Apple & Pear Annual Investment Plan July 2014 June 2015 Industry Summary

Transcription

1 Apple & Pear Annual Investment Plan July 2014 June 2015 Industry Summary Farmgate GVP Estimate for 2014/15 (from Industry) $570M Estimated R&D Levy Income $1,800,000 Estimated Marketing Levy Income $2,979,998 Proposed R&D Levy Project Expenditure $4,079,913 Proposed R&D VC Project Expenditure $1,497,254 Proposed Marketing Levy Project Expenditure $2,485,802 % of R&D & Marketing Project Expenditure with PIB $1,125,742 14%

2 R&D and Marketing Project Expenditure against Industry Objectives 4% Objective 1: Productivity & Supply Chain Objective 2: Climate Change 23% 2% 5% 51% Objective 3: Germplasm Improvement Objective 4: Market Access & Biosecurity Objective 5: Market Research Objective 6: Industry Development 12% 3% Objective 7: Portfolio Management R&D Project Expenditure against Government Rural R&D Priorities 8% 5% 5% Productivity and Adding Value Supply Chain and Markets 7% 4% 49% Natural Resource Management Biosecurity Climate Variability and Climate Change Innovation Skills 22% Technology R&D and Marketing Program Expenditure against HAL Strategic Priorities 11% Deliver New Information & Knowledge 28% 47% Build Consumer Demand Enhance Industry skills & Capability Deliver Operational Excellence 14%

3 Industry Outlook for 2014/15 The latest data available from the Australian Bureau of Statistics (ABS) (May 2013) shows that apple production fell by 4% from 299,700MT in 2010/11 to 289,000MT in 2011/12. The World Apple and Pear Association (WAPA) estimated the Australian 2013 production at 289,200MT and forecast that 2014 production will reach 292,000MT. The major apple production areas in Australia, based on 2011/12 data are: Victoria 46%, New South Wales 15%, Western Australia 11%, Queensland 10%, Tasmania 9% and South Australia 8%. Increased production in Victoria (+3% compared to 2010/11) and Western Australia (+1.2%) was offset by decreases in New South Wales (3%), where hailstorms devastated the crop, and Queensland (2%). According to ABS data the Australian average apple yield increased by 3% from 34kg/tree in 2010/11 to 35kg/tree in 2011/12, this increase was mainly driven by the Victoria average yield increasing by 14% from 36kg/tree in 2010/11 to 42kg/tree in 2011/12. ABS data also shows a 3% reduction of pear production from 123,300MT in 2010/11 to 119,000 tonnes in 2011/12, this is still 20% higher than 2010 production levels (95,000 MT). Cold, wet weather during flowering caused a reduction in production in Victoria, the major contributor with 84% of the Australia s pear production. Other pear production areas in Australia, based on 2011/12 data are: Western Australia 10% (a 5% increase from 2010/11), South Australia with 5%, Tasmania 1%, New South Wales and Queensland production was reduced from 1% in 2010/11 to 0.4% and 0.1% respectively. The long term pear production trend shows a consistent decline over the past twelve years. The Australian average pear yield decreased from 76kg/tree to 72kg/tree (or 5.2%). Victoria s average yield was 7% lower (76kg/tree) than the previous year s 82kg/tree. WAPA estimated a small increase for the Australian 2013 pear production to 128,600MT and forecast the 2014 production at similar levels or 128,000MT. Improving apple and pear productivity to enable Australian growers to compete more effectively against import competitors has been a major investment focus for the industry over recent years with both key research (PIPS) and industry development (Future Orchards) programs. Apple imports into Australia reached 347MT in 2013; 93% from China (an 11.3% increase from 2012) and 7% from New Zealand (56% decrease from 2012) compared to 325 MT in Although apple imports are overall +6.3% higher than 2012, 2013 imports are still 66% below 2011 imported levels (945 MT). Australia imported 1,316MT of pears in 2013, a 17% decrease from the 2012 season (1,582 MT). 96% of pear imports came from China (18.3% decrease from 2012) and 4% from South Korea (+35% increase from 2012). Note that pear data includes Nashi. Total apple exports for the 12 months to December 2013 reached 3,079MT, a 17.5% decrease from 2012 levels (3,734 MT). The return per kilo was $1.89, 8c lower than 2012 returns; the total export value was $5.81M which is 21% lower than the 2012 season ($7.35M). The decline came from lower volumes exported to Indonesia, Thailand and Pink Lady exports to the United Kingdom (440 tonnes). Promising increases included Malaysia with a +68% growth (409 tonnes) and India with +40% growth (144 tonnes). Total pear exports for the 12 months to December 2013 reached 6,390MT, a 16.2% decrease from to 2012 (7,629 MT). Although exports were lower, the return per kilo was $1.58, 18c higher than 2012 returns ($1.40). The total export value was $10.12M ($10.7m) a 5% decrease from last season. The largest export destinations were New Zealand, Indonesia and Canada accounting for 65% of Australian pear exports. Reductions in exports to Singapore and Malaysia

