capital value $ 2 746 201 (9) 2 264 167 (9) 1 505 063 (9)

Farm debt $ 516 388 (14) 408 633 (16) 243 719 (27)

Age yrs 46 (4) 52 (3) 48 (7)

continued …

54


19 Distribution of total variable potato growing costs continued

Low cost Moderate cost High costVictoriaPrice per tonne of potatoes sold $/t 237 (6) 251 (13) 296 (11)

Total potato costs per tonne a $/t 94 (10) 147 (2) 237 (9)





Total cash costs $ 644 995 (27) 355 369 (18) 284 806 (33)

Farm cash income $ 267 576 (29) 101 720 (45) 54 487 (69)

Profi t at full equity $ 239 982 (31) 81 582 (69) 6 033 (99)

Rate of return – excluding capital appreciation % 6. 4 (19) 1. 9 (99) 0.2 (99)

– including capital appreciation % 9.1 (14) 1. 9 (99) 1. 4 (93)

Total capital value $ 4 336 926 (27) 1 816 599 (12) 2 746 594 (43)

Farm debt $ 835 698 (42) 520 307 (26) 177 309 (41)

Age yrs 41 (18) 52 (6) 51 (13)

Western AustraliaPrice per tonne of potatoes $/t 365 (4) 429 (7) naTotal potato costs per tonne $/t 209 (3) 376 (9)

Total potatoes sold t 1268 (10) 561 (12)

Share of total potatoes sold % 72 28Area of land operated 30 June ha 290 (8) 390 (35)

Area irrigated ha 51 (5) 27 (15)

Total cash receipts $ 766 913 (15) 662 131 (17)

Total cash costs $ 667 450 (15) 645 768 (17)

Farm cash income $ 99 463 (22) 16 363 (99)

Profi t at full equity $ 42 749 (40) –47 591 (96)

Rate of return– excluding capital appreciation % 0. 6 (99) 0.9 (45)

– including capital appreciation % 2. 1 (20) 3. 7 (24)

Total capital value $ 6 506 242 (11) 4 945 940 (8)

Farm debt $ 678 232 (10) 558 320 (19)

Age yrs 51 (5) 54 (3)

South east QueenslandPrice per tonne of potatoes sold $/t 478 (32) 507 (17) 999 (6)

Total potato costs per tonne $/t 229 (12) 291 (16) 676 (12)





Total cash costs $ 624 437 (14) 564 618 (12) 345 315 (34)

Farm cash income $ 161 786 (59) 185 075 (37) –31 214 (99)

Profi t at full equity $ 112 173 (99) 109 497 (43) –60 204 (99)

Rate of return – excluding capital appreciation % 2.8 (99) 2.5 (96) –1.1 (99)

– including capital appreciation % 4.7 (71) 4.2 (65) 7.5 (96)

Total capital value $ 3017731 (12) 2000761 (15) 2467219 (27)

Farm debt $ 335688 (46) 354596 (36) 270181 (53)

Age yrs 55 (4) 50 (7) 44 (7)

a Variable costs only - contract growing & harvesting, packing, fuel, and oil, electricity, seed and chemicals, fertiliser, water, freight, handling and marketing, wages and operator labor. Note: Figures in parentheses are standard errors, expressed as percentages of the estimates.

55


Another key result arising from the analysis is that there is generally a positive relationship between unit production cost and economic performance. For example, low cost growers were typically found to be larger in terms of capital invested and areas cropped and irrigated, and generated higher levels of profi t and rates of return to capital. And while low cost farms have signifi cant levels of debt, they typically generate incomes high enough to service that debt effectively.

Other issuesThe surveys also provided a unique opportunity to collect additional information from vegetable growers relating to other aspects of their businesses. Questions asked ranged from how vegeta-bles were sold, to growers expectations about the future. Key results are presented below.

Vegetable selling methodsVegetable growers typically sell their outputs into one of three different markets or segments: the fresh vegetable market; the processed vegetable market; and the export market. In the four regions surveyed by ABARE in 2005, the proportion of vegetables sold into the processing sector was 41 per cent, the proportion sold in the fresh vegetable market was 54 per cent, and the proportion sold for export was around 4 per cent. In general, growers selling into the processing sector typically did so using a contract, while the majority of sales of to fresh vegetable markets were done without contracts. (Vegetable selling methods are shown for each vegetable crop in tables D3–D8 in appendix D).

Computer usageThe majority of vegetable growers across Australia use a computer to manage their vegetable business (table 20).

In Victoria and northern Tasmania the percentages are higher than in south east Queensland and Western Australia. Growers were also asked what they used the internet for. Of the possible responses, most growers said they used it for weather information, followed by using it for business management needs and assistance with project information. Using the internet

20 Use of computers in vegetable businessAverage per farm

Northern Western South east All Victoria Tasmania Australia Queensland states

% % % % %

Computer used 60 (13) 62 (7) 42 (24) 45 (13) 55 (7)

Project information 29 (24) 35 (10) 40 (26) 38 (16) 34 (10)

Market intelligence information 25 (26) 30 (12) 31 (18) 22 (21) 27 (11)

Weather information 44 (15) 62 (7) 44 (23) 60 (10) 52 (7)

Media releases 23 (26) 21 (14) 23 (44) 30 (19) 24 (13)

Industry links 26 (25) 37 (10) 42 (24) 37 (15) 33 (10)

Education resources 21 (29) 36 (10) 31 (32) 36 (16) 29 (11)

Purchasing goods or services 10 (35) 17 (17) 24 (43) 23 (23) 16 (15)

Business management needs, (net banking, etc) 38 (18) 49 (9) 42 (24) 41 (15) 42 (8)

Other 2 (92) 2 (53) 2 (47) 9 (41) 3 (32)

Note: Figures in parentheses are standard errors, expressed as percentages of the estimates.

56


for industry links was also widely used in south east Queensland and Western Australia. Many growers in Western Australia also used the internet to assist with market intelligence information.

Membership of vegetable growers A majority of vegetable growers across Australia are members of particular state fruit and vege-table growers associations (table 21). A sizable number of growers belong to grower groups that are network or discussion groups, while fewer vegetable growers belong to either Landcare or vegetable growers’ cooperatives (both 11%). Growers in Victoria and northern Tasmania are slightly more likely to be members of grower groups and in a Landcare group compared with vegetables growers in south east Queensland and Western Australia. However, growers in south east Queensland and Western Australia are more likely to be members of vegetable growers’ cooperatives, which may be related to the selling methods of vegetable growers in those states.

