Export market appraisal for broccoli and cauliflower

Transcription

1 Export market appraisal for broccoli and cauliflower Peter Gartrell Department of Agriculture & Food Western Australia Project Number: VG05028

2 This report is published by Horticulture Australia Ltd to pass on information concerning horticultural research and development undertaken for the vegetables industry. The research contained in this report was funded by Horticulture Australia Ltd with the financial support of the vegetable industry. All expressions of opinion are not to be regarded as expressing the opinion of Horticulture Australia Ltd or any authority of the Australian Government. The Company and the Australian Government accept no responsibility for any of the opinions or the accuracy of the information contained in this report and readers should rely upon their own enquiries in making decisions concerning their own interests. ISBN Published and distributed by: Horticulture Australia Ltd Level Elizabeth Street Sydney NSW 2000 Telephone: (02) Fax: (02) Copyright 2009

3 VG05028 Peter Gartrell Department of Agriculture and Food, Western Australia Final Report for Project VG05028 March

4 Project Team Project Leader Peter Gartrell Regional Economist Department of Agriculture and Food WA PO Box 1231 Bunbury WA 6231 Tel (08) Fax (08) Team Members Rachel Lancaster Research Officer Department of Agriculture and Food WA PO Box 1231 Bunbury WA 6231 Dennis Phillips Development Officer Department of Agriculture and Food WA Locked Bag 4 Bentley Delivery Centre WA 6983 Administrator John Elliot Development Officer Department of Agriculture and Food WA Locked Bag 4 Bentley Delivery Centre WA 6983 Project Manager Wayne Prowse Export Development Manager Horticulture Australia Limited Level 7, 179 Elizabeth Street Sydney NSW wayne.prowse@horticulture.com.au 2

5 Funding Sources Funding for the investigation conducted by this project was provided by Horticulture Australia Limited (HAL) and the Department of Agriculture and Food, Western Australia. Important Disclaimer Any recommendations contained in this publication do not necessarily represent current HAL Limited policy. No person should act on the basis of the contents of this publication, whether as to matters of fact or opinion or other content, without first obtaining specific, independent professional advice in respect of the matters set out in this publication. The Chief Executive Officer of the Department of Agriculture and Food and the State of Western Australia accept no liability whatsoever by reason of negligence or otherwise arising from the use or release of this information or any part of it. 3

6 Index Page Number Index 1 List of figures and tables 2 1. Media Summary 4 2. Technical Summary 5 3. Introduction, background and objective 6 4. Materials and methods 4.1 Overview Methodology 8 5. Research and analysis 5.1 Australian industry evaluation Australian market performance World market profile Export market brief Competitor analysis Position statement and discussion Recommendations References and further reading 46 1

7 List of figures and tables Title Page 1 Australian total and domestic production of cauliflower and broccoli. 9 2 Australian production of cauliflower by State Cauliflower production share by State for Australian production of broccoli by State Broccoli production share by State for Cauliflower yields by Australian States 13 7 Broccoli yield by Australian States 14 8 Australian production, export volumes and values for cauliflower and broccoli 15 9 Annual export volumes and price 2000 to Trade weighted index for Australian exchange rate and average export price for 16 cauliflower and broccoli 11 Annual cauliflower export volumes by State Average FOB export price for Australian cauliflower Monthly cauliflower export volume for Monthly cauliflower export volumes by State for 2008 and Australia Annual broccoli export volumes by State Average FOB export price for Australian broccoli Monthly broccoli export volume for Monthly broccoli export volumes by State for 2008 and Australia Australian population and apparent consumption of cauliflower and broccoli World production of cauliflower and broccoli Selected countries export : production ratio for cauliflower and broccoli Apparent consumption trend for cauliflower and broccoli for selected countries 25 and the world average ( ) 23 Apparent consumption and GDP for India and China Apparent consumption and GDP for Australia and the United Kingdom 26 2

8 Title Page 25 Annual Australian exchange rate history for selected countries Singapore imports of broccoli from Australia and China Singapore imports of cauliflower from Australia and China Malaysian import volumes and price for cauliflower and broccoli Japanese import volume and price for broccoli Japanese domestic wholesale price for broccoli Japanese broccoli import price and volume from China and US Australian monthly exports of broccoli to the UAE Import volume and price for cauliflower and broccoli for the UAE (2005) Import volume and price for Dubai Direct Cost of production outline for Australian broccoli and cauliflower 36 3

