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Fresh 98 National Conference and Exhibition for the Fresh Fruit and Vegetable Industry, Hilton Hotel, Sydney, 28 August 1998: address.



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Australian Department of Primary Industries & Energy

 

Senator The Hon Judith Troeth

Parliamentary Secretary for Primary Industries and Energy

 

Address to the Fresh 98 National Conference and Exhibition for the

Fresh Fruit and Vegetable Industry,

Hilton H otel, Sydney, 28 August 1998

 

Ladies and gentlemen,

 

I am delighted to be here today to open Fresh '98, and congratulate the Australian Horticultural Corporation and the Australian United Fresh Fruit and Vegetable Association for your joint effort in organ ising such an impressive forum.

 

Today, I would like to focus your attention on future opportunities for Australian horticulture and outline the Government initiatives which are placing these opportunities within reach.

 

With a sound infrastructure and a significant presence in important overseas markets, Australia's fruit and vegetable industries should enjoy a prosperous future, as well as creating jobs and wealth for the benefit of all Australians.

 

Australian Horticulture

 

It will come as little surprise to most of you that horticulture is Australia's third largest agricultural industry behind grains and meat.

 

In 1996/97, the farm gate value of Australian horticulture, excluding wine, stood at an impressive $4.4 billion.

 

Fruit and vegetable establishments through-out Australia employ around 83,000 people. And an additional 11,000 are employed in the processing sector.

 

Complementing this direct employment are many down-stream jobs, including those associated with transportation, storage, packaging, distribution, broking, finance and insurance.

 

When it is all taken into account it amounts to a substantial contribution to our national economy and the lives of many people involved in the industry.

 

Horticultural Exports

 

Australia's closeness to the important markets of Asia has provided a spring­board for flourishing export activity.

 

Thanks to our efficient handling, processing and transportation systems, fresh fruit and vegetables can now be seen in Asian supermarkets, restaurants and hotels within hours of leaving our fields and processing factories.

 

Over the five years to 1997/98, the value of Australia's fresh and processed horticultural exports rose from $871 million to $1.17 billion to markets as diverse as Singapore, the United States and Europe and emerging markets such as the Middle East.

 

However, while 70 to 80 per cent of Australia's total primary production is sold overseas, less than 25 per cent of our horticultural produce is grown for export

 

Clearly, this point alone is a challenge for all of us here today.

 

Asian Financial Crisis

 

In meeting this challenge we obviously have to confront the impact of the Asia's current financial crisis on our horticultural industry. This is proving to be a mixed picture and, in some ways, not as dramatic as we originally anticipated.

 

Data released recently by the Australian Bureau of Statistics show total Australian exports to key Asian markets fell by only 3 per cent in the first six months of 1998 compared to the corresponding period in 1997. Encour agingly, this was offset by a 21 per cent increase in exports to non­Asian countries over the same period.

 

According to the Australian Horticultural Corporation, total exports of fresh fruit, vegetables and nuts were valued at $595 million in 1997/98, an increase of 3 per cent over the previous year. Fresh vegetable exports to all markets increased by 17 per cent to $206 million, while fresh fruit exports declined by around 7 per cent to $312 million.

 

In the case of Hong Kong, fresh fruit exports have grown by approximately 81 per cent.

 

Nevertheless, as the major markets for many horticultural products are in Asia, the region's financial crisis clearly presents difficulties for your industries.

 

The Government remains committed to fostering regional export opportunities and has put in place a number of initiatives designed to stabilise Asian economies and ameliorate the impact of the financial crisis on our export industries.

 

For example, the Government has contributed significantly to the International Monetary Fund packages for Indonesia, South Korea and Thailand. Along with Japan, Australia is the only country to commit to all three packages.

 

The Government has also agreed to extend export credit insurance cover on the National Interest Account to trade with South Korea and Indonesia, both to maintain trade flows and to match credit arrangements provided by our competitors.

 

But more than oft en, problems can also provide opportunities. Asia's financial difficulties have allowed some Australian companies to exploit the temporary absence of traditional competitors in some markets.

 

And this has been boosted by the devaluation of the Australian dollar which has improved our export competitiveness compared with Europe and the United States.

 

Asia's fundamental dynamics still point to sustained growth. Over the longer term, high rates of savings, an increasingly skilled and educated workforce, increases in population and rises in incomes will fuel the purchasing power of Asian markets.

 

Accordingly, those industries prepared to think long-term are the ones who stand to benefit substantially from the region's eventual economic resurgence.