Tactics to improve business productivitySlightly less than a third of vegetable growers believe that they are already as productive as possible with no tactics to improve business productivity (table 22). Of the four vegetable growing regions considered, growers in Western Australia are the least likely to agree with this attitudinal question, while growers in south east Queensland are the most likely to agree with it. Vegetable growers in Victoria are the most likely to agree that they could introduce or expand

21 Organisation and association membershipAverage per farm


% % % % %

Grower group 52 (14) 46 (9) 48 (24) 44 (13) 48 (8)

Cooperative 0 9 (26) 35 (33) 17 (22) 11 (18)

Landcare group 11 (25) 17 (18) 7 (23) 5 (61) 11 (14)

State fruit and vegetable growers association 45 (15) 88 (4) 73 (14) 42 (14) 60 (6)


22 Tactics to improve business’ productivityAverage per farm


% % % % %

Already as productive as possible 24 (23) 28 (14) 21 (49) 37 (14) 27 (11)

Introduce or expand mechanisation 35 (16) 28 (14) 39 (28) 27 (20) 32 (10)

Increase scale to take advantage of economies of size 23 (27) 32 (12) 24 (37) 11 (34) 22 (13)

Introduce more productive/higher yielding vegetable varieties 29 (20) 59 (7) 56 (21) 41 (14) 44 (8)

Introduce GM vegetable varieties 12 (40) 26 (14) 35 (33) 16 (29) 20 (15)

Other 35 (19) 19 (18) 29 (34) 34 (17) 29 (12)


57


mechanisation in order to improve business productivity. Growers in south east Queensland and Western Australia are the least likely to agree that they could increase scale to take advantage of economies of size. This is consistent with the fact that they are the states with the largest farms (in terms of areas cropped) and are more likely to have already achieved economies of size. In contrast, many northern Tasmania vegetable growers (32 per cent) believe increasing scale would have a positive impact on business productivity.

Importance of government supportOn the role of governments, vegetable growers were asked to rank in order of importance different types of government assistance (table 23). In general, vegetable growers rated continued government support for production related research and development as the most important of the different types of government assistance considered. Assistance to improve growers’ marketing skills was the second most popular form of support. The least supported type

of assistance was government support to improve vegetable growing skills. (Both of these results are consistent with results for the same set of questions posed to fruit and other horticultural producers in previous ABARE research.)

Education and training sought by vegetable growersVegetable growers were asked whether they attended various education and/or training events in 2004-05 (table 24). Field days were the most popular event for vegetable growers across the states surveyed (80 per cent), followed by workshops (65 per cent), and conferences attended by growers (45 per cent).

Future in vegetable growingTwo-thirds of vegetable growers surveyed across Australia expect to be growing vegetables in fi ve years time. However, of those who do not expect to be in the vegetable business in fi ve years time, less than a third expect someone else to be growing vegetables on their land at that time (table 25).

The responses of growers to attitudinal questions about future profi tability and productivity were also assessed to determine whether cost of production had an impact on the results. In partic-ular, responses to the questions were assessed separately for potato growers according to their cost category (low, medium and high).

23 Importance of government assistanceAverage per farm, on a 1–5 scale


% % % % %

Financial and business management skills 2.9 (6) 3.01 (4) 2.34 (12) 3.07 (6) 2.87 (3)

Vegetable growing skills 2.47 (7) 3.2 (3) 2.52 (9) 2.92 (6) 2.75 (3)

Marketing skills 3.07 (6) 3.19 (4) 2.6 (17) 3.29 (5) 3.07 (3)

R & D into production 3.41 (6) 3.98 (2) 3.32 (14) 3.76 (4) 3.61 (3)

R & D into processing 2.94 (5) 3.79 (2) 2.44 (17) 2.89 (6) 3.08 (3)


58


24 Education and training sought by vegetable growersAverage per farm


% % % % %Attendance at education and training events in 2005Field days 81 (8) 91 (3) 67 (17) 72 (7) 80 (4)

Conferences 44 (14) 54 (7) 47 (22) 31 (18) 45 (7)

Workshops 68 (10) 64 (6) 61 (19) 62 (9) 65 (6)

TAFE 17 (26) 28 (13) 6 (28) 12 (33) 17 (12)

University 3 (59) 5 (26) 11 (81) 0 4 (36)

Information consultants 30 (18) 48 (8) 39 (22) 48 (12) 40 (7)

Other training events 8 (54) 2 (62) 7 (78) 6 (49) 6 (34)

Intention to attend education and training events in 2006Field days 82 (7) 93 (2) 68 (13) 75 (7) 81 (4)

Conferences 48 (14) 54 (8) 42 (22) 35 (16) 47 (7)

Workshops 67 (10) 64 (7) 53 (19) 57 (10) 62 (6)

TAFE 15 (32) 28 (14) 15 (60) 9 (35) 17 (15)

University 2 (70) 3 (41) 10 (88) 0 3 (50)

Information consultants 27 (22) 53 (8) 44 (21) 42 (14) 39 (8)

Other training events 2 (70) 0 7 (78) 8 (40) 3 (34)


25 Expectations about the vegetable business Average per farm


% % % % %

Expect to be growing vegetables in 5 years 73 (9) 69 (2) 65 (17) 65 (9) 69 (5)

If no, expect anyone to be growing vegetables on land in 5 years 27 (49) 32 (26) 12 (63) 43 (29) 29 (20)

Have a documented farm management plan 24 (27) 30 (12) 42 (28) 39 (15) 31 (11)

Have a succession plan for business 35 (22) 35 (11) 39 (29) 40 (13) 36 (10)

Use an accountant for business other than for tax return 61 (10) 67 (6) 48 (21) 54 (11) 59 (5)


26 Business and productivity expectations in TasmaniaAverage per farm

Low cost Medium cost High cost

Expect to be in business in fi ve years time? 87 (5) 72 (12) 50 (19)

Improve productivity by– already as productive as possible 15 (33) 24 (31) 43 (23)

– expanding mechanisation 23 (27) 28 (25) 18 (40)

– increasing size 51 (15) 22 (27) 13 (25)

– using more productive plant and seed varieties 61 (13) 65 (13) 42 (21)

– introducing GM varieties 21 (26) 25 (27) 33 (25)


59


For three of the regions considered — south east Queensland, Western Australia and Victoria – there was no statistically signifi cant difference between the responses to the questions across different cost categories. However, in Tasmania the results showed signifi cant differences, and indicated that the smaller, higher cost potato growers typically believed that they were less likely to be growing vegetables in fi ve years time compared with larger, lower cost growers (table 26). In general, the smaller, high cost growers were quite pessimistic, with many believing that they were already as productive as they could be, and with fewer believing that they could increase their property size or expand mechanisation to improve productivity. In contrast, in the low cost group (where the average property size was the largest of the three groups) over half believed that they could expand operations to improve productivity, and far fewer believed that they were already as productive as possible.