9 1. Media summary The Australian fresh broccoli and cauliflower industries have experienced significant displacement in export markets. Exports for both products have declined rapidly in recent years. Export volumes of have collectively fallen by 92 per cent since its peak in Broccoli and cauliflower exports have primarily targeted the South East Asian and Japanese markets. Price is the key criteria in any export trade. Qualities such as shelf life and safety play a small part in markets such as Malaysia. More affluent consumers, such Singapore, have maintained a base level of demand for these criteria and the associated price premium. Australia still commands one third of the Singapore market for broccoli despite its apparent 100 per cent premium in price. The most significant shift in market dynamics has been the emergence of the Chinese vegetable industry. China now produces 45 per cent of the world s cauliflower and broccoli. Its production has grown 51 per cent since the year Not surprisingly this corresponds to its increased export market presence. During this time countries such as Australia and the United States have reduced their exports, as a percentage of production, from approximately 30 to 5 per cent. China has a relatively low cost labour supply and subsequently a lower cost of production. Production growth and price competitiveness has been further spurred by government incentives such as tax relief and infrastructure support, particularly for export based business. Australian costs of production have been driven up primarily by wage, energy and fertilizer cost increases. Broccoli and cauliflower production systems have relatively high labour and low levels of mechanization throughout the supply chain. Exchange rates have further exacerbated export costs in recent times. Some gains in agronomic performance have softened these cost impacts. Australia s collective yield performance for cauliflower and broccoli has increased by 1.5 per cent per annum since the year This includes the environmentally induced, substandard performances encountered by the traditionally largest producing State of Victoria. Australia s production base for these products has collectively remained stable. Since the year 2000, cauliflower has declined 8.7 per cent in volume whilst broccoli has conversely increased 17.5 per cent. This increase in production, coupled with significant declines in exports, reveals a significant increase in apparent domestic consumption of approximately 3 per cent per annum. This exceeds the annual population growth of 1.4 per cent. The Australian cauliflower and broccoli industries need to consolidate by focusing on its strengths, particularly for the domestic and Singapore markets. Greater emphasis on cost competitiveness through agronomic and structural change is required. Continual monitoring of production and market competitiveness is required to steer these investments. 4

10 2. Technical summary From the year 2000 to 2007 Australian production of cauliflower fell by 8.7 per cent whilst broccoli increased by 17.5 per cent. Production has been dominated by Victoria and Queensland. In 2007 they collectively represented about two thirds of production of each product. Yield performances have been increasing by about 1.5 per cent per annum since 2000, despite some substandard performances in Victoria in recent times. Australian domestic consumption has increased 20 percent or 0.89 kg per person since Apparent consumption of fresh cauliflower increased from 2.84 to 3.25 kg per capita. Fresh broccoli increased from 1.58 to 2.07 kg per capita. Domestic trends have dampened the impact of the decline in exports, particularly so for broccoli. Cauliflower and broccoli exports represented approximately 30 per cent of production in the export peak of By 2007 this had declined to below 2 per cent. Export volumes of cauliflower and broccoli have collectively fallen by 92 per cent. Export value of fresh cauliflower and broccoli declined by $25.4m and $8.7m respectively from 2000 to Export FOB price for cauliflower increased by $0.44 per kilogram (36 per cent) and broccoli increased by $0.94 per kilogram (60 per cent). The price increase is the result of more favorable markets being maintained and increased opportunistic trade. World production of cauliflower and broccoli was estimated to be 1.9 million metric tonnes in Since 2000 world production has increased 3.9 per cent per annum. China and India are the leading producers of cauliflower and broccoli with approximately 70 per cent of world production. The export markets evaluated for broccoli and cauliflower included Singapore, Malaysia, the UAE and Japan. Collectively they showed unquestionable market dominance by Chinese exporters. It is clear that China has directly substituted Australian supplies. Chinese exports of these vegetables have grown value of market share from 15 per cent in 2003 to over 45 per cent in Chinese price is consistently 35 to 65 per cent cheaper than the Australian cost of supply in to the same markets. For some markets it is not possible to extract information at an individual product level. Cauliflower and broccoli are often aggregated making it difficult to ascertain the market trends. General data is often untimely and questionably accurate. Exchange rates, Chinese cost of production, its government support and its proximity to Australia s traditional markets have severely reduced Australian competitiveness. Labour and general input costs are significantly lower in China. The Australian cauliflower and broccoli industries need to consolidate by focusing on its strengths, particularly for the domestic and Singapore markets. Greater emphasis on cost competitiveness through agronomic and structural change is required. Continual monitoring of production and market competitiveness is required to steer these investments. 5

