Export opportunity evaluation study for Australian vegetable industry

Transcription

1 Export opportunity evaluation study for Australian vegetable industry International Trade Unit Australian Business Limited Project Number: VG01090

2 VG01090 This report is published by Horticulture Australia Ltd to pass on information concerning horticultural research and development undertaken for the vegetable industry. The research contained in this report was funded by Horticulture Australia Ltd with the financial support of the vegetable industry. All expressions of opinion are not to be regarded as expressing the opinion of Horticulture Australia Ltd or any authority of the Australian Government. The Company and the Australian Government accept no responsibility for any of the opinions or the accuracy of the information contained in this report and readers should rely upon their own enquiries in making decisions concerning their own interests. ISBN Published and distributed by: Horticultural Australia Ltd Level 1 50 Carrington Street Sydney NSW 2000 Telephone: (02) Fax: (02) horticulture@horticulture.com.au Copyright 2002 Horticulture Australia

3 t s Australian Business Limited Advice* Networking-Support'Advocacy EXPORT OPPORTUNITY EVALUATION STUDY for AUSTRALIAN VEGETABLE INDUSTRY PROJECT VG01090 Prepared by International Trade Unit Australian Business Ltd July, 2002

4 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 2 ACKNOWLEDGEMENTS The project team wishes to acknowledge the financial support of the Australian Vegetable Industry through Horticulture Australia Ltd. The team also wishes to thank the many contributors to the report including the vegetable growers of Australia, packers, exporters, and industry research and support staff who gave of their time, information, and advice. These are shown in the 'Acknowledgements' section at the rear of this report. We apologise if we have overlooked any contributor. We would also thank the Project Steering Committee team led by Kim James and including Jonathon Eccles, Amani Ahmed, Clive Stephens, Danny de leso, Ian Young, Tony Cavallaro, John Said, Merv Tasker, and David Ellement for their support and guidance. PROJECT TEAM Graham Ferguson, Senior Manager, International Trade Unit, Australian Business Ltd (ABL). (Project Team Leader) Victoria Qiu, Manager, International Trade Unit, ABL Grant Payne, Consultant, International Trade Unit, ABL Gee Yap, Consultant, International Trade Unit, ABL Paul van der Westhuizen, Researcher, International Trade Unit, ABL and, Specialist Industry Consultant: John Baker, CEO, Produce Marketing Australia DISCLAIMER Care has been taken to ensure that the information contained in this report is reliable and that the conclusions and recommendations reflect considerable professional judgement. Australian Business Ltd however does not guarantee that the report is without flaw or is wholly appropriate for all purposes and therefore disclaims all liability for any loss or other consequence which may arise from reliance on any information contained herein. Prepared by Australian Business Ltd July, 2002

5 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 3 INDEX Page 1.0 EXECUTIVE SUMMARY PROJECT BRIEF & METHODOLOGY CURRENT STATUS AUSTRALIAN INDUSTRY Growing Regions and Seasonality Production Data Production History by Vegetable State Shares of Production Export Data Export History Exports by Vegetable by Market State Shares of Exports MAJOR COMPETITORS IN EAST ASIA USA China New Zealand Netherlands EAST ASIAN MARKETS - BY COUNTRY South Korea Japan China Hong Kong Taiwan Thailand Philippines Malaysia Singapore Indonesia SUPPLY CHAIN ISSUES Market Access Requirements Vegetable Maximum Shelf Life Time to Market Supply Chain Cost Structures 87 Prepared by Australian Business Ltd July, 2002

6 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) OPPORTUNITIES AND THREATS Australia's Overall Performance in Asia Broccoli Cauliflower Carrots Celery Capsicum China CONCLUSIONS AND RECOMEMENDATIONS 107 REFERENCES & ACKNOWLEDGEMENTS 110 Prepared by Australian Business Ltd July, 2002

7 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) EXECUTIVE SUMMARY: The project 'Export Opportunity Evaluation Study for the Australian Vegetable Industry' (HAL number VG01090) was initiated by Horticulture Australia Ltd (HAL) and awarded to Australian Business Ltd in December, The project's primary objective was to assess export opportunities for 5 nominated fresh vegetables (broccoli, cauliflower, carrots, celery, and capsicum) across 10 East Asian markets (Korea, Japan, Taiwan, China, Hong Kong, Thailand, Malaysia, Singapore, Philippines, and Indonesia). The brief included an assessment of the current status and competitiveness of the Australian export industry for each vegetable, an analysis of each of the 10 markets to identify opportunities, a study of competitor performance and threats, and to make recommendations as to best prospects and any other matters which might flow from the study. The work included a detailed literature search of published material along with phone and face to face interviews with Australian and overseas growers, exporters, agricultural field personnel, shippers and freight forwarders, and Asian buyers / importers in each of the 10 countries. Work also focussed on the acquisition and analysis of import data for each market by vegetable by month by supplying country, this being used to identify seasonal windows of opportunity and to understand the strong and weak supply periods of our competitors. The 5 vegetables covered in the report represent a significant part of the Australian fresh vegetable industry. Production (1999) totalled over 450,000 tonnes of which some 84,000 tonnes ($78 million) was exported, 90% of which went to the 10 East Asian countries in this study confirming the importance of these markets to us. Singapore and Malaysia are by far the most important markets for the 5 vegetables. Carrots, cauliflower, and broccoli are in order our biggest exports with celery and capsicums comprising minor quantities, the latter somewhat restricted through being a fruit fly host. West Australia dominates carrot and cauliflower exports with most of their production going overseas whilst broccoli exports are more evenly spread between Qld and Victoria. We are not without competition in Asia especially from the USA who do better than they should in North East Asia generally and dominate both the North East and South East Asian celery markets. New Zealand is an effective competitor in carrots in the first half of the calendar year and also do well with capsicums. China looms as the biggest threat to our markets, being a low cost producer who is rapidly overcoming perceptions of poor quality but has some way to go to convince consumers in markets like Japan and Korea that their produce is safe. Joint vegetable growing ventures with foreign companies from Japan, Korea, and Singapore is providing China with access to advanced technology and ready markets. China already appears to have made some inroads into our sales for example with broccoli in Hong Kong, Malaysia and Singapore. Prepared by Australian Business Ltd July, 2002

8 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) Q We were able to make some broad observations about Australia's performance: > We perform far better in South East Asia (Thailand, Malaysia, Singapore, Philippines, and Indonesia) than North East Asia. > We perform well with carrots, broccoli, and cauliflower in South East Asia but relatively poorly in North East Asia. > We perform poorly with celery and capsicum in most markets, the former because we do not supply what the markets want, the latter partly because of restricted market access. There were reasons for the above. South East Asian markets are our traditional markets where we have advantages in reputation, in relationships, and in shipping times / costs / frequencies. Western Australia in particular has done a good job building our image. The problem for Australia is that the largest markets are in North East Asia. Whilst Indonesia, Thailand and the Philippines all have large populations, their consumers are unable to yet afford costly imports. The big potential business lies in Japan, along with Hong Kong, and an emerging Taiwan however these markets are very competitive, not that this should deter us. Part of the project entailed matching product shelf life with time to market and we found (using the latest shipping services) most vegetables could reach most markets using sea transit rather than air. This was especially true for shipments out of Fremantle (all markets within 5-19 days) and Brisbane (all markets within 8-16 days). We felt more use could be made of sea freight to target market niches where cost was a more important consideration without significantly sacrificing quality. Airfreight was being used because many existing clients wanted it but there were others who would prefer a lower price. A saving likely in excess of AUD$2-3 per kg could be achieved at the final point of sale using sea rather than air. We also have provided tables which show the approximate costs (given that they are a mix of fixed and variable costs which thus vary with each scenario) from port of loading to port of discharge, this providing growers and exporters with some sort of basis to assess if import / landed prices allowed them to supply the market in a profitable manner. It could never be more than a guideline given that market prices fluctuate with supply and demand, transport costs at both ends of the supply chain will vary, as do currency exchange rates, and the distribution chain in each instance can be simple or complex. We need to be conscious that the system does not encourage spot selling which we know to be against Australia's long term interests. There is also a need to clearly understand the price being advised and whether it is with / without tariff charges, transport to the importers warehouse, etc. The report has provided a list of opportunities and threats for Australian growers and exporters to act on. We believe opportunities exist for Australian broccoli in Japan using sea or air freight but supplying the 'crown cut' variety that the Prepared by Australian Business Ltd July, 2002

9 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 7 fastidious Japanese consumer wants and which the USA is supplying. Similarly we think opportunities could exist for our broccoli in Hong Kong despite recent sales declines. Transhipment times by sea are viable from Brisbane and Fremantle, at least some supermarkets don't want air freighted iced broccoli, and the quality of supply from China over their summer season is still lacking. Taiwan has opened its markets somewhat since joining the WTO and opportunities previously restricted to the USA through quotas are now available to Australia. Exports of our carrots and cauliflower are showing good growth and are capable of further exploitation. The industry should focus their efforts on this market. Taiwan also offers opportunities for Australian celery but so does most of North East Asia. At present we simply do not provide the celery that markets want and yet opinion is that we could supply this if we wanted. We were even criticised in Singapore for our inconsistent, poorly packaged, shorter shelf life, and more expensive celery, a market where we have a good overall reputation. The USA export some 35,000 tonnes of celery to East Asian markets and we should be able to win at least a share of this if we grow the right varieties and provide the necessary post harvest treatments. The export of capsicums from Tasmania to Japan has been examined before but Korean prices moved too low for Tasmania to compete. We think it might be worth examining again using a recently established air / sea supply chain transhipping through Singapore. Sea freight of capsicums generally is worthy of examination. New Zealand exporters believe three week sea journeys are possible. This would open Asian markets like Singapore / Malaysia / Hong Kong to more competitively priced sea freighted mainland capsicums from ports such as Brisbane. Many other minor opportunities were identified which in total offer Australia prospects to counter anticipated loss of business from expanding production and exports from China. Despite China's entry into the WTO prospects for large sales into China are some time off given that the population is still not generally able to afford imported vegetables and given that formal approval for access of each item of our produce will be a time consuming process. China will however become a substantial competitor whom we should assume will overcome current concerns for safety from high chemical residues. A growing affluence in China will bring a double benefit as it will see our produce more affordable and will also see Chinese grown vegetables more expensive. This is some way off and until then it will become even more important to be competitive and to ensure that Australian produce in Asia is seen as a quality and safe product, and that we focus on opportunities provided by our opposite season, our horticultural expertise, and our time to market. Promotion of Australian produce under the 'Australia Fresh' brand would reinforce existing perceptions of our clean and safe image and provide a useful vehicle for in-store promotion. On the assumption that these product and market opportunities are accepted by the vegetable industry, an important next step is to confirm those production Prepared by Australian Business Ltd July, 2002

10 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 8 regions who are in the best position to satisfy the needs of the markets and develop integrated production, post harvest and marketing packages to respond accordingly. Task forces need to be formed who can confirm and target specific opportunities (eg broccoli into Japan, celery into North East Asia) and proactively identify the ideal growing regions, the varieties, the production and post harvest techniques, packaging and shipping, which will meet the specific needs of the market and the seasonal window. This then becomes true demand driven planning. In summary the prospects for Australia across the 10 East Asian markets and 5 vegetables studied are mixed. Some losses will likely occur and some wins will be made. On balance we believe we can substantially improve on our existing performance and export sales however it must be made to happen - "to stand still is to go backwards" is even more true today than ever. Prepared by Australian Business Ltd July, 2002

11 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) Q 2.0 PROJECT BRIEF & METHODOLOGY: The project titled 'Export Opportunity Evaluation Study for the Australian Vegetable Industry' (HAL number VG01090) was initiated by Horticulture Australia Ltd (HAL) and awarded to Australian Business Ltd on December 10, The Project Reference Group comprised HAL staff Kim James (Project Manager), Jonathon Eccles, and Amani Ahmed, plus the members of the Vegetable Industry R&D Export Committee. The project's objective was to evaluate export opportunities in 10 East Asian markets for 5 nominated fresh vegetables. The markets were: > In North East Asia - Korea, Japan, Taiwan, China, Hong Kong. > In South East Asia -Thailand, Malaysia, Singapore, Philippines, Indonesia. The vegetables to be studied were: > Broccoli, Cauliflower, Celery, Carrots, Capsicums. The brief required: > Analysis of current status of the 5 nominated Australian vegetable export industries. > Analysis of each of the 10 Asian markets for the specified vegetables including competitor performance and consumer preferences. > Assessment of relative competitiveness of each of the nominated Australian vegetable industries. > Prioritise export opportunities and recommend the means to grasp these. > Make other recommendations as appropriate. Project completion date was targeted as end of June, The Australian Business Ltd team delivering the project comprised: Graham Ferguson, Senior Manager, International Trade Unit (Project Team Leader) Victoria Qiu, Manager, International Trade Unit Gee Yap, Consultant, International Trade Unit Grant Payne, Consultant, International Trade Unit Paul van derwesthuizen, Researcher, International Trade Unit. and, Specialist Industry Consultant: John Baker, CEO, Produce Marketing Australia. Prepared by Australian Business Ltd July, 2002

12 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 10 We initiated the project by conducting a literature search gathering all available and relevant published information on the industry and in this regard many useful articles and reports were obtained. Significant information sources are recorded in the reference section at the end of the report. Sources of information for our desktop research included past industry reports, Australian Business Ltd's own extensive library resources, the internet, United Nations' FAO data base, Australian Bureau Statistics (ABS), as well as trade statistics accessed through our subscription based membership of the Dialogue Corporation's Tradstat data service which provides country import statistics by product / by supplying country / by month. This monthly import data was an important element of our research as it allowed a clearer understanding of seasonality of supplying countries and potential supply windows. We also assembled a comprehensive list of people whom we should speak to including growers and exporters both in Australia and in competitor countries, and importers / buyers in each of the 10 countries under study. We have a strong belief that in projects such as this the gathering of information first hand through face to face and telephone interviews is not just a supplement to desk research but is an essential component of gaining a true understanding of the issues. Other sources of information were AQIS, Austrade, state departments of agriculture, shipping companies and freight forwarders, overseas trade consulates and trade organisations. Australia finds it difficult to be the lowest cost producer compared with countries such as China which has low labour costs, or the USA where benefits of scale are apparent. Consequently the more secure, longer term opportunities for Australia are often confined to where we have a relative competitive advantage and that relative competitive advantage usually tends to lie in either: > Having a seasonal supply window available in which other producer countries have difficulty in meeting actual or potential demand. > Where time and / or cost to market favours Australia. > Where perceptions of quality and / or safety are important. > Where labour costs are not a significant component of total costs or where capital can replace labour Thus many of the opportunities for us tend to favour vegetables that are strongly seasonal, or time sensitive vegetables with a short shelf / storage life, or occur in more affluent countries where matters of safety, freshness, convenience are valued over price. We thus approached the project by firstly wanting to understand the major varieties grown in Australia, the regions they are grown in, their seasonality, and the maximum acceptable time from harvest to retail shelf for each of the 5 vegetables. By knowing the maximum time available to get produce onto retail shelves in good condition, and from a knowledge of shipping times (air and/or Prepared by Australian Business Ltd July, 2002

13 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 11 sea) and frequencies, we could identify overseas markets within reach as well as have some basis for establishing the costs to reach those markets. We then assessed accessibility of each market in terms of phytosanitary requirements etc, and by examining each country's imports by supplier / by month, we sought seasonal windows where Australia might be able to supply when competition was weak in either quality or price, or where existing supply was seemingly insufficient to meet inherent demand. We then spoke with vegetable importers / buyers in those markets to confirm our research and to understand just what were the needs of consumers and those in the distribution chain. We did not focus on providing general economic and other data on the 10 East Asian countries as this has been amply covered in previous reports and for the same reasons we did not report on trends in distribution channels and supply chains. We have tried to focus on the current performance and status of Australia as a supplier and an analysis of the opportunities and threats that may exist for us. Frozen, processed, and other value added vegetable opportunities were not explored. 3.0 CURRENT STATUS OF AUSTRALIAN INDUSTRY 3.1 Growing Regions & Seasonality We have attempted to establish the Australian seasonality of supply of each vegetable and place in both tabular and chart form. This data was obtained from phone interviews with growers, state field officers, seed suppliers, and exporters as well as published literature. Considerable views as to seasonality exist and we can only claim the chart as an approximation. A host of varieties exist which can be planted at different times of the year, varying climates are apparent within a region / sub-region, whilst the season start and end can of course vary somewhat from year to year. The tables also do not tell us about the level of production within each region nor within each month of the year thus it cannot tell us if produce is available for export from that region at that time. We have tried to indicate high and low levels of the production season on the chart through use of colour. Despite these weaknesses, the tables and chart do assist in providing an overall picture of availability of supply from Australia. Broccoli WA Seasonality Year round -highest from September to April Growing Regions Perth Metropolitian and outer areas, Manjimup. Prepared by Australian Business Ltd July, 2002

14 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 12 NSW Year round -highest from April to November Gosford, Sydney Basin, Windsor, Cowra, Camden, Hay, Forbes, Dareton, Central Coast and Tamworth Queensland April to September Lockyer Valley / Gatton, Darling Downs / Toowoomba, Stanthorpe, and Sunshine Coast Victoria SA Year round - highest from April to December Year round - highest between May to November Robinvale, Longford, Bairnsdale, Lindenow, Rosebud, Bacchus Marsh, Werribee Adelaide Hills and Adelaide Plains Tasmania January / February / March Northwest region Cauliflower WA Seasonality Year round supply highest from March to June, average from July to September and good from October to February Growing Regions Manjimup, Perth Metropolitan and outer areas NSW April to December - highest around June to September Gosford, Outer Sydney, Hunter Valley, Cowra, Mudgee, Bathurst, Windsor, and Forbes Queensland June to September Lockyer & Fassifern Valley, Darling Downs / Toowoomba Victoria SA Year round supply with production peaking from around April to November Best from June to October Werribee region Riverland, Virginia, Adelaide Hills and Adelaide Plains Tasmania N/A N/A Prepared by Australian Business Ltd