60

appendix australian vegetables production sector abare eReport 06.5

terms of reference

Economic assessment of the international competitiveness of ele-ments of the Australian vegetable production industryThe objective in this assessment is to examine the international competitiveness of the Australian vegetable production sector. It is designed to contribute to a better understanding of the compet-itive pressures being faced by the vegetable industry and to provide input to the strategic plan for the industry being managed under the Industry Partnerships Program. The assessment should include:

■ A review and analysis of trends in domestic production and trade in vegetables and vegetable products, with particular emphasis on the extent of import competition;

■ An analysis of factors underpinning the competitiveness of imports in the Australian domestic market;

■ A comparison of the costs of production in Australia and relevant overseas countries

– This will be based on an industry survey of approximately 400 growers using nation-ally representative case studies of costs of production and enterprise characteristics, the results of which will be compared with available benchmarks for overseas competitors;

■ A national survey to determine the country of origin of up to 12 fresh and processed vege-table lines on supermarket shelves (product lines to be selected in consultation with industry);

■ An assessment of how the location and concentration of processing facilities and transport and logistics affect industry viability;

■ An assessment of the impacts of international competition on the domestic vegetable production sector — including impacts on producer prices, farmer incomes, and labor, and the contribution of vegetable production to state and national economies;

■ An assessment of region specifi c capacity in responding to international competition in vegetable production;

■ Australian horticulture’s capacity to adjust to the effects of international competition, including:

– Identifi cation of potential production effi ciencies in the Australian sector, and– Identifi cation of potential export growth opportunities.

■ Take account of industry and stakeholder issues that are identifi ed in the Industry Partner-ships Program.

A

61


Timeframe

An interim report on the trends in production and trade and a preliminary analysis of the drivers of competition will be prepared to provide timely input to the Vegetable Industry Partnership Project, which aims to produce strategic directions and options for future industry development. The interim report is scheduled for release in late September 2005. The release of the fi nal report is scheduled for March 2006.

62

appendix australian vegetables production sector abare eReport 06.5B

defi nition of vegetables

As per the Australian New Zealand Standard Product Classifi cation (ANZSPC), Group 12 (excluding dried, shelled leguminous vegetables).

B1 Vegetable defi nitions

Class Subclass Item Title

121 1210 1210 Potatoes

123 1230 Other vegetables, including herbs, fresh or chilled

1230.01 Alliaceous vegetables 01230.01.10 Garlic 01230.01.20 Garlic chives 01230.01.20.10 Flowering garlic chives 01230.01.20.90 Other garlic chives 01230.01.30 Leeks 01230.01.40 Onions, white and brown 01230.01.50 Shallots 01230.01.60 Spring onion 01230.01.90 Other Alliaceous vegetables

1230.02 Artichokes

01230.02.10 Jerusalem artichokes 01230.02.90 Other artichokes

1230.03 Asparagus

1230.04 Basil

01230.04.10 Asian basil 01230.04.20 Basil (excluding Asian basil)

1230.05 Beans (excluding fi eld beans for grain or seed)

01230.05.10 Broad beans 01230.05.20 French and runner beans 01230.05.30 Snakebean (long bean) 01230.05.40 Winged bean 01230.05.90 Other beans, fresh or chilled

1230.06 Beetroot

1230.07 Bitter melon / bitter gourd

1230.08 Bitter melon leaves

continued …

63


B1 Vegetable defi nitions continued


1230.09 Brassicas 01230.09.05 Broccoli (excluding Chinese broccoli) 01230.09.10 Brussels sprouts 01230.09.15 Cabbages (excluding Chinese cabbage and Chinese fl owering cabbage) 01230.09.20 Caulifl ower 01230.09.25 Chinese broccoli 01230.09.30 Chinese cabbage (excluding Chinese fl owering cabbage) 01230.09.35 Chinese chard (bok choy) 01230.09.35.10 Baby Chinese chard 01230.09.35.20 Shanghai Chinese chard 01230.09.40 Chinese fl owering cabbage 01230.09.40.10 Baby Chinese fl owering cabbage 01230.09.40.20 White Chinese fl owering cabbage 01230.09.45 Mustard green (mustard cabbage) 01230.09.90 Other Brassicas

1230.1 Camomile (chamomile)

1230.11 Cang cua

1230.12 Capsicums, chillies and peppers 01230.12.10 Capsicums and peppers 01230.12.20 Chillies

1230.13 Carrots

1230.14 Celery

1230.15 Chilli leaves

1230.16 Chinese boxthorn

1230.17 Chinese celery

1230.18 Chokos

1230.19 Coriander 01230.19.10 Long coriander 01230.19.20 Coriander (excluding long coriander)

1230.2 Curry leaves

1230.21 Drumstick

1230.22 Eggplant 01230.22.10 Thai eggplant 01230.22.20 Eggplant (excluding Thai eggplant)

1230.23 Fennel (sweet)

1230.24 Foo yip

1230.25 Garland chrysanthemum

1230.26 Ginger

1230.27 Guava bean

continued …

64




1230.28 Hairy melon

1230.29 Horse radish

1230.3 Jicama

1230.31 Jute/Jew mallow

1230.32 Kinh gioi

1230.33 La lot

1230.34 Lemon grass

1230.36 Lettuce 01230.36.10 Celtuce 01230.36.20 Vietnamese lettuce 01230.36.90 Other lettuce

1230.37 Lizard’s tail

1230.38 Lotus root, fresh

1230.39 Luffa

1230.4 Marjoram

1230.41 Mint 01230.41.10 Hot mint 01230.41.90 Other mint (excluding peppermint and spearmint)

1230.42 Mushrooms

1230.43 Okra

1230.44 Oregano

1230.45 Parsley 01230.45.10 Water parsley 01230.45.20 Parsley (excluding water parsley)

1230.46 Parsnips

1230.47 Peas (excluding fi eld peas for grain or seed) 01230.47.10 Peas (green) 01230.47.20 Snowpea/sugar pea

1230.48 Pea shoots

1230.49 Pennywort

1230.5 Perilla

1230.51 Pumpkins and marrows 01230.51.10 Cucumbers 01230.51.20 Gherkins 01230.51.30 Japanese pumpkin 01230.51.40 Squash 01230.51.50 Zucchini 01230.51.90 Other pumpkins and marrows

1230.52 Pumpkin leaves

continued …

65




1230.53 Radishes 01230.53.10 Green radish 01230.53.20 White radish 01230.53.90 Other radishes

1230.54 Rhubarb

1230.55 Rosemary

1230.56 Sage

1230.57 Silver beet and spinach 01230.57.10 Amaranth / Chinese spinach 01230.57.20 Buffalo spinach 01230.57.30 Ceylon spinach 01230.57.40 Water convolvulus 01230.57.90 Other silver beet and spinach