11 3. Introduction, background and objectives The aims of the project were to identify the export market position for Australian fresh broccoli and cauliflower. The information produced by the project would provide an indication of markets which may be profitable destinations for the export produce. Markets that would be studied in detail include those in the Middle East (specifically the United Arab Emirates) and other traditional markets. Total production of Australian broccoli was estimated at 55,000 tonnes in This was an increase of approximately 38 per cent or 15,000 tonnes per annum from 5 years earlier. The main States for broccoli production were Queensland and Victoria. Together they accounted for over half of Australia s production and nearly 40 per cent of exports. Total production of Australian cauliflower was estimated at 73,000 tonnes in This was an increase of approximately 12 per cent or 8,000 tonnes per annum from 5 years earlier. The main production States for cauliflower were Western Australia and Victoria with just over 50 per cent of production. Queensland was also a significant producer with 22 per cent of Australian production. Western Australia was clearly the most significant exporter with 84 per cent of exports. Australia exported approximately 5,000 tonnes of broccoli and 9,000 tonnes of cauliflower at the inception of the project. These markets were collectively valued at $23 million at that time. 5 years prior to the study their collective exports were 29,000 tonnes at a value of $40 million. Broccoli exports had declined almost 35 per cent or 4,000 tonnes per annum. Cauliflower had declined by a similar amount representing a 23 per cent decline over the 5 year period. Broccoli is exported to several countries, however almost three quarters of exports comprised the three main markets, being Japan (22 per cent), Singapore (39 per cent) and Malaysia (11 per cent). Cauliflower produced for export is reliant on limited markets in the South East Asian region, in particular, Singapore and Malaysia, with 94 per cent of exports being sent to these two countries. The decline in exports of both broccoli and cauliflower is obviously of concern to the brassica industry. A major cause of the decline, in addition to the high Australian dollar, is the increase in competition in Singapore and Malaysia from Chinese supplies. The quantity of Chinese product in these markets has risen substantially over the past three years, with continually improving quality and relatively low prices. The increased competition requires the brassica industry to look at other markets and mechanisms where Australian cauliflower and broccoli can be competitive. Primarily the objectives of the project were to provide an analysis of production and market performance for Australian broccoli and cauliflower industries. The project aimed to outline potential new markets and the competitive environment. It would also examine niche opportunities for fresh produce supplies into these and existing markets. As the project progressed the scope was reduced in light of the initial findings. It was decided, in 6

12 consultation with the funding bodies (Horticulture Australia and the Department of Agriculture and Food, WA), that the project be halted prematurely and reported. It was considered that investment in detailed market studies would be withdrawn in light of the initial findings. 4. Materials and methods 4.1 Overview A brief situation analysis was conducted and identified significant decline in the export market performance for cauliflower and broccoli. Opportunities to reinvigorate existing markets, and define new markets, were identified as an industry priority. A specialist team was identified and consulted. The project aim was to identity the competitive position for Australian product, particularly in the Middle East. The desktop survey of select countries aimed to identify markets which may have profitable potential for fresh Australian broccoli and cauliflower. An outline of the competitor s active in these markets, with particular reference to those who are actively displacing Australian exports. The main output from this project will be a document that will outline the market opportunity for broccoli and cauliflower in the Middle East and Asian export markets. This will contain an interpretation of statistical information on the price and volume from suppliers to the selected markets. After the release of the document, industry will be able to use the data to reposition planning in relation to export markets for fresh cauliflower and broccoli. The outcome for this project is expected to be a more informed approach to supply chain assessment to assist in a directional guide for Australian cauliflower and broccoli producers. The initial objective of the project was to address the export decline of cauliflower and broccoli exports for Australian producers. From this outline, provide direction to reinvigorate the industry with the identification of new direction to capture export opportunities. From the primary capture of desktop data, priority market for examination would be identified. This was to be done by gathering relevant information on existing and potential markets. The information gathered would then be used to determine the markets most likely to be able to accept Australian product at an acceptable price for the producer. Employment of consultants in these identified markets would then sieve out the potential supply chain and its relevant components. Areas of investigation include indicative prices, product specifications, specific barriers or opportunities for trade, packaging requirements and alternative product handling options. The findings of the study were aimed to produce a handbook as a guide to the identified opportunities. This was revised to provide a situation analysis of the Australian cauliflower and broccoli export industries. 7

13 4.2 Methodology The trade data for cauliflower and broccoli and its potential competitors for the Middle East and traditional markets would be examined to outline market history and position. The countries which have the most potential would be selected for more detailed study. Countries in North and South East Asia will be examined to determine if these have reasonable potential, however the Middle East will be the main focus of the project. Information collected would include current import data, current market suppliers and their capacities and trends. The future capacity of countries to continue imports or act as reexporters of Australian product would also be examined. In the markets selected for more detailed examination, factors which would be considered include gathering wholesale data in small increments, determining the product specifications and packaging requirements of the importing countries, indicative prices and identification of potential contacts in the countries examined. The importance of aspects of Australian product such as low chemical application and product traceability will also be assessed. The size and diversity of the market segments in these countries would also be examined as this can have an impact on the price received for the product. Market segments include the wholesale markets, supermarkets, food service sector and processing sectors. A critical part of the project is the investigation of the actual state of markets compared to the statistical data collected throughout the project. It is intended where possible, to employ or identify local consultants in the target countries who can ground truth the information gained from the statistics. This is necessary as various countries report their statistics by different methods, which can make the direct comparison of the information difficult. The consultants would also be able to provide contact details for companies interested in obtaining Australian product. The information gathered will be compiled into a reference report. The report will be freely available. The report can be used by those who may wish to investigate further the export of broccoli and cauliflower to new and traditional markets. An offer will be made to interested exporters and other industry personnel who may wish to further discuss the statistical information in the report. This could be presented at a national vegetable industry conference. 5. Research and analysis 5.1 Australian industry evaluation Total production of Australian cauliflower and broccoli has collectively shown a marginal fall since the year Broccoli production peaked during this period but declined in the later part to close at 46,031 tonnes per annum. This was an increase of 6,847 tonnes or 17.5 per cent (Figure 1). Over the same period cauliflower declined from 76,437 to 69,792 tonnes per annum. This is a decline of 6,644 tones or 8.7 per cent. Average annual production for cauliflower and broccoli since 2000 was 76,726 and 48,509 per annum. 8