 

And with limited growth prospects in the domestic market, as I have already said, the challenge for Australia's horticultural industries is to develop a stronger export focus.

 

The Supermarket to Asia Council, chaired by the Prime Minister, is working to develop that focus by increasing the volume and value of Australian food exports.

 

The Council, which comprises relevant Government ministers and key figures from the farming, food-processing, packaging, transport, research, trade union and retailing sectors, promotes better links in the agribusiness marketing chain.

 

I note on your conference program the session on Asian markets is sponsored by the Supermarket to Asia Council. This should give you the opportunity to look more closely at the work of the Council and how it can help your industry.

 

Future Opportunities

 

In establishing an export focus, there are a range of issues that have to be factored into our decisions to take advantage of the opportunities that exist.

 

Technological advances continue to provide Australian agribusiness with opportunities to sharpen its competitive edge.

 

Ready access to emerging biotechnologies will be fundamental to Australia securing a pre-eminent position in future international food markets.

 

This is an issue that our science community, government and industry are grappling with, both in terms of R&D investment, intellectual property and consumer acceptance.

 

The information technology revolution is already part of our everyday lives and business operations. I am sure we all appreciate the potential such technology offers to dramatically increase the international competitiveness of Australia's rural and regionally-based businesses by providing 'virtual' access to customers and merchants.

 

It is my pleasure here now in opening this conference to also launch the Australian horticultural industry's own intranet, through the internet. Fresh Chain will provide the horticulture industry with a protected communications environment that will deliver easy rapid communication between growers and suppliers and their customers, locally, nationally and globally

 

Fresh Chain has been initiated by the industry for the industry, with the support of the Horticultural R&D Corporation, and major industry interests such as the Produce Markets of Australia, AUSVEG, PIVOT, service providers and the Australian and States Growers and Wholesalers associations.

 

I would encourage you all to contribute to the site and project as it develops. It can be found at www.freshchain.com.au or you can see it and talk to the designers during the conference at the HRDC booth.

 

Whether it's establishing contacts via e-mail, using electronic services to conduct business, or accessing expert information on business practices, weather forecasts and market prices from the Internet, many Australian businesses now experiencing the benefits of being 'on-line'.

 

This initiative will make the wealth of knowledge that is available that much closer and easier to access for everyone in the industry.

 

Quality Assurance

 

We must understand that technology is a tool, rather than an end in itself - It is a part of the package or sum that helps us meet our customers' expectations and improves our bottom line.

 

As such Australian horticulture must always look at improving the focus on quality if it wants to enhance the global marketability of its products. Technology is a valuable tool to be used in achieving this.

 

Australia's horticultural exporters need to be fully aware of the specific requirements of its international customers, especially in respect of quality, residue levels, labelling, packaging and storage life.

 

And, if fresh produce is to capture a bigger share of the supermarket trolley, greater attention must also be paid to changing market dynamics and shifting consumer preferences.

 

Importantly, the Australian Horticultural Corporation's 'Australia Fresh' program, which aims to secure a preference for Australian fruit and vegetables in export markets, continues to complement the marketing efforts of individual exporters.

 

Domestically, our fruit and vegetable markets are characterised by vigorous competition and the growing importance consumers are attaching to product safety.

 

It is pleasing to note the co-operative relationship that now exists between producers and processors, as individual supply chains are being more tightly integrated through contracts addressing the joint management of quality assurance, supply management and food safety.

 

Macro-Economic Policy

 

The imperative to be internationally competitive applies equally to the Government as it does to industry.

 

One of the Government's most important roles is to ensure Australia's economic fundamentals are right so that industry can do what it does best - create employment and wealth for all Australians.

 

Disciplined economic management will help ensure Australia enjoys sustained economic growth and low inflation. The Government will also continue to control expenditure and reduce public sector debt.

 

It is worth considering that interest repayments traditionally represent around 10 per cent of the total average costs of Australian farm businesses.

 

Current interest rates, coupled with low inflation rates, which are both at their lowest levels in 30 years, are already making a substantial contribution to the competitiveness of Australian agriculture.

 

Taxation Policy

 

Australia's export-oriented industries are expected to be prime beneficiaries of the Government's proposed changes to Australia's taxation system.