1230.58 Spearmint

1230.59 Sprouts

1230.6 St John’s-wort

1230.61 Sweet corn

1230.62 Sweet potato leaves

1230.63 Taro shoots

1230.64 Thyme

1230.65 Tomatoes

1230.66 Turnips 01230.66.10 Swedes 01230.66.20 Turnips, white 01230.66.90 Other turnips

1230.67 Watercress

1230.68 Winter melon

1230.69 Witloof chicory (french endive)

1230.9 Other vegetables, fresh or chilled, nec

124 1240 Edible roots and tubers with high starch or inulin content

1240.1 Sweet potato

1240.2 Tapioca/ cassava/ manioc

1240.3 Taro

1240.4 Water chestnut

1240.5 Yam

1240.9 Other edible roots and tubers with high starch or inulin content

66

appendix australian vegetables production sector abare eReport 06.5C

harmonised system (HS) codes for vegetables

C1 Commodity classifi cation list

Code Commodity Description

HS-070110 Potatoes seed, fresh or chilledHS-070190 Potatoes, fresh or chilled except seedHS-070200 Tomatoes, fresh or chilledHS-070310 Onions and shallots, fresh or chilledHS-070320 Garlic, fresh or chilledHS-070390 Leeks & other alliaceous vegetables, fresh or chilledHS-070410 Caulifl owers and headed broccoli, fresh or chilledHS-070420 Brussels sprouts, fresh or chilledHS-070490 Edible brassicas nes, fresh or chilledHS-070511 Cabbage lettuce (head lettuce) fresh or chilledHS-070519 Lettuce, fresh or chilled except cabbage lettuceHS-070521 Witloof chicory, fresh or chilledHS-070529 Chicory, fresh or chilled, except witloofHS-070610 Carrots and turnips, fresh or chilledHS-070690 Beetroot, salsify, celeriac, radishes etc. fresh, chilledHS-070700 Cucumbers and gherkins, fresh or chilledHS-070810 Peas, shelled or unshelled, fresh or chilledHS-070820 Beans, shelled or unshelled, fresh or chilledHS-070890 Legumes except peas & beans, fresh or chilledHS-070910 Globe artichokes, fresh or chilledHS-070920 Asparagus, fresh or chilledHS-070930 Aubergines(egg-plants), fresh or chilledHS-070940 Celery, other than celeriac, fresh or chilledHS-070951 Mushrooms, fresh or chilledHS-070952 Truffl es, fresh or chilledHS-070960 Peppers (Capsicum, Pimenta) fresh or chilledHS-070970 Spinach fresh or chilledHS-070990 Vegetables, fresh or chilled nesHS-071010 Potatoes, frozen, uncooked steamed or boiledHS-071021 Peas, frozen, uncooked steamed or boiledHS-071022 Beans, frozen, uncooked steamed or boiledHS-071029 Legumes, except peas and beans, frozenHS-071030 Spinach, frozen, uncooked steamed or boiledHS-071040 Sweet corn, frozen, uncooked steamed or boiledHS-071080 Vegetables, frozen nes, uncooked steamed or boiledHS-071090 Frozen vegetable mixtures, uncooked, boiled or steamedHS-071110 Onions, provisionally preserved

continued …

67


C1 Commodity classifi cation list continued

Code Commodity Description

HS-071130 Capers, provisionally preservedHS-071140 Cucumbers and gherkins provisionally preservedHS-071190 Vegetables nes and mixtures provisionally preservedHS-071210 Potatoes, dried, not further preparedHS-071220 Onions, dried, not further preparedHS-071230 Mushrooms and truffl es, dried, not further preparedHS-071290 Vegetables nes & mixtures, dried, not further prepareHS-071410 Manioc (cassava), fresh or driedHS-071420 Sweet potatoes, fresh or driedHS-071490 Arrowroot, salep, etc fresh or dried and sago pithHS-090420 Capsicum or Pimenta, dried, crushed or groundHS-110510 Potato fl our or mealHS-110520 Potato fl akes, granules and pelletsHS-110813 Potato starchHS-110814 Manioc (cassava) starchHS-200110 Cucumbers, gherkins, prepared or preserved by vinegarHS-200120 Onions prepared or preserved by vinegarHS-200190 Veg, fruit, nuts nes prepared or preserved by vinegar*HS-200210 Tomatoes, whole/pieces, prepared/preserved, no vinegarHS-200290 Tomatoes nes, prepared or preserved, not in vinegarHS-200310 Mushrooms, prepared or preserved, not in vinegarHS-200320 Truffl es, prepared or preserved, not in vinegarHS-200410 Potatoes, prepared, frozenHS-200490 Vegetables nes and mixtures, prepared, frozenHS-200510 Homogenized vegetable preparations, not frozen/vinegarHS-200520 Potatoes, prepared or preserved, not frozen/vinegarHS-200530 Sauerkraut, prepared or preserved, not frozen/vinegarHS-200540 Peas, prepared or preserved, not frozen/vinegarHS-200559 Beans nes, prepared or preserved, not frozen/vinegarHS-200560 Asparagus, prepared or preserved, not frozen/vinegarHS-200580 Sweet corn, prepared or preserved, not frozen/vinegarHS-200590 Veg nes, mixes, prepared/preserved, not frozen/vinegarHS-200950 Tomato juice not fermented or spiritedHS-210320 Tomato ketchup and other tomato sauces

* one third of this category only.

68

appendix australian vegetables production sector abare eReport 06.5

grower survey results detailed tables

D

D1 Vegetable grower characteristics, by state

Northern Western South east Victoria Tasmania Australia Queensland All States AAGIS

2004-05 2004-05 2004-05 2004-05 2004-05 2004-05PhysicalArea of land operated at 30 June ha 218 (15) 214 (10) 168 (13) 110 (11) 188 (8) 6261 (6)

Carrots sown ha 1.3 (99) 2.4 (14) 11.3 (20) 0.7 (55) 3 (24) naCaulifl owers sown ha 1.1 (45) 1.3 (20) 1.7 (21) 2.0 (27) 1 (17)

Onions sown ha 0.8 (99) 3.5 (11) 1.8 (21) 2.8 (39) 2 (19)

Other vegetables sown ha 3.9 (56) 3.1 (13) 3.3 (21) 11.4 (30) 6 (19)

Peas sown ha 0.0 (99) 6.1 (16) 0.0 1.9 (33) 2 (14)

Potatoes sown ha 24.1 (24) 14.6 (9) 8.4 (12) 8.0 (20) 16 (14)

Tomatoes sown ha 12.4 (46) 0.0 2.0 (36) 4.1 (40) 6 (37)

Other crops sown ha 69.5 (26) 43.5 (6) 12.4 (21) 38.2 (15) 49 (15)

Area irrigated ha 49.9 (17) 53.8 (4) 33.4 (9) 50.9 (11) 48 (7) 6 (29)

Carrots sold t 47.0 (135) 156.6 (16) 663.6 (20) 31.3 (59) 161 (19)

Caulifl owers sold t 48.8 (70) 25.0 (20) 27.5 (23) 48.0 (32) 38 (36)

Onions sold t 28.8 (129) 216.8 (11) 114.2 (21) 173.2 (49) 113 (19)

Other vegetables sold t 81.8 (46) 44.4 (15) 159.8 (39) 369.0 (27) 134 (18)

Peas sold t 0.3 (99) 32.5 (12) 0.0 14.0 (34) 10 (13)

Potatoes sold t 850.4 (22) 726.8 (8) 301.6 (12) 221.0 (22) 603 (13)