14 Figure 1 : Australian total and domestic production of cauliflower and broccoli 100,000 90,000 80,000 70,000 Volume - tonnes 60,000 50,000 40,000 30,000 20,000 10,000 Cauliflower Production Cauliflower domestic Broccoli Production Broccoli domestic Figure 2 : Australian production of cauliflower by State Australian Bureau of Statistics 35,000 30,000 WA NSW Vic Qld Other 25,000 Production - tonnes 20,000 15,000 10,000 5, Australian Bureau of Statistics 9

15 Apparent domestic supply of cauliflower increased 26.6 per cent, or 14,592 tonnes, at an average supply level of 64,925 tonnes per annum. Average domestic supply of cauliflower was 85 per cent of production. Broccoli domestic supply increased at nearly doubled that of cauliflower to realize an increased supply of 13,605 tonnes, or 44.6 per cent growth, since Annual supply averaged 41,879 tonnes per annum or 86 per cent of production for the period. The convergence of the production and domestic supply lines (Figure 1) highlight the fall in Australian fresh exports of cauliflower and broccoli. Cauliflower production in Australia has been led by Victoria which averaged approximately 21,000 tonnes or 27 per cent per annum since Recent market and environmental constraints have realized a decline in Victorian production with Queensland, and to a lesser extent Western Australia, responding to fill the void. New South Wales has a very domestically focused supply industry. It has remained relatively fairly static over this period. Western Australia has realized significant decline. It has fallen from 24 per cent of the national crop to only 12 per cent in This has been largely due to South East Asian market trade decline. Some recovery has been realized with increased interstate trade. Some of the increase could be partly attributed to product specifications for domestic versus export produce. That is the product now being traded domestically is recorded at greater weights due to the presentation of the product. Queensland has increased production of cauliflower by approximately 4,500 tonnes or 30 per cent to become the leading supplier of Australian cauliflower with 29 per cent of the national crop (Figure 3). The other smaller producing States have realized significant gains since This is from a modest average base of 13,393 tonnes per annum but is none the less significant. These have increased from 12.7 to 20.8 per cent of cauliflower production. South Australia and Tasmania share this segment in almost equal proportions. Australian production of broccoli is dominated by Victoria with more than half of Australian production. Victorian broccoli production has increased by around 10 per cent since 2000 equivalent to the national rate of growth. New South Wales has shown the greatest level of growth whilst all other States slowed after significant gains during the mid 2000 s. Domestic trade has dominated the growth in the broccoli industry and assisted in the alleviation of export declines. Domestic trade now accounts for about 44,000 tonnes per annum which is approximately 95 per cent of production. This up from the 77 per cent of production being for domestic use, back in 2000/01. 10

16 Figure 3 : Cauliflower production share by State for 2007 Tas. 9% NSW 14% WA 12% SA 11% Vic. 25% Qld 29% Australian Bureau of Statistics Figure 4 : Australian production of broccoli by State ,000 WA NSW Vic Qld Other 25,000 Production - tonnes 20,000 15,000 10,000 5, Australian Bureau of Statistics 11

17 Queensland accounted for 20 per cent of broccoli production in This State realized significant growth which saw it over double in the first 5 years, but retreated rapidly as export demand and domestic supplies slowed. At the same time Western Australia accounted for 8 per cent of production, but this varies significantly over time. Using 2000/01 production averages, Western Australia varied from a 10 per cent fall to a doubling of production during that 8 year period. Figure 5: Broccoli production share by State for 2007 Tas. 10% NSW 8% SA 2% WA 8% Qld 20% Vic. 52% Australian Bureau of Statistics The planted area of Australian cauliflower has averaged 3,700 hectares over the 2000 to 2008 period. The area planted, as a general trend, has declined over this period in the order of 10 to 15 per cent. During the same period apparent yield has increased by 20 to 25 per cent. Yields were around 18 tonnes per hectare and increased to just above 22 tonnes. 12