4 (over 50%) were mainly driven by market share gains from competitors such as South Africa and Argentina. According to WAPA production data, Australian apple and pear exports currently represent 1.06% and 5% of their production respectively. Objective 2 of the Apple and Pear Strategic Investment Plan looks to Expand apple and pear export markets to 10% of marketable product exported by While industries are focused predominantly on the domestic market, continuous efforts to develop export markets through current project initiatives such as the exporter group Team Australia and the finalisation of the industries Export Strategic Plans will continue to contribute to the achievement of this objective. Strategic Priorities Objective 1 Improve Sales Volume by 5% for apples and maintain pear volume (Volume sold) by: A. Stimulate Domestic Demand by 5% through product quality & innovation B. Expand apple and pear exports to 10% of marketable product exported by 2015 Strategies: 1.1 Improve consistency of product quality to match consumer expectations 1.2 Coordinate industry product promotion and marketing programs Define and understand overseas markets that offer profitable export opportunities Develop collaborative approaches to enter and expand selected export markets Resolve technical market access issues in target markets Monitor export market competitor activities Objective 2 Produce High Quality Apples and Pears at Internationally Competitive Prices (Costs & Risks) Strategies: 2.1 Enhance orchard productivity and management 2.2 Facilitate variety transition to match changing markets Objective 3 Provide a supportive operating environment (Skills & Communication) Strategies: 3.1 Enhance industry value within the community 3.2 Adapt industry services to meet changing needs of growers Improve quality and flows of information for decision-making across the supply chain Invest in leadership and people development Invest in intra-industry and inter-industry relationships Invest in Pro-active Portfolio Management initiatives to deliver an integrated, strategic investment plan Advertised Annual Priorities HAL on behalf of the apple and pear industry did not seek levy funded proposals for the HAL Call Although the apple and pear industry established its priorities for 2014/15 in the areas of: production of industry data, orchard productivity, strategic planning and market access; appropriate projects that will satisfy these priorities will be sought through a separate commissioning and/or competitive tender process. The potential continuation of capacity building projects also contributed to the industry decision.

5 Strategic Investment Plan Gap Analysis Strategy Actions / Investment Commentary Objective 1: Improve Sales Volume by 5% for apples and maintain pear volume (Volume sold) by: A. Stimulate Domestic Demand by 5% through product quality & innovation 1.1 Improve consistency of product quality to match consumer expectations Work collaboratively with retailers and the supply chain to identify and prioritise quality issues and implement improvement programs Establish a baseline of consumer perceptions of the eating quality of Australian apples and pears and monitor changes. To be completed within MT Understanding the Purchase Behavior of Fresh Produce Consumers MT Fruit and Nut Tracking Study New: AP Understanding the Purchase Behavior of Fresh Produce Consumers MT Multi Industry Fruit Tracking Study AP Aussie Apples Industry Benchmark Research Projects MT12048 and MT12010 contribute to the industry s Domestic Marketing Plans by defining requirements for consumer research. AP14013 is the continuation of project MT12010; they were both designed to investigate current consumer perceptions about Australian apples and pears. MT14014 is the continuation of project MT12048 both projects collect quantitative data through a survey to robustly track consumer behavior. AP14010 will conduct a benchmark study to identify, understand and profile consumer attitudes and behavior changes toward Apple consumption over time, and the impact they may have in communication messages. Fruit quality is a major component of Future Orchards extension project and PIPS program (see Strategy 2.1). Across Industry initiatives such as the Partnering Fresh Produce with retail: Quality Assurance Harmonisation (AH12016) contributes towards addressing sub strategy by focusing on food safety and the regulatory requirements for growers. Sub strategy is also addressed by various across industry initiatives including project AH13020 Horticulture Information Unit