Tomatoes sold t 1005.9 (49) 0.0 137.6 (38) 241.5 (35) 470 (40)

Cash receiptsCarrots receipts $ 10 525 (109) 18 400 (18) 156 527 (20) 4 115 (43) 32 532 (19) naCaulifl owers receipts $ 19 501 (62) 12 526 (21) 27 932 (24) 24 077 (33) 19 396 (26)

Onions receipts $ 4 511 (84) 27 777 (13) 51 987 (24) 85 126 (52) 33 896 (25)

Other vegetables receipts $ 73 401 (42) 30 659 (14) 125 392 (36) 215 841 (37) 99 022 (20)

Peas receipts $ 325 (107) 13 430 (14) 30 623 (41) 8 813 (25)

Potatoes receipts $ 178 266 (26) 167 511 (8) 154 959 (25) 122 046 (25) 157 422 (13)

Tomatoes receipts $ 121 962 (40) 165 915 (39) 411 592 (38) 146 159 (24)

Other crops receipts $ 62 767 (15) 117 082 (6) 64 270 (61) 162 441 (21) 86 949 (10) 12 758 (37)

Sheep and lamb sales $ 21 760 (24) 18 122 (13) 6 157 (33) 379 (86) 14 292 (15) 35 489 (6)

Wool sales $ 1 690 (30) 6 154 (44) 1 835 (31) 17 (86) 2 406 (30) 32 659 (4)

Beef cattle sales $ 44 469 (30) 34 401 (11) 15 450 (21) 5 754 (31) 29 603 (22) 99 691 (11)

Other livestock sales $ 967 (59) 480 (48) 179 (57) 6 (86) 525 (44) 1 247 (21)

Off-farm sharefarming receipts $ 4 879 (92) 3 816 (49) 3 471 (84) 3 464 (55) 1 761 (21)

Off-farm contracts receipts $ 2 947 (41) 14 626 (19) 5 041 (27) 27 423 (65) 10 347 (31) 5 805 (18)

Other cash receipts $ 33 543 (35) 17 863 (14) 30 897 (44) 27 081 (33) 27 076 (19) 18 910 (7)

Total cash receipts $ 581 511 (12) 482 846 (4) 806 541 (13) 1 119 994 (21) 672 722 (8) 285 265 (4)

continued …

69


D1 Vegetable grower characteristics, by state continued


2004-05 2004-05 2004-05 2004-05 2004-05 2004-05Cash costsSheep and lamb purchases $ 15 662 (25) 5 680 (15) 1 157 (51) 429 (86) 7 908 (20) 7 761 (9)

Beef cattle purchases $ 23 784 (36) 13 349 (15) 4 842 (39) 359 (43) 13 416 (32) 24 055 (32)

Other livestock purchases $ 326 (77) 75 (78) 23 (63) 149 (66) 59 (29)

Seed $ 40 161 (14) 30 105 (7) 46 422 (13) 54 231 (25) 40 599 (8) 2 265 (11)

Fodder $ 1 407 (42) 855 (23) 353 (31) 417 (30) 916 (26) 10 166 (12)

Agistment $ 169 (88) 2 012 (52) 31 (69) 3 (86) 571 (46) 1 624 (16)

Fertilizer $ 42 956 (20) 51 859 (6) 66 334 (14) 51 764 (15) 48 013 (7) 20 194 (4)

Sprays $ 25 926 (14) 28 702 (6) 37 710 (16) 41 687 (26) 30 573 (8) 12 075 (5)

Fuel, oil and lubricants $ 31 673 (11) 21 974 (6) 32 541 (9) 31 546 (17) 28 363 (6) 15 956 (3)

Repairs and maintainance $ 35 927 (13) 33 566 (7) 42 426 (10) 56 530 (26) 38 987 (8) 19 770 (4)

Shearing and crutching expenses $ 212 (44) 1 300 (31) 261 (26) 474 (23) 5 955 (5)

Administration $ 10 957 (12) 13 227 (10) 20 744 (9) 15 419 (15) 13 378 (6) 10 476 (5)

Freight $ 14 463 (19) 12 870 (14) 36 445 (13) 82 437 (25) 29 209 (13)

Handling and marketing expenses $ 4 120 (21) 2 890 (10) 1 219 (22) 165 (28) 2 578 (16)

Materials $ 21 865 (37) 5 186 (15) 70 120 (19) 121 221 (28) 41 689 (17)

Rent and rates $ 24 203 (17) 8 332 (8) 11 036 (17) 30 571 (24) 19 504 (11) 9 316 (5)

Interest payments $ 29 703 (18) 27 874 (10) 29 875 (13) 23 063 (24) 27 356 (9) 19 703 (5)

Hired labour $ 30 184 (21) 28 349 (10) 133 463 (17) 207 340 (21) 76 510 (11) 7 942 (6)

Payments to sharefarmers $ 5 769 (94) 2 954 (86) 3 434 (37) 645 (61) 3 609 (61) 649 (26)

Other cash costs $ 84 474 (17) 89 558 (6) 99 721 (10) 297 492 (32) 125 610 (14) 62 742 (5)

Total cash costs $ 443 944 (11) 380 718 (4) 638 155 (8) 1 015 317 (23) 549 413 (9) 230 710 (5)

Financial performanceTotal cash receipts $ 581 511 (12) 482 846 (4) 806 541 (13) 1 119 994 (21) 672 722 (8) 285 265 (4)

less total cash costs $ 443 944 (11) 380 718 (4) 638 155 (8) 1 015 317 (23) 549 413 (9) 230 710 (5)

Farm cash income $ 137 568 (20) 102 128 (10) 168 386 (47) 104 677 (31) 123 309 (14) 54 555 (10)

plus buildup in trading stocks $ 2 951 (64) –1 223 (99) –478 (99) –590 (99) 637 (99) 6 372 (48)

less depreciation $ 39 171 (28) 31 290 (9) 38 732 (12) 49 543 (16) 37 725 (11) 26 435 (3)

less operator/manager and family labour $ 55 021 (7) 45 050 (4) 60 622 (9) 52 816 (5) 51 492 (4) 42 173 (2)

Farm business profi t $ 46 327 (57) 24 565 (41) 68 555 (99) 1 728 (99) 34 730 (49) –7 681 (70)

Rate of return – excl. cap. apprec. % 3.4 (45) 2.9 (41) 3.5 (56) 2.0 (35) 3.1 (24) 0.7 (32)

– incl. cap. apprec. % 4.8 (36) 5.8 (18) 5.3 (71) 5.0 (67) 5.1 (16) 7.2 (7)

Rate of return excl. cap apprec. plus operator and family labour % 5.5 (25) 5.1 (10) 5.5 (44) 4.2 (34) 5.2 (15)