18 Figure 6 : Cauliflower yields by Australian States 35.0 WA NSW Vic QLD 30.0 Yield - tonnes per hectare Australian Bureau of Statistics Victoria s cauliflower s poor yield performance in 2007 reduced the Australian average by over 1 tonne per hectare for the end of the period. Victoria had 38 per cent of area and only 24 per cent of production. New South Wales yields have generally been greater than those recorded for other States. This reflects the market presentation of domestic produce versus export. Domestic product per unit records a greater weight largely due to sales with leaves on, and the less stringent size and quality requirements relative to some export markets. This may also partly explain the sudden rise in Western Australian yield as the export supply ratio falls. It could also be argued that the more marginal producers of cauliflower have exited the market in the wake of increase cost/price pressure Australian planted area for broccoli has remained relatively stable since Apparent yield has increased over this period by 10 and 15 per cent on average. Yield for the whole period average 7.0 tonnes per hectare. This is an increase of 0.4 tonnes per hectare from the first half of the period 2000 to 2008 to the later. Inversely to cauliflower, Western Australia realizes a variable but superior yield performance than the other States. A typical yield range within each State varies by 2 to 2.5 tonnes between years. Western Australia s short term average yield is 9.6 tonnes per hectare. Queensland and Victoria are relatively more stable and average in the vicinity of 7 tonnes per hectare. Given that these two States represent two thirds of supply they will dictate the national performance average. The New South Wales short term yield average is 4.4 tonnes per hectare. This is over half the performance of the leading State and substantially below the average. It is widely variable with a range of 1.5 to 7.2 tonnes per hectare as a State average yield. 13

19 Figure 7 : Broccoli yield by Australian States WA NSW Vic QLD Yield - tonnes per hectare Australian Bureau of Statistics 5.2 Australian market performance Production of cauliflower and broccoli in Australia has remained relatively stable since the year Inversely the export markets for both products have declined severely. Australian export volumes of cauliflower and broccoli from 2000 to 2009 declined by almost 30,000 tonnes or 33.5 per cent per annum. This equates to a collective loss in annual export earnings of $34.2 million per year over that period. Exports as a percentage of production fell from approximately 28 per cent in 2002/03 to 2 per cent in FOB (Free on Board) price receipts remained relatively static until 2005 and then escalated rapidly. This is a result of the broader market presence being redefined to relatively more expensive and opportunistic market participant. The increased use of air freight to fill these niche markets has contributed to further increase the cost of supply. 14

20 Figure 8 : Australian production, export volumes and values for cauliflower and broccoli 100,000 90,000 Cauli Prod Broc Prod Cauli Export Broc Export 80,000 70,000 Volume - tonnes 60,000 50,000 40,000 30,000 20,000 10, Australian Bureau of Statistics Figure 9 : Annual export volumes and price 2000 to ,000 Cauli Export Broc Export Cauli Price Broc Price 25, Volume - tonnes 20,000 15,000 10, Export Price - FOB ($A) 5, Australian Bureau of Statistics 15

21 Price competitiveness, and not capacity, has largely eroded export market participation. The agents for this change are increased supply from competitors and currency exchange rates. China has increased its participation in export with a much cheaper production base. This coupled with significant increases in the Australian exchange rate has greatly reduced its price competitiveness. There is a recognizable correlation between export FOB prices and shifts in exchange rate (Figure 10). Figure 10 : Trade weighted index for Australian exchange rate and average export price for cauliflower and broccoli TWI Cauli Price Broc Price Exchange Rate Index Export Price - FOB ($A) Reserve Bank of Australia - Australian Bureau of Statistics Cauliflower exports have declined by about 21,000 tonnes at a rate of 39.5 per cent per annum. Australian export volumes have fallen from 28.3 to 0.6 per cent of production. Total value of cauliflower export fell 37 per cent per annum from $26.1 million in 2000 to $0.7 million in This rapid decline is primarily due to Western Australia s South East Asian market displacement. Western Australia dominated Australian cauliflower exports with over 80 per cent of exports. Western Australia still exports 40 per cent of Australian supplies, but from a very low base of 159 tonnes. This in stark contrast to the 24,595 tonnes exported in That is a 51 per cent annual decline in cauliflower exports. The majority of export declines are realized from loss of market share an all destinations, particularly Singapore and Malaysia. Queensland and Victoria have declined 21 per cent per annum from a much lower base. Collectively these States have declined from an approximate annual average export of 2,000 to 200 tonnes. For these States export reliance has fallen from approximately four to one per cent of production. 16

22 Figure 11 : Annual cauliflower export volumes by State 25,000 WA NSW Vic QLD 20,000 Export volume - tonnes 15,000 10,000 5, Figure 12 : Average FOB export price for Australian cauliflower Australian Bureau of Statistics 2.80 Average Export Price - FOB ($A) WA NSW Vic QLD Other Australian Bureau of Statistics 17

