Bad apples in Australia's exports

Imagine our rugby and cricket teams decided that defeat by teams from other countries, particularly New Zealand, was intolerable and convinced the government to prevent them from playing in Australia or, if they were allowed to come, they first had to pass impossibly stringent health checks that kept them out anyway.

The outcome would be obvious. The overseas teams would play against teams elsewhere in the world and maintain a high standard of competitiveness. Our teams would only play against each other and their standard would decline to the point where Australian rugby and cricket were no longer internationally competitive.

That is what has been occurring in key parts of Australia’s horticulture sectors. While the Kiwis have been busy competing in international markets and maintaining their competitiveness, Australian producers have focused on domestic markets and keeping foreigners out. The result, as a recent Rabobank report highlights, is that New Zealand fruit and vegetable growers are in better shape than ours.

A decade ago the Australian fruit and vegetable sectors contributed almost half a billion dollars of net exports to the national economy. Since then imports have steadily grown while exports plateaued, sending the overall balance well into negative territory.

A number of factors contributed to this. The already growing trend towards higher imports of processed vegetables from lower cost producers accelerated during the drought when domestic production was limited. There has also been a general increase in out-of-season fruit imports such as citrus, table grapes and stone fruit and, more recently, smaller volumes of in-season produce such as tomatoes, avocados and table grapes.

By contrast, New Zealand horticulture is a consistent net export earner, contributing over $NZ1.5 billion in 2009-10. Fruit exports are by far the most significant component, driven predominantly by kiwifruit and pipfruit (such as apples and pears).

The New Zealand horticulture industry also has bold ambitions, with a stated objective of $NZ10 billion in turnover by 2020. New Zealand’s single desk exporter of kiwifruit aims to triple exports by 2025. Meanwhile, Australia’s apple industry is focused on protecting its local market. Opposition agriculture spokesman John Cobb has introduced a bill to give politicians the right to veto import license’s in spite of biosecurity clearances, and the Tasmanian government has banned imports of New Zealand apples citing fears that fire blight will threaten its remaining export markets. This is despite the fact that the U.S., which has fire blight, also exports to these markets.

Fire blight on apples is not the threat it is made out to be. The real issue is that Australian horticulture is not internationally competitive. This has nothing to do with low wages or differences in environmental standards. New Zealand’s wages are comparable to ours and our regulatory systems have a high degree of commonality. Our high dollar doesn’t help but its impact is recent, and the New Zealand dollar is also relatively high.

Our problem is that many of our producers, like rugby and cricket players who never face international competition, have become unfit and complacent. Unless Australia reverses its longstanding support for free trade, which would inevitably invite retaliation by other countries and harm those sectors that are competitive, our horticulture industries must change their ways.

That means more producers orienting their activities towards export markets rather than the big supermarkets. More should buy out struggling neighbors to increase scale and achieve greater efficiencies. More ought to experiment with new varieties that allow them to differentiate their produce in the market; and of course everyone should welcome innovations in growing, harvesting and processing that increase productivity. Naturally, they should all check that their levies are only being used for these things as well.

They could go further and follow rugby’s lead by stealing one of New Zealand’s coaches, in the form of someone who knows how to sell produce into export markets. Although New Zealand’s fruit and vegetable exports are scattered amongst Australia, Europe, the U.S. and Asia, it is Asia that has shown the greatest growth over the past 10 years. Ongoing economic development of the region is likely to offer some of the greatest opportunities in future. If New Zealand can increase sales of its produce there, Australia can too.

There are also new markets that have great potential, based on phyto-farming. This is the growing of crops for the production of specific nutrients or bioactive components. Plants contain many components with the potential to prevent or control diseases such as obesity, diabetes, cancer, dementia, asthma and heart disease. They can also be a source of natural flavorings, colorings, cosmetics and drugs.