Total farm capital at 30 June $ 2 659 304 (13) 2 133 671 (5) 3 102 961 (6) 2 477 473 (11) 2 495 230 (6) 2 740 992 (3)

continued …

70


D1 Vegetable grower characteristics, by state continued


2004-05 2004-05 2004-05 2004-05 2004-05 2004-05Farm capital and debtFarm debt at 30 June $ 368 447 (20) 368 796 (9) 379 663 (12) 224 741 (22) 333 840 (9) 242738 (5)

Equity ratio at 30 June % 86 (3) 83 (2) 88 (2) 91 (2) 87 (1) 81 (1)

OtherLiquid assets including FMDs at 30 June $ 67 672 (22) 72 289 (18) 41 976 (18) 137 502 (18) 74 982 (11) 96102 (6)

Off-farm income $ 13 611 (29) 25 649 (11) 6 146 (39) 9 804 (20) 14 448 (12) 23500 (7)

FMDs at 30 June $ 17 091 (45) 14 794 (41) 5 380 (56) 39 349 (35) 18 057 (23)

D2 Financial performance by size of turnoverAverage per group

Small Medium Large

2004-05 2004-05 2004-05PhysicalArea of land operated 30 June ha 62 (7) 139 (11) 362 (11)

Carrots area sown ha 0 (42) 1 (25) 8 (31)

Caulifl owers area sown ha 0 (46) 1 (29) 3 (21)

Onions area sown ha 1 (20) 2 (21) 4 (34)

Other vegetables area sown ha 1 (40) 3 (18) 11 (31)

Peas area sown ha 0 (26) 2 (20) 4 (20)

Potatoes area sown ha 6 (17) 13 (8) 30 (23)

Tomatoes area sown ha 1 (36) 2 (92) 15 (26)

Other crops area sown ha 11 (15) 32 (21) 101 (23)


Carrots sold t 12 (44) 49 (28) 432 (23)

Caulifl owers sold t 4 (48) 17 (33) 95 (38)

Onions sold t 43 (23) 70 (16) 233 (29)

Other vegetables sold t 11 (41) 54 (12) 338 (21)

Peas sold t 3 (27) 12 (22) 18 (16)

Potatoes sold t 173 (18) 501 (8) 1 167 (19)

Tomatoes sold t 17 (33) 139 (126) 1 240 (29)

Cash receiptsCarrots receipts $ 742 (46) 8 373 (37) 90 409 (22)

Caulifl owers receipts $ 2 394 (48) 12 687 (28) 43 642 (30)

Onions receipts $ 5 065 (22) 19 526 (22) 71 668 (34)

Other vegetables receipts $ 12 521 (37) 41 129 (15) 230 936 (26)

Peas receipts $ 1 791 (36) 6 356 (37) 19 088 (30)

Potatoes receipts $ 39 723 (18) 113 839 (9) 326 128 (19)

Tomatoes receipts $ 17 038 (36) 57 619 (37) 368 362 (25)

Other crops receipts $ 17 690 (15) 89 679 (25) 175 746 (12)

Sheep and lamb sales $ 6 946 (19) 12 043 (28) 24 276 (20)

Wool sales $ 1 201 (29) 809 (37) 5 565 (38)

Beef cattle sales $ 12 537 (23) 21 886 (11) 55 813 (28)

Other livestock sales $ 502 (101) 372 (50) 754 (79)

Off-farm sharefarming $ 529 (64) 2 464 (57) 7 673 (73)

continued …

71


D2 Financial performance by size of turnover continuedAverage per group

Small Medium Large

2004-05 2004-05 2004-05Cash receipts cont’dOff-farm contracts $ 2 776 (36) 8 084 (24) 21 054 (48)

Other cash receipts $ 6 046 (38) 13 468 (11) 63 066 (27)


Cash costsSheep and lamb purchases $ 2 605 (24) 8 029 (40) 13 444 (26)

Beef cattle purchases $ 4 755 (30) 8 379 (18) 28 131 (36)

Other livestock purchases $ 301 (101) 63 (70) 103 (104)

Seed $ 7 334 (17) 25 823 (11) 88 590 (12)

Fodder $ 1 278 (35) 610 (31) 879 (77)

Agistment $ 335 (59) 1 459 (55) 10 (69)

Fertilizer $ 10 096 (13) 36 896 (15) 102 686 (9)

Sprays $ 5 092 (14) 16 633 (18) 70 963 (11)

Fuel, oil and lubricants $ 8 719 (9) 23 531 (8) 54 782 (11)

Repairs and maintainance $ 10 935 (11) 29 109 (7) 78 931 (13)

Shearing & crutching expenses $ 284 (52) 326 (26) 765 (36)

Administration expenses $ 5 183 (8) 12 214 (8) 23 866 (9)

Freight costs $ 5 146 (10) 15 812 (13) 67 298 (17)

Handling and marketing expenses $ 1 228 (17) 1 847 (16) 4 763 (22)

Materials costs $ 10 217 (23) 20 778 (27) 96 525 (21)

Rent and rates $ 6 643 (19) 12 072 (11) 38 403 (15)

Interest payments $ 7 512 (14) 22 029 (11) 53 781 (14)

Hired labour $ 6 402 (21) 38 810 (14) 184 943 (13)

Payments to sharefarmers $ 488 (46) 2 479 (78) 8 141 (80)

Other cash costs $ 20 718 (13) 73 750 (10) 281 478 (18)

Total cash costs $ 115 271 (6) 350 647 (5) 1 198 482 (11)

Financial performanceTotal cash receipts $ 127 502 (6) 408 334 (3) 1 504 181 (9)

less total cash costs $ 115 271 (6) 350 647 (5) 1 198 482 (11)

Farm cash income $ 12 231 (41) 57 687 (20) 305 699 (13)

plus buildup in trading stocks $ –59 (841) 3 075 (65) –851 (189)

less depreciation $ 13 828 (7) 26 995 (13) 74 899 (19)

less operator/manager and family labour $ 47 275 (9) 53 976 (4) 57 336 (5)

Farm business profi t $ –48 931 (12) –20 210 (65) 172 613 (24)

Rate of return– excluding capital appreciation % –4 (16) 0 (137) 6 (19)

– including capital appreciation % 1 (191) 2 (43) 8 (17)

Farm capital and debtFarm debt $ 103 795 (17) 281 156 (9) 637 878 (15)

Equity ratio at 30 June % 91 (2) 86 (1) 85 (2)

OtherLiquid assets $ 54 540 (21) 58 083 (15) 118 979 (20)

Off-farm income $ 19 279 (19) 15 038 (20) 10 450 (28)

Total closing harvest loan $ 0 254 (83) 0 Per cent farms with negative farm cash income $ 38 (12) 22 (21) 9 (24)

Farm management deposits $ 11 396 (54) 13 037 (46) 31 432 (32)

Percent of turnover % 6 20 74

72


D3 Carrots – costs of productionAverage per farm

South east Western Northern All Victoria Queensland Australia Tasmania States

2004-05 2004-05 2004-05 2004-05 2004-05Cash costs per tonne soldContract growing and harvesting costs $/t na na 1 (48) 6 (21) 8 (61)