15 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 13 Carrots Seasonality Growing Regions WA Year round supply Guilderton, Perth, Myalup and Scott River NSW June to January Mangrove Mountain, Gosford, Windsor, Riverina, and Sunraysia Queensland June to January Lockyer & Fassifern Valley, Darling Downs / Toowoomba Victoria July to April Baimdale, Sale, Thorpdale, Mornington Penninsula, Dandenongs and Sunraysia SA July to December Riverland, Adelaide Plains and Adelaide Hills Tasmania July to November North West Coast, Devonport and Forth Celery Seasonality WA Year round supply - highest from April to October Growing Regions Perth Metropolitan, Busselton and Harvey NSW July to October Windsor, Hunter Valley Queensland April to December. Gatton, Stanthorpe and Toowoomba Victoria April to December Sunraysia, Dandenongs and Healsville SA N/A Adelaide Plains Tasmania N/A N/A Capsicum Seasonality Growing Regions WA Year round supply Perth Metropolitan and outer areas NSW Year round supply Sydney Metropolitan, Dareton, Cowra, Griffith, Central Coast, Hunter Valley Prepared by Australian Business Ltd July, 2002

16 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 14 Queensland Year round supply Gumliu, Burdekin, Bowen, Stanthorpe, Redland Bay and Bundaberg Victoria December to March Orbost, Wandin, Murchison, Sheppparton, and Tatura SA N/A Riverland, Adelaide Hills and Waikerie Tasmania Mid November to May (Glasshouse) North West and South Information Sources: Qld DPI Dept of Ag. WA Dept of Ag. NSW DPIR, SA Dept Natural Resources & Environment, Victoria. Prepared by Australian Business Ltd July, 2002

17 VEGETABLE SEASONALITY Veaetablt State Source of Info. Weeks ll 2l 3, 4l 5l «l 7l Sl»l 10l l 13[ Hi 15, 1S 17l isl 10l 201 2ll 22l sl 29i Months L_ j j j j 1 F F F m M M M a A A A A m M M M 1 j j j 1 j j J J a A A Broccoli Western Australia Seminis r^h MINIM Key: Victoria Colour High Supply Light Supply Seminis N T j rm ""H I1IIIII 1 r^r^r^r IN I I I 1^ ^ pr-r- _ M Ttr ZL J3, J3J JJr 3- ji"ih i, r _r r 3* X we m 1 IT T" II I PPWPW ^T 11 1 Tl tzl 1

18 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) PRODUCTION DATA Production History by Vegetable 6 years historical production figures by state by vegetable follow (ABS statistics were unavailable for a full 10 years history whilst data for 2000 and 2001 were unavailable until October, 2002): Broccoli Broccoli - Production by State (tonnes) Season NSW VIC QLD SA WA TAS ACT Total ,444 15,701 8,273 2,409 3,208 2, , ,159 14,583 7,074 2,398 2,713 2, , ,974 17,349 7,658 3,320 1,802 3, , ,407 19,198 9,116 1,828 2,649 4, , ,621 22,448 6,418 1,823 1,854 3,680 N/A 39, ,364 21,410 7,511 1,202 2,179 4,723 N/A 39,389 (Source: Australia Bureau of Statistics) Cauliflower Cauliflower - Production by State (tonnes) Season NSW VIC QLD SA WA TAS Total ,852 28,573 9,743 5,441 14,066 4,560 75, ,524 19,638 8,250 7,089 15,676 4,928 66, ,743 20,780 9,290 6,624 19,200 4,415 71, ,692 17,409 10,518 3,709 16,213 4,851 64, ,453 16,515 10,918 3,926 18,538 4,428 64, ,908 16,306 14,997 4,315 21,046 4,861 73,433 (Source: ABS) Carrots Carrots - Production by State (tonnes) Season NSW VIC QLD SA WA TAS Total ,576 48,548 28,184 22,970 36,439 19, , ,460 66,460 26,856 22,885 2,757 19, , ,757 91,123 29,427 39,996 45,369 21, , ,765 99,274 28,522 40,307 52,992 22, , ,315 95,607 22,898 47,767 51,991 31, , ,378 96,492 20,335 27,105 56,738 36, ,609 (Source: ABS)

19 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 17 Celery Celery - Production by State (tonnes) Season NSW VIC QLD SA WA TAS Total ,931 12,269 4,167 6, , ,257 11,199 4,036 4, , ,064 13,229 5,788 6, , ,403 11,717 4,247 5, , N/A 21,497 15,362 2,916 4, , NA 21,787 10,018 5,281 5, ,208 (Source: ABS) Capsicum Capsicum (including Chillies and Peppers) - Production by State (tonnes) Season QLD VIC WA SA NSW NT TAS Total ,592 2,679 2,296 1,098 1, , ,576 3,106 2,308 1, , ,105 3,233 2,081 1, , ,403 3,353 2,226 1, , ,131 4,305 2, , , ,715 2,404 1,410 1,094 1, ,262 (Source: ABS) Growth in Australian production of each vegetable 1994 to 1999 (ie over the 5 year period) is interesting: Broccoli +18.2% Capsicum +59.4% Cauliflower - 2.4% Carrots +51.9% Celery + 6.2% State Shares of Production Total production in 1999 (latest ABS statistics available until October, 2002) and each state's share of national production are shown below:

20 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 18 State Share of Australian Production (% of 1999 production) Vegetable QLD VIC NSW SA WA TAS Total Aust Production (Tonnes) Broccoli 19% 54% 6% 3% 6% 12% 39,389 Capsicum 84% 6% 4% 3% 3% 0% 41,262 Cauliflower 20% 22% 16% 6% 29% 7% 73,433 Carrot 8% 38% 7% 11% 22% 14% 256,609 Celery 23% 51% N/A 12% 13% 1% 43,208 In summary: > Of the 5 vegetables under study, only carrots and capsicum have shown significant growth in production in the 5 years to > Victoria dominates production of broccoli, celery and carrots, Queensland dominates capsicum production, whilst cauliflower is more evenly spread across most states. Western Australia produces more than its share of cauliflower, carrots, and celery and is a major exporter of these. 3.3 EXPORT DATA Export History Australian Exports - By Volume and Average Selling Price 1995 to % Vegetable Tonnes $/kg Tonnes $/kg Tonnes $/kg Tonnes $/kg Tonnes $/kg Broccoli 8,179 $2.15 7,942 $2.03 9,323 $1.86 7,981 $1.97 8,429 $1.80 Capsicum 469 $ $ $ $ $2.55 Cauliflower 18,860 $ ,357 $ ,318 $ ,827 $ ,763 $1.36 Carrot 42,616 $ ,901 $ ,192 $ ,473 $ ,200 $0.65 Celery 4,403 $0.77 2,505 $0.80 3,505 $0.84 3,088 $0.88 2,117 $0.88 Source: ABS statistics Exports over the 5 year period to 1999 have been variable:

21 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 19 Vegetable Export (Tonnes) Export (Average Price / Kg) Broccoli Steady Down Capsicum Steady Down Cauliflower Down Steady Carrot Up Steady Celery Down Up Note: A lot of broccoli and capsicum is exported by airfreight and this could be the reason that average export prices are trending down Exports by Vegetable by Market Looking at each individual vegetable and its export markets over the years 1998 and 1999: Broccoli Export Markets Broccoli - Australia's Major Export Markets Destination Year 1998 Year 1999 Tonnes ($'000) $/kg Tonnes ($'000) $/kg Singapore 3,636 6,478 $1.78 3,724 6,347 $1.70 Malaysia 1,717 3,153 $1.84 2,144 4,035 $1.88 Japan 803 2,346 $ ,689 $1.97 Hong Kong 720 1,212 $ $1.58 Taiwan 557 1,142 $ ,189 $1.63 Philippines $ $1.89 United Arab Emirates $ $2.23 Brunei $ $2.17 New Zealand $1.95 N/A N/A N/A Saudi Arabia $ $5.40 Other $ $0.66 Total 7,981 15,700 $1.97 8,429 14,834 $1.76 (Source: ABS) Cauliflower Export Markets Cauliflower - Australia's Major Export Markets Destination Tonnes ('$000) $/kg Tonnes ('$000) $/kg Malaysia 9,425 12,561 $ ,446 13,574 $1.30 Singapore 6,061 8,671 $1.43 5,545 8,131 $1.47 Hong Kong $ $1.29 Taiwan $ $1.13

22 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 20 Brunei $ $1.31 Japan $0.59 N/A N/A N/A Indonesia $ $0.75 Papua New Guinea 10 6 $ $1.00 New Caledonia 8 13 $ $1.66 Philippines 8 19 $ $2.12 Others $ $1.70 Total 16,827 22,809 $ ,763 22,729 $1.36 (Source: ABS) Carrot Export Markets Carrots - Australia's Major Export Markets Year 1998 Year 1999 Destination Tonnes ('$000) $/kg Tonnes ('$000)$/kg Malaysia 23,175 15,902 $ $0.59 Singapore $ $0.64 Hong Kong $ $0.70 Japan $ $0.83 Thailand $ $0.74 Taiwan $ $0.70 United Arab Emirates $ $0.65 Brunei $ $0.56 Bahrain $ $0.58 Seychelles $ $0.83 Others $ $0.58 Total 59,473 42,334 $ ,200 36,420 $0.65 (Source: ABS) Celery Export Markets Celery - Australia's Major Export Markets Destination Year 1998 Year 1999 Tonnes ('$000) $/kg Tonnes ('$000) $/kg Malaysia 1,580 1,419 $ $0.94 Taiwan $ $0.68 Hong Kong $ $0.80 Singapore $ $0.88 United Arab Emirates $ $1.06 Thailand $ $0.97

23 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 21 Brunei $ $1.13 Indonesia $ $3.50 Fiji $ $0.88 Bahrain $ $1.11 Others $ $1.06 Total 3,088 2,715 $0.88 2,117 1,869 $0.88 (Source: ABS) Capsicum Export Markets Capsicum - Australia's Major Export Markets Destination Year 1998 Year 1999 Tonnes ('$000) $/kg Tonnes ('$000) $/kg New Zealand 818 2,079 $ $2.56 Singapore $ $1.96 Thailand $ $2.71 Indonesia $ $2.90 United Arab Emirates $ $2.50 Hong Kong $ $2.57 Japan $ $10.67 New Caledonia $ $1.57 Mauritius $ $5.00 Malaysia $ $1.98 Others $ $2.11 Total 880 2,242 $ ,321 $2.55 (Source: ABS) The tables above show the importance of the Asian region as a market for many of our vegetables. The proportion of exports of each of the 5 vegetables that are destined for North East / South East Asia are (1999 statistics): Broccoli 97% Cauliflower 99% Carrots 90% Celery 25% Capsicum 15% State Shares of Exports Some states are larger exporters than others. Information was purchased from Australian Bureau of Statistics (ABS) which allowed us to show exports by vegetable by state for the year Detailed tables showing each state's exports by vegetable, by month, and by destination market, are attached as

24 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 22 appendices. Below we show summaries which focus on states and export seasons. (a) Broccoli Export s (tonnes) by Month / By State FULL j F M A M J J A s O N D STATE YEAR 2001 OLD NSW VIC TAS SA WA TOTAL Victoria and Queensland are the major export states with Victoria exporting some 8 months (April - December) of year 2001 and Queensland a shorter period over winter (June - September). To get a rough fix on the proportion of each state's production that is exported, we have compared year 2001 exports by state with year 1999 production by state (the most recent figures we could obtain). STATE Production Exports % State Production Exported (1999) (2001) (Approx) (tonnes) (tonnes) QLD 7,511 2,249 30% NSW 2, % VIC 21,410 3,593 17% TAS 4, % SA 1, % WA 2, % TOTAL 39,389 7,364 19%

25 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 23 PRODUCTION SHARES OF BROCCOLI BY STATE (1999) Source: ABS QLD _ NSW n = u VIC States I Portion of Production being Exported (2001) TAS SA WA (b) Cauliflower Almost all of Australia's 25,000 tonnes of cauliflower exports in year 2001 were from West Australia with the only other state exceeding 1,000 tonnes being Queensland (1,598 tonnes). West Australia is exporting all year round but with a weighting towards the colder winter months. Ex ports ( tonnes) by M onth / By State - 2t 301 FULL J F M A M J J A s O N D STATE YEAR 2001 QLD NSW VIC TAS SA WA TOTAL STATE Production (1999) (tonnes) Exports (2001) (tonnes) % Production Exported (Approx) QLD NSW 14,997 11,908 1, % 2%

26 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 24 VIC 16, % TAS 4, SA 4, WA 21,046 22, % TOTAL 73,433 25,201 34% PRODUCTION SHARES OF CAULIFLOWER BY STATE (1999) a OLD NSW VIC TAS SA Source: ABS I Portion of Production being Exported (2001) Almost all of West Australia's cauliflower production is for exports and currently makes them most dependant on two markets - Malaysia and Singapore (fortunately feedback from buyers in both countries is very positive towards Australian cauliflower). (c) Carrots Carrots mirror cauliflower in that West Australia is by far the major exporting state with some 53,000 of the 60,000 tonnes of carrots exported in 2001 coming from there. Only other exporters of any significance were Queensland (2,400 tonnes) and Tasmania (3,600 tonnes). West Australian exports are year round but weighted towards the spring / summer period (August to December). Queensland exports are all in late winter / spring whilst Tasmanian exports occur late summer / autumn. Exports (tonnes) by Month / By Stal te - 20! 31 FULL J F M A M J J A s O N STATE YEAR D 2001 QLD NSW VIC TAS

27 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 25 SA WA TOTAL STATE Production Exports % Production Exported (1999) (2001) (Approx) (tonnes) (tonnes) QLD 20,355 2,429 12% NSW 19, <1% VIC 96, <1% TAS 36,561 3,616 10% SA 27, % WA 56,738 52,956 93% TOTAL 256,609 59,647 23% Exports are currently essential to West Australia's carrot industry and an important part of Tasmania's industry. Although West Australia is almost totally reliant on exports of its carrot production, its markets are fairly well spread being across some 7 Asian countries although half of these exports are to Malaysia. PRODUCTION SHARES OF CARROTS BY STATE (1999) QLD VIC TAS SA Source: ABS States Portion of Production being Exported (2001)

28 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 26 (d) Celery Very little celery is exported (some 2,500 tonnes in 2001). What little is exported however is mainly from West Australia and again into the traditional markets of Malaysia and Singapore. Exports (tonnes) by Month / By State FULL j F M A M J J A S O N D STATE YEAR 2001 QLD NSW VIC TAS SA WA TOTAL STATE Production Exports % Production Exported (1999) (2001) (Approx) QLD 10, % NSW 195(1997) 5 2% VIC 21, % TAS 569-0% SA 5,281-0% WA 5,553 1,839 33% TOTAL 43,208 2,485 6%

29 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 27 PRODUCTION SHARES OF CELERY BY STATE (1999) a S Source :ABS QLD NSW VIC TAS SA WA States I Portion of Production being Exported (2001) In summary, most states are currently growing celery only for the domestic market and only West Australia has any dependence on exports. (e) Capsicum From the ABS 2001 statistics, capsicum exports are negligible and capsicum production is (almost) negligible in all but Queensland who grow some 85% of the national production. We have some doubts as to the ABS statistics in that some 500-1,000 tonnes are believed to be exported to New Zealand (refer Asiafruit magazine, March/April, 2002) and previous years export statistics confirm this, however it is still a minor export vegetable for Australia and as such, any comparison of production versus exports is rather meaningless. Exports (tonnes) by Month / By Stat te - 20( )1 FULL J F M A M J J A S O N D STATE YEAR 2001 QLD NSW VIC TAS SA WA TOTAL

30 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) MAJOR COMPETITORS IN EAST ASIA Other significant vegetable growing countries that supply East Asian markets are: USA China New Zealand Netherlands We purchased export data by month by destination for each vegetable for the USA, China, New Zealand, and the Netherlands (capsicums only). 4.1 USA Broccoli UNITED STATES: CAULIFLOWER AND BROCCOLI EXPORTS BY COUNTRY ToTAT TJB -JaTTuB T&m MaTSC ApOT TBayW" JunTO JuTO AugW SepJO od-00 - TJoTBB"' BedOu TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE UK Russia Canada 46, Mexico 1, Panama and Canal Zone Bahamas Jamaica Barbados Trinidad & Tobago Colombia Kuwait Indonesia Malaysia Singapore Philippines China South Korea Japan 24, Taiwan Hong Kong Total 74, ,099 6,356 6,604 6,712 7,610 4,330 3,869 4,781 5, ,419 Average Price per Tonne (AU$): ,078 1,235 1,324 1,132 1,352 1,209 1,292 1,273 1,432 1,186 Source: Tradstat Ninety percent of the broccoli grown in the United States is produced in California. Broccoli is also grown in Arizona, Maine, Wisconsin, Ohio, Colorado, Oregon, Texas and Florida. Most Californian broccoli comes from the Salinas and Santa Maria valleys and California can produce broccoli all year round. Consumption and production of broccoli in the USA has shown significant growth. Field sorting / packing is used for export product and eliminates pack houses. Slush ice is also injected into cartons to remove field heat within 2 hours and temperature is reduced to 2 C within 4 hours. Under ideal storage this then provides a shelf life of days. In the year 2000 the USA exported 74,244 metric tonnes of broccoli / cauliflower (Tradstat statistics only give combined amounts of both vegetables) with Canada being the main market importing 46,422 tonnes. Exports are constant

31 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 29 all year round with only a slight decrease in the summer months July through to September. The Japanese market is also a major importer of United States broccoli. The USA dominates this market supplying 24,923 Metric tonnes in the year The USA supplies what the Japanese market wants. They offer broccoli in three categories - florets (small pieces in a bag), bunches (the side shoots from the plant), and 'crown cut' (main shoots with a short stem about 4 pieces per kg). The crown cut variety or crown broccoli is well established in the USA and has become the benchmark in Japan with consumers expecting broccoli to be like this. The USA also is the major supplier to the Hong Kong broccoli market although China has a growing presence. Cauliflower Approximately 86 percent of United States cauliflower is produced in California with four primary growing regions: Central Coast, South Coastal, South Eastern Desert and the San Joaquin Valley. Most of the USA cauliflower produced is sold in the fresh market, with a portion sold for processing, primarily as a frozen product. In the year 2000, United States produced 351,990 Metric tonnes of cauliflower, slightly up on 1999's volume of 351,170 Metric tonnes. Of the 351,990 Metric tonnes that was produced in 2000, 74,244 Metric tonnes of cauliflower and broccoli (Tradstat statistics only give combined amounts of both vegetables) was exported. Canada is the main market, importing 46,422 Metric tonnes. Exports (of both vegetables combined) are constant all year round with only a slight decrease in the months July through to September. Japan also imports cauliflower from the United States. Tradstat statistics show 24,923 Metric tonnes of cauliflower and/or broccoli was imported in year It is thought that the majority of these imports however are broccoli. Carrots The United States of America (USA) might not be the largest producer of carrots, however they are the world's largest exporters. In the year 2000, 126,506 Metric tonnes (65 percent) of the 1,941,100 Metric tonnes produced was exported. California produces about 85 percent of the carrots grown in the USA. Colorado, Florida, Michigan, Texas and Washington are other carrot producing states. Carrots are exported all year round but with shipments being the highest between December and July (i.e. the Northern Hemisphere winter and spring). The major export market for USA carrots is Canada who imported 112,652 Metric tonnes of USA carrots in year 2000 with the United Arab Emirates and Mexico importing 3,961 and 3,632 Metric tonnes respectively.

