Apples next on trade priority list for China

Australia’s new Agriculture Counsellor – Technical in China, Adam Balcerak, recently visited orchards in Victoria and is committed to getting Australia’s mainland apples access to China.

Author: Annie Farrow Industry Services Manager, APAL 03 9329 3511 afarrow@apal.org.au

Author:
Annie Farrow
Industry Services Manager, APAL
03 9329 3511
afarrow@apal.org.au

Prior to departing for his new post in Beijing as Australia’s new Agriculture Counsellor – Technical, the Department of Agriculture’s Adam Balcerak took time out to visit a number of horticulture farms and packing sheds in Victoria in mid-November.

Adam has most recently worked in the south-east Asian section of the Trade and Market Access division of the Department of Agriculture and is familiar with protocol negotiations. Adam acknowledges that this recent visit to meet growers from across the key horticulture industries has provided a good introduction to the myriad of expectations around China access.

“My work program will be driven out of Canberra in the sense of priorities across the agriculture sector including the priorities within horticulture,” said Adam. “But the trip around Mildura to meet with almonds, citrus and table grapes and the visits to apples in Narre Warren North and cherries in Wandin on the outskirts of Melbourne has exposed me to the visions that each industry has for China and the particular issues they face in improving existing access or gaining new access. I thank APAL very much for organising the trip.”

Adam has a big role to play in assisting the Australian agricultural sector to build a sustainable export presence in China. He will act as one of two on-ground Department of Agriculture officials to promote Australia’s agricultural interests in China, facilitating trade and pursuing Australia’s agri-food trade policy objectives.

His key focus will be to work with Chinese officials to progress technical market access issues, of which there are many. The livestock, grain and dairy sectors all have market access issues to varying degrees. For horticulture, the list is also long. In the immediate term Australia is seeking access for nectarines. The application for access for Australian stone-fruit into China was first lodged in 2006 but finally a trade protocol is believed to be imminent.

According to Rowan Little, General Manager at Montague Fresh, the Chinese market for nectarines and plums will be important to the Australian stone-fruit industry.

“Just to get 3-4 per cent of product off the domestic market and into exports in the last few years has had a staggering impact on grower returns,” said Rowan. “Growing that export base and capturing a small slice of the market prior to Chilean product arriving in China will similarly be of enormous benefit.”

Once the protocol is signed Montague Fresh plan to export the bulk of product directly to Chinese retailers rather than into the wet market. Montague Fresh has visited China a number of times in recent years to identify target retailers and build relationships prior to trade.

“Nectarines and plums are delicate and require specific handling and storage knowledge so having direct relationships with the retailer is important,” explained Rowan. “But we will also be able to assist those retailers to market our branded products.

“Nevertheless, we will probably also place some product through the wet markets because that importer then has a vested interest in monitoring and ensuring that no copy-cat unlicensed brands enter the Chinese market.”

Once the stone-fruit protocol is signed mainland apples will move into first spot on the market access queue for Australian horticulture. The site visit by Adam provided an opportunity for APAL and Montague Fresh to stress the importance of mainland apples remaining as the next fruit to be assessed by Chinese officials for resolution around a trade protocol.

Montague Fresh Marketing Manager and APAL Director Scott Montague said, “as is the case for stone fruit, shifting product into export markets will help keep domestic apple prices firm. Export avenues provide growers with another suite of buyers and helps dissipate the pressures created by the competitive domestic trade.”

This point was a major focus of discussions at the July Key Stakeholders Roundtable where the major industry players gave commitments to work toward greater export volumes. The Chinese market is incredibly important to Australia’s mainland apple industry, particularly as plantings of ‘Cripps Pink’ continue to dominate, accounting for over 50 per cent of the crop in some regions. To avoid Pink Lady™ apples from becoming a commodity, volumes need to be shifted offshore.

In recent submissions to government, APAL has stressed that industry has no pretences that we could ever hope to compete for the attention of the Chinese middle class consumer, despite their numbers exploding. We are too costly compared with Chile and New Zealand, our main southern hemisphere competitors, as well as the USA. Instead, we believe that Australian apple and pear growers should focus their attention at the elite consumer who wants and can afford a high-priced premium product that is safe, clean, green and Australian. Initiatives to establish a Pink Lady™ brand presence in China have commenced.

”The Chinese market for mainland Australian apples is some time off,” said Scott. “We first lodged the application for access for both stone-fruit and mainland apples into China in 2006. We hope that the access for mainland apples doesn’t take as long as the stone-fruit protocol has.”

The nature of the forthcoming protocol for stone-fruit into China is not yet known. It will be most disappointing if it specifies a sea freight protocol and not an air freight protocol as well.

“We need to be able to get our produce into the Chinese markets before the Chileans do,” said Rowan. “There is little difference between the cost of air freight and shipping freight for us and the freight obviously handles much better by air because of the considerably shorter time frames involved.

“Chile can only airfreight into China via Los Angeles and the additional time lags and airfreight charges adds to their overall costs. So we have an airfreight advantage.

“Australian product quality is much better than Chile’s partly because they pick early to keep fruit firm during the long sea voyage. So the Chinese will pay more for the better quality Australian product. But the price for Australian fruit will be driven down once the Chilean sea freight enters the market – just because of the sheer volume involved. So we really will need an airfreight protocol,” Rowan added.

On a final note Adam said that building rapport with the key Chinese officials and trying to understand the level of influence that various organisations might have on speeding up the resolution of commercially-workable trade protocols will take him some time.

“Nevertheless, I am keen for industries to contact me when they are in China so that I can assist with introductions and discussions around creating sustainable and profitable trade with China,” concluded Adam.

By |November 28th, 2014|Market access|

About the Author:

Industry Services Manager at Apple and Pear Australia Ltd (2009-2016).
For information regarding Industry Services contact APAL at ea@apal.org.au or on 03 9329 3511.