Seed and chemical costs $/t 28 (18) 13 (10) 28 (15)

Packing costs $/t 9 (46) 1 (73) 12 (40)

Wage cost $/t 42 (15) 6 (21) 34 (21)

Operator cost $/t 4 (30) 12 (16) 11 (34)

Electricity cost $/t 10 (19) 3 (18) 9 (15)

Fertiliser cost $/t 21 (20) 11 (13) 19 (18)

Freight cost $/t 11 (23) 0 (64) 11 (22)

Fuel and oil costs per tonne $/t 9 (18) 6 (15) 10 (15)

Handling cost $/t 2 (29) 0 2 (24)

Water cost $/t 0 (67) 0 (64) 0 (54)

Share of unallocated overhead cost $/t 46 (6) 30 (6) 46 (8)

Total costs per tonne sold $/t 184 (10) 88 (7) 189 (10)

Receipts per tonne sold $/t 211 (7) 121 (9) 207 (6)

Selling/marketing methodsContract in processing market % 0 41 (20) 22 (20)

Other marketing method in processing market % 0 2 (65) 1 (65)

Contract in fresh market % 0 31 (25) 21 (24)

Other marketing method in fresh market % 26 (20) 3 (75) 33 (9)

Contract in export market % 10 (66) 13 (40) 8 (35)

Other marketing method in export market % 64 (10) 10 (68) 15 (24)

Total % 100 100 100


73


D4 Caulifl owers – costs of productionAverage per farm


2004-05 2004-05 2004-05 2004-05 2004-05Cash costs per tonne soldContract growing and harvesting costs $/t 49 (29) 109 (40) 6 (45) 82 (27) 57 (24)

Seed and chemical costs $/t 71 (33) 61 (26) 189 (17) 68 (15) 72 (18)

Packing costs $/t 92 (48) 91 (17) 63 (35) 3 (68) 53 (17)

Wage cost $/t 26 (26) 101 (22) 277 (24) 44 (19) 69 (25)

Operator cost $/t 54 (64) 48 (35) 134 (18) 46 (15) 52 (35)

Electricity cost $/t 8 (41) 10 (30) 24 (27) 10 (23) 10 (26)

Fertiliser cost $/t 46 (37) 22 (40) 104 (15) 49 (13) 40 (16)

Freight cost $/t 19 (22) 48 (31) 38 (17) 2 (54) 23 (21)

Fuel and oil costs per tonne $/t 21 (53) 21 (36) 91 (10) 24 (17) 25 (29)

Handling cost $/t 1 (106) 8 (52) 17 (38) 0 4 (48)

Water cost $/t 2 (82) 1 (80) 0 (70) 1 (67) 2 (54)

Share of unallocated overhead cost $/t 83 (31) 112 (25) 357 (15) 127 (11) 116 (22)

Total costs per tonne sold $/t 470 (29) 632 (11) 1301 (14) 455 (9) 525 (16)

Receipts per tonne sold $/t 399 (12) 483 (13) 1144 (14) 508 (7) 502 (13)

Selling/marketing methodsContract in processing market % 0 0 9 (64) 78 (11) 19 (11)

Other marketing method in processing market % 0 0 0 8 (82) 2 (82)

Contract in fresh market % 11 (98) 11 (84) 8 (66) 6 (73) 9 (52)

Other marketing method in fresh market % 89 (13) 89 (10) 59 (16) 9 (56) 66 (8)

Contract in export market % 0 0.36 (84) 24 (31) 0 3 (30)

Other marketing method in export market % 0 0 0 0 0

Total % 100 100 100 100 100


74


D5 Onions – costs of productionAverage per farm


2004-05 2004-05 2004-05 2004-05 2004-05Cash costs per tonne soldContract growing and harvesting costs $/t na 119 (33) 2 (30) 10 (20) 42 (50)

Seed and chemical costs $/t 22 (11) 66 (32) 18 (11) 30 (13)

Packing costs $/t 37 (33) 59 (27) 1 (16) 22 (31)

Wage cost $/t 41 (11) 79 (15) 11 (15) 45 (27)

Operator cost $/t 21 (39) 18 (20) 20 (12) 22 (21)

Electricity cost $/t 6 (13) 10 (18) 3 (13) 6 (10)

Fertiliser cost $/t 10 (40) 39 (20) 16 (10) 20 (16)

Freight cost $/t 16 (22) 10 (31) 3 (27) 8 (32)

Fuel and oil costs per tonne $/t 8 (25) 23 (18) 6 (10) 11 (14)

Handling cost $/t 3 (73) 13 (31) 0 (60) 3 (33)

Water cost $/t 1 (78) 1 (70) 0 (40) 1 (39)

Share of unallocated overhead cost $/t 52 (20) 109 (23) 41 (11) 64 (16)

Total costs per tonne sold $/t 337 (12) 428 (17) 129 (7) 274 (14)

Receipts per tonne sold $/t 461 (7) 384 (14) 141 (9) 306 (16)

Selling/marketing methodsContract in processing market % 0 6 (46) 41 (15) 24 (15)

Other marketing method in processing market % 0 0 9 (38) 5 (38)

Contract in fresh market % 11 (82) 4 (58) 17 (24) 13 (25)

Other marketing method in fresh market % 88 (11) 80 (8) 10 (27) 45 (6)

Contract in export market % 0 0 21 (22) 12 (22)

Other marketing method in export market % 0.32 (89) 10 (58) 2 (78) 2 (49)

Total % 100 100 100 100


75


D6 Peas – costs of productionAverage per farm


2004-05 2004-05 2004-05 2004-05 2004-05Cash costs per tonne soldContract growing and harvesting costs $/t na 59 (41) na 20 (20) 31 (24)

Seed and chemical costs $/t 131 (39) 73 (13) 91 (17)

Packing costs $/t 58 (44) 0 14 (45)

Wage cost $/t 640 (28) 25 (20) 170 (30)

Operator costs $/t 306 (32) 42 (11) 113 (20)

Electricity cost $/t 22 (26) 8 (17) 13 (16)

Fertiliser cost $/t 128 (36) 46 (12) 70 (19)

Freight cost $/t 95 (44) 2 (37) 24 (42)

Fuel and oil costs per tonne $/t 62 (20) 18 (16) 29 (16)

Handling cost $/t 10 (22) 0 2 (38)

Water cost $/t 7 (43) 2 (34) 4 (48)

Share of unallocated overhead cost $/t 496 (22) 139 (11) 248 (16)

Total costs per tonne $/t 2013 (20) 377 (6) 809 (15)

Receipts per tonne $/t 2111 (26) 411 (5) 889 (20)

Selling/marketing methodsContract in processing market % 8 (109) 90 (109) 62 (7)

Other marketing method in processing market % 12 (75) 8 (75) 9 (44)

Contract in fresh market % 4 (86) 2 (86) 3 (55)

Other marketing method in fresh market % 76 (5) 0 (5) 26 (5)

