Australia’s citrus industry is seeking to maintain the momentum from last year’s record export campaign in 2016, with early indications pointing to a highly ‘marketable’ crop and strong market demand.
Speaking at last week's Market Outlook Forum, which drew more than 140 industry professionals from the growing, packing and marketing sectors to Sydney on 16-17 March, Citrus Australia CEO Judith Damiani said the industry was in its healthiest position for a long time.
While the first official crop forecast for the 2016 season will not be released until next month, Damiani told Asiafruit that early indications were very positive.
“We are looking at a similar-sized crop to last year, which was quite a good volume for us,” she said. “Fruit sizing looks a little smaller, but last year we had a leaning towards larger sizes, so the size curve should be more favourable for marketing.
“Cosmetically, the crop is looking great, with smoother skin texture and less wind rub or scarring.”
From an export market perspective, Damiani reported “strong demand signals”, with good levels of interest from a range of countries.
While it is too early to gauge the competitive environment in Asia and in Australia’s other key export markets, there are indications that Argentina’s citrus production will be down significantly this year due to wet weather and disease pressures.
“If this proves to be the case, there is likely to be more demand for our fruit, particularly from South East Asia for our mandarins,” she noted. “With South Africa, a lot depends on what happens with their approach to Europe with the whole Citrus Black Spot issue, and on whether they decide to divert produce to other markets.”
China powers export surge
Australia’s citrus exports expanded by 30 per cent last year to top 205,000 tonnes worth A$280m, the second consecutive year of strong growth.
“We achieved growth in almost every market with a few exceptions, notably Indonesia due to the recent trade restrictions with import quotas,” said Citrus Australia’s market access manager David Daniels, who provided an overview of the 2015 campaign at the conference.
Hong Kong/China was again the standout performer for the industry. Exports to Hong Kong grew 21 per cent to almost 44,000 tonnes, while direct shipments to China rose by 58 per cent to reach level pegging with second-placed market Japan – both on around 29,000 tonnes.
“China has risen from almost zero four years ago to become basically our leading market when you consolidate the numbers with Hong Kong,” Daniels told Asiafruit. “It’s also become the leading market by volume and value for our mandarin exports.”
He sees great potential for further growth. “We’re really only skimming the surface along the eastern seaboard in China. There are opportunities further in-land that we need to pursue, and into some of the second and third-tier cities.”
One of the constraints on growth in direct exports to China has been the number of orchards registered to ship there, but the industry has witnessed a 60 per cent growth in the production area registered for shipping to protocol markets including China, Thailand and South Korea ahead of the new season.
Daniels said the increase in registrations had been driven by existing growers preparing more orchard blocks to meet protocols, rather than by new growers coming into the deal.
“The increase in hectares registered for China this year has been the result of a lot of hard work by growers to comply with China’s import conditions,” he told Asiafruit. “Through strong collaboration with the Australian government we have developed a modern and efficient electronic process of registration and auditing. The old paper-based system just would not have coped.”
As well as becoming Australia’s leading mandarin export market, China’s ever-increasing demand for navel oranges is a very encouraging trend for the industry at time when consumption of navels has been flat domestically and in other key markets around the world. “A few years ago, we thought we might have a few too many navels in the mid-season period – now it’s looking like we won’t have enough,” said Daniels.
Kurt Huang of Shanghai Huizhan’s Wholesale Market – who addressed delegates at the conference on trends in China’s fruit import market –identified plenty of room for Australia to develop its position.
“Chinese consumers lack knowledge of products and their origins so you need to spend time and money to educate them,” he told the audience.
He urged the industry to engage with a variety of channels in China to market its fruit and spread its message – from WeChat to specialist fruit chain stores – and had some tips on country-of-origin branding.
“The marketing of New Zealand in China in one word is ‘Pure’,” said Huang. “When you see a New Zealand product, it always reminds you of this word ‘Pure’. For Australian products, there is not one word or image that comes to mind, even though they’re seen as being of high quality.”
Another standout success for the industry in 2015 was the Philippines. The market only opened up to Australian citrus in 2013 under a cold treatment protocol, but last year its imports grew to 5,000 tonnes, and Daniels sees exciting potential to grow the volume, particularly with mandarins.
Promotional efforts have helped to drive the gains, and Vanessa Perez from Austrade Manila outlined plans at the conference to expand in-market activities under the Now in Season banner in 2016.
She also alerted delegates to the growing market for higher value product in the Philippines. “Don’t just look at the Philippines as a seconds market,” said Perez. “There’s a growing market of middle-income consumers and you need to put up a good quality product at the right price for retail stores.”
The Indonesian market was the only major setback for the 2015 export campaign, with volumes dropping by 23 per cent due to the government not issuing citrus import permits or quotas during the Australian season. Import permits have only been issued for February, March and April this year, with indications some are likely to be issued for September/October. This means the Australian industry will remain locked out of the market for the bulk of its season.
Daniels said regaining viable access to Indonesia was his “number one priority”. Australia’s agriculture, trade and prime ministers have all visited Indonesia over the past year while the countries are reported to be resuming negotiations for a free trade agreement.
“Indonesia’s only 5 per cent of our total citrus export volume, but it could be as high as 20-25 per cent for our Queensland mandarin industry,” he said. “We’re hopeful that in the longer term we can come up with a sensible arrangement with Indonesia to allow access for our fruit – we’re less than half a per cent of their total citrus market. We think Indonesia can become a very good market in the long-term, and it’s so close.”
Investing in an Asian future
Taking a look at the bigger picture, Daniels said ‘the Asian Century’ represented a huge opportunity for Australia’s citrus industry, but cautioned that the sector needed to invest in the adequate infrastructure and underpinning to capitalise.
“We need to ensure that we’re protecting our production base with proper biosecurity programmes; producing fruit with consistent colour and quality standards; getting access to the latest and best agrichemicals; and stepping up our in-field controls but at the same time exploring novel end-point quarantine treatments,” he said. “All this requires R&D dollars and we need to make sure we get adequate levies and spend the money correctly.”
Daniels also highlighted “sweeping food safety reforms” taking place across a range of export markets as a looming challenge. Most of the reforms centre on MRL standards. Several nations are introducing their own standards or lists of MRLs, or applying strict testing regimes. This requires suppliers to provide country-by-country compliance similar to retailer audits, he noted.