32 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 30 UNITED STATES: CARROT EXPORTS BY COUNTRY "TCTAruO" Jan-00 Teb-00 Mar-00 Apr-00 May-00 Jun-00 -Jul-Oo Aug-00 Sep-00 T5cT-uu " "Nov-00 Dec-00" TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE W TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE France Netherlands Germany UK Spain Norway Canada 112, Mexico 3, Belize Panama and Canal Zone West Indies British Virgin Islands Jamaica Barbados Trinidad & Tobago 2, Guyana French Guiana Ecuador Brazil Chile Saudi Arabia Kuwait United Arab Emirates 3, Indonesia Malaysia Singapore Japan Taiwan Hong Kong New Caledonia Total 126,506 8,367 9,566 13,293 15,230 15,852 16,960 11,225 6,559 5,741 6,744 7,457 9,512 Average Price per Tonne (AU$): ,092 1,275 1,216 1,281 1,156 Source: Tradstat Exports to Asian countries are minimal in comparison to the total volumes exported and produced. Japan imported 449 metric tonnes in the year 2000 with Malaysia and Indonesia importing 160 and131 metric tonnes respectively. One of the main reasons for the low quantity of USA fresh carrot imports into the Asian region is reportedly that the USA grows little of the Kuroda / Koyo type carrot, which much of the North East Asian market prefers, nor do they grow much of the Nantes / Berlicum types which South East Asia enjoys. The USA domestic market prefers the Imperator variety which is a long and skinny type. Of the USA crop the only type of carrots that the Asian market finds attractive are the frozen and partly processed (e.g. 'cut and rumble') carrots and exports of these to Asia is significant. Capsicums According to US Department of Agriculture records, commercial 'bell peppers' as they are known in the USA were first produced in the southern United States in Today seed companies distribute several hundred varieties of both sweet and hot peppers with most of the bell peppers harvested in the USA sold as fresh produce. In the year 2000 the USA produced 885,630 metric tonnes of capsicum. Of this amount only 81,414 tonnes were exported, with Canada once again being the

33 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 31 major destination and importing almost all of this (79,609 metric tonnes in year 2000). Mexico and Japan are small markets for the USA. UNITED STATES: CAPSICUM EXPORTS BY COUNTRY 'TOTATTKT Jan-00 Feb-00 Mar-00 Apr-00 May-oTj' Jun-00 "Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE U TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE France Netherlands Germany UK Denmark Belgium Sweden Canada 79, Mexico 1, Panama and Canal Zone Bahamas West Indies Jamaica Venezuela Philippines South Korea Japan Taiwan Total 81,414 8,489 7,644 7,769 7,341 7,579 7,451 7,711 3,635 3,394 6,405 6,979 7,017 Average Price per Tonne(AU$): 1,608 1,791 1,673 1,802 1,610 1,525 1,493 1,526 1,376 1,668 1,864 2,080 Source: Tradstat Bell Peppers are grown all year round in the USA and exports remain solid throughout the year with the export volume only less than average in August / September. Celery United States celery production is concentrated in California with approximately 75 percent of the USA celery crop produced there and with Florida, Michigan and Texas being minor producing states. UNITED STATES: CELERY EXPORTS BY COUNTRY TOTAL' 00 Jan-00 Feb-00' 'Mar-00 '" Apr-00 WoTT - Jun-00 Jul-00 Aug-00 Sep-00 -CcnxT Nbv'-OO Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Netherlands UK Switzerland Slovenia Canada 86, Mexico 2, Costa Rica United Arab Emirates Malaysia Singapore 2, Philippines China 6, Japan 5, Taiwan 7, Hong Kong 7, New Zealand Total 119,918 11,578 10,725 11,948 10, ,894 9,968 6,234 6,367 7,329 10,970 12,258 Average Price per Tonne (AU$): ,024 Source Tradstat

34 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 32 The United States grow and export celery all year round and product is reported as consistently available in market. The state of California produces all year round whilst crops from Florida and South Texas augment winter supplies and those from Michigan, and to a much lesser extent Ohio, contribute to summer totals. The USA places particular attention on post harvest treatment, using hydro-vac technology. In the year 2000 exports totalled 119,918 metric tonnes. Of this amount Canada took 86,155 tonnes whilst Taiwan, Hong Kong, and China all imported around 7,000 tonnes each in 2000 and Japan some 5,000 tonnes in the same year. Malaysia, a big market for Australian produce, imported some 740 tonnes. The USA success with celery exports into Asia were felt to be due to providing the markets with the product characteristics that they wanted and when they wanted it. They also sea freight produce and thus access relatively low freight costs. This combined with their excellent post-harvest processing treatment of the product gave them an edge over Australia. 4.2 CHINA China's overall food production has been increasing at 5% per annum for the last 5-7 years. Weaknesses have however included lack of capital, labour intensive, significant pest and disease problems, lack of expertise, and a 30% to 50% wastage in the supply chain. Rapid progress is however being made and problems are being overcome. China has received a lot of outside investment (including from Taiwan) through joint ventures. For example, SC Foods, a subsidiary of Japan's Sumitomo Corporation, is currently producing 20 types of vegetables (including broccoli) at their Shandong test farm for export to Japan (Asiafruit, March/April, 2002). One positive for China is their improvements in post harvest methods and advancement in farming related infrastructure. Although these initiatives are seeing a rapidly increasing quality of vegetable coming from China they can still however find application of the technology and practices difficult. China is a growing competitor who is developing a reputation for quality and consistent produce at least within the fruit and vegetable industry. They pose a significant threat to Australia's Asian markets and competing with them on price is not the way to head. Competition needs to be on issues of quality, convenience, safety, long term commitment, and supply chain relationships. China's challenge is to overcome perceptions with, for example, Japanese consumers, that the produce is one of quality and is safe. Broccoli Broccoli grown in China was unheard of until the mid-1990's. In the year 2000 China exported 22,668 metric tonnes of broccoli and cauliflower (Tradstat statistics only give total of both vegetables, not individual totals). China's main supply of broccoli comes from the area known as the Kunming region which is approximately the same altitude as our Atherton Tablelands. It

35 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 33 produces best quality broccoli between the months of November through to April whilst exports are less than average in the period May - October, which is their low season (and our high season). China especially has struggled to produce a quality crop over the period August/September/October due to the monsoon / rainy season. CHINA: BROCCOLI AND CAULIFLOWER EXPORTS BY COUNTRY TOTAL'W Jan-00 Feb-flO Mar-00 Apr-Ofl May-Ofl Jun-uO Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Uec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Germany UK Sweden 1 1. Russia 1, Zaire Canada United Arab Emirates Vietnam 4. 4 Malaysia 1, Singapore 3, Mongolia South Korea Japan 12, Hong Kong 3, Total 22,668 2,462 1,364 2,191 2,651 1,303 1, ,989 7,460 Average Price per Tonne(AUS): Source: Tradstat China's major export market is Japan and in the year 2000, some 12,500 metric tonnes were imported into Japan. Singapore and Hong Kong imported some 3,500 tonnes and 3,000 tonnes respectively whilst Malaysia took 1,400 tonnes. However more recently Japanese importers have been reported as cancelling orders of Chinese broccoli following media reports of excessive chemical residue detection in Chinese vegetable imports sparking considerable concern among consumers. Exports to Japan nose-dived recently following discovery of excessive chemical residue on Chinese vegetable imports. "Chinese broccoli shipments dropped from 50 containers per week to 1-2 containers per week after the scare" said a Shanghai based exporter (Asiafruit, May/June, 2002). But while Japanese consumers are now more wary of Chinese supplies, the low prices will continue to appeal to shoppers. Carrots China is the world 's largest producer of carrots, producing just under 5 million metric tonnes in the year 2000 and 5.12 million metric tonnes in the year 2001, suggesting production levels are on the rise. Of the 5 million Metric tonnes of carrots produced in 2000 only 62,277 metric tonnes were exported. Improvements in crop techniques and marketing practices have enabled the amount exported to grow over the past years.

36 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 34 CHINA: CARROT EXPORTS BY COUNTRY "ToTSTTO DarTCD Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Uec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Netherlands UK Russia 7, USA Canada Mexico Brazil United Arab Emirates Thailand Vietnam Indonesia Malaysia 1, Singapore Mongolia North Korea South Korea 9, Japan 22, Taiwan Hong Kong 19, Australia Total 62,277 3,125 2,993 5,036 5,979 4,467 2,925 3,897 4,130 5,515 8,138 7,458 8,614 Average Price per Tonne (AU$): Source: Tradstat China exports almost all year round with the larger quantities coming in the months of October, November and December. The major export market again is Japan, which imported 22,381 metric tonnes in the year Other major importers are Hong Kong (19,720 tonnes) and South Korea (9,911 tonnes) with smaller amounts going to Malaysia, Indonesia, and Russia. Many believe China poses a threat to Australia's share of the Asian carrot market but that they need more time before quality is of the desired standard. Other China exports negligible quantities of celery whilst limited exports of capsicum (5,000 tonne) are almost all destined for Hong Kong. 4.3 NEW ZEALAND Broccoli Broccoli is the 6 th most popular vegetable in New Zealand and is grown mainly for the domestic market. At present there are no major volumes being produced for export, nor is there any current major producer of broccoli deliberately targeting the broccoli export market. Export statistics are only available as a combination of broccoli and cauliflower and at the end of the year 2000 exports totalled 253 tonnes. Of this French Polynesia imported 83 tonnes, Malaysia 67 tonnes, and Japan 34 tonnes. Smaller volumes were exported into other countries in and around the pacific islands.

37 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 35 There are various types of broccoli grown including Sprouting, Purple, Romanesco, Chinese Sprouting, and Broccofiower, which is a hybrid mixture of cauliflower and broccoli. Of these the Sprouting Broccoli or Calabrese as it is known, is by far the most popular, it has dark bluish green heads with firm stalks, which snap easily. This variety is also the main variety that is exported. Slush ice / field packing is used with some 15 kg of ice added to the pack reducing temps to 1C. This is said to then provide a shelf life of up to 6 weeks. Broccoli is grown all year round in New Zealand, however it is more plentiful in the winter months. NEW ZEALAND: CAULIFLOWER AND BROCCOLI EXPORTS BY COUNTRY TOTAL 1 oc - Jan-00 heb-00 Mar-00 Apr-66 May-06 Jun-66 Jul-66 Aug-66 5ep-60 6ct-6o Nov-00 Dec-OO TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Malaysia Singapore Philippines South Korea Japan Papua New Guinea Tuvalu New Caledonia Fiji Western Samoa French Polynesia Cook Islands Total Average Price per Tonne (AU$): 1,520 2,007 1,668 2,201 1,301 2,340 3,378 3,208 2,966 3,244 3,291 2,893 Source: Tradstat Cauliflower Currently the 8 th most popular vegetable in New Zealand, cauliflower is grown all year round in full supply. It is however a minor export for New Zealand with year 2001 cauliflower production reaching approximately 56,000 tonnes (FAO statistics) and only 253 tonnes of this (and the figure also includes broccoli) being exported. Throughout the year export quantities fluctuate with no consistent pattern appearing. Carrots New Zealand is an established and well regarded supplier of fresh and processed carrots. Fresh, frozen, and dehydrated carrots, along with carrot juice concentrate have become New Zealand's second fastest growing vegetable export, second only to capsicums. Over the past 10 years, New Zealand carrot exports have increased from AUD$0.45 million to over AUD$20 million, amounting to over 30,000 tonnes of exported produce in year A consistently high quality product and an effective marketing strategy have put New Zealand in a strong position for carrot exports into Asia.

38 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 36 New Zealand exports carrots to Asia during the February to July period supplying (in year 2000) Japan (12,5001), Malaysia (4,6001), Thailand (4,0001), Hong Kong (2,000 t), Singapore (1,900 t), and Taiwan (1,500 t). NEW ZEALAND: CARROT EXPORTS BY COUNTRY TOTAL'06 Jan-00 FeWo" Mar-06 Apr-00 May-00 Jun-00 Jul-flO Aug-66 Sep-M 6ct-06 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE MTONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Seychelles Mauritius India Thailand 4, Indonesia Malaysia 4, Singapore 1, South Korea Japan 12, Taiwan 1, Hong Kong 1, Australia Tuvalu New Caledonia Wallis & Futuna Fiji 2, Vanuatu Tonga Western Samoa American Samoa French Polynesia Niue Cook Islands Total 30, ,504 6,900 6,237 6,100 3,981 2,384 1, Average Price per Tonne (AU$): Source: Tradstat New Zealand grows carrots in specific regions/soils/climates and thus is seasonal (first half of calendar year) but results in high quality. This suitable growing environment has seen investments in NZ carrot growing by several Australian companies. Export based production begins in the south of the south island from January to April then extends to June/July from Canterbury and the Mount Ruapehu/Ohakune region on the north island, 700 metres above sea level and one of the primary growing areas for carrots in New Zealand. This area is said to have a January to August harvest period and produces a high percentage of locally consumed carrots and the majority of the carrots produced for the export market (HRDC carrot benchmarking study, 1995). The main export period is between the months of February and June when 80 percent of New Zealand carrot exports are activated. This is when carrots can be grown at least cost and best quality. Exports taper off in the cooler winter months and it is generally too cold to grow carrots during the New Zealand winter. Spring carrots tend to be typically inferior quality and lower yields make them more costly. The Pukekohe region south of Auckland was reported as growing carrots from August - December thus complementing the Ohakune region but these have been mainly the Imperator type which are not that suitable for export to Asia. Attempts to grow Nantes for export were reported as suffering from lower yields and are harder to produce and wash due to the heavier soils.

39 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 37 Most carrots NZ exports to Japan are for processing not the table. Carrots that are for the Japanese retail and table market are mainly medium size products packed in 10kg cartons, whilst the Japanese processing market demands large and extra large carrots in 20kg cartons. The Kuroda type is the most popular variety exported especially to the Japan market where high quality and exceptional presentation are major requirements. Kuroda / Koyo types are more expensive to grow because of lower yields so they are not as price competitive as other varieties and thus do not find a market outside of Japan. Nantes and occasionally Chantenay (for juicing) are also exported with other major export markets being Malaysia and Thailand with 4,679 tonnes and 4,006 tonnes exported respectively in the year A leading player in the New Zealand carrot market, Intermax, is stepping up its focus on the requirements of the Japanese and other Asian markets in an effort to grow its business. Peter Mence of Intermax says, "South East Asia will always be a growing market if we prepare the product and present it well". The increased demand for fresh and processed carrots has led to an expanding production base and further research into varieties and post harvest handling techniques. Such has the emphasis on carrots for both domestic and export consumption been that a "Carrot Export Access Group" comprising growers and exporters has been established in New Zealand. Capsicums Capsicums, known in Asia as Bell Peppers or Paprikas have been New Zealand's fastest growing vegetable export in recent years, however opinions are varied as to whether the boom growth years have ended and peppers, as they are more commonly known, are now just another commodity. Over the last 10 years exports of capsicums had grown from AUD$120,000 in 1990 to just over the AUD$22 million mark by the end of the year Domestic consumption had also risen with consumers familiarising themselves with the vegetable and its various uses. NEW ZEALAND: CAPSICUM EXPORTS BY COUNTRY TOIAL'OO Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-UO Oct-00 Nov-00 Uec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Japan 1, Taiwan Hong Kong Australia New Caledonia Fiji French Polynesia Cook Islands Total Average Price per Tonne (AU$): 4,480 4,401 4,628 4,663 4,236 4,111 6,412 3,928 3,188 4,061 6,209 5,656 Source: Tradstat However throughout the 2001/02 season, New Zealand capsicum exporters and producers were faced with various challenges, such as the Japanese economic

40 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 38 downturn, the weakening of the yen against the New Zealand dollar and increased competition from Korea. "It has been a difficult season. Volumes have been okay and no product has gone unsold but returns have been a lot lower" explained sales manager of NZ Hothouse, Lex Dillion. New Zealand's export window for capsicums is from November through to April with full supply available throughout these summer months. It also the best time to maximise production as it is also when costs in the northern hemisphere are at their highest, hence resulting in a better export price. Much of New Zealand's production is in hot houses and is in joint venture with Dutch companies who supply product from the Netherlands for the remainder of the year, thus providing buyers with a year round supply source. Japan is the principal export market importing 1,780 tonnes of New Zealand product during year 2000 with Australia importing 810 tonnes and Taiwan 152 tonnes respectively. The New Zealand industry is becoming more export focused and the formation of a New Zealand capsicum growers group that focuses on issues such as pest management, export market research, and promotional activities has been put in place. It is expected that with further export market research the dependence on the Japanese market will lessen and other market opportunities will open up. New Zealand has also been conducting trials with a simulated 3 week sea freight transit of capsicums. These trials appear promising. Sea freight to Japan would substantially reduce the CIF cost of capsicums into that market. Variety and wall thickness play a part. Celery Celery is the 15 th most popular vegetable in New Zealand and has various uses from a side vegetable, an additive to casseroles and soups or an ingredient in salads or as a raw snack. Exports are negligible and primarily are to service the Pacific islands. Consumer choice in New Zealand has changed over time, from the white celery which farmers used to grow away from the sunlight to the green-stemmed celery that was introduced to New Zealand by the United States in the 1960's. Today New Zealanders prefer the bright green variety. NEW ZEALAND: CELERY EXPORTS BY COUNTRY TOTAL'00 Jan-00 Feb-M Mar-06 Apr-00 May-66 Jun-M Jukx) Aug-00 Sep-00 Oct-00 Nov-00 Dec-OO TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE New Caledonia Fiji Western Samoa French Polynesia Cook Islands Total Average Price per Ton ie(au$): 1,644 1,677 1,792 2,049 1,862 1,775 3,360 1,747 1,701 2,513 2,017 1,721 Source: Tradstat

41 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 39 Celery is grown all year round and small quantities are exported all year round. 72 tonnes was exported in the year 2000 with Fiji and French Polynesia both importing most of this. New Caledonia, Western Samoa and the Cook Islands made up the remaining imports. 4.4 NETHERLANDS The Netherlands is a major global producer and exporter (282,000 metric tonnes exported in CY2000) of capsicums having set the world standards and trends and thus dominate the premium end of the market for this vegetable. Exports to Asia are primarily to Japan (7,000 tonnes) but smaller quantities are also shipped to Taiwan and Hong Kong. Dutch 'bell peppers' as they are known offer a large variety of bright and attractive colours - of the various colours green and violet are the strongest in flavour. Yellow, red and orange are milder and sweeter while purple and white peppers are mainly block shaped, however they are also available in tapered shapes. Their glossy thick walled skins, uniform sizes and square shapes have earned a firm place on supermarkets all over the world. Capsicums are available in the Netherlands mainly in their summer/autumn (May to November) period.