6 (HIU) which acts as a conduit between members, levy payers, HAL and other stakeholders to equip and enable industries with the necessary knowledge to manage the supply chain. 1.2 Coordinate industry product promotion and marketing programs Establish and manage productive working relationships at the strategic level between major retailers and the apple and pear industry Invest in marketing and promotional programs that re-position Australian apples and pears with consumers and stimulate demand through the development of an Aussie Apples brand. To be completed within AP Apples Marketing Parent 2013/14 PA Pears Marketing Parent 2013/14 New: AP Apples Marketing Parent 2014/15 PA Pears Marketing Parent 2014/15 Value chain tree to table project, identified in the RD&E Implementation Plan, is yet to be implemented. Current (2013/14) and new (2014/15) Annual Apple and Pear Domestic Programs address Strategy 1.2 and incorporate the activities under its sub strategies. Projects under Strategy 1.1 partially address this strategy by researching and monitoring consumer attitudes towards Australian apples and pears Research and monitor changes in consumer attitudes towards Australian apples and pears. B. Expand apple and pear exports to 10% of marketable product exported by Define and understand overseas markets that offer profitable export opportunities Engage with Australian apple and pear exporters to prioritize target markets, design and conduct in-market research Provide information and tools to enable growers to understand potential In progress: AP Apple and Pear Industry Asian Export Market Development To be completed within MT Export-Import Market Intelligence New: MT Export Import Strategic Analysis Current project AP11023 involves collaboration between the Department of Environment and Primary Industries and APAL to help address this strategy specifically in Asian Markets. Team Australia is an initiative within project AP11023 which engages Australian apple and Pear exporters. Project MT12009 and its continuation MT14006 aim to analyse and report Australian

7 export opportunities and identify pathways to participate. 1.4 Develop collaborative approaches to enter and expand selected export markets Engage with exporters to prepare marketing plans for apples and for pears for each target market Work with major Australian fruit exporters to develop and implement collaborative market initiatives for each of pears and apples. 1.5 Resolve technical market access issues in target markets Define technical and commercial market access issues in key export markets Support and participate in negotiations and invest in research as required to improve market access for Australian apples In progress: AP Market Development for the Apple Industry To be completed within MT China Fruit and Vegetable Trade Fair 2013 AP Apple and Pear Industry International Networking AP Apple Export Promotion Parent PA Pears Export Marketing Parent MT Australia Fresh Core Program for Export Development MT Australia Fresh - Asia Fruit Logistica 2013 MT Australia Fresh - China FVF Trade Show New: AP Aussie Apples Export Activity PA Australian Pears Export Activity MT Australia Fresh - Core Export Market Development Program In progress: AP Market Access and Biosecurity Program MT OHMA Operational Support 2012 to 2015 MT Horticultural Market Access Manager MT Submission to authorities in Japan and Taiwan addressing provisional MRLs MT A model for industry planning and export and import trends. Project AP11016 partially addresses Strategy 1.4 by developing collaborative approaches between exporters and exploring new markets. There is also cross over with project AP11023 under Strategy 1.3 Current (2013/14) and new (2014/15) Apple and Pear Export Programs address Strategy 1.4 and incorporate activities under its sub strategies. The Australia Fresh program (MT13011) and its continuation (MT14013) are multi-industry programs focused mainly on export development for Australian horticulture industries. Initiatives such as projects MT12504, MT13030 and MT13032 relate to the Australia Fresh program specifically for the development of Asian markets. The apple and pear Export Strategic Plan is currently being developed by the DAFF, the engaged service provider is closely working with industry. The objective for the plan is for it to become the overall guide for the industries strategic export investment and assist the DoA on industry market access requests. The Market Access and Biosecurity Program objective is to support strategy 1.5 via investments in research to help deliver improved market access in target markets. The Export Strategic Plan (Strategy 1.4) will help prioritise these markets resulting in more effective market access investment. Project MT12028 specifically supports OHMA s activities to