 

The features of the tax package that will directly benefit Australian business and exporters include:

 

• the indirect tax base will be broadened by replacing Wholesale Sales Tax with a Goods and Services Tax;

• a system of tax inp ut credits that will ensure farmers and business operators get back any GST paid on inputs used in the production of goods for export and domestic consumption;

• goods that are exported will be tax free, which will put them on a much more equal footing wi th our overseas competitors;

• provisional tax, and the provisional tax uplift factor, the Reportable Payments System and company tax instalments will be replaced by a new, single pay-as-you-go system;

• nine State taxes will be abolished such as Financial Institutions Duty and Bank Account Debits tax;

• a cut in the cost of diesel fuel used in heavy transport from 43 cents per litre to 18 cents per litre for all registered businesses, including farms; and

• a GST credit will apply on petrol used for business purposes, estimated at saving seven cents per litre.

 

These changes will minimise the cost of transporting primary produce from farm to market and substantially reduce charges for delivering everyday items to regional areas.

 

The bottom-line is tha t Australia's export industries are poised to slash their annual business costs by an estimated $4.5 billion.

 

Considering primary products account for around 30 per cent of Australia's earnings from merchandise exports, this represents a huge windfall for Australian agriculture, regional businesses and exporters.

 

Market Access

 

Market access negotiations are another front the Government is continuing to work on to achieve broad penetration into export markets. High tariffs, quotas, stringent food standards, quarantine and other technical barriers continue to deny Australia valuable export opportunities in many important markets.

 

While Australian fruit and vegetable exporters have developed many significant markets, access to the burgeoning markets of Japan, Thailand and Korea remains partially closed because of trade barriers.

 

Japan's food market is immense. Worth around $150 bi llion, imports account for about $90 billion. Sadly, Australia's share of Japan's $3.5 billion imported fresh fruit and vegetable market is less than 2 per cent.

 

An integral part of Australia's push to liberalise international markets for horticulture is the Horticultural Industry Market Access Committee, chaired by the Australian Horticultural Corporation.

 

The Market Access Committee meets regularly to identify and prioritise market access initiatives for horticulture so governments and industry can work together to achieve the most effective outcomes.

 

And new markets for Australian horticulture are expected to be opened when China and Taiwan join the World Trade Organization.

 

In the longer term, further gains are likely to flow from the APEC agreement to move towards free trade in the Asia Pacific region.

 

Meanwhile, the Government is continuing to promote freer world trade in farm produce by working through bilateral, regional and multilateral negotiations to lower trade barriers.

 

In the financial years 1995/96 and 1996/97, quarantine and technical access negotiations opened up markets for 130 products across 82 countries. In Taiwan, for example, these gains included access for stone fruit and citrus, a reduction in the beef tariff and a doubling of the import quota for apples.

 

But it is an on-going process, and Australia must continue its push for better market access in international trade. A key objective for Australia at the next round of World Trade Organization negotiations, scheduled to commence in 1999, is the elimination of all production and export subsidies that depress international commodity prices and artificially enhance the competitiveness of farmers in other countries.

 

Horticultural Industry Alliance Steering Committee

 

Turning briefly to industry infrastructure issues, you will be aware that that the Australian Horticultural Corporation and the Horticultural R&D Corporation are both statutory bodies, that manage industry levies to provide marketing and promotional services and R&D services to the industry.

 

In order to deliver a higher level of service to horticultural industries, levy-paying members of the Horticultural Research and Development Corporation and the Australian Horticultural Corporation have established the Horticulture Industry Alliance Steering Committee to investigate the creation of a single entity. This initiative has the support of the Government and I look forward to seeing an outcome that will better meet the industry's needs.

 

In parallel, but separate to this initiative, industry leaders are also investigating a permanent, representative horticultural industry forum, to replace the Horticulture 2000 Group which will wind up in June next year.

 

Conclusion

 

In conclusion, Australia's horticultural industries hav e made remarkable progress in recent years. Both the Australian Horticultural Corporation and the Australian United Fresh Fruit and Vegetable Association should be congratulated for playing important roles in helping make this happen.

 

The Government will continue its commitment to maintaining low interest rates, low inflation and reforming our taxation system to provide Australian industry with an operating environment conducive to business prosperity.

 

The challenge for Australia's horticultural industries is to be sustainable, innovative and internationally competitive. And there are already many encouraging signs.

 

As our front line land managers, farmers are developing and implementing production systems that will preserve the integrity of Australia's resource base for successive generations.

 

And Australia's horticultural infrastructure continues to foster new innovations and cutting-edge technologies. If we can further streamline the management of our supply chains, Australian horticulture will become even more efficient and therefore more successful.

 

I commend the organisers of this conference for putting together such a high quality program and I wish Australian horticulture every success in realising its full potential on the global stage.

 

I now officially declare Fresh '98 open.

 

 

 

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