Logistical issues associated with the transportation of fruit from Australian farms to the European marketplace continues to limit the development of European markets for Australian citrus producers.
“European customers have told us that Australian citrus has excellent flavour, and would like to buy much more if we could get the fruit there fast enough,” says Wayne Prowse, citrus industry manager, Horticulture Australia Limited.
However, despite the vast distance and time-lag between Australia and Europe, several Australian exporters have successfully developed long-term relationships with European importers in the French, German and UK markets for navel oranges.
Prowse says: “Australian exporters have secured exports for navel oranges during the August to October period.”
Developing faster and more efficient farm-to-market transport systems, including sea--airfreight transport combinations, is a priority for the £1.05 million Australian citrus industry research and development program.
Competition for the European citrus market is increasingly tough, with well-established southern hemisphere sources in South Africa and South America ruling the roost. However Australian citrus is gaining ground on these market leaders.
“Australia is finding a powerful niche in the premium quality area as we are not matching the volumes available from other countries that export more than 70 per cent of their crop,” says Prowse.
Strong demand for both fresh and juicing citrus ensures that product exported is of high quality. Exporters are able to select the best in terms of quality to suit specific market requirements.
Australian production for the forthcoming 2005/2006 season is estimated to be around the 500,000 tonnes mark. Processing and domestic consumption account for about 400,000t - of which 10,000t is for processing. This leaves an export market of around 110,000t.
Production areas have declined from a high in the mid-1990’s of 28,000 hectares, to the current levels of 26,000ha, which resulted in production dropping from over 600,000t to the current level of under 500,000t.
Recent years of drought in key production regions has kept industry investment to a minimum and citrus groves remain as small family holdings of around 10ha.
However in late 2004 the New South Wales Government announced plans to reinvigorate the industry through a 1,200ha citrus expansion across six regions within the state. Much of the expansion will be in the outer north westerly areas of the state, which reflect investment into irrigation and other water development projects in these areas. This £8m citrus investment will do much for the rejuvenation of the £180m Aussie citrus industry.
Australia continues to focus mostly on the bulk markets of South East Asia - of which Hong Kong is the most significant, with a primary role as a central distribution point for many of the broader ASEAN countries.
The US market has gained considerable importance - exports are around 20,000t - which is likely to increase further with the signing of an Australia-US Free Trade Agreement (FTA) in 2004. This FTA began in operation in January 2005, and as yet it is too early for the citrus sector to determine the true effects in terms of trade.
However a strong Australian dollar against the US dollar may actually result in poorer returns to Australian farmers.
The flip-side of the Australia-US FTA is the increased imports of citrus from the Florida region. Florida is the second largest citrus producing region in the world, and is likely to hit the Australian market with bulk fresh and juice oranges, which may have significant impact on consumption of Australian product. This in turn will produce a surplus of production, either for exporting as fresh or as processed product.
The forthcoming season will be a testing time for Australian citrus producers, one that will either see an expansion of opportunity or a contraction of business. Either way, with more Australian product available on the marketplace, European retailers will have a greater opportunity to import more quality citrus product at a cheaper price. Good news for retailers and profit margins, but perhaps not the successful outcome of an FTA with the US which Australian growers had hoped for.
The Australian industry has coped with a tough 10 years. Increased juice imports from South American countries, in particular Brazil; industry restructure, varietal change due to demand and disease outbreak have all taken a toll.
Disease outbreaks in citrus regions in northern Australia are causing trade concerns. Originally mooted as a one-off outbreak - and blamed on illegally imported budwood - citrus canker has been found again as recently as early February 2005.
Already in a quarantine area, the canker outbreak is likely to result in further trees destroyed (over 8,000 trees were destroyed in the 2004 outbreak) and restriction of trade imposed for a second time within a year.
Australian citrus industry leaders have been quick to minimise the damage by reinstating quarantine barriers in the affected region.
However, this is dire news for growers in this area. As production is expected to be up on last year, and a good start to the season - improved rains and weather conditions - growers need a good financial year to regain the lost profits of the last few years. The trade restrictions will affect trading into other Australian areas, namely the major markets for domestic and export distribution - Sydney and Melbourne.
This further outbreak could also see Australian citrus put on the banned list for imports into markets such as Japan, which is particularly rigorous when it comes to plant health (biosecurity) issues.
In an extreme scenario this could also affect the FTA relationship with the US, New Zealand, and further discussions with ASEAN countries and China, all of whom have biosecurity as a priority.
Ironically, access into the Australian market by Florida has been restricted to-date based on quarantine concerns. It is becoming harder for the Australian industry to claim pest and disease free status, and hence restrict imports, given the reoccurring outbreaks.
Despite the regional disease setback, the Australian citrus industry is set to have a high production and good quality year in 2005. Many exporters have gained considerable ground in developing secure markets for their products. Worldwide demand for citrus continues to increase in both the fresh and juice sectors, which will place Australia in position for good returns to farmers and industry alike.
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