Growing exports for domestic success

Author: Jenny Van de Meeberg – Head of Trade, APAL

This article originally appeared in the Spring 2021 edition of AFG, available online here.

Whether its apple and pear varieties with better packouts or better orchard practices, the productivity of Australian apple and pear orchards is outstripping domestic demand.

Basic economics tells us that if this supply-demand imbalance continues – or is made worse by increased apple and pear imports – there is little prospect of improved prices. It also tells us that developing our export potential is key to the future viability of each apple and pear business in Australia.

Tapping into muscle memory

Twenty years ago, Australian apple and pear exports were second only to citrus. Other industries dreamed of achieving our level of export activity, but this all changed from 2001.

In 2001 Australia exported more than 35,000 tonnes of apples – around 10 per cent of the national crop – and close to 20,000 tonnes of pears or around 12 per cent of the national crop.*

From 2002 onwards, exports fell off a cliff. Within five years, apple exports dropped by 85 per cent to below 5,000 tonnes and have stayed there.

Pear exports bottomed out at around 4,000 tonnes in 2007 – a decline of almost 80 per cent from their peak.

There’s a range of seasonal and trade factors that contributed to the decline since 2001 but it shows that Australian apple and pear producers have a proud history of growing quality export fruit.

There is an urgent need for our industry to tap into this muscle memory and rebuild our export focus.

Investment in export is a strategy to maintain domestic market buoyancy.

It is the only way to keep domestic market prices healthy as production grows and imports place pressure on the balance between supply and demand.

Favourable winds

While domestic prices may be facing strong headwinds, Australia’s apple and pear exports have been quietly gathering momentum with volumes steadily growing.

If we look more closely at activity over the past decade there is evidence of a steady, albeit slow, resurgence lead by a small but growing number of growers and pack houses.

They have recognised the domestic outlook is a threat to their business viability and exports offer a logical alternative. Importantly, all Australian producers are benefiting as even these modest export volumes relieve some of the domestic market pressure.

The Apple & Pear Export Readiness and Market Access Project delivered by APAL and funded by Hort Innovation has played a key role in supporting the apple and pear export resurgence. APAL has worked closely with growers and industry to develop export market priorities and to streamline complex export protocols and pathways.

Over the past three years the project has secured valuable market access improvements for apple and pear exporters in key markets that across Asia and North America.

Accelerating exports

With export growth critical to the viability of Australian apple and pear industry, there is some good news.

We have the ‘infrastructure’ in place to support and grow exports – we are not starting from scratch.

Australia enjoys an excellent reputation for high quality, clean fresh produce and seasonality plays to Australia’s advantage in many markets.

We have a number of motivated and committed Australian apple and pear growers with export experience, networks and relationships, and in many cases they can and are leveraging their export
of other crops including cherries and stone fruit.

This foundation is very similar to Australia’s most successful horticulture export industries. For example, the almond industry, the citrus industry, the mango industry and the carrot industry are
characterised by a consolidated handful of large, experienced export entities who, between them, move the overwhelming majority of export product.

This means, in its current state, the apple and pear industry would be capable of moving incredible volumes of fruit through the existing industry structure.

Therefore, the barrier is not export capability but the number of growers willing to commit fruit to export supply chains and the market access opportunities for this fruit.

And this is where the Export Project is key.

Market access and trade negotiations are notorious for their slow turning wheels. The progress the Project has made in a relatively short time underscores the value of an advanced and properly
resourced technical program that is focused on activities growers cannot readily do for themselves and/or require an industry wide response.

With the project ending later this year, APAL and industry agree there is still much work to be done.

The project has laid the foundations that will underpin accelerated export growth for Australian apple and pear growers at a critical time for the domestic industry.

As we see exports grow, we will also see the project’s real measure of success – improved returns to all Australian apple and pear growers.

The industry knows that exports are essential to domestic market stability, and viability especially if US apple imports are permitted in the coming years.

We only need to look to the example of the Australian banana industry. Bananas are the only fruit that has a higher consumer market penetration than apples, but they also know there is a saturation point. Studies have shown that for every one per cent increase in supply on the domestic market, prices decline five per cent.

Entering export

In exploring its export options, APAL is encouraging the apple and pear industry to follow the lead of other successful horticulture export industries.

We are encouraging industry to consolidate exports through a handful of export packhouses. We don’t have a number in mind, but as other industries have shown there are advantages to meeting export compliance requirements and managing the seasonal risks to supply and quality. It is also a model that, based on other industries’ experiences, creates opportunities for all growers to be involved in export.

Serious buyers in international markets do not have the capacity and/or willingness to deal with hundreds of small suppliers. They are looking for volume and consistency. This can only be achieved by working together as an industry. A scenario where we encourage hundreds of individual growers to become exporters is impractical and doesn’t meet the needs of the market. The industry’s objective must be to push more fruit into export supply chains, not turn everyone into an individual exporter.

With the emphasis on growing export quality fruit rather than becoming an exporter, there are a range of options available to Australian growers.

Whether it’s planting a club variety or contracting your crop to an exporter or packhouse there are options that allow growers to play to their strengths including their ability to grow great quality fruit.

* Year Book Australia (1301.0) 2004, Australian Bureau of Statistics

Acknowledgement: The Apple & Pear Export Readiness and Market Access Project (AP 17002) is funded by Hort Innovation, using the apple and pear research and development levy and contributions from the
Australian Government, and delivered by APAL. Hort Innovation is the grower-owned, not-for-profit research and development corporation for Australian horticulture.