42 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) NETHERLANDS: CAPSICUM EXPORTS BY COUNTRY I 1 TOTAT'UU TftTAI 'M I TRADING EXP COUNTRY M TONNE ASP/TONNE (AU$): France ,505 Germany ,978 Italy ,848 U.K ,048 Ireland ,059 Denmark ,824 Greece 565 3,125 Portugal 20 2,596 Spain 478 2,264 Belgium ,627 Luxembourg 44 3,245 Iceland 458 3,585 Faroe islands 10 4,110 Norway ,581 Sweden ,976 Finland ,908 Switzerland Austria Gibraltar Malta San Marino Turkey Estonia Latvia ,340 Lithuania 835 2,501 Russia Poland ,867 Czech Republic ,266 Slovakia 326 1,805 Hungary 38 2,922 Romania 138 2,863 Bulgaria Belorussia 152 1,651 Kazakhstan 42 2,901 Moldavia Ukraine 43 3,270 Croatia 135 1,923 Slovenia Bosnia&Herzegovina 4 1,803 Serbia 2 2,163 Sierra Leone Liberia 2 5,408 Nigeria 2 4,687 Kenya 2 1,442 South Africa U.S.A ,508 Canada ,673 Barbados 1 12,979 Curacao 6 4,447 Surinam 2 3,245 Cyprus 171 3,298 Lebanon 2 2,524 Israel Saudi Arabia Kuwait Bahrain Qatar United Arab Emirates 381 4,660 Oman 9 3,125 India 1 2,884 Malaysia Singapore 9 6,890 South Korea 5 10,383 Japan ,989 Taiwan Hong Kong 171 6,169 Not Determined Total ,177 Source: Tradstat

43 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 41 Bell Peppers are usually packed in standard 11Lbs/5kg cartons. Customised cartons with private label are also made available. For shipments to Japan and other Asian countries, customised cartons are available and this method is continually used and is highly successful with Asian buyers. Generally the peppers are shipped by air on clean, bark free wooden pallets of size 120cm x 120 cm (96 cartons), and 80cm x 100 cm (45 cartons). Optimum storage temperature is usually between C at relative humidity of 90-95%. Availability in % per month Peppers J JF lm A JM J p A S [0 N D Mm m mmmmmmkim Source: Availability is mainly May to November. 5.0 EAST ASIAN MARKETS The per capita Gross Domestic Product (GDP) of a country can in fact be a useful tool to broadly assess opportunities for Australian exports of fresh fruit and vegetables, especially when viewed in conjunction with the tariff levels applied to vegetable imports in each country: Country Per Capita GDP (PPP) Tariff rates for vegetables (April, 2001) covered in this study. Singapore USD$ 25,353 Nil Japan USD$ 23,780 3% Hong Kong USD$ 20,485 Nil Taiwan USD$ 17,495 28% South Korea USD$ 14,806 30% Malaysia USD$ 8,513 5% Thailand USD$ 5,757 46% Philippines USD$ 3,622 15% China USD$ 3,291 25% Indonesia USD$ 2,685 25% (Note: PPP stands for Purchasing Power Parity and is a means to allow for the value of the local currency rather than just the US dollar) Low per capita GDP means the ordinary person simply cannot afford imported fresh vegetables. This is further enhanced where high import tariffs apply. Thus opportunities in countries like Indonesia, Philippines, China, and Thailand tend to be limited more to the food service sector such as international hotels and resorts, western restaurants, and fast food chains. Market such as Taiwan and Korea have for political and other reasons discouraged imports through high tariffs etc but are relatively affluent and are

44 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 42 now opening up. Affluent economies with few import barriers are usually markets that value freshness, quality, convenience, and safety. These broad guidelines seem to fit for the countries and vegetables under study in this report. 5.1 SOUTH KOREA The consumption of vegetables in Korea is mainly through stews, soups and condiments (kimchi). Of the five vegetables under study, only carrot is prominently featured in traditional Korean cooking - mainly used in soups and stews. While most Korean consumers have some awareness of broccoli, celery, capsicum and cauliflower, they have little knowledge of how to incorporate the vegetables into everyday cooking. South Korea was the most difficult market to obtain information on. Australia does not currently export a lot of vegetables to Korea because of trade barriers, irregular demand (Korea is fairly self sufficient in vegetables), and extreme price sensitivity (vegetables are considered as a low priced item). Tariff rates on imported fruit and vegetables are still high (30 to 50%) and whilst the Korean National Plant Quarantine Service bans the import of many fruit and vegetables from Australia, only capsicums out of the 5 vegetables under this study are restricted. Our interviews with Korean buyers advised that many Korean farmers have started to grow western style vegetables like broccoli, capsicums, and asparagus and can produce for most of the year. In general, Koreans perceive vegetable as a price driven item with little need for appearance, texture or taste. As most vegetables are not consumed raw but instead used for making stews, soups and condiments, there is little need for quality (appearance, texture and taste). The Koreans are also very specific with their vegetables preferring to only eat the locally grown varieties. Korea's extreme weather conditions means that most vegetables are grown in greenhouses. Where domestic production is not possible, the vegetables are imported mainly from China. It is reported that the vegetables supplied by China are grown from seeds supplied by Korean companies. While Koreans prefer cheap vegetables, they are also expressing concerns with chemical residual levels (MRLs). One importer advised that consumers are currently refusing to buy any vegetables grown in China because of perceived high MRL levels. Australia's image as a supplier of fresh produce which is 'clean' and 'safe' could translate into an opportunity for Australia. Overall long term prospects would appear promising given Korea's population of some 47 million, an increasing per capita consumption of vegetables, and a trend to western style vegetables.

45 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 43 Broccoli / Cauliflower SOUTH KOREA: CAULIFLOWER AND BROCCOLI IMPORTS BY COUNTRY TOTAL '00 Jan-60 Feb-00 Mar-Off'"ApOT ^"- Jun3fl Jul-60 Aug-66 Sep-00 Oct-00 Nov-OO Dec-60 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE France USA China Taiwan Australia New Zealand Total Source: Tradstat Broccoli is becoming more popular in Korea but a buyer we interviewed said it is being grown locally year round and is cheap. Korea imported minor amounts (some 80 Metric tonnes) of broccoli / cauliflower in 2000 according to Tradstat data and small quantities did enter from Australia. Several Korean buyers stated they generally import vegetables in times of floods etc when the local crop falls short of demand. Feedback from importers is that the demand for both vegetables is limited to only hotels and western restaurants. There is no domestic production available as demand is too small to interest local growers. Quantities in 2001 grew slightly (ABS export statistics) to some 26 Metric tonne of cauliflower (ex WA) and 11 Metric tonne of broccoli (ex Vic). Opportunities were reported for these two vegetables on a visit to Korea in June 1999 by the Ausveg chairman at the time whilst Austrade also report that opportunities exist. Carrots SOUTH KOREA: CARROT IMPORTS BY COUNTRY TOP IMPORTS TOTAL'OcT Jan-00 FeBTB natots AFOT! TCIaToTS JmW JuI-00 Aug-flO ' "Sep-M Oct-66 Nov-60 Dec-66 TRADING AVERAGE EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY PRICE/TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE China (AU$) 509 9, Taiwan (AU$) Australia (AU$) New Zealand (AU$) Total (AU$) , , ,163 1, Average Price per Tonne (AU$): Source: Tradstat China currently dominates the Korean import market for carrots with some 90% share. Other suppliers in 2000 were Taiwan, Australia, and New Zealand. Average import prices as expected favoured China (AUD$509 per tonne) versus AUD$800 ex Australia and AUD$700 ex New Zealand respectively. Australia's exports of carrots to Korea would appear a growing market. ABS export statistics for 2001 show Korea received some 2,000 Metric tonnes from Australia with supplies split between Queensland (592 Metric tonnes), Victoria (125 Metric tonnes), and West Australia (1397 Metric tonnes). Exports were all in the period June / July / August / September whereas one would think that the best prospects might be in the Northern Hemisphere winter.

46 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 44 Carrots are said to be used in soups in Korea. Round pointed carrots were reported as commanding the highest price. Korea is a strong producer of carrots but also needs to rely heavily on imports (between August - November) as they are unable to grow the crop over winter. Celery SOUTH KOREA: CELERY IMPORTS BY COUNTRY TOTAL' FeEoTJ Oa76Tj SpOT MayUB juresc JHW ATjgTHS 5ep355 OcOT NoToTJ BeSOTT TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE France USA Total Source: Tradstat The demand for celery is very similar to broccoli and cauliflower with import at just 8 tonnes in It seems there is little demand for the celery in Korea at the moment. Capsicums SOUTH KOREA: CAPSICUM IMPORTS BY COUNTRY TOTAL' 00 Jan-00 Feb-00 Mar-00 Apr-66 May-66 Jun-66 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA 1....! Total Source: Tradstat Currently Australia has no access for capsicum into the Korean market because of fruit fly. Capsicums are field grown in Korea during May to August and thought to be grown in glasshouses for the remainder of the year. Capsicums are not widely used in Korean cooking but chilies are (mainly in powder form). What we know as capsicums are in Korea (and Japan) called paprikas or sweet paprikas. While domestic demand for capsicums is negligible, Korea grows them to supply the Japanese market. In 2000, Korea exported 6,727 tonnes of capsicums to Japan. We are however not totally confident that the exports were what we know as capsicums (paprikas in Korea and Japan) and not sweet peppers (smaller, tapered shape with thin walls, popular in Japan and parts of China), or hot peppers. 5.2 JAPAN Japanese consume relatively large amounts of vegetables compared to most other countries with per capita consumption calculated at 100kg per head per annum. Vegetable production in Japan has been decreasing since the mid

47 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 's with over 15% of needs now sourced from imports. An aging rural population (35% of farmers are > 60 years old), little succession to the land by their children, conversion of farmland to urban use, and small farms / high costs / low productivity, have all contributed to lower domestic vegetable production. Japanese consumers are very fastidious about product freshness and about the safety and appearance of the fruit and vegetables that they consume and will reject a product that does not match their standards regarding size, shape, colour, and overall appearance. Similarly the slightest suggestion of chemical contamination will see purchase cease. (HRDC report VG Asian Study Tour - Singapore, Japan, Taiwan, and HK). Australia does not appear to perform to its full potential in exports of vegetables to Japan and, like most North East Asian markets; we seemingly perform far better in South East Asian markets. Accessing the Japanese market is not a problem, other than for mainland grown capsicum, whilst tariffs are just 5%. The market is however most demanding in consistency of quality and is more familiar with USA supplied fresh vegetables whilst China is a growing threat in broccoli and carrots. Broccoli JAPAN: BROCCOLI IMPORTS BY COUNTRY TOP IMPORTS IOIAL'00 Jan-00 Feb-00 Mar-M Apr-flu May-M Jun-ufl Jul-00 Aug-00 Sep-UO Oct-UU Nov-00 Dec-00 TRADING AVERAGE EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY PRICE/TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Serbia USA Canada Mexico China South Korea Taiwan Australia New Zealand (AU$) 2705 (AU$) , , Total (AU$) ,174 5,711 4,734 5,791 6,771 6,880 7,466 7,650 7,116 7, ,705 5,895 Average Price per Tonne (AU$): 2,576 2,267 2,002 2,089 2,633 2,669 2,777 2,653 2,656 2,800 3,065 2,792 1,995 Source: Tradstat Confirmation was received that the market requires 38-head count per carton, good shelf life, with an appearance of freshness signified by ice. Australian product (in 1995) was seen as a high priced air freighted 'market filler'. Our quality at that time was seen as equal to the USA or local sourced (Hokkaido) product but the local produce was perceived as 'fresher'. Secondary wholesalers were said to see a need for the imported (CIF) price to be half of the domestic broccoli price for everyone to make money (and allow retailers to discount imported product if a shorter shelf life). Market size was about 165,000 metric tonnes (1994) with about 100,000 tones produced locally, and was growing at about 15% pa. Preferred size was reported as 125mm height x 125mm long with 28-head count per carton (size unknown), compact dome shape head and consistent dark green colour. Local product was said to flood

48 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 46 the market in May/June. Opportunities were reported as existing for Australia in the December- May period (source: AHC Broccoli Benchmarking Study (1995). A USDA Japan Competitor Alert report (2001) stated that Japanese imports of Chinese broccoli continue to grow with year 2000 imports forecast at 9,000 Metric tonnes up from 2,300 Metric tonnes in 1999 (year 2000 actuals were 10,000 Metric tonnes). Most Chinese imports were reported as entering the market in the Japanese late Autumn/Winter period (monthly import statistics for year 2000 confirm Chinese imports are in the November to March period) which is the peak period for Chinese production and also when US imports are highly priced. We interviewed the general manager of Ito Yokado's fresh vegetable import section who said, "China and USA export broccoli to Japan all year round. Until now China supply was weighted towards the Japanese winter but supplies in summer are now growing. China is increasing its volumes and quality is now better and they have the lowest price". He felt there were few prospects for Australian broccoli. Chinese C & F prices average USD$8.50 per 10 Kg case. USA C&F prices (June 10, 2002) were about USD$11.00 per 10 Kg case. He confirmed Japan can grow broccoli domestically year-round. He advised consumer preference is for L size, green colour (no purple), no branchy head or flat head. Cauliflower JAPAN: CAULIFLOWER IMPORTS BY COUNTRY TOTAL'00 Jan-00 Feb-66 Mar-66 Apr-66 May-66 Jun-66 Jul-00 Aug-00 Sep-00 Ocl-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA China Total Source: Tradstat Cauliflower is not all that popular in Japan and broccoli is preferred. Imports of broccoli outnumber cauliflower some 100 fold. In fact imports of cauliflower in year 200 were only 517 metric tonnes. China is the main supplier of imports over the Japanese winter (November to February) whilst the USA supplies mainly in the Japanese late summer/autumn (Aug/Sept/Oct). CIF import prices (year 2000) ex China averaged 80 yen per Kg (AUD1.20/Kg) whilst ex USA averaged 138 yen (AUD2.00) per Kg. 8 Kg cartons are used domestically with LL size (8 heads per box), L size (9 heads), M size (12 heads), and S size (15 heads). USA imports are in 25-pound boxes (12-13Kg) with 20 heads/16 heads/14 heads per carton. China supplies 6Kg carton L size with 8 heads per box. (Source: Horticulture Australia report

49 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 47 VG 'Development of an Internationally Competitive Eastern Australian Cauliflower Industry' (Clarrie Beckingham, NSW Agriculture, December, 2001). Prospects: Cauliflower is not that popular in Japan and imports are minimal. Volumes through wholesale markets are low in the June/July/August/September period as are imports and this may present a small opportunity for Australia. Carrots JAPAN: CARROT IMPORTS BY COUNTRY T6P IMPORTS IOTAL'00 Jan-flO 1 Feb-fli Mar-W Apr-flu May-M Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Uec-00 TRADING AVERAGE EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY PRICE/TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA (AU$) Thailand 8 8 Vietnam China (AU$) South Korea Taiwan (AU$) 627 5, Australia (AU$) , New Zealand (AU$) Total (AU$) , ,362 6,419 7,786 6,928 2,755 1,701 3, ,862 4,208 Average Price per Tonne (AU$): Sourc*: Tradslat Carrots are grown year round in Japan with many growing regions but supply is least in the January/February winter period. Domestic production is approx. 600,000 metric tonnes per annum with highest prices reported as occurring in August - October. (Source: DPI report 'Export Market Opportunities' May, 1995) Tasmania, New Zealand, and China all export to Japan. The market for carrots in Japan is large with some 600,000 Metric tonnes reported as grown domestically all year round (but least supply in January/February) and over 40,000 Metric tonnes imported in Y2000. Prices achieved are higher than other markets for carrots in Asia - for example Australia and New Zealand both achieve C& F prices of some AUD$1000 in Japan CF AUD$ in South Korea and AUD$900 in Hong Kong. This is likely due to the Japanese preference for Koyo / Kuroda types which can be more expensive to grow. Celery JAPAN: CELERY IMPORTS BY COUNTRY TOTAL 00 Jan-00 Feb-00 Mar-00 Apr-Ofl May-00 Jun-00 Jul-00 Aug-00 sep-00 Oct-00 Nov-00 Uec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA China 6, Total 6, Source: Tradstat

50 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 48 Celery is not that popular in Japan and imports are not that great (6,500 tonnes in 2000 cf Hong Kong 10,000 tonnes with a population 1/20 th that of Japan). The USA dominates external supply into the Japan market and exports to Japan year round. There appears no reason why Australia could not compete in this market provided Australian growers were willing to invest in post harvest processing technology and equipment and in providing the market with continuity of supply. Capsicum JAPAN: CAPSICUM IMPORTS BY COUNTRY TOP IMPORTS TOTAL'Ofl TZZm FeoTB KlaTTO ApToTj U^W 3uT7OT OT8 JSgOT Sep-ofl Oct-M Nov-Oo Dec-oo TRADING AVERAGE EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY PRICE/TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Netherlands South Africa & Namibia USA Saudi Arabia United Arab Emirates Oman Thailand South Korea Australia New Zealand (AU$) 7186 (AU$) 6040 (AU$) , i , , Total (AU$) , ,117 1,339 1,438 1,506 1,756 1,575 1,404 1,282 1,080 2,034 Average Price per Tonne <AU$): 6, ,850 6,895 7,632 6,545 5,620 5,646 6,167 7,129 7,193 9,195 6,993 Source: Tradstat Capsicum terminology can be confusing; pepper, chili, chile, chilli, Aji, paprika and pimento are used interchangeably for "chile pepper" plants in the genus Capsicum. Capsicums as we know them are called paprikas in Japan and in Korea and are called bell peppers in other parts of the world. In Mexico, Central American and the southwestern U.S.A., a capsicum is called a Chile pepper. To confuse matters even more, a sweet bell pepper is often called a capsicum pepper whereas a hot pepper is often called a chile pepper! Sweet peppers in Japan are smaller than what we call capsicums and are tubular shaped. The Bell Peppers represent the larger-fruit variety and they are mainly used in a fresh and sweet format, for example in salads. They have little or no pungency, a thicker wall (outside flesh), a bigger and more rounder shape and a number of different colours. This variety is named Capsicum annuum grossum (or C. annuum var. annuum) and includes the green pepper, red pepper, yellow pepper, etc. It is therefore rather a vegetable than a spice. To add to the confusion, the import / export statistics as above refer to HS (Harmonised System) Code 'Fruits of the genus Capsicum or of the genus Pimenta', a broader base of produce than just what we in Australia commonly call capsicums. The statistics that break this down into the individual product types were not available (other than for Hong Kong) in the countries under study. Thus it is difficult to determine just what is being exported / imported into markets such as Japan. Similarly articles written on markets for capsicums may mean different products or a grouping of products depending on the article's source country. What we know as capsicums are not all that