23 Annual average FOB price for Australian cauliflower has increased steadily since The major producing States of Western Australia and Queensland have realized steady increases in FOB price over time. For other minor export participants the FOB prices fluctuate considerably. This reflects both the volatile nature of opportunistic marketing and the reliability of data and error on small collections. Monthly export trade volumes of cauliflower from Australia typically peaked during the winter months June to August. Cauliflower produce specifications are generally larger at this time. This realizes less cost per unit of production and marginally less costs in irrigation supply. For all of 2001 (Figure 13) Western Australian exports were consistently ranged between 1,500 to 2,500 tonnes per month. This was the peak calendar year for export volume of Australian cauliflower. Other exporting States participated during the late winter early spring time. Supply would tend to peak at this time. With declining exports, the shape of monthly exports has averaged 30 tonnes in 2008 with a peak period in early spring (Figure 14). This is dominated by Queensland supplies with 45 per cent of annual supply. Singapore and Malaysia are still the primary export markets with 50 per cent of export value. Brunei and Indonesia collectively bring export representation to 70 per cent. In per cent of export went to Singapore and Malaysia. Over two thirds of that trade was with Malaysia. Figure 13 : Monthly cauliflower export volume for ,000 2,500 WA Other States Volume - tonnes 2,000 1,500 1, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Australian Bureau of Statistics 18

24 Figure 14 : Monthly cauliflower export volumes by State for 2008 and Australia WA Other Australia ,000 3, , Volume - tonnes ,500 2,000 1,500 1, Volume - tonnes Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec - Australian Bureau of Statistics Figure 15 : Annual broccoli export volumes by State 6,000 5,000 WA NSW Vic QLD Export volume - tonnes 4,000 3,000 2,000 1, Australian Bureau of Statistics 19

25 Volumes of Australian export broccoli have declined from 8,697 tonnes in 2000 to 1,926 in This is a decline of 78 per cent or 17.2 per cent annually. The broccoli export FOB value fell by 65 per cent, from $13.5 million to $4.8 million for the period. Queensland and Victoria are clearly the principal Australian exporting States. The annual decline in export for Victoria and Queensland, since 2000, has been 21.6 and 10.2 per cent respectively. Queensland s exports actually peaked in 2003, and since that time have declined at 22.9 per cent per annum. Other States have realized similar rates of decline but from a much lower base. Export price (FOB) was reasonably stable until 2004 and then experienced significant escalation. Export price average until 2004 was $1.51 per kilogram, which increased to $2.02 in the second half. The price range average in the first half of the 2000 to 2008 period was $0.59 per kilogram. This increased to $1.39 for the second half of this period. Figure 16 : Average FOB export price for Australian broccoli 4.50 WA NSW Vic QLD Other 4.00 Average Export Price - FOB ($A) Australian Bureau of Statistics Average broccoli export prices for Queensland were about $1.50 per kilogram, along with most other Australian suppliers. Price remained fairly static for most supplying States and increased rapidly after Queensland s average price dipped in 2003 to 2005 and then accelerated. Queensland price has increased to $2.16 per kilogram in 2008, at a much lower rate (4.8 per cent pa) than other exporting States (7.3 per cent pa). Victoria experienced significant volume decline in direct correlation to price increase. 20

26 Figure 17 : Monthly broccoli export volume for , QLD VIC Other Volume - tonnes Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Australia Bureau of Statistics Figure 18 : Monthly broccoli export volumes by State for 2008 and Australia ,400 1,200 QLD VIC Other Australia ,000 Volume - tonnes Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Australian Bureau of Statistics 21

27 Annual exports of Australian broccoli peaked in At this time a clear supply pattern was evident. Australia realized low trade levels during the summer months. Queensland predominantly exported in the winter early spring periods and was flanked by Victorian supplies (Figure 17). Total Australian supply peaked during the winter months. Average monthly supplies were approximately 1,200 tonnes from April to October and 350 tonnes per month for the balance of the year. A similar pattern remained in 2008 but from a much lower base. During 2008 the monthly average volume for April to October was 220 tonnes whilst the balance was 76 tonnes per month. Australian population has increased from 19.3 million people in 2000 to 21.2 million in This is an average growth rate of 1.36 per cent per annum. For the same period apparent cauliflower consumption grew at a greater rate of 2.05 per cent per annum. This was up from 2.82 kilograms per capita in 2000 to 3.28 kilograms in Broccoli for the same time period was up 4.00 per cent per annum. In 2000 the apparent consumption was 1.58 kilograms per capita. This increased to 2.08 kilograms per capita in It is not possible to capture the domestic trade data accurately. The numerous, undocumented in-state trade avenues and interstate trade data make analyses of State based consumption difficult. Average annual Consumer Price Index (CPI) has averaged 3.0 per cent since The apparent vegetable price index has been approximately 4.1 per cent per annum. Applying these to wholesale market data suggests that broccoli has tracked with CPI but slightly behind the vegetable price index. Cauliflower wholesale price, in Western Australia for example, is approximately 16.6 per cent behind the CPI from 2001 to Figure 19 : Australian population and apparent consumption of cauliflower and broccoli , Australian population - 000's 20,000 15,000 10,000 5,000 Population Cauliflower Broccoli Apparent consumption - kg/hd Australian Bureau of Statistics 22

