APAL Chair Michele Allan Report to 2017 AGM

APAL Chair Michele Allan

Welcome everyone, and thank you very much for attending APAL’s AGM here in Melbourne.

I welcome those of you who have travelled from country Victoria and interstate to be here. There’s always a lot to do in the orchard in spring, so we appreciate you taking the time to join us.

2017 has been a busy and eventful year for both the apple and pear industry and for APAL, with some significant organisational and market challenges to tackle.  I will talk about the changes at APAL a little later but first I’d like to share some recent figures that indicate that, despite the challenges, the industry continues to grow in capability and efficiency.

Those of you who attended the recent Future Orchards® walks organised by APAL will know from the latest Orchard Business Analysis figures prepared by AgFirst and presented there that as growers you continue to get better at what you do. The average gross yield from the 25 businesses across the country aggregated in the analysis has risen from 38t/ha in 2011 to 48t/ha in 2017 with the top-level producers achieving 90 tonnes/ha. Pack-outs are also rising, with the model average approaching 70pc.

Yields and pack-outs at these levels would, a decade ago, have seemed unachievable.

At a national level, apple production rose slightly in 2016/17 to just under 320,000 tonne, while pear production fell back 8pc to 108,000t following the 13pc jump last year.

The value of production also rose – in apples by 13pc to $497.3m and in pears by 6pc to $123m on top of an 11pc rise in 2015/16.

Whilst the data shows per capita consumption slightly up, at 9.3 kg for apples and 2.4 kg for pears, the recent trends emanating from retail sales, indicate volumes are down meaningfully year on year, which is of significant concern.

Growing production necessitates growing markets and that is one of the most significant challenges we face as an industry. The board recognises that APAL has to take a leadership role by creating an Industry Strategy to address these challenges – this is not an HIA or a SIAP role. The board is fully supportive of management’s recruitment strategy, bringing highly-commercial capability to create and execute this strategy – those industry players who attended the stakeholder meeting this morning have had some exposure to this process.

Taking volumes off the domestic markets through exports and a more co-ordinated approach to the domestic market is fundamental to a long-term sustainable industry. Whilst the trend of current exports is positive, we have a long way to go, with only 7 per cent of pear production and 1.5pc of apples sent offshore.

APAL is taking a lead role in implementing the recently published Apple & Pear Industry Export Development Strategy and the market access work for mainland apples into China. The export strategy recommended a co-ordinated approach, through a consolidated number of resourced packers, using high value brands/varieties. APAL is in a unique position to support the Australian export effort, particularly in China, via Pink Lady® which is a managed brand outside Australia.

Ensuring APAL is best positioned to understand and access the export opportunities and help deliver outcomes for the whole industry has seen us make some changes internally.

Phil Turnbull was recruited to the role of CEO from the APAL Board, just over a year ago, bringing to the organisation a strong understanding of accountability and an outcome focussed approach. Phil has begun delivering on the APAL’s strategy to realign our operations and commercial activities to the clear purpose of APAL’s constitution: to benefit Australian growers.

As CEO, Phil has led the transition of APAL from an organisation in which the commercial team, building the industry Pink Lady asset internationally, operated in isolation from the arm representing the Australian industry, to now a fully-integrated operation of industry development and commercial activity, where knowledge across the whole industry is shared.

APAL’s commercial and global activity delivers not just income to support industry development domestically but also capability and relationships, which importantly enable APAL to act in the interests of Australian growers in global commercial activities.

Externally, APAL has renewed effective working relationships with industry stakeholders, such as HIA, the Department of Agriculture and Water Resources and our global commercial partners.

Internally, APAL has shifted to a fully-integrated global business, bringing our marketing expertise in Coregeo UK into APAL operations. Phil has recruited fresh, highly experienced talent to assist drive the strategy and implementation. Whilst the organisational and strategic realignment has seen some staff leave, the current team at APAL are now settled as a focused and high performing team working together across the many operational functions of APAL.

For any organisation, let alone a small not for profit, this is a massive amount of turn-around in a year. The board are now engaged with clear, relevant, and substantially more robust data and business metrics and are fully supportive of the improved performance of management.

In approving the APAL strategic plan as presented by management, the APAL board prioritised the strategic objectives of the organisation to align with the interests of its members and the APAL constitution.  APAL relies on the performance of it’s commercial operations, not on grower levies, to fund it activities. Importantly, these commercial operations cannot have a negative impact on the Australian industry and ideally build capability that’s transferable to industry. Reaffirming this governance approach, whilst seemingly obvious, has been important.

Future investment programs, brought to the board by management, will need to also need to pass this test. We expect the work management is currently undertaking on the Industry Strategic plan will generate investment opportunities to benefit industry.

Existing investments, such as Prevar, are also being scrutinised through a similar lens – the benefit to Australian growers must absolutely clear. Prevar is currently in a funding round so management & board are reviewing this and will advise in due course.

With the appointment of our new CFO, Beth Schofield, both management and board now have accurate and appropriate reporting, giving us greater visibility into the financial performance of the organisation. Finance resources are now focussed on systems improvement and implementation across the organisation.

During the year, all Board members undertook an Institute of Company Director training course targeted at enhancing Board financial skills.  I am pleased to report that this was a very productive session and all attendees gained great value to be applied to APAL financial management into the future.

In line with the process set out in the APAL constitution, there were two director positions that came up for appointment during the financial year as the directors representing NSW and Victoria both completed their three-year terms.

Director selection committees were set up for each state comprising members of the APAL Board and members of the State Associations.  I am pleased to report that there was a good level of interest for the roles, and the selection committee nominated Mr Greg Mouat to continue as the APAL director in NSW.

The selection-committee-nominated director for Victoria unfortunately had to withdraw his application, and Mr Kevin Sanders was the only other candidate to nominate as an alternate so will be duly appointed today.

In closing, I thank all of my fellow directors for their considerable efforts over this past year.  It has been a time of great change, and great improvement for the organisation and I thank them also for their commitment to continue for the coming years

Finally, I would like to express my appreciation to you, the members.  Thank you for your support through what has been a tough year and we look forward to providing greater service to the industry and its committed stakeholders over the coming year.

– Dr Michele Allan