51 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 49 popular in Japan (and currently retail at 198 yen = AUD$3.00 each for Dutch produce) with the smaller tapered green and recently introduced red 'sweet peppers' being more popular. Japan grows capsicums (we believe they are sweet peppers or what translate to English as pimentos) year round but the peak production period seems around March - July. Domestic production is around 150,000 Metric tonnes per annum (Source: DPI report 'Export Market Opportunities' May, 1995). Capsicums as we know them are not that popular in Japan and are imported mainly for restaurants, hotels, etc (Source: Tokyo Tsukiji Vegetable Markets). Korea and New Zealand supply during the Japanese winter although Korean supply now extends from November to July (Asiafruit, Sept/October, 2001). The Netherlands is also a large supplier in the Japanese summer. If Australian mainland capsicum was allowed entry (access into Japan from the Australian mainland is prohibited due to Queensland and Mediterranean fruit fly but allowed from Tasmania) then it was felt it would have a chance. The market is however currently very price competitive with Korean supply at a reported C&F price of 1600 Japanese yen (AUD$23)/5Kg case and Netherlands sourced product (C&F Narita airport) around Yen 2200 (AUD$31)/5kg case (source: interview with Ito Yokado fresh vegetable buyer). Korea freights capsicums to Japan by sea. 5.3 CHINA China is currently ranked as the world's largest producer of vegetables with an annual output of 400 million Metric tonnes. Most of this is consumed domestically but recent improvements in quality and supply chain infrastructure have allowed China to begin significant exports of vegetables. Until early 2002 imports of vegetables into China were only allowed into the hotel sector of the market. China's entry to the WTO requires them to open up markets and in theory Australia can now export vegetables to China, however it appears that market access for horticultural and other products is being considered on a case by case basis and an "Import Risk Analysis" may be necessary, thus considerable time is expected to pass before access across a broad range of produce is granted. Considerable investment is being made by Singaporean, Hong Kong, Korean, and Japanese companies in establishing joint venture vegetable production in China and this will improve the quality of local produce which has been variable (but improving) and with regular concerns at pesticide and chemical levels. China's extensive range of latitude also allows year round growing of some vegetables (e.g. the southernmost province of Hainan has a warm winter climate) although domestic production quantities will likely be insufficient across the whole year and seasonal windows should still exist for Southern Hemisphere suppliers like Australia. Similarly the growing prosperity of Chinese consumers will progressively see (as it has in other countries) more demand for produce that is higher quality, safe, fresh, convenient, and nutritious. The

52 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 50 establishment in China of western style supermarket chains will accelerate this trend. Broccoli / Cauliflower CHINA: CAULIFLOWER AND BROCCOLI IMPORTS BY COUNTRY IOTAL'00 Jan-00 Feb-OU Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-OO Uct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Switzerland Total Source: Tradstat Import statistics are year 2000 and thus pre-wto membership. Broccoli and cauliflower statistics were unavailable as separate data. Imports are expected to be considerably larger than the year 2000 data above. Broccoli is believed the more popular of the two and the larger import. Importer surveys said broccoli is imported from the USA all year round as is cauliflower. Australia supplies some broccoli but is unreliable in consistency of quality and continuity of supply. Another company who imports Australian broccoli said they get supplied all year round (10kg packs, approx. AUDI7.60 to AUD20.00 per 10kg) and they target the top end of the market (which is small), with locally grown product beating them on price. They state imports are not really restricted to hotels anymore but the large local supply especially through foreign joint ventures meets local consumer needs. A third company interviewed imported only carrots and obtained their broccoli etc locally from local growers in southern China. Prospects: Chinese importers advise Australian broccoli is already being imported even if in small quantities and not necessarily for hotels. Year 2001 export statistics confirm direct imports of broccoli and cauliflower whilst these products would also enter China via Hong Kong. Premium product could achieve sales. No advice was provided on packaging or the supply chain and whether the market prefers their broccoli on ice. Carrots CHINA: CARROT IMPORTS BY COUNTRY TOTAL'60 Jan-60 Feb-o6 Mar-60 Apr-M May-00 Jun-00 Jul-00 Aug-00 Sep-00 Uct-UO Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Hungary USA Japan Total Source: Tradstat Year 2000 statistics show few carrots were imported and those that were came from the USA and Japan, almost certainly destined for the international hotel market. Average import price ex USA in the above year 2000 statistics was

53 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 51 AUD$550 per tonne and ex Japan AUD$590 per tonne. Many foreign chefs are employed in these hotels (including Australians) and prefer imported produce for reasons of quality and safety. One importer interviewed stated he imports small size (baby) USA carrots year round but delivery can be unreliable. He also imports from Thailand 2 months per year. Sizes he imports are 3-4cm, 5-7cm, and < 10cm. Landed prices are Yuan per pack (AUD AUDI.10 per kg) in pack sizes 5 to 8kg. Total carrot imports are not high and the reason given was price. Another company said it imports carrots year round from Australia and the USA. It felt prices from Australia needed to be lower (AUD$1.80 to 2.00 per Kg) and packaging (10kg cartons) was susceptible to damage. When asked why carrot imports were so low they said China is a large producer of carrots especially Xing Jiang province in the north and these were sweet and large. A third importer imports baby carrots from the USA and Thailand. Appearance is sharp head, 5cm long, packed in 2.5kg cardboard box, landed prices (airfreight) AUDI.10 per kg (ex USA) and approx. AUD0.55 per kg (ex Thailand). This company felt opportunities would exist for Australia as it has a quality image and should be cheaper than the USA. They also felt AQIS was too rigid in its policing of exports ("over reaction to just one insect in a shipment"). They felt imports of carrots into China were not high because of the low price and reasonable quality of local carrots and lack of promotion by importers. Prospects: Growing opportunities would appear to exist targeting the premium end of the carrot market. Celery CHINA: CELERY IMPORTS BY COUNTRY TOTAL' 00 Jan-60 Feb-00 "Mar-OO Apr-Co - ' May^oTj 3KTO Jul-00 Aug-00 5ep-00 Oct-00 Nov-00 Bec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA 7, Mexico Total 7, , Source: Tradstat From the year 2000 statistics, China imported large quantities (7,500 Metric tonnes) of celery from the USA. One importer surveyed said imports are from USA and Thailand, in 6kg cartons, with landed prices around AUDI.65 per kg (USA) and AUD0.90 per kg (ex Thailand). Another importer said they import year round from Australia and USA but supply is for international hotels. Prospects: Little is known about the opportunities. Further information is required as to why the USA can supply quantities that appear to be well above the needs of international hotels in China.

54 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 52 Capsicum CHINA: CAPSICUM IMPORTS BY COUNTRY TOTAL' 00 Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Japan Total Source: Tradstat Statistics show negligible imports of capsicums into China in Y2000 however quantities would be increasing. One importer said the reason for low levels of imports was because local growers in joint ventures with foreign companies provided all the domestic market needs. Another importer said he brings in product from the USA all year round (but minor quantities in May / June) with Thailand as a second supplier (again year round). Thai capsicums were regarded as a little too spicy. Size is about 4-5cm, pack sizes 5kg, and colours red, yellow (both mainly imported) and green (mainly local). Landed prices are about AUD9.00 per kg ex USA and AUD4.50 ex Thailand. Main markets were seen as hotels and airlines. Again we are unsure as to what type of capsicums the buyers were referring to given the differing understandings as to what a 'capsicum' (as we understand it) is. Prospects: Opportunities were seen for Australia if it can price below the USA and if combined with shipments of other produce. Market access can be expected to be a problem. 5.4 HONG KONG Hong Kong has been a popular market for Australian fresh fruit and vegetables and this has remained unchanged since its incorporation into China as a Special Administrative Region (SAR). Apart from the needs of its population of approx. 7 million, it has traditionally been an entry point into mainland China and this also has continued despite other entry points along the China coast opening up. Total fresh produce imports thus do not necessarily reflect local consumption as a lot is re-exported to China. Imports into Hong Kong are duty free and no quarantine requirements exist. Broccoli / Cauliflower HONG KONG: CAULIFLOWER AND BROCCOLI IMPORTS BY COUNTRY I OP IMPORTS TOTAL'00 EOT Feb"OT Ham AprTS!! USyW JuTOT 3uT6Tj A^TO SepOT Oct-00 Nov-00 Dec-00 TRADING AVERAGE EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY PRICE/TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA (AU$) , China (AU$) , Taiwan Australia (AU$) New Zealand Total (AU$) , , Average Price per Tonne (AU$): 1,604 1,227 1,258 1,195 1,535 1, ,676 1,846 1,522 1,880 1, Source: Tradstat

55 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 53 Australia had just 7% of the broccoli / cauliflower imports market in Hong Kong in year The statistical data available (ex Tradstat) combines the two vegetables and thus makes any interpretation of individual product prices or identification of seasonal opportunities difficult. For example, import statistics ex Tradstat show average C&F prices for calendar year 2000 as: Ex USA - AUD$1,820 per Metric tonne (AUD$1.82 per kg) Ex China - AUD$1,005 per Metric tonne (AUD$1.00 per kg) Ex Australia - AUD$2,278 per Metric tonne (AUD$2.28 per kg) The fact however that this is for cauliflower + broccoli combined renders it rather meaningless except to suggest a lot if not all of the produce ex Australia and USA is airfreighted. Cauliflower Cauliflower is more popular in Hong Kong than in Japan however we have conflicting data as to the ratio of broccoli usage to cauliflower usage and available import statistics do not assist by combining the two vegetables. Horticulture Australia report VG 'Development of an Internationally Competitive Eastern Australian Cauliflower Industry' reports the ratio is 60/40 broccoli / cauliflower whilst buyers that we interviewed in the Dairy Farm Group state it is 30/1 in favour of broccoli. Indicative prices for cauliflower shown in the above report (VG00037) which was completed in December, 2001 were: Imports: Wholesale: Ex Australia AUD$ per kg, ex China AUD$1.00 per kg. Ex Australia AUD$ per kg, China AUD$1.50 per kg Supermarkets: In Wellcome In ParknShop In Jusco In CRC - ex Aust AUD$2.97/kg - ex China AUD$1.92/kg - ex China AUD$1.75/kg - ex China AUD$2.20/kg Size required for cauliflower was reported as about 700g to 1200g per piece, preferred g, white compact medium head, free of bruising, totally bald or well trimmed but a few leaves left on side of the curd, 20kg cartons but prefer 22kg. Dairy Farm believes China is now a supplier of reasonable quality cauliflower, which is available year round with prices Australia cannot match. Although most

56 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 54 cauliflower exported from Australia is produced in WA, exports to the Hong Kong market are in fact shared between WA (66%) and Qld (31%) and are exported into HK from each of these states around June/July/August. Cauliflower should be able to be sent by sea to HK at the same time as broccoli shipments and this could assist in competing with Chinese supplies. Broccoli C&F prices for broccoli are reported by Dairy Farm as: Ex China (reasonable quality) Ex USA (good quality) - AUD$1.35 per kg (HK$6 per kg) - AUD$1.80 to 3.20 per kg (HK$8-$14) Chinese sourced broccoli was reported as dominating in Hong Kong's winter as does the USA product in summer. China struggles to produce quality broccoli in Hong Kong's summer and California takes over. USA broccoli was reported as all shipped by sea with shipping costs ex Oakland in 40' FCL's regarded as very cheap cf seafreight ex Australia. Dairy Farm do not believe that Australian production costs are all that different to the USA but it is in freight costs that the USA has an advantage (we would doubt that there is a significant cost difference). Dairy Farm advised that Hong Kong wholesale markets prefer broccoli that is iced as it gives the impression that it is fresh (and thus a higher price). Supermarkets prefer no ice as it melts and floods storage areas etc. Market requirements as reported in the AHC Broccoli Benchmarking Study (1995), were head count per carton, good shelf life with an appearance of freshness signified by ice, short stem, and large head. A current exporter said the market requires 34/36/38 count in 10 Kg cartons. Prospects: Australia was thought unable to compete with Chinese broccoli in the Northern Hemisphere winter, and is said to suffer against USA supply in summer because of uncompetitive freight rates when shipping by sea. The initial 2001 data we purchased from ABS, plus prior year's data, would suggest that our exports of both broccoli and cauliflower to Hong Kong appear in decline: Exports to HK Y1998 Y1999 Y2000 Y2001 Cauliflower 621 Mt 357Mt 535Mt 215Mt Broccoli 720Mt 421 Mt 215Mt 147Mt We need to confirm if these are long term trends.

57 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 55 We are not convinced that building a larger market share for our broccoli in Hong Kong is not possible and we regard the above trend as reversible. Carrots Hong Kong primarily imports carrots from Taiwan (38% of imports in 2000), Australia (29%), China (20%), and New Zealand (9%). Average landed prices are both Australia and New Zealand around AUD$900 per metric tonne, China AUD$ per tonne, and Taiwan AUD$400 per tonne. Requirements as advised to us by Hong Kong supermarket buyers were size medium (for supermarkets) to large (wholesale) but consistent within a load, bright orange colour, no sprouting, regular shape, Kuroda varieties, 1kg prepacks preferred for retail, whilst food service looks for larger carrots in bulk packs. HONG KONG: CARROT IMPORTS BY COUNTRY TOP IMPORTS TOTAL'06 Jan-66 Feb-00 Mar-M Apr-ft6 May-66 Jun-M Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING AVERAGE EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY PRICEHTINNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE France Belgium-Luxembourg Netherlands Germany UK USA Indonesia China (AU$) 543 5, Japan Taiwan (AU$) 397 9, Australia (AU$)913 7, New Zealand (AU$) 892 2, Total (AU$) ,887 2,122 1,929 1,776 2,051 2,786 2,676 2,666 2,358 2,572 1,836 1,652 1,463 Average Price per Tonne (AU$): We were advised the end use of Chinese and Australian sourced carrots are different. Most Australian carrots are medium sized pre-packs destined for supermarkets or large sized bulk carrots for the food service market. Chinese carrots (and we assume Taiwanese carrots) are irregular shape and size and even though sold through the wholesale system they end up retailing in wet markets for meals such as Chinese stews. Most of supply from Australia to HK comes from West Australia (75 to 80%) with Queensland and Tasmania having smaller shares of about 10% each. Exports from West Australia to HK are generally year round whilst those from Queensland are exported in our late winter to summer. Tasmanian exports are over our summer and autumn. Import statistics for year 2000 suggest import levels are low during the October to December period with supplies from China, Taiwan and New Zealand dropping at that time.

58 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 56 Celery HONG KONG: CELERY IMPORTS BY COUNTRY TOTAL'00 Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Netherlands USA 10, Curacao Brazil Thailand China Taiwan Australia New Zealand Total 10, , , , Source: Tradstat Australia exported only minimal quantities of celery to HK in both 2000 and The USA dominates celery imports into this market with a 95% share in 2000 and with year round supply. The main advantage of USA celery was reported as consistency within shipments with the product well trimmed, and tightly bunched. Australian celery was regarded as not well trimmed and stalks / branches partially separated. USA price delivered to the supermarket warehouse is around AUD$1.00 per piece. Capsicum HONG KONG: SWEET CAPSICUM IMPORTS BY COUNTRY ToTAiroTj Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Netherlands USA Canada Israel 2 2 India Thailand Indonesia Malaysia China Australia New Zealand 1 1 Total Source: Tradstat Hong Kong imports relatively small quantities (773 Metric tonnes in year 2000) of capsicum according to Tradstat data. (Note that Tradstat data for Hong Kong is available for 'Capsicum', which includes non-sweet capsicums like chili peppers, which come mainly from China and Thailand, and 'Sweet Capsicum', which is the product of interest to us). Tradstat figures do not reconcile with ABS data however differences are relatively minor. The main suppliers of capsicums to HK are Canada, Australia, China, Indonesia, and Netherlands. Capsicums are time sensitive products (14 day post harvest life) and supply at least out of Canada, Australia, and Netherlands is by airfreight. Queensland and NSW are the major states that export to HK. Dairy Farm Group advise that they obtain most of their capsicums from China at prices that are difficult to beat whilst Netherlands supplies the top end of the

59 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 57 market (AUD$5.70 to AUD$7.00 per kg) with 'spectacular' quality. They stated they have tried Qld grown capsicums but they do not match the Dutch quality as are field grown (not glasshouse). ParknShop advised that capsicums come from Holland because "unavailable from Australia". 5.5 TAIWAN Given their political relationship with mainland China, Taiwan has seen themselves in the past as needing to remain self sufficient in food production and have controlled market entry with high tariffs and quotas. They have also traditionally favoured the USA in imported fruit and vegetables in return for trade opportunities and political support and until now the USA has enjoyed high market shares. Recent entry to the WTO provides the impetus for change with removal of quota restrictions and gradual reduction of tariffs such that Australia and other supplying nations such as China can expect a significant increase in opportunities. Supply chain mark-ups were reported as: Importer 5-10% Wholesaler 5-10% Supermarkets 20-30% Other retailers 15-25%, reasonable shelf life 15-20%, short shelf life 25-35% (i.e. the more time sensitive the higher the markup). Broccoli / Cauliflower TAIWAN: CAULIFLOWER AND BROCCOLI IMPORTS BY COUNTRY TOTAL'M 3aETJ8 Fer>o7j flatto AprSC flayto TmW OT5B ATJgTJo 1 5ep38 CcPoTj RoToTj DecTHT TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA 6, Vietnam 27 - Australia Total 6, , ,419 1,145 1, Source: Tradstat Data ex Tradstat has broccoli and cauliflower imports into Taiwan combined. USA dominated imports in year 2000 with Australia a long second with just a 4% share. ABS statistics show Australia's exports to Taiwan as: Year 2000 Year 2001 Broccoli 233 tonnes 45Mt (80-90% is ex Qld) Cauliflower 151 tonnes 350Mt (over 95% is ex WA)

