The Australian government has announced that after 1 July it would no longer partly fund inspections of the country’s fruit and vegetable exports, leaving industry to cover 100 per cent of inspection costs.
Currently the government funds 40 per cent of the cost of inspections through a rebate scheme.
In a media release the Australian Horticultural Exporters Association said the withdrawal of government funding had come at a time when the industry was reeling from the effects of heavy rain, flooding, cyclones and a soaring Australian dollar.
Association spokesperson David Minnis told Fruitnet.com that as part of the new inspection arrangement non-government inspectors, which would be known as AQIS Approved Officers (AAO’s), would now carry out inspections rather than AQIS officials.
Privatising the inspection process could lead to problems in the future, said Mr Minnis, and would not necessarily make the process more cost efficient.
“Contactors will have to be on call all of the time and we’ve got a seasonal industry, so while they will be flat out over the summer months, come winter they will be scratching around and the work will decline drastically,” he told Fruitnet.com. “How many people are going to want to take that on?”
And while AQIS believed it would be cheaper for the industry to undertake its own inspections, all certification and documentation would still have to be signed off and charged for by AQIS, he added.
Contracting the export inspection process out to the private sector could also create unease amongst some of the country’s more sensitive export destinations, he said.
Due to tight profit margins the industry could not transfer costs along the value chain, said Mr Minnis, and cost increases would be borne by growers and exporters.
“Other industries, such as the dairy industry and the wool industry are currently enjoying high world prices. This is not the case with horticulture. Prices have remained the same and in some cases even decreased in the last 10 years,” he said.
The nature of the horticultural industry also meant inspection costs were higher than in other primary production industries, he added.
“There are more pests in this industry and so export regulations are much more complex, and whereas inspection points for other industries are centralised, the horticultural industry is spread out in small pockets around the country.”
Further cost increases made it more difficult for the Australian horticulture industry - which already faces high labour costs and unfavourable exchange rates relative to its major trading partners - to remain viable in international markets, Mr Minnis pointed out.
“We’re constantly fighting to retain our place in the industry.”
Mr Minnis believed the government needed to do more to support the horticultural industry because of the many benefits it brought to the country.
“At the end of the day when we export we bring money into the economy, and we create employment, horticulture is the leading employer in rural areas, and this employment creates tax revenue for the government.”
