Local Market Training/Showcasing Learnings Hosted by: Carnarvon Chamber of Commerce Inc

Transcription

1 Local Market Training/Showcasing Learnings Hosted by: Carnarvon Chamber of Commerce Inc This Activity received funding from The Australian Government as part of the Free Trade Agreement Training Provider Grant Program. The views expressed herein are not necessarily the views of the Commonwealth of Australia, and the Commonwealth does not accept responsibility for any information or advice contained herein.

2 Feeding Earth s Population 1.6 billion people in billion people in 1950 s 5 billion people mid 1980 s 7.6 billion people in the world today 8.6 billion people by billion people in by 2050 Self Sufficiency (Government) Profitability (Business)

3 PROFITABILITY Margin = Price minus Cost Cost end: Productivity Land, Fertiliser, Seed, Labour, Machinery, Fuel, Chemicals, etc Crops, Livestock, etc Price end for Exports: Terms of Trade» aka custom duties - a tool by government to restrict imports 3

4 TARIFF PAID BY BUYER What is your purchase terms? FOB, CFR/CIF or DDP SELLER CUSTOMS CLEARED FOR EXPORT CUSTOMS CLEARED FOR IMPORT BUYER CONSIGNMENT 4

5 MEDIA (The West Australian) TODAY - 26 JUNE 2018

6 Free Trade Agreement (FTA) Australia s Bilateral Agreements 1. China - ChAFTA in Japan - JAEPA in Republic of Korea KAFTA in Malaysia MAFTA in Chile AClFTA in United States of America AUSFTA in Thailand TAFTA in Singapore SAFTA in Canada CANATA in New Zealand ANZCERTA in

7 North Asia Focus 7

8 CCIWA s Agreement with Government of Australia (Austrade) To increase the utilisation of FTAs in ChAFTA, JAEPA and KAFTA especially in the agribusiness sector. CCIWA has over 9,000 members and it has the reach for greater visibility with the private sector. Raising awareness on how to use the North Asia FTA through targeted 1:1 industry stakeholder consultations and workshop sessions in the WA agri-food sector. 8

9 China-Australia Free Trade Agreement (ChAFTA) By 2029, 97.9% of Australia goods exported to China will enter duty free. In Agriculture Dairy: tariffs up to 20% eliminated by 2026 Beef : tariffs up to 12-25% eliminated by 2024 Wine: tariffs up to 14%-20% eliminated by 2019 Wool: Australia-only duty free quotas,

10 China: Market Size for main agri-food items impacted by FTA

11 Japan Australia Economic Partnership Agreement (JAEPA) 97% of tariffs will be eliminated in 10 years Australia has a significant first mover advantage In Agriculture Tariffs reductions on wine, dairy, fruit, sugar and processed foods Tariffs on beef will be halved over 15 years 11

12 Japan: Market Size for main agri-food items impacted by FTA

13 Republic of Korea Australia Free Trade Agreement (KAFTA) 99.7% of Australia s goods exported to the Republic of Korea will enter duty free In Agriculture Tariffs eliminated on biscuits, juice, chocolates, raw sugar, wheat and wine 1

14 Republic of Korea: Market Size for main agri-food items impacted by FTA

15 BUT WAIT!

16 Non tariff barriers Market Access

17

18 China: Products with Market Access Products with Market Access Base Rate (%) Tariff 2018 (%) 2019 (%) Import Market Size in 2016 (A$) * Remarks Grapes m Fruit fly treatment required. Competition: Chile & Peru Olive Oil m No FTA advantage. Competition: Spain, Italy and Greece Oranges Export approval required for cold treatment facilities. Tariff reduction 1.2% per year to 0% in Rolled Oats m Competition: USA Beef Carcasses Tariff reduction 2 % per year to 0% in Lamb Carcasses Tariff reduction 1.65% per year to 0% in Rock lobster m Competition: New Zealand and USA Chocolates m Competition: Italy, Switzerland, Belgium Milk m Yoghurt m Tariff reduction 1.5% per year to 0% in Competition: Germany and New Zealand Tariff reduction 1% per year to 0% in Competition: Germany, Spain and Switzerland Honey m Competition: New Zealand Beer m Competition: Germany, Netherlands and Spain Wine (2l or <) m Competition: France Animal Pellets m Competition: USA and Uruguay *No Market Access for Apples, Avacados, Carrots, Cauliflower/Broccoli, Celery, Potatoes, Strawberries Source:

19 Japan: Products with Market Access Tariff Import Market Base Products with Market Access Size in 2016 (A$) Rate 2018 (%) 2019 (%) * (%) Remarks Avocados (under negotiation) m Competition: Mexico, USA and New Zealand Olive Oil m Competition: Spain, Italy and Greece Rolled Oats m Tariff reduction to 0% in Australia is main supplier. Beef Boneless m Tariff reduction to 23.5% from 2028 onwards. Competition: USA Lamb Boneless m Competition: New Zealand Rock lobster m Chocolates m Tariff reduced to 0% from 2021 onwards. Competition: South Africa Tariff reduction of 0.175% per year to 8% from 2024 onwards. Competition: Belgium, USA, France Milk (on quota) ,000 Competition: UAE and Germany Honey m Tariff reduction of 2.3% per year to 0% in Competition: China, New Zealand and Canada. Beer m Competition: Belgium, Mexico and Ireland 15% (or 8.2 (or 6.8 (or Wine (2l or <) m Y125/l) Y125/l) Y125/l) *No Market Access for Apples, Carrots, Plums, Potatoes, Strawberries Tariff reduction of 1.3% per year to 0% from 2024 onwards. Competition: France, Chile and Italy Source:

20 Republic of Korea: Products with Market Access Products with Market Access Base Rate (%) Tariff 2018 (%) 2019 (%) Cauliflower/Broccoli m Import Market Size in 2016 (A$) * Remarks Tariff Reduction of 8.1% per year to 0% from 2023 Competition: China, USA and Spain Celery ,000 Competition: China and USA Grapes m Competition: China, USA and Peru Olive Oil m Tariff reduction to 0.8% per year and 0% from 2023 onwards. Competition: Spain, Italy and Turkey Oranges m Competition: USA, South Africa and Spain. Truffles m Beef Boneless m Lamb Boneless ,000 Tariff reduced to 0% from 2028 onwards. Competition: China, Vietnam and Italy Tariff reduction of 2.7% per year to 0% from 2028 onwards. Competition: USA and New Zealand Tariff reduction of 2.25% per year to 0% from 2023 onwards. Australia is the main supplier. Rock lobster ,000 Competition: Cuba, Vietnam and Argentina Chocolates m Competition: China, USA and Belgium Milk m Yoghurt m Tariff reduction of 1.8% per year to 0% in Competition: Poland and Italy Tariff reduction of 2.4% per year to 0% in Competition: USA, France and Greece Honey Competition: USA and New Zealand Beer m Competition: Japan, China, Germany Wine m Competition: France, Chile, USA Corn b *No Market Access for Avocados, Apples, Carrots, Melons, Plums, Potatoes, Strawberries Tariff reduction of 18.2% per year to 0% in Competition: USA, Brazil and Argentina Source:

21 Learnings from One to One Sessions High Value Products No direct air access from Perth to Shanghai; Perth to Tokyo and Perth to Seoul. Maintaining cold chain and product integrity. CIQ Customs clearance issues vis-à-vis different interpretations & translations into Mandarin. Product variety restrictions in the Japan market is a limiting factor to current production. Need for an Irradiation treatment facility in WA for the purpose of treating fruit and vegetables destined for export markets. Meeting China's new regulation on shelf life. 2

22 Learnings from One to One Sessions (Continued) General Gaining access to a digital sales platform. CIQ expense line item costs. Need for a well promoted national brand for Australian agricultural products Promotion of WA agrifoods as premium and unique Better supply chain collaboration and promotion of WA as a premium F&B supplier to China. Need to understand export market entry strategies to China MICOR difficult to navigate. New and additional external investment in WA Supply Chain to scale up production.

23 Learnings from One to One Sessions (Continued) General More information on logistics and supply chain costings. In-market distribution with the capacity to consistently market premium fresh produce. Language interpretations & labelling discrepancies in different ports CIQ interpretations of FTA concessions in different ports of China are inconsistent - Pre- approved labels exist but they can be rejected at different ports. Cultural understanding of food trading in China & Japan. Increasingly difficult to compete with Brazil and Argentina. Speedy abattoir licensing for the Chinese markets - currently up to 2 years for approval. Limited market options for Wagyu beef trim in China.