60 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 58 (We note a continuing difference in these figures compared with those sourced from Tradstat. The differences however are not of sufficient consequence to change any conclusions we have drawn). Imports into Taiwan appear extremely seasonal and occur during the northern summer/autumn monsoon season. Domestic production is in winter (December to March) and most likely explains this. Buyer interviews confirmed that cauliflower outsells broccoli in Taiwan. The USA is the major supplier with shipments mainly in the period April to November (peaking in July to September) and Australia a marginal player July to November. Landed prices (broccoli) are reported by one buyer as around AUD$ per kg. Another said cauliflower was landed (from USA) at approx. AUD$1.35 per kg and broccoli at AUD$2.00 per kg. Carton sizes are 25pounds (9.8kg) ex USA and 10kg ex Australia. Another buyer stated size as broccoli 42 pieces per 28 pound (11kg) carton, and cauliflower as 16 pieces per 15kg carton. An Australian exporter said market wants broccoli heads in 10Kg cartons. One buyer said opportunities are always apparent for product with a competitive price and good quality. Advice to us was to offer consistency in appearance and to ensure the product is kept fresh after shipment. Capsicum TAIWAN: CAPSICUM IMPORTS BY COUNTRY TOTAL'00 Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Netherlands Thailand Vietnam Indonesia Malaysia Philippines New Zealand Total 1, Source: Tradstat With Taiwan producing some 25,000 Metric tonnes of capsicums (1993 figure also includes 'chilies and peppers') and with Thailand, the Netherlands, Indonesia, and New Zealand as significant suppliers, one has to ask 'where is Australia?' however fruit fly restrictions prevent supply from mainland Australia (although supply ex Tasmania is OK). The import market is also currently small (under 2,000 Metric tonnes in year 2000). Taiwan is reported as growing capsicum primarily from December through to August and import statistics confirm that although limited quantities flow into

61 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 59 Taiwan in this period (especially from New Zealand), the major import season is from around August to October / November. Importers advised us that red capsicums are the most popular but orange and yellow are also sold, freshness is essential, and Taiwanese like medium to large sizes. Landed prices were reported as around AUD$5.00 per kg. Prospects: Prospects for Australian capsicums appear not that attractive with air freighted supply ex Tasmania currently being necessary and landed prices being quoted as around AUD$5.00 per kg (although it is interesting that New Zealand continue to supply and would incur higher freight costs than us). Celery TAIWAN: CELERY IMPORTS BY COUNTRY TOTAL' 00 Jan-00 Peb-00 Mar-00 Apr-OB MayTO 3SETO Jul-00 Aug-00 5ep-00 Oci-00 Nov-00 Dec-OO TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA 7, Mexico Thailand Vietnam Australia Total 7, ,186 1,206 1, Source: Tradstat According to the above data, Taiwan imports large quantities of celery but almost all from the USA and currently only small quantities (2% of imports in 2000) from Australia. A large number of varieties and consistent quality were given as the reason imports from the USA were so dominant. Local produce was mainly available in winter and spring i.e. December to May with imports mainly arriving in the northern summer and autumn (May to December). Importers advised requirements are 30 pieces per carton, fat (bigger the better one importer said), juicy, green not yellow (not fresh), small fibre, no damage. Landed prices were reported as equivalent to AUD$27.00 per 24 pieces (1.2 to 1.3kg per piece), or 30 pieces (1kg per piece). Another importer advised prices as around equivalent to AUD$45.00 per 24 piece / 24kg ex USA and around equivalent AUD$40.00 per 24 piece ex Vietnam. We were advised cartons weigh 24kg and hold 24 or 30 pieces. One importer was critical of Australian inconsistency of size and an excessively long supply chain (but was being supplied with Australian celery ex Singapore). Prospects: There appears no reason why Australia cannot increase its share of the Taiwanese celery market especially in our winter / springtime when local Taiwanese product is short.

62 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 60 Carrots TAIWAN: CARROT IMPORTS BY COUNTRY TOTAL'00 Jan-00 ' "Fe'CTff Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 OcWW Nov-00 Dec-M TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA Canada Japan Australia 1, New Zealand 1, Total 3, Source: Tradstat Australia and New Zealand currently dominate the Taiwanese imported carrot market. The market is seasonal with the bulk of imports over the June to October northern summer/autumn period. Large quantities are said to be grown locally in the January to August period and are cheap. One buyer said carrots need to be medium to large (15cm or above), round head, with landed prices approx. AUD$1.00 to 1.20 per kg. Two others said they required Nantes variety and that prices were around AUD$0.75 per kg ex Australia and AUD$0.83 ex New Zealand. 0.5kg packs/20kg cartons were common. Baby carrots are not regarded as popular in Taiwan. Prospects: Australia's exports of carrots grew from 1,500/1,800 Metric tonnes in year 2000 (depending on whose figures you use) to almost 5,000 Metric tonnes in West Australia and to a lesser extent Tasmania have shared this growth. Prospects for future growth would seem good given Taiwan's entry into the WTO. In addition, New Zealand supplies in year 2000 entered the market around April/May and continued until around August. Australia took over at that time and continued supply until around December. An opportunity may exist to take share from New Zealand in their supply window through supply ex West Australia (Nantes / Berlicum) or Tasmania (Kuroda). 5.6 THAILAND The Thai government commitment to make Thailand a major food production country has resulted in significant research and development to cultivate new varieties of vegetables. Hillside regions like Chiang Mai and Chiang Rai have been transformed over the last five years with emphasis on growing a range of cold climate vegetables, which Australia has traditionally, supplied including cauliflower, broccoli, carrots and celery. The rapid development of the vegetable industry in Thailand is having a significant impact on Australia. For example, all of the importers surveyed no longer import capsicum from Australia because of strong domestic production. Importers also felt that Thailand will soon be self-sufficient in other vegetables

63 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) Q1 like broccoli, cauliflower, and celery because the Thai government is continually introducing new growing techniques and crop varieties to improve quality and yield. While the cold climate vegetables produced in Thailand do not match the quality of supply from Australia, they cater to a different market with most of the vegetables distributed through wet markets and targeted at average income families. On the other hand, the distribution of Australian vegetables is limited more to hotels, restaurants, catering and upscale supermarkets. The premium price for Australian vegetables put them out of reach for most average income Thai families. Our research showed there currently appeared only modest growth opportunities for Australian celery, broccoli, capsicum and cauliflower as the premium pricing puts it out of reach for most consumers however, Thailand's inability to produce reasonable quality carrots means there is strong demand for Australian carrots. Capsicum THAILAND: CAPSICUM IMPORTS BY COUNTRY (Deduced) TOTAL' 00 Jan-00 Feb-00 Mar-00 Apr-00 May-66 Jun-66 UuOT Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY Australia M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE 1 Total Source: Tradstat The market for imported capsicum in Thailand is very small with imports totalling just 6 metric tonnes for 2000 (source: Tradstat) and with Australia the sole supplier. One of the reasons for the small import volume is that Thailand's production capability has improved dramatically over the last four to five years with the introduction of new growing techniques and crop varieties from Holland. For example, four years ago Fine Foods International said it used to import 400kgs per week from Australia but now sources directly from local growers. Thailand is now also an exporter of capsicums to Hong Kong and Taiwan with exports totalling just under 900 metric tonnes in 2000 (Tradstat). Thai capsicum retails between $ $4.00/kg. Green capsicums are general cheaper than red and yellow capsicums. The Thai market requires capsicums to be rich in colour, firm on texture and slightly sweet in taste. Size uniformity is also important when supplying the catering and hospitality industry. Prospects: Thailand's ability to produce good quality capsicums year round means there is little supply opportunity for Australia except for December and January when domestic production is lowest and imports are needed to fill the market shortfall.

64 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 62 Universal Purity Products Company Ltd. suggested there might be an opportunity for Australia to supply capsicums in other colours like mole, orange or brown as chefs are continually looking for new produce to create new dishes. Broccoli THAILAND: CAULIFLOWER AND BROCCOLI IMPORTS BY COUNTRY (Deduced) I IOIAL'00 Jan-00 Feb-00 Mar-00 Apr-60 May-60 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Australia 20 '- - - " ' i T Total Source: Tradstat Tradstat data indicated that Thailand imported just 20 Metric tonnes of broccoli and cauliflower in 2000 with Australia the sole supplier. While the data groups broccoli and cauliflower together, feedback from in-market buyers is that a typical order generally consists of 70% broccoli and 30% cauliflower. Thailand grows broccoli in the hillside regions of Chiang Mai and Chiang Rai year round. Thai buyers described Thai broccoli as having long and thick stem, small head and yellow in colour. The Thai broccoli is extremely popular with local consumers as it is prominently featured in traditional Thai cooking, which uses the stem rather than the head. The wholesale price for Australian broccoli was reported as between AUD$5.00 to $8.00/kg. Importers we interviewed require Australian broccoli to be dark green, short stemmed, tightly packed heads and free from rots. As imported broccoli is mainly targeted at four and five star hotels and up-market restaurants, size uniformity is also an important factor. In periods where Australia is unable to supply, importers said they source their broccoli from Holland. The quality of Dutch broccoli is very similar to Australia but it is claimed the Dutch have better packaging - using 5kg rather than 8kg box, which allows for easier handling. Prospects: There is little opportunity for Australia to further develop the Thai market as Australian broccoli is seen as a premium vegetable with distribution limited to restaurants, catering, hotels and upscale supermarkets. To increase exports, Australian broccoli will need to cater for a wider consumer segment. For example, it was reported that China has created an opportunity by filling a niche between locally grown and Australian/Dutch broccoli. The Chinese broccoli is better quality than the Thai variety while not as expensive as Australian or Dutch broccoli, thus catering to middle income families.

65 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 63 Cauliflower Demand for cauliflower imports in Thailand is not great. Tradstat import data for year 2000 showed imports totalled only 20 metric tonnes (this is cauliflower plus broccoli combined) with Australia the only supplier. Feedback from importers was that broccoli outsells cauliflower by a ratio of some 2.5 to 1. Australia's exports of cauliflower in 2001 however were significantly larger at 405 tonnes - all ex West Australia (Source: ABS statistics). Broccoli exports in 2001 (Source: ABS) were just 7 Metric tonnes. The distribution of Australian cauliflower is generally limited to restaurants, catering, hotels and upscale supermarkets. Importers require Australian cauliflower to be 800g - 1kg, trimmed of leaf, full white, tightly packed and free from blemish and physical damage. The wholesale price for Australian cauliflower was reported as between $4 - $8/kg. Thailand also grows cauliflower domestically, but the quality is low compared to Australian product. The local variety is described as small, yellow, loosely packed and contains black spots. Thai cauliflower caters to the lower end of the market segment and is mainly distributed through the wet markets. Prospects: The wholesale price of $4 to $8 makes Australian cauliflower a premium vegetable and thus limits the distribution to hotels, restaurants and upscale supermarkets. Given what appears to be an almost 100% share of the import market, any increase in sales would need to come from expansion in consumption and accelerating this usually requires unit price reductions or significant promotion. Celery THAILAND: CELERY IMPORTS BY COUNTRY (Deduced) TOTAL'CO Jan-Co" ' rasw mm ApOT txzm T»m UPW ' Aug-60 Sep40~o'ct-0o Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Australia China Total Source: Tradstat Thailand's import of celery is relatively small with imports totalling just 45 metric tonnes in 2000 (source: Tradstat). Australia was the dominant supplier accounting for 97% of total imports. Western Australia is the main supplying region. One reason for the small import volume is that Thailand is a producer of celery and the importation of 2-3 tonnes of celery per month is used to fill market shortfalls. The market shortfall increases to 6-8 metric tonnes from September - January suggesting this is the period where local production is lowest.

66 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 64 The cultivation of celery is still quite new in Thailand and the quality is unable yet to match that of Australia. Thai celery can be described as very small (less than 500g), short, thin and dark green in colour and is mainly used in stir-fry cooking. Thai celery is distributed through the wet markets while Australian celery is targeted towards restaurants, hotels, and supermarkets. Again, Australian celery is seen as a premium vegetable. Imported celery needs to be around 1kg in size, leaves trimmed, light green in colour and free from blemishes and physical damage. Wholesale price for Australian celery was reported as approximately $4.00/kg. Prospects: There appear few opportunities to expand the Thai market as Australian celery already dominates imports. Any market expansion would involve price reduction to make it more affordable to average income families, and/or promotion to expand consumption. The USA could be a threat if the supply chain from the USA into Thailand improves. Carrots THAILAND: CARROT IMPORTS BY COUNTRY (Deduced) TOTAL'00 Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Belgium-Luxembourg China Taiwan Australia 3, New Zealand 4, Total 7, Source: Tradstat Thailand is a significant importer of carrots with 7,847 metric tonnes imported in New Zealand was the major supplier with 51% market share while Australia had 40%. As in most other East Asian markets New Zealand is strong in the first half of the year and Australia the latter half. Other countries to supply Thailand with carrots include China (4% share) and Taiwan (4.5% share). Importers we spoke with said they preferred to import New Zealand carrots because the quality is very similar to Australia while the price is slightly cheaper. Price is particular important as the bulk of the carrots are targeted at middle income families and distributed through the wet markets. Australian and New Zealand carrots are popular because they are priced at a level afforded by most middle income families. Thailand is a producer of carrots and has ability to supply year round. Fine Foods International described Thai carrots as small, skinny, pointy end, dark

67 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 65 orange and lacking sweetness. Thailand's inability to grow quality carrots has led to strong demand for imported product. The CIF price for New Zealand and Australian carrots is around $1.007kg and they retail for around $2.60 to $2.80 per kg. Importers require New Zealand and Australian carrots to be approximately 20cm length, 3-4cm diameter top, bright orange colour, and packed in 20kg bags. Both China and Taiwan have started to supply the Thai market. Import data showed Thailand imported 306 Metric tonnes from China and 360 Metric tonnes from Taiwan. Importers said the carrots were well received by consumers with no complaints of quality or appearance. Both countries are a direct threat as their season overlaps with Australia (October - February). Prospects: Australia's ability to produce carrots year round means there is opportunity to further develop the market. However, increasing sales in the Thai market would involve further competing with New Zealand. Feedback from importers is that the price differential between the two countries is minimal but New Zealand has better quality carrots (better appearance and texture). New Zealand is unable to supply beyond August because the winter season makes it too cold to grow carrots. The emergence of China and Taiwan means the market will get a lot more competitive in the near future. Australia will need to closely monitor the development of capability in China and Taiwan. 5.7 PHILIPPINES The demand for imported vegetables is small in the Philippines as the price premium puts it beyond the reach of most Filipinos. The demand for imported vegetables mostly comes from the hospitality industry and upscale supermarkets. Both Australia and the USA have been traditional suppliers of vegetables to the Philippines. Importers prefer to source from Australia where possible because of proximity between the two countries. When Australia is unable to supply, the alternative source would be the US. The importers also advised that it was cheaper to airfreight vegetables from Australia compared to the US. However, if sea freight was used, the costs and transport time are almost the same between the USA and Australia. Filipino importers don't like to use sea freight from the USA because the market is not large enough to absorb 40ft reefers of vegetable (they say the USA only supplies in 40ft reefers). In recent years, growth within the food sector has been in fast food chains. The emergence of new franchises such as Kenny Rogers, Taco Bell, Subway, A&W and Burger King has created a need for a range of quality fresh and processed vegetables including tomato, lettuce head, capsicum, corn, potato and onion. Where possible, most of these vegetables are sourced domestically with imports used to fill market shortfalls.

68 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 66 All of the importers surveyed were very satisfied with the vegetables imported from Australia. The market for imported vegetables is expected to remain small and stable, however growth in the fast food sector could translate to further opportunities for imported vegetables. Capsicum PHILIPPINES: CAPSICUM IMPORTS BY COUNTRY (Deduced) TOTAL'00 Jan-00 Feb-66 Mar-66 Apr-66 May-66 Jun-66 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA Total Source: Tradstat Tradstat data shows the USA as the only supplier of capsicums to the Philippines with 23 metric tonnes sold in Australian capsicums are banned from entering the Philippines in regions susceptible to Queensland and Mediterranean Fruit Fly. The Philippines Department of Agriculture Bureau of Plant Industry (BRI) Quarantine Administrative Order No 23 states that the ban applies to Victoria, New South Wales, Queensland and Western Australia but with no mention of South Australia, Tasmania, or the Northern Territory. One assumes supply from these latter states / territories is allowed (requires confirmation) however product must not be transshipped through regions with fruit fly or ports such as Singapore where no restrictions exist. Feedback from importers however is that there is little need to import capsicums because of adequate domestic production. The Philippines produced 9,775 metric tonnes of bell peppers (capsicums) in 1998 (source: Philippines' Department of Agriculture) and have averaged 8,000-10,000 metric tonnes per annum for some years. Austrade reported that little or no local production of capsicums occurred in the Philippines (DPI report 'Export Market Opportunities'- 1995) and again there would appear differences in what we describe as a 'capsicum'. The capsicums grown in the Philippines were described to us as firm, rich in colour, good moisture content and slightly sweet in taste. Prospects There are minimal supply opportunities as the Philippines appears self-sufficient in growing and supplying quality capsicums to the domestic market. Supply from some parts of mainland Australia (South Australia / Northern Territory) does however appear unrestricted. Broccoli PHILIPPINES: CAULIFLOWER AND BROCCOLI IMPORTS BY COUNTRY (Deduced) TOIAL'oO Jan-66 Feb-00 Mar-66 Apr-66 May-66 Jun-00 Jul-06 Aug-00 iiep-00 Oct-00 Nov-00 Uec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA Australia New Zealand Total Source: Tradstat

69 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 67 The above data from Profound Corporation shows Australia as the dominant supplier of broccoli and/or cauliflower (statistics are combined) to the Philippines with exports of 366 metric tonnes in 2000 (and 705 tonnes in 2001 according to ABS statistics). Importers estimate that broccoli outsells cauliflower by a ratio of 4 to 1 in the Philippines. Australia's exports to the Philippines in 2000 were some 7/1 in favour of broccoli (source: ABS statistics). The market for imported broccoli is not large as the reported CIF price of between $ $5.00/kg puts it beyond the reach of most Filipinos, thus imported broccoli is mainly destined for restaurants, fast food chains, hotel and upscale supermarkets. Domestic production of broccoli is minimal and officially reported at just 1,562 metric tonnes in Locally grown broccoli is reputedly not popular with consumers as it suffers from small head (6-8cm wide), long stem (12cm), light green/yellowish in colour and has poor shelf life. The lack of economies of scale from small growers also makes it expensive to grow broccoli in the Philippines. Importers require imported broccoli to be around g, dark green, trimmed of leaves at the stem and free from rots and bruising. The broccoli usually arrives in Manila by airfreight packed in 8kg box and covered in shaved ice. Size uniformity is also important as the broccoli is mainly destined for restaurants and hotels. The importers also advised that China has started to supply broccoli to the Philippines in 20ft reefers. Initial feedback from retailers is that the broccoli suffers from poor shelf life. The use of reefers allows the broccoli to be sold at a price much lower than Australia while delivering better quality than the locally grown variety. Prospects: Philippines low average income per capita means that imported vegetables like broccoli tend to be beyond the reach for most Filipinos. The market for imported broccoli is small with Australia having a 95% market share. Australia needs to closely monitor China's activities. Given the small market size in the Philippines, China's supply of broccoli in 20ft reefers has the potential to saturate the market and cut into Australia's market share. Cauliflower Unlike broccoli, the Philippines produces a reasonable volume of cauliflower with production reaching 11,875 metric tonnes in Despite this, a few tonnes of high quality cauliflower is still needed monthly to service the hospitality industry.