8 and pears to target markets preparedness for an incursion of Varroa mite To be completed within MT Fourth Australia- China Cooperation Forum New: AP MRL Risk analyses for major export markets of the pome fruit industry provide industry advice to government agencies for the negotiation of quarantine and nonquarantine market access. MT12029 Horticultural Market Access Manager proactively seeks recommends and pursues market access opportunities and outcomes on behalf of investing industries while working in close collaboration with HAL and government agencies. The Fourth Australia- China Cooperation Forum (MT13045) multi-industry project objective is to further develop industrygovernment relations with China and thereby strengthen current market access and support attainment of further new market access for horticulture industries. 1.6 Monitor export market competitor activities Conduct in-market research and establish systems to understand and monitor key existing and potential overseas competitors for the domestic or targeted export markets for apple and pears No existing projects specifically to address this area. Project AP14002 precedes project AP10009 which identifies official government standards in key export markets to inform exporters and help them manage fruit pesticides and residue limits, assisting compliance with importer standards and thereby minimising potential losses through breaches in those markets. This strategy is partly addressed by projects AP11023 and AP11016 (see Strategies 1.3 and 1.4). It is expected that the Apple and Pear Export Strategic Plan/s will outline international competitors for potential export markets for Australian apples and pears. Further establishment of monitoring systems will be required once key markets are defined. Objective 2: Produce High Quality Apples and Pears at Internationally Competitive Prices (Costs & Risks) (Incorporates APFIP Program 2.1 Enhance orchard productivity and In progress: AP Productivity, One of the major projects addressing strategy 2.1 (sub

9 management Evaluate next steps for Future Orchards 2012 and re-focus the program to accelerate adoption of highdensity orchard systems and broaden its scope to link information from the supply chain including consumers Invest in national research and development that is regionally relevant and aimed at improving the productivity of orchard production and the consistent supply of quality fruit to the supply chain Maintain research in biosecurity issues to minimise the impact of pest and disease incursions Ensure the early adoption of new technology. Irrigation, Pests and Soils (PIPS) Orchard Productivity Program AP Apple and Pear Technical Manager AP Future Orchards 3 AP Precision fertigation for improved apple orchard productivity AP Profitable Pears: Maximising productivity and quality of new pear varieties MT Development of mass-trapping methods for codling moth females in disrupted orchards AP Understanding to revitalise fresh pear industry development AP Orchard Action - Transfer of latest technology to Victorian pome fruit orchardist MT Protecting pollination for the Australian horticultural industry Stage 3. To be completed within AP Extension AP05002: Alternaria Fruit Spot: New Directions AP Managing the risk of flesh browning for 'Cripps Pink' apples using a climate model AP Technology transfer of modern production techniques AP Minor Use Permits for the Apple and Pear Industry AP An independent review of the PIPS program AP An Independent Review of the Future Orchards program MT Understanding practice in key pollination industries AP PIPS Phase II strategy 2.1.2) is project AP The PIPS program was independently reviewed in 2013 (AP12032) as part of its risk management strategy to ensure that this investment remains focused and on target, to assess progress against objectives and the program success overall, to make recommendations regarding its ongoing role as well as to help with planning for future RD&E investment within the Apple and Pear Production Program. The PIPS program is due to end within 2014/15. A workshop including key industry stakeholders and researchers (AP13028) was conducted in 2013 to identify the research priorities for the next phase of the apple and pear productivity program. Project AP14014 will look to conduct the second phase of productivity invesment, this project will go though a competitive tender process within 2014/15. Project AP Understanding to revitalise fresh pear industry development, aligns with sub strategy through, initially, a segmentation analysis for the pear industry. Future Orchards is a national extension program that has the objective of supporting Australian apple and pear orchards to become internationally competitive. Project AP11017 Future Orchards 3 went through an independent review (AP13020) in The Future Orchards program and its potential continuation through project AP14017, specifically addresses sub strategy Other initiatives that partially address sub strategy and include projects AP10019, AP12704 and AP Further

10 2.2 Facilitate variety transition to match changing markets Maintain investment in a variety development programs Establish an industry knowledge base on annual production and the sales and pricing trends of each apple variety and provide access to growers. Workshop AP North American Apple and Pear Study Tour New: AP Capacity Building, Program AP14014 Apple and Pear Productivity Program Phase II In progress: AP Pear Rootstocks Trial AP Data and Analysis - InfoPome AP Commercialisation of Pear varieties AP Bridging the knowledge-gap to breed highvalue, flavonoid-rich apples AP Field, postharvest and consumer evaluation of new apple cultivars AF Australian Pome Fruit Improvement Program Limited (APFIP) To be completed within AP Development of New Pome Fruit Products AP Pear Variety Evaluation & Certification AP New Zealand Study Tour 2014 AP Consultancy to develop a Business Plan for a National Pome Fruit Breeding Company Started or starting within AP Industry Data Project work on mechanisation within orchards and education regarding benefits of adopting new technology to fully achieve sub strategy is yet to be implemented. Several projects involving research and biosecurity issues addressing sub Strategy are in progress or will be completed during the 2013/14. Project AP12035 is due for completion in 2013/14. The main objective of this Voluntary Contribution (VC) project was to fund a consultancy to develop a business case and concept plan for a new pome fruit breeding company, investigate its feasibility and whether or not it provides a better option (compared to existing pathways) for providing the Australian apple and pear industry with a reliable supply of internationally competitive apple and pear varieties. Other VC and levy projects addressing sub strategy include Prevar (AP09035) and AP08002 which are soon to be completed. In progress projects such as AP10016, AP09026, AP12036 and AP13025 also aim to facilitate variety transition to match changing markets within this strategy. Projects addressing sub strategy include InfoPome (AP11033) which provides volumes of apple and pears data in cool storage throughout the year. Over 2013 improved accuracy of the stock figures by an increased number of cool stores regularly participating had improved the outputs and industry value of the project. Project AP13702 also addresses sub strategy by increasing grower awareness of key trends in