28 5.3 World market profile World production of cauliflower and broccoli was estimated to be 1.9 million metric tonnes in International trade is estimated at $800 million per annum. Since 1980 world production has increased at 2.1 per cent. From the year 2000 it has accelerated to 3.9 per cent per annum. China and India are the leading producers of cauliflower and broccoli with approximately 70 per cent of world production and approximately 40 per cent of population. On a per capita basis China produces approximately 5.6 kilograms. Australia by comparison produces 6.5 kilograms per head per capita Since 1980 Chinese and Indian production has been increasing at 6.4 and 0.6 per cent per annum respectively. Since 2000 India has increased at 1.6 per cent whilst China has recorded an annual production increase of 6.9 per cent. Since 1992, China s growth is unparalleled by any other producing nation or the world as a collective (Figure 20). Figure 20 : World production of cauliflower and broccoli 10,000,000 9,000,000 8,000,000 China India World Balance Production - tonnes 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, FAO Chinese production has increased 51 per cent since Unsurprisingly this resulted in an increase in Chinese exports from this time. Chinese exports represented approximately 2 to 3 per cent of its production. From 1990 to 2000 countries such as Australia and the United States of America increased their exports as a percentage of domestic production. From 2000 these fell in direct correlation to increases in Chinese exports (Figure 21). India s participation in export is extremely low. 23

29 Figure 21 : Selected countries export : production ratio for cauliflower and broccoli 40% 35% Australia China India United States of America Production Exported - percentage 30% 25% 20% 15% 10% 5% 0% The apparent world consumption is approximately 2.9 kilograms per capita. The apparent consumption in China has increased rapidly since 1990 (Figure 22). This is up from 1.6 to 6.0 kilograms per head from 1990 to China s domestic consumption has increased 138 per cent since the year Over the same period population has increased by 3.7 per cent. Australian and United States consumption by comparison is 5.3 and 3.9 kilograms per head. FAO Gross Domestic Product (GDP) per capita measures can be litmus to the demand shifts for various products. As per capita GDP increases consumption patterns change. In less developed countries the fundamental food products, such as cauliflower and broccoli, increase. GDP and consumption trends for China and India reasonably demonstrate this (Figure 23). When income or GDP increases, it will reach a level where substitution of basic products will take place. Generally more developed and growing economies will show a plateau or decline in basic produce demand. Price drivers will also alter consumption patterns. To a lesser extent product perception, such as product image or health benefits, can influence consumption. Australia and the United Kingdom have shown increases in GDP over the past two decades (Figure 24). Over this period consumption declined and then rose toward the end of this period. This could be due to the relative price competitiveness of these products since the year It also coincides with a lot of positive, health related publicity for both products. 24

30 Figure 22 : Apparent consumption trend for cauliflower and broccoli for selected countries and the world average ( ) 7.0 Australia China United Kingdom World Apparent Consumption - kg/capita/annum FAO Figure 23 : Apparent consumption and GDP for India and China Apparent Consumption - kg/capita/annum China India China GDP India GDP India consumption trendline China consumption trenline China GDP trendline India GDP trendline 2,500 2,000 1,500 1, GDP - $US per capita FAO 25

31 Figure 24 : Apparent consumption and GDP for Australia and the United Kingdom ,000 Apparent Consumption - kg/capita/annum UK consumption trendline UK GDP trendline Aust GDP Trendline Aust consumption trendline Aust UK UK GDP Aust GDP ,000 35,000 30,000 25,000 20,000 15,000 GDP - per capita 10,000 5,000 - FAO - USDA Figure 25 : Annual Australian exchange rate history for selected countries US Malay China Singapore TWI Australian Dollar Buying Trade Weighted Index Jan Reserve Bank of Australia 26

32 Many traditional markets and competitor currencies are closely linked to the United States of America (US) dollar. Exchange rates are a critical component of international trade competitiveness. The Australian dollar has fluctuated widely in recent times from around $0.50 to $0.95 US. As the Australian dollar increases against the target market currency produce price will be relatively higher for the importer. This is particularly so where the importing country and competitor suppliers are on a similar currency base. This is fundamentally the case with China and Malaysia. Conversely the cost of freight and some inputs for production should theoretically be improved. 5.4 Export market brief Australia s primary fresh vegetable export markets include Singapore, Malaysia, Hong Kong, Japan and in more recent times the Middle East. The South East Asian destinations have been attractive due to their need to import many food products outside their producing capacity. As these economies have grown, so have their capacity to pay. The demand for quality and timeliness of produce has increased over time. This is not to under estimate the strong focus on produce price. Australia s proximity to these markets and attention to quality parameters have realized a market opportunity. During the 1980 s, Australia began to increase exports as Taiwan lost capacity and became less price competitive. Australian presence in these markets peaked around At this time China responded to fiscal and policy signals to increase vegetable exports. Singapore Singapore was historically the South East Asian trading hub for a significant amount of fresh produce. Re exports have declined as trade logistics have matured. Singapore has been a primary market for Australian cauliflower and broccoli. Up until the mid 1980 s Australia held 60 per cent of the market, Taiwan held the balance. During the mid to late 1990 s Australia held over 90 per cent of the cauliflower market. Singapore has a population of approximately 4.4 million people with a per capita GDP of nearly $US 35,000. Vegetable trade in 2008 was $390 million of which $19 million was cauliflower and broccoli. Cauliflower and broccoli accounted for $7 and $12 million respectively in Approximately $1million was re exported, primarily to Malaysia. This is a mature market for these products. Consumption and thus market growth has slowed significantly over the past decade. Consumption in of cauliflower in 1995 was approximately 1.6 kilograms per head. A decade later it was the virtually the same. Broccoli consumption has grown to 1.67 kilograms per capita in