70 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 68 The cauliflower grown in the Philippines is described as yellowish, small (less than 600g), long stem and sometimes slightly bitter in taste. Filipino cauliflower is usually distributed through the wet markets and supermarkets targeted at middle income families. Importers require Australian cauliflower to be between 800g and 1kg, domed head, white, firm, trimmed of leaf and free of black spots. Size uniformity is important as Australian cauliflower is mainly destined for western restaurants and hotels. CIF price for Australian cauliflower was reported as between $ $3.20/kg. Prospects: Similar to other imported vegetables like celery and broccoli, the demand for imported cauliflower is small as the premium pricing puts it beyond the reach of most average income families. The volume for imported cauliflower is expected to remain small and stable with little or no competition from other countries (market size is too small). Celery PHILIPPINES:CELERY IMPORTS BY COUNTRY (Deduced) I TOTAL'00 Jan-00 l-eb-00 Mar-00 Apr-00 May-00 Jun-00 JT575 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Australia USA Total Source: Tradstat The Philippines imported a mere 27 metric tonnes of celery from the USA and Australia in This level of import seems to indicate that only a small quantity (1-3 tonnes) is needed each month to service the market. Celery is not particularly popular among Filipinos, as it is not widely featured in traditional cooking. Domestic production of celery was only 3,400 metric tonnes in Domestic celery suffers from poor colour, size and shelf life and hence the need to import higher quality celery from Australia and the USA to service hotels and restaurants. Importers require imported celery to be around 1kg, trimmed of leafs, light green in colour, firm and good moisture content. One of the importers interviewed said that celery from the USA has fewer leaves than Australia. She further added that while the USA is able to supply a better quality celery, she had to stop importing from the USA because it was too hard to organise the transport logistics between California and Manila - much easier to source from Melbourne or Sydney.

71 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 69 Prospects: As most average Filipinos cannot afford imported celery, the market is expected to remain small with demand to remain between 1 and 3 metric tonnes per month to service the hospitality industry and up-market retail outlets. Carrots PHILIPPINES: CARROT IMPORTS BY COUNTRY (Deduced) lolal'oo Jan36" FePoTJ ^artsc AprTO ElaFoTJ 3un3o" OToTJ ATJgTO SepTSC OcPoTj NoToTJ UecW TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY Australia M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Total NOTE: * represents less than 500kgs Source: Tradstat Data from Tradstat indicates negligible quantities of carrots were imported into the Philippines in None of the importers that we surveyed imported carrots because of strong domestic production. Figures released by the Philippines' Department of Agriculture show that total domestic production in 1998 was 32,302 metric tonnes. Carrots grown in the Philippines are described as small (12-14cm length, 2.5cm top), firm, bright orange and pointy-ended. The retail price of between AUD$1.10-$1.80/kg makes it extremely difficult for imported carrots to compete, especially when the quality of domestic carrots is considered to be of reasonable quality. Prospects: Opportunities to supply carrots to the Philippines appear minimal. 5.8 MALAYSIA Malaysia is a large market for Australian fresh produce. All 5 vegetables covered in this study have ready access to the Malaysian market and entry is duty free. Broccoli / Cauliflower MALAYSIA: CAULIFLOWER AND BROCCOLI IMPORTS BY COUNTRY (Deduced) luial'oo Jan-00 l-eb-00 Mar-00 Apr-00 May-M Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA Indonesia China 1, Taiwan Australia 14, New Zealand Total 16,335 1, ,490 1,171 1,517 1,286 1,281 1,597 1,873 2,210 Average Price per Tonne (AU$): 1,315 1,322 1,172 1,347 1,344 1,296 1,291 1,231 1,376 1,326 1, Source: Tradstat

72 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 70 Tradstat data (deduced from country export data) showed Malaysia imported some 16,000 metric tonnes of broccoli / cauliflower in year 2000 and over 90% of this came from Australia. Second largest supplier was China with just 8%. Local product is available but regarded as of poor quality. Similarly Chinese and Vietnamese product is not regarded as up to the Australian quality - one buyer told us "Australia the best". Imports of cauliflower from Australia in 2001 (16,819 metric tonnes) were well up over 2000 figures (12,520 metric tonnes) according to ABS statistics. Although cauliflower and broccoli are both popular in Malaysia, Australia's cauliflower exports to Malaysia exceed our broccoli exports by some 6 or 8 to 1 with 95% of cauliflower supplies coming out of West Australia, and Victoria the main supplier (60-70%) of broccoli. Our exports of cauliflower to Malaysia are year round from West Australia, the dominant supplying state, but weighted to the Malaysian summer / autumn from the other states. Broccoli is imported into Malaysia primarily in their summer/autumn and a window shows in both supply ex Australia and overall broccoli imports from all sources (despite China supplying at this time) in the period December/January to April/May i.e. the northern winter/spring. Average CIF prices (source: ABS statistics) for 2001 were broccoli (in 8kg boxes) from AUD$1.70 to AUD$2.60 per kg depending on the exporting state. An importer advised broccoli landed prices were approx. AUD$20.50 per 8kg = AUD$2.50 per kg. Average CIF cauliflower prices (ABS, 2001) were AUD$1.10 to $1.40 per kg. Importers advised cauliflower was around AUD$1.75 per kg in 20 kg boxes. We were told broccoli needs to have short stems (5cm). The AHC Broccoli Benchmarking Study (1995) stated that the market requires foliate diameter larger than the stem, will take small sizes, colour can be slightly purple but no evidence of flowering. Prospects: Opportunities to increase exports of broccoli over our summer/autumn period would appear worthy of research. Overall broccoli imports into Malaysia are down during this period and supply of quality product ex West Australia or Tasmania should be possible. Given our already large share of the cauliflower market, prospects to grow this further would seem remote. Carrots MALAYSIA: CARROT IMPORTS BY COUNTRY (Deduced) loial'oo Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA Indonesia China 1, Taiwan Australia 24, New Zealand 4, Total 31,089 2,241 2,363 2,796 2,986 2,599 2,591 2,862 2,232 2,379 2,234 2,512 3,294 Average Price per Tonne (AU$): Source: Tradstat

73 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 71 Australia currently dominates the Malaysian carrot imports market (about 80% share) and it is West Australia who claims 99% of this Australian business. We have a good reputation in the market. Supplies ex China were not well regarded. Preferences seemed to vary - one importer advised they like long carrots, another said large carrots are preferred, another buys medium size. Carton sizes are 20 kg. Landed prices were advised as around AUD$0.85 per kg for class 1 and $0.70 for class 2. One other advised prices of AUD$0.85 to $0.95 per kg whist another said AUD$1.05 per kg. We think these responses from importers sometimes become confused between import prices and wholesale prices. According to ABS statistics carrot exports from West Australia to Malaysia in 2001 averaged $608 per Metric tonne or AUD$0.61 per kg. Prospects: Australia already dominates the market however we are relatively weak in the first half of the calendar year when New Zealand and to a lesser extent China do well. Of the approx. 24,000 Metric tonnes we supplied in 2000, 58% was in the second half and 42% in the January - June period. Our share of the first half-year's imports was 66% but our share of the second half was 93%. Opportunities to build share in January to June may be possible if we focus on this. Celery MALAYSIA: CELERY IMPORTS BY COUNTRY (Deduced) 1 OTAL '00 Jan-00 Feb-00 Mar-00 Apr-66 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA China Taiwan Australia 1, Total 1, Source: Tradstat This is one of the few celery markets where Australia enjoys the major share. In 2000 Malaysia imported some 1000 metric tonnes of Australian celery, a 56% market share. ABS data for 2001 stated our exports rose to some 1500 metric tonnes. Supply is spread over Old (in 2001), Victoria and West Australia (who supply some 80% of these exports). Our exports have a strong bias to our winter/spring period and supply over our summer/early autumn drops away. This could be an opportunity to build our business. Our interviews with buyers were favourable. One buyer said we can compete with USA sourced product and that the supply chain certainly favoured us into Malaysia. He had purchased some amounts from China and Vietnam but he stated they had little taste.

74 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 72 Carton size was 25kg and landed prices were stated as AUD$1.50 per kg, AUD$1.20 per kg, and another said AUD$1.10 per kg. One buyer said small buts were preferred, another wanted 1kg per bunch, less leaves, no yellowish colour, another stated he likes smaller size. Prospects: Opportunities to increase exports over the Jan/Feb/March/April period would seem apparent for those regions that can supply celery during in our hotter periods. Capsicum MALAYSIA: CAPSICUM IMPORTS BY COUNTRY (Deduced) TOTAL'00 Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-OU TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Indonesia China Australia Total Source: Tradstat Australia exports minor quantities of capsicums to Malaysia despite no problems with market access. Few opportunities were reported for Australia as the local produce was regarded as good and available year round and most imports whenever needed were sourced from Indonesia. Colours required were red, yellow, green, produce should be bell-shaped ("not oblong like out of Sydney") and medium sized. Local product was supplied in 10kg cartons. Average wholesale prices (import + wholesale margin) over whole of season were reported (Barraclough report for NSW Dept. State & Regional Development, 'Potential Demand for Export Crops in Asia', Feb, 2000) as: Prospects: Capsicum red 6kg box AUD$ Capsicum yellow 6kg box AUD$ Given the reported high reputation of the locally grown product and the proximity of supply from Indonesia for any import needs, Australia may find it difficult to expand the negligible level business we currently have. Some seasonal windows of opportunity may exist and supply by sea rather than air may offer a more competitive price but the market is unlikely to be of significance into the foreseeable future. 5.9 SINGAPORE Singapore grows very little of its own food and almost totally relies on food imports. Despite a relatively small population of some 4 million, it is thus a significant vegetable importer.

75 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 73 Singapore has been a traditionally strong market for Australia in fresh fruit and vegetables with no restrictions on access and we are the 3 rd largest supplier of fruit & vegetables to Singapore (China - 27%, Malaysia - 19%, Australia 17%). We have a good reputation for quality, business hours are in a convenient time zone, and both air and shipping services are fast, relatively cheap, and frequent. Information on relative shipping costs into Singapore for Australia, USA, and New Zealand, although now rather old (Benchmarking study 1995) provided some interesting insights: Aust - Singapore 20 ft FCL = AUD$0.74 per kg USA - Singapore 40 ft FCL = AUD$0.78 per kg NZ - Singapore 20 ft FCL = AUD$1.02 per kg Aust - Singapore (airfreight) = AUD$ per kg That is, air freight was only cents per kg more than sea freight, and compared with the New Zealand to Singapore air freight costs (AUD$ per kg), we had a significant price advantage. Shipping times Fremantle - Singapore are just 5 days, and from eastern Australian ports, 9 to15 days all with good frequencies. Key market sectors are wholesale, retail, food service (Singapore a large number of foreign visitors and is a major air and sea transport hub), re-export (approx. 25% of imports but has been in decline), and processing. Singapore consumers prefer sweetness in their fruit & vegetables. Broccoli SINGAPORE: CAULIFLOWER AND BROCCOLI IMPORTS BY COUNTRY (Deduced) TOTAL'00 Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 L)ec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA Indonesia China 3, Taiwan Australia 9, New Zealand Total 13,886 1, ,140 1,352 1,369 1,204 1,141 1,340 1,688 1,279 Source: Tradstal The data indicates the main suppliers of broccoli/cauliflower (statistics not separated) are Australia and China with Australia enjoying around a 70% share of imports. Australia's exports of broccoli to Singapore are some 30% of those of cauliflower and ABS data shows we exported 3,754 metric tonnes of broccoli into Singapore in 2000 and 3,815 metric tonnes in 2001 (as against 6,206 Metric tonnes of cauliflower in 2000 and 7,077 metric tonnes in 2001). Broccoli was reported as more popular in Singapore than cauliflower. Broccoli exports are weighted to our winter/spring (May to around October) and negligible quantities are supplied over our summer/autumn period representing

76 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 74 a potential opportunity for those regions who can supply in this period. Chinese supply has a weighting towards this period. Buyer interviews indicated broccoli is the most popular and outsells cauliflower by about 2 or 3 to 1. China was said to have improved a lot as a supplier and their broccoli sells for AUD$ per kg (8kg cartons). Another supplier said landed prices were around AUD$3.50 per Kg ex Australia (airfreight) and AUD$2.50 per kg ex China. Another advised prices fluctuated between AUD$2.50 to 3.50 per kg. Broccoli seen in a 'Giant' supermarket was retailing at AUD$0.30 per 100g's. Mark-ups in this store on fresh vegetables were 27 to 30% on buying price realising an average margin of 18-20%. They allow a 5% in-store wastage on vegetables. Consumer requirements are dark green, tight and firm, 6-7cm head. One buyer said they require 24 heads per carton, whilst a recent report said broccoli should be medium to large compact head 10cm diameter, uniformly green no sign of yellowing (Singapore Visit Report April, Kim James, Horticulture Australia). An Australian exporter stated the market requires 32 heads in an 8Kg styrene carton. An AHC Broccoli Benchmarking Study (1995 and thus somewhat old) - said the market required foliate diameter larger than the stem, will take small sizes, colour can be slightly purple but no evidence of flowering. Broccoli was said to land in Singapore at AUD$ per kg and retail at AUD$ Air freighted broccoli is preferred as it is considered fresher and the added cost (about $3.00 per carton) is considered acceptable. Retailers were said to obtain a 20-30% mark-up from importers. They want a short stem product with head diameter larger than the length and piece weight about g*s although g's was acceptable. Colour required is an even dark green but a slight purplish tinge is tolerated. Yellowing is unacceptable. Packaging is in polystyrene cartons 8kg net with two layers with shaved ice. Product shipped by sea can show stem rot. The Australian product was regarded as more tasty than the Chinese supply however supply ex China is cheaper and quality was said to be improving. Prospects: Opportunities possibly exist to increase our share of the market over the December/January - February/March period for those regions such as Tasmania that can supply good quality during that period. Cauliflower Similar to Malaysia, our annual exports of cauliflower to Singapore (which total some 6-7,000 metric tonnes), are year round from West Australia (the dominant supplying state with some 90% share of our exports) but only during our winter / spring from Vic and Old.

77 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 75 Requirements are white, firm, head size 12cm or more. Another buyer interviewed said white, no damage, 14 or 16 heads per carton. A market visit report (Singapore Visit Report, Kim James, April, 2000) stated requirements for cauliflower are - medium sized tightly formed, white not yellow, 12-14cm diameter. Prices are approx. AUD$1.85 per kg ex Australia (8kg cartons) and AUD$1.50 per kg ex China 10kg cartons). Other reported prices ex China were AUD$1.20 to 1.40 per kg and Australia AUD$1.75 to 1.85 per kg. Prospects: Given our large market share and year round supply, few opportunities to improve on our current performance would seem to exist. Carrots SINGAPORE: CARROT IMPORTS BY COUNTRY (Deduced) TOP IMPORTS IOIAL'00 Jan-00 Feb-00 Mar-Oo Apr-M May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-UO Nov-00 Uec-00 TRADING AVERAGE EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY PRICE/TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA Indonesia China (AU$) Taiwan Australia (AU$) , New Zealand (AU$) 853 1, Total 12,830 1, , , , Source: Tradstat Tradstat figures for imports of carrots into Singapore in year 2000 confirm Australia dominates this market with over 80% share and almost all of this being supplied from Western Australia. The only competitor of significance at the moment is New Zealand who, like their other Asian markets for their carrots, only supply in the February/March to July/August period. China supplies small quantities but their carrots are regarded as still having quality problems with poor handling techniques, no machine washing, and consequently not adequately cleaned. These problems are however all correctable and some buyers regard China as a big threat in vegetables generally. Buyer interviews indicated the NZ carrot is well accepted and some regarded it as better quality than Australia (brighter, looks fresher). One buyer said he thought New Zealand would take over the market from Australia, as quality was better and price cheaper. Requirements were medium size (16 to 17cm minimum), Nantes variety, appearance shiny, clean, long and straight, smooth. A market visit report by Kim James (Horticulture Australia) in April, 2000 reported requirements as medium size (defined as 22cm long, 25-30mm diameter, straight, well-formed, washed, dried, and graded before packing, brightly coloured, tops well trimmed with no greening. Prices were reported as AUD$18 per 20kg carton (AUD$0.90 per kg). Other reported prices were AUD$0.80 to 1.10 ex Australia, AUD$1.00 to 1.35 ex NZ, and AUD$0.60 per kg ex China.