11 varieties. New initiative AP13031 aims to further complement sub strategy by providing orchard/production data and crop forecasting to assist growers with on-farm decisions, both at a strategic and an operational level. Objective 3: Provide a supportive operating environment (Skills & Communication) 3.1 Enhance industry value within the community Advance environmental sustainability and promote what the industry is doing and achieving Influence Government policy and regulation that impacts on industry competitiveness. In progress: AP Understanding apple and pear production systems in a changing climate AP Student Scholarship: Orcharding the Future: the influence of temperature on pome fruit flowering across Australia Project AP12029 is part of the Apple and Pear Climate Change Program. Its objective is to reduce the vulnerability of the Australian apple and pear industries to climate change by identifying and understanding the potential impacts climate change has on these industries throughout Australia, and developing and extending appropriate adaptive responses to industry. Project AP13023 started in 2013 with the aim to conduct more detailed assessments of the flowering-temperature relationship of additional phenology data collected within project AP12029 building further research capacity while aligning with industry directions and strengthening crossinstitutional collaborative efforts. 3.2 Adapt industry services to meet changing needs of growers Conduct annual independent research to monitor grower needs and satisfaction with industry No existing projects specifically to address this area. Irrigation is part of the PIPS Program (Strategy 2.1) where water efficiencies may be identified. Current Across Industry initiative (AH10003) also contributes to address Strategy 3.1 Sub strategy refers mostly to APAL related activity regarding national industry association structure. Ongoing review provides feedback to both APAL and IAC on growers needs/ views. Project AP12013 (see Strategy

12 services Review industry organisational structures and ensure alignment to achieve effective implementation of the strategic plan to the satisfaction of investors. 3.3 Improve quality and flows of information for decision-making across the supply chain Conduct an independent national survey of orchard businesses to establish a reliable baseline data on physical characteristics and farm financial performance to assist investment decisions in R&D, marketing and policy Produce an implementation plan to deliver the outcomes of the Industry Development Needs Analysis In progress: AP Apple and Pear Industry Communications AP Apple and Pear Industry Development Initiative AP Developing sustainability through extension of best practice in the South Australian apple and pear industry To be completed within AP /13 Apple & Pear Industry Annual Report MT Deciduous Tree Fruit Industry Conference 2013 Apples, Pears, Summerfruit, Nashi New: AP Apple & Pear Industry Annual Report 2013/14 3.3) will conduct an IPSOS survey every three years with the objective to mainly evaluate the effectiveness of communications and other industry development programs. The Industry Development Needs Assessment implementation plan outcomes are incorporated into the Industry Development Program within the apple and pear RD&E Implementation Plan. Further work, on developing improved ways of engaging with growers and supply chain participants, and better utilisation of private advisors (input suppliers, agronomists and agribusiness consultants), as identified in the Industry Development Program, was conducted during 2013 (AP12033) and will continue in 2015 through project AP14003 (see Strategy 3.5), AP12037, AP12038 and though the potential project AP14017 (see Strategy 2.1). Project AP Industry Data Project (see Strategy 2.2) aims to produce crop forecasting data partially addressing strategy Some baseline data on physical characteristics and farm financial performance is included in Future Orchards. 3.4 Invest in leadership and people development In progress: AP Apple and Pear Industry Leadership Initiative Project AP12013 Apple and Pear Industry Communications, will go through an independent midterm review to assess progress against the project plan, level of industry satisfaction, potential enhancement of engagement, impact of the project on the capacity of the industry, among others. The Industry Development Program proposed to enhance people skills and leadership