33 Figure 26 : Singapore imports of cauliflower from Australia and China 2.00 China Vol Australia Vol China Australia ,000 6, ,000 CIF Price - $A / kg ,000 3,000 2,000 Volume - tonnes , GTIS Figure 27 : Singapore imports of broccoli from Australia and China 3.10 China Vol Australia Vol China Australia ,000 7,000 6,000 CIF Price - $A / kg ,000 4,000 3,000 Volume - tonnes ,000 1, GTIS 28

34 In 2008 over 95 per cent of Singapore s cauliflower imports were supplied by China. Australia has decreased from 75 per cent of supply in 2003, to 2 per cent in Malaysia now exports double the volume of cauliflower to Singapore than Australia; this is primarily Chinese re exports. Broccoli imports for Singapore have increased steadily over the past decade. Market growth was 3.6 per cent per annum over the past decade. During this time, Australia has lost significant market share. Australian share is down to 15 per cent of volume, an annual decline of 13 per cent. This is a direct correlation with the Chinese increase in the market. China now supplies 82 per cent of Singapore s broccoli. Singapore is a developed economy with high quality demands and is a health and safety conscious consumer. The market has a strong Chinese heritage and linkage. Quarantine restrictions are very low. These factors provide Chinese importers with a good opportunity, in conjunction with their competitive pricing. Some health, safety and consistency of supply have provided some limited opportunity in trade for Australian exporters. Singapore has a relative geographic advantage as an export destination, particularly for Western Australia. Produce is primarily a sea freighted from Australia for cost management reasons, generally with out major compromise in quality. Chinese competitors are geographically better positioned but the freight cost is only marginally less. Timeliness and frequency of shipping is improved. Strong links have been developed over time in many fresh food items. This provides some level of access with these existing linkages. Malaysia The population of Malaysia exceeds 26 million people. GDP per capita is estimated at $US7,000 or approximately 20 per cent of that for Singaporeans. With a lower GDP or country wealth it is a more price sensitive market. Surveys show that price is the most important factor with a majority of Malaysian consumers. While Malaysia has a large population, the niche or wealthier segment is quite small. It is therefore difficult to target and these products do not carry a prestige image. Health and safety information regarding food is not readily promoted. Like Singapore, there is a strong Chinese link and influence in Malaysia. Quarantine requirements are relatively relaxed for Malaysia s fresh produce imports. These are two elements that assist Chinese trade in Malaysia. Both the Malaysian and Chinese economies are closely linked to the US currency. Most cross currency confusion, risks and impacts are relatively diffused by this commonality. The Malaysian imports of vegetables in 2007 totaled more than $550 million and just over one million tonnes. Over 33,000 tonnes (3 per cent) of vegetable imports were cauliflower and broccoli. This market has grown at 7.4 per cent per annum since Taiwan used to be the most significant supplier of cauliflower and broccoli up until the early 1980 s, similar to the history with Singapore. Taiwan held the balance of trade for 29

35 cauliflower for longer than it did in Singapore. The price point of Taiwanese cauliflower was more competitive but lost market share due to capacity. In recent times China has expanded its market share for cauliflower and broccoli from 53 per cent in 2003 up to 95 per cent in Australia has conversely declined from 43 per cent to down 2 per cent in Malaysia represents 62 per cent of the value of Chinese cauliflower exports at an FOB value of $16.2 million in Broccoli represented $8.7 million or 23 per cent of the value of Chinese exports. From 2003 through to 2008 the CIF price for Chinese cauliflower and broccoli increased in response to other suppliers. Both Malaysia and China have currencies exchanges largely dictated by the US exchange rate. The change in price would therefore be due to an opportunistic response, a reflection of supply shift or an increase in costs such as freight. Australian prices have increased in parallel with its strengthening dollar. The fall in other supplier prices in response to the withdrawal of European and US suppliers. These supplies have been substituted by imports from South Africa and smaller Asian suppliers. South Africa has predominantly supplied during the second quarter of the previous 5 years. Other suppliers have remained at a low base of approximately 1,000 tonnes per annum. Figure 28 : Malaysian import volumes and price for cauliflower and broccoli Import Volume - tonnes 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 China Australia Other China price Aust price Other price Import price - $au per kilogram GTIS Japan Japan s population is approximately 130 million people with a GDP per capita of an estimated $US 34,000. Vegetable consumption per capita in Japan is remarkably high but a wide range of vegetable products are consumed. Based on wholesale data consumption of 30