Contract in export market % 0 0 0Other marketing method in export market % 0 0 0

Total % 100 100 100


76


D7 Potatoes – costs of productionAverage per farm


2004-05 2004-05 2004-05 2004-05 2004-05Cash costs per tonne soldContract growing and harvesting costs $/t 7 (28) 8 (33) 5 (22) 24 (11) 13 (15)

Seed and chemical costs $/t 28 (13) 34 (30) 53 (12) 29 (7) 32 (7)

Packing costs $/t 0 (90) 24 (36) 27 (41) 0 (89) 4 (29)

Wage cost $/t 8 (25) 78 (21) 71 (43) 10 (12) 18 (22)

Operator cost $/t 20 (23) 37 (23) 53 (20) 18 (10) 25 (14)

Electricity cost $/t 2 (22) 8 (30) 8 (16) 5 (12) 4 (11)

Fertiliser cost $/t 20 (22) 45 (26) 37 (8) 27 (7) 27 (9)

Freight cost $/t 4 (32) 41 (27) 26 (27) 8 (13) 10 (17)

Fuel and oil costs per tonne $/t 14 (16) 18 (21) 27 (10) 10 (9) 14 (9)

Handling cost $/t 1 (45) 9 (33) 6 (25) 0 (42) 2 (24)

Water cost $/t 3 (28) 5 (54) 2 (68) 0 (38) 3 (24)

Share of unallocated overhead cost $/t 80 (10) 101 (10) 133 (10) 76 (5) 89 (5)

Total costs per tonne sold $/t 179 (11) 408 (15) 447 (17) 207 (4) 239 (7)

Receipts per tonne sold $/t 226 (7) 575 (18) 455 (19) 248 (3) 291 (5)

Selling/marketing methodsContract in processing market % 65 (11) 10 (47) 11 (24) 82 (5) 57 (5)

Other marketing method in processing market % 7 (55) 1 (77) 1 (49) 5 (48) 5 (37)

Contract in fresh market % 2 (93) 7 (75) 13 (21) 2 (50) 4 (29)

Other marketing method in fresh market % 26 (23) 82 (7) 71 (5) 11 (32) 33 (8)

Contract in export market % 0 0 4 (27) 1 (88) 1 (32)

Other marketing method in export market % 0.10 (101) 0 0.12 (64) 0 0 (76)

Total % 100 100 100 100 100


77


D8 Tomatoes – costs of productionAverage per farm


2004-05 2004-05 2004-05 2004-05 2004-05Cash costs per tonne soldContract growing and harvesting costs $/t 10 (38) 288 (17) 2 (75) na 35 (43)

Seed and chemical costs $/t 16 (13) 191 (20) 68 (33) 32 (33)

Packing costs $/t 0 269 (44) 202 (51) 28 (60)

Wage cost $/t 8 (56) 412 (34) 115 (45) 45 (52)

Operator cost $/t 7 (25) 23 (43) 101 (58) 0Electricity cost $/t 0 (85) 20 (22) 9 (27) 2 (58)

Fertiliser cost $/t 6 (20) 77 (37) 49 (15) 13 (28)

Freight cost $/t 2 (66) 168 (27) 47 (60) 17 (55)

Fuel and oil costs per tonne $/t 6 (17) 38 (13) 12 (34) 9 (26)

Handling cost $/t 0 17 (31) 28 (62) 2 (64)

Water cost $/t 1 (33) 4 (15) 6 (82) 2 (30)

Share of unallocated overhead cost $/t 29 (19) 404 (18) 118 (13) 65 (37)

Total costs per tonne sold $/t 86 (15) 1910 (20) 759 (22) 261 (40)

Receipts per tonne sold $/t 121 (13) 1719 (10) 1176 (3) 275 (33)

Selling/marketing methodsContract in processing market % 41 (51) 0 0 17 (51)

Other marketing method in processing market % 0 0.24 (48) 0 0.1 (48)

Contract in fresh market % 0 6 (79) 5 (111) 3 (72)

Other marketing method in fresh market % 59 (36) 93 (5) 95 (6) 80 (11)

Contract in export market % 0 0.22 (13) 0 0.0 (13)

Other marketing method in export market % 0 0 0 0Total % 100 100 100 100


78

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81

Research funding ABARE relies on fi nancial support from external organ isations to complete its research program. As at the date of this publication, the following organisa-tions had provided fi nancial support for ABARE’s research program in 2004-05 and 2005-06. We gratefully acknowledge this assistance.

Agricultural Production Systems Research Unit

Asia Pacifi c Economic Cooperation Secretariat

AusAid

Australian Centre for International Agricultural Research

Australian Gas Association

Australian Greenhouse Offi ce

Australian Plague Locust Commission

Australian Quarantine and Inspection Service

Australian Wool Innovation Limited

Batelle Pacifi c NW

Canegrowers

Chevron Texaco

Commonwealth Grants Commission

Commonwealth Secretariat, London

CSIRO (Commonwealth Scientifi c and Industrial Research Organisation)

Dairy Australia

Department of Agriculture, Fisheries and Forestry

Department of Business, Industry and Resource Develop-ment, Northern Territory

Department of the Environment and Heritage

Department of Foreign Affairs and Trade

Department of Health and Ageing

Department of Industry, Tourism and Resources

Department of Infrastructure, Victoria

Department of Natural Resources and Mines, Queensland

Department of Primary Industries, Queensland

Department of Primary Industries, Victoria

Department of Prime Minister and Cabinet

Department of Transport and Regional Services

Deutsche Bank

East Gippsland Horticultural Group

Exxon

Fisheries Research and Development Corporation

Fisheries Resources Research Fund

Food and Agriculture Organisation of the United Nations

Forest and Wood Products Research and Development Corporation

Grains Research and Development Corporation

Grape and Wine Research and Development Corporation

GHD Services

Horticulture Australia

Independent Pricing and Regulatory Tribunal

Institute of National Affairs, Papua New Guinea

International Food Policy Research Institute

ITS Global

Land and Water Australia

Meat and Livestock Australia

Melbourne Development Institute

Minerals Council of Australia

Ministerial Council on Energy

National Land and Water Resources Audit

National Landcare Program

National Oceans Offi ce

Natural Heritage Trust

Newcastle Port Corporation

New South Wales Department of Primary Industries

New Zealand Ministry for the Environment

New Zealand Ministry of Foreign Affairs and Trade

New Zealand Ministry of Prime Minister and Cabinet

NSW Sugar

Offi ce of Resource Development, Northern Territory

Organisation for Economic Cooperation and Development

Plant Health Australia

Pratt Water

Primary Industries, Victoria

Rio Tinto

Rural Industries Research and Development Corporation

Snowy Mountains Engineering Corporation

Terrapin Australia

University of Queensland

US Environmental Protection Agency

WA Global Ocean Observing System

Wheat Export Authority

Woodside Energy

Woolmark Company

abare ereport 06.5 stephen apted, peter berry, christopher...

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