13 3.4.1 Prepare development plans to deliver: (i) greater leadership capacity (ii) improved skill development across the supply chain Implement the leadership and skill development plans and promote participation across the supply chain. New: AP Industry Roundtable Forum capacity by formulating a high profile project to encourage and support the participation of keen individuals. Project AP12034, led by APAL, partly addresses Strategy 3.4 by providing leadership opportunities via a capability enhancement program developed together with Marcus Oldham College. The program includes a short term intensive course aimed at equipping budding industry leaders with practical skills in leadership and management as well as the opportunity of three scholarships. 3.5 Invest in intraindustry and interindustry relationships Review intra-industry and inter-industry relationships and develop a plan to maximise value from collaborative effort in research, extension, policy development, market intelligence and communications. 3.6 Invest in Pro-active Portfolio Management To be completed within AP Research Speed Updating pilot New: AP Research Speed Updating program In progress: AP Costs to develop Further work such as: studying the possibility to lever partnerships and funds with universities to engage students to undertake specified components of individual projects. E.g. embedding of a PhD within the PIPS program; and exploring other skill development activities e.g. negotiation skills, business skills, succession planning, etc in the form of workshops are yet to be planned and implemented. Across Industry initiative AH13023 Industry Development Forum with International Horticulture Congress also contributes to address Strategy 3.4. See Strategy 3.3 for background. Project AP14003 follows the success of pilot project AP13004 which had the objective to develop a network to enable research practitioners, program managers and information wholesalers to better understand the apple and pear R&D portfolio. The project aimed to improve management, identify R&D gaps, and foster industry participants communication and collaboration. The new project will also invite the participation of growers. The current apple and pear Strategic Investment Plan (2010-

14 initiatives to deliver an integrated, strategic investment plan Explore and strategically analyse partner capabilities and potential opportunities in conjunction with the National Horticulture Research Network (NHRN) Develop and review a 5 year Strategic Investment Plan and Annual investment plans that provide the greatest return on investment for the apple and pear industry projects within the apple and pear RD&E Programmes To be completed within AP Apple & Pear Consultation Funding Agreement New: AP Apple & Pear Consultation Funding Agreement AP Strategic Investment Plan 2015) will conclude at the end of 2015/16. Project AP14019 aims to develop the next five year industry Strategic Investment Plan. The development process is envisaged to commence within 2014/15 to be completed before 2015 priorities are set. A major component of Strategy 3.6 is the Consultation Funding Agreement with APAL. 2014/15 Apple & Pear P&L Summary Apple & Pear Budget R&D Levy R&D VC Marketing Levy Total Opening Industry Reserve 1 July 2014 $1,281,903 $0 $518,963 $1,800,866 Income Levy/VC Receipts $1,800,000 $878,537 $2,979,998 $5,658,535 Commonwealth Matching Grants $2,294,346 $852,899 - $3,147,244 Interest, Royalties & Other Income $28,779 - $39,509 $68,288 Total Income $4,123,125 $1,731,435 $3,019,507 $8,874,067 Expenditure Total Project Expenditure $4,079,913 $1,497,254 $2,485,802 $8,062,969 Levy Collection Costs $54,582 - $66,468 $121,050 Corporate Cost Recovery $508,778 $208,544 $301,468 $1,018,790 Across Industry Contribution $96,261 $25,638 - $121,899 Total Expenditure $4,739,535 $1,731,436 $2,853,738 $9,324,708 Operating Surplus / (Deficit) for year ($616,410) ($0) $165,769 ($450,641) ending 30 June 2015 Estimated Closing Reserves $665,493 ($0) $684,732 $1,350,225

