Aussie farmers benefit from Asian Free Trade agreements

farmers-2The Free Trade Agreements (FTAs) among Australia’s neighbouring countries China, Japan and South Korea in 2014 and 2015 is benefiting the country, IBISWorld research showed.

Fresh fruit and vegetable exports have markedly increased since the agreements came into effect.

“Although many tariffs will remain for some years yet, Australian farmers have been busy forging supply links with wholesalers and retailers across China, Japan and South Korea,” IBISWorld Senior Industry Analyst Sam Johnson said.

“Australian fruit and vegetable exports to Asia, particularly to countries that have FTAs with Australia, will continue to enjoy healthy growth over the next five years and well into the future as Australia positions itself as a major food supplier for increasingly wealthy Asian consumers.”

Citrus, banana and other fruit growers have welcomed the FTAs, with revenue from exports growing at a staggering annualised 19.9 per cent over the five years through 2016 to 2017.

“According to IBISWorld, exports in the Citrus, Banana and Other Fruit Growing industry will generate $689.6 million in the current financial year,” said Johnson.

“Australian almonds have performed particularly well, outpacing robust export growth across the overall industry. While FTAs have contributed to this success, almond growers have enjoyed larger harvests [because of] significant planting in 2006 and 2007. Water shortages that adversely affected Californian growers, the world’s largest supplier of almonds, also pushed global prices upwards over 2015 and 2016.”

Outdoor vegetable farmers have also benefitted from the FTAs, with revenue from exports increasing at a vigorous annualised 8.9 per cent over the five years through 2016 to 2017.

“According to IBISWorld, exports of outdoor vegetables will generate $303.7 million in 2016 [to] 2017,” Johnson further explained. “Asparagus exports to South Korea have driven some growth over the last five years, rising in value by 123 per cent between 2014 and 2015. Other vegetables that have been successful in China, Japan and South Korea under the FTAs include lettuces, broccoli and broccolini, beans, spinach, cabbage, cauliflower, celery and peas.”

The total value of Australian vegetable exports to China alone increased from $570,000 in 2014-15 to $17.2 million in the following year.

“While the FTAs are largely positive for Australian producers, the story is less positive in some areas. Avocado growers have yet to benefit from falling tariffs on their produce. Despite tariffs on Australian avocados entering China set to fall from 25 per cent to 0 per cent from January 2019 onward, Australian avocado growers have yet to secure access to Chinese markets,” stated Johnson.

He said, they will have to prove that the risks from quarantine are manageable. He also said that it is possible to safely implement the importation processes. Mexican and Chilean avocados are already accessing the Chinese market, “which could limit the growth potential for domestic growers once exports to China commence.”

The FTA paved way for expansion opportunities in areas where Australia had previously seen as “uncompetitive or did not have market share”.

 

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