24 Learnings from China Market Visit Agri-food profiled Fresh Milk shelf life issues with no direct flights to Shanghai Beef Frozen boneless beef in high demand but new competition from USA and Argentina. Sheep meat difficult to compete with New Zealand Honey jarrah and red gum honey gaining traction but long way behind manuka honey from New Zealand, on-line sales growing, grey channel is active Tropical Rock Lobster WA well known, direct air access to Shanghai will be opportunity for other products to dove tail Wine Australian wines gaining market share as a consumer product (not solely gift market). WA wine regions need more promotion Oranges big demand but to Chinese taste consider future plantings, fruit fly and cold treatment not an issue, on-line standards Mangoes potential to supply R2E2 mangoes during spring festival. Why? Market Access Capacity in WA Capability in WA Market Opportunity Tariff rates Sea Freight Logistics Transhipment in Singapore/Malaysia 2

25 Learnings from China Market Visit (continued) Market Insights Legal importation through the official channels can be discouraging when many are importing through the black and grey market. Integrity and traceability are ongoing issues Premium product from Australia not be affordable to 98% of the population. Consumers generally trust imported fruits with the appropriate colour, taste, freshness and price. Chinese consumers are increasingly becoming aware of the of the freshness of product. Fast growing trend to buy fruit, packaged food and beverages from on-line platforms. Products in the gift market is now in the general consumer segment thus opening up the demand. Chinese quarantine policy requires customs clearance at first entry airport in China. Inconsistencies in customs interpretations and translations between ports/airports. Businesses integrating trading system with automated IT systems extending to consumers e.g. Wechat pay. Demand for fruits during the Chinese New Year season is massive. Consistent supply is critical to success in Chinese food market. Political relationship between countries do affect business. Why? Market Access Capacity in WA Capability in WA Market Opportunity Tariff rates Sea Freight Logistics Transhipment in Singapore/Malaysia Future Direct air access to Shanghai Potential to increase supply specifically to Chinese demand 2

26 Learnings from Japan Market Visit Agrifood profiled Beef - premium and organic (GMO, hormones and antibiotics free); no major technical market issues Sheep meat MSA not recognised; Shelf life issues for chilled; halal certification; no major technical market issues with 0% tariff Honey Sugar level; promotion for premium pricing Table Grapes counter seasonal advantage; packaging options; new varieties approval Avocados market access in 2018 with 0% tariff; forecast to grow; competition with Mexico Market Insights High quality and consistent supply niche Food with a difference and health benefits Relationships crucial Participate in agri-food trade shows Market is closed and heavily regulated should not be a deterrence Future Direct air access Rugby WC in 2019 and Olympics in 2020 Why? Market Access Capacity in WA Capability in WA Market Opportunity Tariff rates Sea Freight Logistics Transhipment in Singapore/Malaysia 2

27 Learnings from Republic of Korea Market Visit Agrifood profiled Beef WA beef high valued; organic demand growing; Wagyu beef growing with fast food chain; no major technical market issues Sheep meat demand for shoulder, breast and flap cuts; new market segments; need for promotion, consumer education and support import partners Lupins demand for animal feed; new demand as health food Barley demand for beer brewing and animal feed Corn demand for non GMO corn from Ord River; opportunity for increased supply when tariff is reduced by 2021 Market Insights Distinct market with cultural differences Relies on imported agri-food but competitive Food products with health benefits Niche market penetration Relationships with face to face contact Future Direct air access Long term prospects as ROK heavily reliant on imported food Why? Market Access Capacity in WA Capability in WA Market Opportunity Tariff rates Sea Freight Logistics Transhipment in Singapore/Malaysia 2

28 MICOR

29 FTA PORTAL

30 CCIWA International Trade Services Australian Made Logo Carnets Certificates of Origin Your export documentation hassles! A certified trademark with instant brand recognition that will win you more sales for Australian made products locally and overseas. An ATA Carnet is a temporary customs clearance document that removes the need to raise bonds or deposit duty at customs posts. It reduces the clearance time on importation and re-exportation. Includes other supporting documents for exports 3

31 Thank you