15 Estimate Four Year P&L Summary 2014/ /18 R&D Levy Only Apple & Pear 14/15 15/16 16/17 17/18 Opening Industry Reserve $1,281,903 $665,493 $470,363 $809,363 Income Levy Income $1,800,000 $1,800,000 $1,800,000 $1,800,000 Matching Income $2,294,346 $1,872,713 $1,361,040 $1,116,469 Other Income $28,779 $16,786 $18,912 $12,140 Total Income $4,123,125 $3,689,499 $3,179,952 $2,928,609 Expenses Committed Expenses* $2,304,775 $1,285,586 $406,124 $205,618 Proposed Expenses* $1,775,137 $2,051,645 $2,019,305 $1,783,985 CCR* $508,778 $408,196 $296,651 $243,335 AIC $96,261 $82,983 $60,967 $50,243 Levy Collection Costs $54,582 $56,219 $57,906 $59,643 Total Expenses $4,739,535 $3,884,629 $2,840,953 $2,342,824 Operating Surplus / (Deficit) for year ending 30 June 2015 ($616,410) ($195,129) $339,000 $585,785 Estimated Closing Reserves $665,493 $470,363 $809,363 $1,395,148 Minimum Levy Reserve Required $467,780 $455,380 $450,000 $450,000 Available Levy Reserves $197,713 $14,984 $359,363 $945,148 *Matched Levy and Commonwealth Funds 2014/15 Apple & Pear Program R&D Program Objective 1: Productivity & Supply Chain AP09031 PIPS Orchard Productivity Program R&D/VC $1,175,986 AP11023 Apple and Pear Industry Asian Export Market MK/R&D $85,000 Development AP12006 Precision fertigation for improved apple orchard R&D $78,002 productivity AP12036 Bridging the knowledge-gap to breed high-value, VC $135,000 flavonoid-rich apples AP12038 Developing sustainability through extension of best VC $43,200 practice in the South Australian apple and pear industry AP13011 Understanding to revitalise fresh pear industry R&D $10,000 development AP13025* Field, postharvest and consumer evaluation of new apple VC - cultivars AP14009* Crop Load Management for the Australian Apple Industry VC - - CHO model AP14014* Apple and Pear Productivity Program R&D - AP14015* Farm of the Future R&D - MT12000 Development of mass-trapping methods for codling moth R&D $100,000

16 females in disrupted orchards Objective 2: Climate Change AP11006* Climate Change Program R&D - AP12029 Understanding apple and pear production systems in a changing climate R&D $144,632 Objective 3: Germplasm Improvement AP09026 Commercialisation of Pear Varieties VC $53,280 AP10016 Pear Rootstocks Trial R&D $12,800 AP11007* Germplasm Improvement Program R&D - AP12002 Profitable Pears: Maximising productivity and quality of R&D $215,000 new pear varieties AP12013 Apple and Pear Industry Communications R&D $417,803 Objective 4: Market Access & Biosecurity AP11008 Market Access and Biosecurity Program R&D $229,880 AP14002* MRL Risk analyses for major export markets of the pome R&D - fruit industry MT12028 OHMA Operational Support 2012 to 2015 R&D $2,627 MT12029 Horticultural Market Access Manager R&D $17,623 MT12045 Submission to authorities in Japan and Taiwan addressing R&D $1,150 provisional MRLs MT12049 A model for industry planning and preparedness for an R&D $6,167 incursion of Varroa mite MT13002 Protecting pollination for the Australian horticultural industry Stage 3 R&D $21,375 Objective 5: Market Research AP14013* Understanding the Purchase Behaviour of Fresh Produce Consumers R&D - Objective 6: Industry Development AP11014 Apple and Pear Technical Manager R&D $50,734 AP11016 Market Development for the Apple Industry R&D $44,777 AP11017 Future Orchards 3 R&D $43,200 AP11033 Data and Analysis - InfoPome R&D $20,660 AP12034 Apple and Pear Industry Leadership Initiative R&D/VC $90,000 AP12037 Australian Apple and Pear Industry Development Initiative R&D $118,691 AP13023 Student Scholarship: Orcharding the Future: the influence VC $5,006 of temperature on pome fruit flowering across Australia AP13027* Orchard Action - Co-production of knowledge to Victorian VC - pome fruit orchardist AP13031* Apple and Pear Industry Data Collection R&D - AP14004* Industry Roundtable Forum R&D - AP14017* Capacity Building, Industry Development and Extension Program - Project Definition R&D - Objective 7: Portfolio Management AP11038 Costs to develop projects within the apple and pear RD&E R&D $30,000 Programmes AP14019* Strategic Investment Plan R&D - AP14800* Apple & Pear Industry Annual Report 2014/15 - AP14910* Apple & Pear Consultation Funding Agreement MK/R&D - Total R&D 2014/15 $5,577,167

17 Apple Marketing Program Objective 1: Productivity & Supply Chain AP11023 Apple and Pear Industry Asian Export Market MK/R&D $30,000 Development AP14500* 2015 Aussie Apples Domestic Marketing Parent MK - Objective 4: Market Access & Biosecurity AP14501* 2015 Aussie Apples Export Marketing Parent MK - Objective 5: Market Research MT14014* Multi Industry Fruit Tracking Study MK - Objective 7: Portfolio Management AP14910* Apple & Pear Consultation Funding Agreement MK/R&D - Total Marketing 2014/15 $1,744,616 Pear Marketing Program Objective 1: Productivity & Supply Chain AP14502* 2015 Australian Pears Domestic Marketing Parent MK - Objective 4: Market Access & Biosecurity PA14500* 2015 Australian Pears Export Marketing MK - Objective 5: Market Research MT14014* Multi Industry Fruit Tracking Study MK - Objective 7: Portfolio Management AP14910* Apple & Pear Consultation Funding Agreement MK/R&D - Total Marketing 2014/15 $741,186 *Projects yet to be contracted

18 APFIP Annual Investment Plan July 2014 June 2015 Industry Summary Farmgate GVP Estimate for 2014/15 (from Industry) $570M Estimated R&D Levy Income $165,000 Estimated Marketing Levy Income $0 Proposed R&D Levy Project Expenditure $209,713 Proposed R&D VC Project Expenditure $0 Proposed Marketing Levy Project Expenditure $0 % of R&D & Marketing Project Expenditure with PIB $0 0%

19 R&D and Marketing Project Expenditure against Industry Objectives 0% Objective 1: Productivity & Supply Chain Objective 2: Climate Change Objective 3: Germplasm Improvement Objective 4: Market Access & Biosecurity Objective 5: Market Research Objective 6: Industry Development Objective 7: Portfolio Management 100% Objective 8: Not Allocated R&D Project Expenditure against Government Rural R&D Priorities 10% Productivity and Adding Value 20% 0% 40% Supply Chain and Markets Natural Resource Management Biosecurity Climate Variability and Climate Change Innovation Skills 20% 0% 10% Technology R&D and Marketing Program Expenditure against HAL Strategic Priorities 11% 0% Deliver New Information & Knowledge Build Consumer Demand Enhance Industry skills & Capability Deliver Operational Excellence 89%

20 2014/15 APFIP P&L Summary APFIP Budget Opening Industry Reserve 1 July 2014 Income R&D Levy R&D VC Marketing Levy Total $338,157 $0 $0 $338,157 Levy/VC Receipts $165,000 $0 $0 $165,000 Commonwealth Matching Grants Interest, Royalties & Other Income $117,684 $0 - $117,684 $7,123 - $0 $7,123 Total Income $289,807 $0 $0 $289,807 Expenditure Total Project Expenditure $209,713 $0 $0 $209,713 Levy Collection Costs $6,647 - $0 $6,647 Corporate Cost Recovery $25,655 $0 $0 $25,655 Across Industry Contribution $4,707 $0 - $4,707 Total Expenditure $246,723 $0 $0 $246,723 Operating Surplus / (Deficit) for year $43,084 $0 $0 $43,084 ending 30 June 2015 Estimated Closing Reserves $381,241 $0 $0 $381,241

21 Estimate Four Year P&L Summary 2014/ /18 R&D Levy Only APFIP 14/15 15/16 16/17 17/18 Opening Industry Reserve $338,157 $381,241 $366,041 $532,889 Income Levy Income $165,000 $165,000 $165,000 $165,000 Matching Income $117,684 $173,801 $0 $0 Other Income $7,123 $7,399 $8,900 $5,329 Total Income $289,807 $346,200 $173,900 $170,329 Expenses Committed Expenses* $209,713 $309,713 $0 $0 Proposed Expenses* $0 $0 $0 $0 CCR* $25,655 $37,888 $0 $0 AIC $4,707 $6,952 $0 $0 Levy Collection Costs $6,647 $6,846 $7,052 $7,263 Total Expenses $246,723 $361,400 $7,052 $7,263 Operating Surplus / (Deficit) for year ending 30 June 2015 $43,084 ($15,201) $166,848 $163,066 Estimated Closing Reserves $381,241 $366,041 $532,889 $695,955 Minimum Levy Reserve Required $44,022 $42,298 $41,250 $41,250 Available Levy Reserves $337,219 $323,743 $491,639 $654,705 *Matched Levy and Commonwealth Funds 2014/15 APFIP Program R&D Program Objective 3: Germplasm Improvement AF11002 Australian Pome Fruit Improvement Program Limited Total R&D 2014/15 R&D $209,713 $209,713