78 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) JQ Some buyers were critical of Australia's lack of consistency of delivery and that we should be more business minded and more market minded. Celery SINGAPORE: CELERY IMPORTS BY COUNTRY (Deduced) ToTAL'M Jan-00 Feb-00 IflaTuTj AprTO OafOO ' Jun-00 TOO Aug-00 Sep-00 Oct-00 Nov-00 Dec-OO TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA 2, Australia China Taiwan Total 3, Source: Tradstat Australia does not perform well in Singapore in celery. Imports from Australia were 369 metric tonnes in 2000 and 585 metric tonnes in 2001 (most of this is from West Australia). USA dominated the market in 2000 with over 85% of the market and has done so for some years. We were told China is becoming a major player (one buyer said the major supplier) in the celery market although this is not obvious in the year 2000 import data (66 tonnes supplied ex China). Chinese prices were said to be around AUD$0.65 to 0.70 per bunch. Taiwan supplies the market occasionally and was said to be catching up to the USA. One buyer advised that imports of celery into Singapore from California average some 2,500 cartons per week and are all year round. China supplies (from a state/privately owned joint venture in Kunming) are seasonal and enter the market in the February to June period. Product requirements are green in colour, straight, fat with more 'meat', taste is less important. Size 15cm +/- 2cm at least. Landed prices vary for the USA product from AUD$29 to $45 per carton, Chinese supplies were reported as around AUD$20 per carton but another buyer said AUD$28 per carton. Heads are 24/30/36 per carton. It was reported Australia sells by weight and USA and China by the bunch. Carton sizes are USA 27kg (36-38 bunches), China 20kg with 20kg the preference. The USA product was seen as cheaper than the Australian product, longer shelf life, and better packaging. Australia was criticised for inconsistent size, less pieces per carton, and more expensive. Capsicums SINGAPORE: CAPSICUM IMPORTS BY COUNTRY (Dedui TOTAL'00 ErToTj keb-oo" Mar-00 ApToTJ KEyTO I^oTj CToTJ ATJPC Se^oTJ SOTS RoToTj BSOT TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Indonesia China Australia Total 59 3 i Source: Tradstat

79 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) J J From the above data capsicum imports seem very small on a per capita basis: Country Population Imports Per Capita Consumption Singapore 4 million 59 Metric tonnes 1.5g's Hong Kong 7 million 770 Metric tonnes 10g's Japan 125 million 16,000 Metric tonnes 128g's The problem is that statistics from Tradstat in this case need to be derived from supplying country export data as Singapore does not make its own import data available. The data will similarly not include any imports from Malaysia since that country also does not release its official export statistics. Most supply of capsicum to the Singapore market comes from the Cameron Highlands in Malaysia with year round supply. One buyer said Australia supplied whenever Malaysia could not. The Netherlands export figures for 2000 show 9 metric tonnes going into Singapore. Prices ex Malaysia were reported as AUD$1.50 per kg and of course do not require airfreight to reach the market, arriving by truck. Other prices obtained from buyers were ex Malaysia under AUD$1.00 per kg and AUD$0.85 per kg for lower grade, ex Australia AUD$2.60, and AUD$1.55 ex Indonesia (who were said to have been less than one year in the market) and whose quality was stated by one importer as better than Australia. Another importer said prices varied but that AUD$1.25 per kg was an average. Average wholesale prices (import + wholesale margin) in Singapore over the whole season were reported (Barraclough report for NSW State & Regional Development, February, 2000) as: Capsicum red 6kg box AUD$ Capsicum yellow 6kg box AUD$ Carton sizes are 20 and 25kg from Malaysia, 10kg Indonesia (preferred), and 8kg ex Australia. Colours are green, red, yellow, and orange. Smaller ones are wanted - "Australian capsicums are too large for Singapore" one buyer said. Another said the market required bell shaped capsicums, again causing confusion as to just what is called a 'capsicum'. Prospects: Malaysia has a freight/proximity advantage with this time sensitive vegetable and is reported as supplying quality product into Singapore year round. Indonesia provides an alternate source when needed. Opportunities for Australia to significantly increase exports seem remote.

80 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) INDONESIA Indonesia has traditionally been strong in horticulture and is a large producer of vegetables. Total vegetable production in 1996 was almost 8 million metric tonnes grown over 928,000 hectares. Most growers are small operators with under 0.2 hectares and lack any benefits of scale. Growers in the hillside regions of Sumatra and Java have been trying to cultivate temperate vegetables with mixed success. Similar to other Southeast Asian countries, both the government and private sector are placing significant emphasis on research and development to further improve growing techniques and introduce new heat resistant crop varieties. For example, the introduction of new growing techniques has reportedly allowed Indonesia to grow high quality capsicums. All of the importers surveyed said that Australia's proximity to Indonesia makes it their preferred location to source quality temperate vegetables. Indonesia's low average income per capita means that imported vegetables are beyond the reach for most average income families. Therefore, the distribution of Australian vegetables tends to be limited primarily to restaurants, hotels and better supermarkets. The importers would like to work with Australian growers and exporters to further develop the Indonesian market. For example, one way proposed by Indonesian importers to further expand the Indonesian market was through forward selling. For forward selling to succeed, the importers said they need better information from growers about weather conditions, expected harvest and estimated price. This allows importers to plan their forward marketing strategy and push the necessary volume through their distribution channels. For example, if Australia is expecting a big harvest in broccoli, the importers can with sufficient forward notice organise with the hotels or restaurants to undertake the necessary promotions to increase consumption of broccoli. Broccoli INDONESIA: CAULIFLOWER AND BROCCOLI IMPORTS BY COUNTRY TOTAL 1 00 Jan-flO Feb-flC fflatotj ApHTC flatto JurTTO 3uTu8"" Aug-66 Sep-Ofl Oct-Ou Nov-Ofl Dec-Ofl TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE USA Australia Total Source: Tradstat In 2000, Indonesia imported 170 Metric tonnes of broccoli and cauliflower with Australia having a 95% market share. Importers were asked the proportion in which broccoli and cauliflower were sold - Mulia Raya advised that broccoli outsells cauliflower by 20 to 1. ABS statistics for 2001 indicate Australia's exports to Indonesia had dropped further to 11 tonnes of cauliflower and 45 tonnes of broccoli. Relative to Indonesia's market size (200 million people), the import volume for broccoli is small. One reason is that Indonesia grows broccoli domestically. This was confirmed by Makro Supermarket advising they preferred to source domestically rather than import from Australia. Makro Supermarket only imports

81 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 79 Australian broccoli when there is a shortage in the domestic market. This would suggest imports are going to vary considerably year to year. Importers described Indonesian broccoli as reasonable quality, smaller head, slightly longer stem and dull green in colour. Indonesia broccoli is popular as it can be afforded by most middle income families. We were advised that CIF price for Australian broccoli ranged from AUD$ $5.00/kg. This price premium limits distribution to hotels, restaurants, catering and better supermarkets. Importers require Australian broccoli to be around g, dark green, trimmed of leafs at the stem and free from rots and bruising. Size uniformity is important when supplying to restaurants and hotels. One of the importers interviewed is organising to import Chinese broccoli in 20ft reefers. While the quality of Chinese broccoli is not as good as Australia, the importer believes it will be well received by consumers because of price savings compared with the Australian product. Prospects: Currently domestic production in Indonesia is insufficient to always meet all levels of consumer demand and there is a need to import to fill shortfalls in the market and supply up-market hotels etc. Demand for higher quality product will gradually increase as the standard of living rises but will take a long time before most Indonesians can afford imported product. Australia also needs to closely monitor the development of China with the supply of lower priced broccoli, which may have the potential to eat into Australia's market share. Cauliflower The demand for imported cauliflower is very low, with broccoli outselling cauliflower 20 to 1. Similar to broccoli, Indonesia also cultivates cauliflower in temperate regions. Domestic production of cauliflower is not big, as the vegetable is not commonly featured in traditional Indonesian cooking. Cauliflower is mainly used in Chinese cooking and stir-fry. Indonesian cauliflower is described as yellowish, small (less than 600g), slightly long stemmed and sometimes slightly bitter in taste. Indonesian cauliflower is usually distributed through the wet markets targeted at middle income families. Importers require Australian cauliflower to be 800g - 1kg, domed head, white, firm, trimmed of leaf and free of black spots. Size uniformity is important as Australian cauliflowers are mainly destined for western restaurants and hotels. CIF price for Australian cauliflower is between $2.70 -$3.20/kg.

82 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 80 Prospects: There is little demand for cauliflower in Indonesia and it is a minor stock item for importers and distributors. The small market size and proximity of Australia make the market unattractive for other potential competitors. The market for cauliflower could be expected to remain exclusive to Australia with demand low but stable. Celery INDONESIA: CELERY IMPORTS BY COUNTRY IOIAL'00 Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Australia Total Source: Tradstat The market for celery is relatively small in Indonesia with imports totalling just 118 metric tonnes in 2000 and Australia shown as the sole supplier. Celery is not widely consumed in Indonesia as it is not commonly featured in traditional cooking. The consumption of celery mainly occurs in Chinese and Western restaurants and hotels. The cultivation of celery is relatively new in Indonesia with growers' still reportedly fine-tuning growing techniques. Indonesian celery was described as small, short, yellow in colour, and leafy and slightly stringy. Importers require Australian celery to be around 1kg, trimmed of leaves, light green in colour, firm and good moisture content. The importers said it is important that the right variety of celery be imported to ensure good shelf life. One of the importers said that he only imports the 'Schreur' brand from Australia. CIF price for Australian celery is between AUD$ $2.70/kg. Importers advised that the market for Australian celery is not big but there is a steady demand from hotels and restaurants. Prospects: The prospect for Australian celery in Indonesia is expected to remain small and stable. The demand for celery is likely too small to attract competitors other than domestic producers.

83 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 81 Carrots INDONESIA: CARROT IMPORTS BY COUNTRY TOTAL 1 00 Jan-00 Feb-00 Mar-66 Apr-66 May-00 Jun-66 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE Thailand Malaysia China Taiwan Australia New Zealand Total Source: Tradstat Demand for imported carrots in 2000 was 306 metric tonnes with Australia the major supplier (66% of imports). Other countries supplying carrots included Thailand (8.8%), Malaysia (6.8%), China (9.5%), Taiwan (4.2%) and New Zealand (4.2%). Again these figures are at variance with ABS statistics which we purchased and which show Australia exporting 51 tonnes of carrots to Indonesia in 2000 and 133 tonnes in Irrespective, the market is relatively small and can be attributed to strong domestic production. According to ABS statistics, Queensland supplied more than half of the 2001 sales but almost no product in West Australia supplied some 40 tonnes in both years. Indonesian carrots can be described as small (14cm length, 2.5cm top), bright orange, pointy end, and with poor shelf life. Distribution of Indonesian carrots is mainly through the wet markets and no frills supermarkets. The CIF price for Australian carrots was advised as between AUD$18 -$19 per 20kg bag. This competitive CIF price allows Australian carrots to be afforded by most average income families and Australian carrots are distributed through all channels including wet markets and no frills supermarkets. The size of the market is significant enough to attract attention from other carrot producing countries like New Zealand, China and Taiwan. One of the importers surveyed said he recently switched over to New Zealand carrots because of quality, but will commence importing from Australia again when the Koyo variety becomes available in June from Queensland. None of the importers surveyed were able to provide any comment on carrots from China, Taiwan, Malaysia and Thailand as they only deal with Australian and New Zealand carrots. Importers said they required Australian and New Zealand carrots to be firm, good moisture content, bright orange, 18-20cm length, 3-4cm diameter top and packed in 20kg bag. Prospects: All of the importers surveyed believe there are further growth opportunities provided Australia maintains consistent quality and set prices at a level that can be afforded by most average income families.

84 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 82 Australia needs to closely monitor the development by China and Thailand as both countries have potential to further grow their current combined market share of 18.3%. Capsicum INDONESIA: CAPSICUM IMPORTS BY COUNTRY IOIAL'00 Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 TRADING EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP EXP COUNTRY M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE M TONNE India China Hong Kong Australia Total Source: Tradstat Data from Tradstat shows that Indonesia imported 155 metric tonnes of capsicums in The suppliers were China (68.3%), Australia (22.5%) and India (9%). The market for capsicums in Indonesia has changed dramatically over the last two years. Feedback from importers is that Indonesia's production capabilities have improved dramatically and there is no longer the need to rely on imports. ABS statistics are maybe confirming this as they show Australia's exports to Indonesia in 2001 were just 6 tonne. The capsicums currently grown in Indonesia are very similar in quality to Australian capsicums. None of the importers we surveyed currently imported capsicums. Wholesale prices for Indonesian capsicums was reported as AUD$1.60/kg for green, AUD$2.00/kg for red and AUD$3.40/kg for yellow. The market requires capsicums to have a firm texture, good moisture content and rich in colour. Size is not particularly important although medium is preferred. Prospects: There is little need to import capsicums because Indonesia is now said to be self-sufficient in growing quality capsicums. Exports from Australia in 2001 showed a big drop in volume. All of the importers surveyed said they no longer imported capsicums because of Indonesia's capacity to supply year round. Prospects appear poor unless outlets wanting a high quality product which Indonesia cannot meet are apparent.

85 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 6.0 SUPPLY CHAIN ISSUES 6.1 Market Access Requirements Australia does not have access to all markets for all vegetables. Market access requirements ar Inspection Service) and we show below what restrictions etc are in place as advised by AQIS. MARKET ACCESS REQUIREMEN Country Vegetable Access Re Japan Capsicum Tasmania only (Qld and Med fruit fly ba Carrot Phytosanitary Certificate (PC) required - 'Found free from Radopholus similis growing season' or stating 'Grown in an determined by official soil sampling (pr season)'. Broccoli, Celery, Cauliflower PC required China Capsicum Prohibited commodity Broccoli, Celery, Cauliflower All fruit and vegetable imports are proh imports have to be submitted to the po inspect them on arrival. Taiwan Carrot Prohibited from New South Wales and free of soil. PC required, additional dec has been thoroughly inspected and fou and Ditylenchus dipsaci'. Celery, Broccoli, Cauliflower PC required, additional declaration stat inspected and found free from Graphog dipsaci'. Capsicum PC required, Separate additional decla mainland states. See AQIS for further d required.

86 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) Hong Kong Broccoli, Celery, Capsicum, Permitted entry with nil requirements Cauliflower, Carrot South Korea Capsicum Not permitted (fruit fly) - (advised by Ko that no pest risk analysis) Carrot PC required Broccoli, Celery, Cauliflower Import Permit & PC required. Note: ther export of other vegetables, but there ma South Korea for importation requiremen Thailand Carrot, Broccoli, Celery, Capsicum, Cauliflower PC required Philippines Capsicum Import Permit, PC required. Different co states. Additional declaration required s and packed in Tasmania and shipped d Other options are also available, consu Broccoli, Celery, Carrots, Cauliflower PC required. Different conditions for Ta commodities must be treated at a facilit Plant Industry. Additional Declarations r was grown and packed in Tasmania an Malaysia Singapore Broccoli, Celery, Carrots, Cauliflower & Capsicum Broccoli, Celery, Carrots, Cauliflower & Capsicum Philippines'. Other options are also ava Permitted entry with nil requirements. N tested for pesticides compliance. Permitted entry with nil requirements. Indonesia Capsicum PC required, Additional declaration. Broccoli, Celery, Carrots, PC required Cauliflower PC = Phytosanitary Certificate Source: Australian Quarantine Inspection Service (AQIS)

87 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) Vegetable Maximum Shelf Life A knowledge of maximum storage life (under optimum conditions) is important to identify markets within reach and the costs (air or sea freight) to reach them. The following information was derived from phone interviews with growers, field officers, and exporters. The data is intended to represent the maximum time under ideal / recommended post harvest processing and storage conditions that product is retained in its original saleable condition (and without MAP - modified atmosphere packaging). This involves a subjective judgement and thus it was not unexpected that there were some differences of opinion in these figures. Those shown represent generally accepted views by those directly involved in the industry. Capsicum Broccoli Celery Cauliflower Carrots 14 days (one knowledgeable person stated 4 weeks) 21 days 28 days (some said 3 weeks) 28 days (some said 3 weeks) 35 days (many believe 8 weeks or longer) Matching these figures with the time to reach markets can be useful in identifying opportunities and we discuss this later in our report. 6.3 Time to Market Fundamental to successful supply is ensuring produce reaches markets in good condition. Shelf life under ideal post-harvest practices and the time it takes to reach a market are critical factors. We have examined shipping times from various ports to Asian markets. This can then be related to what markets can be readily reached by Australia relative to its competitors, whether sea freight is viable, and thus freight's contribution to landed costs. The figures provided are from Lloyd's List and discussions with various shipping companies. We would add a further average 7 days to the time to market to allow for the time taken from harvesting to Australian loading port, and from Asian disembarkation port to point-of-sale. Thus assessment of whether supply to a market is viable can be roughly made by comparing the maximum shelf life of the vegetable to the sea or air transit time + 7 days. Use of Modified Atmosphere Packaging (MAP) has not been allowed for.

88 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 86 Sea Freight Country Ex Sydney Ex Brisbane Ex Melbourne Ex Fremantle Japan China Taiwan Hong Kong Korea Thailand Philippines Malaysia Singapore Indonesia 10 days direct, weekly frequency. 16 days direct, weekly frequency. 18 days direct, weekly frequency. 10 days direct, weekly frequency. 14 days direct, weekly frequency. 22 days transhipment, weekly frequency. 20 days direct, weekly frequency. 10 days direct, weekly frequency. 13 days direct, weekly frequency. 15 days via Singapore, weekly frequency. 8 days direct, weekly frequency. 14 days direct, weekly frequency. 16 days direct, weekly frequency. 9 days direct, weekly frequency. 12 days direct, weekly frequency. 14 days via Singapore, weekly frequency. 14 days via Kaohsiung, weekly frequency. 8 days direct, weekly frequency. 9 days via Tanjung Pelepas, weekly frequency. 11 days direct, weekly frequency. 12 days direct, weekly frequency. 19 days direct, weekly frequency. 22 days direct, weekly frequency. 19 day, weekly frequency. 16 days, weekly frequency. 22 days transhipment, weekly frequency. 22 days direct, weekly frequency days, weekly frequency. 15 days, weekly frequency. 10 days direct, fortnightly frequency. 16 days direct, weekly frequency. 16 days direct, weekly frequency. 13 days direct, weekly frequency. 9 days direct, weekly frequency. 12 days direct, weekly frequency. 11 days direct, weekly frequency. 19 days direct, weekly frequency. 5 days direct, weekly frequency. 5 days direct, weekly frequency. 7 days direct, weekly frequency. Source: 'Maersk Sealand Australia ( *COSCO 5 Star Shipping ( *Uyoa"s List DCN From the above shipping times and from the generally accepted shelf life of the 5 vegetables (under ideal post-harvest conditions) as shown in section 6.2 above, it would appear feasible to at least consider use of sea freight in the following circumstances if not already doing so (allowing a total 7 days pre- and post- shipping time before reaching retail shelves): Potential for Shipping by Sea Freight Country Ex Sydney Ex Brisbane Ex Melbourne Ex Fremantle Japan China Taiwan Hong Kong Korea Broccoli Cauliflower Carrots Celery Cauliflower Carrots Celery Cauliflower Carrots Celery Broccoli Cauliflower Carrots Celery Broccoli Cauliflower Carrots Broccoli Cauliflower Carrots Celery Broccoli Cauliflower Carrots Celery Cauliflower Carrots Celery Broccoli Cauliflower Carrots Celery Broccoli Cauliflower Carrots Broccoli Cauliflower Carrots Celery Cauliflower Carrots Celery Carrots Cauliflower Carrots Celery Cauliflower Carrots Celery Cauliflower Carrots Celery Cauliflower Carrots Celery Broccoli Cauliflower Carrots Celery Broccoli Cauliflower Carrots Celery Broccoli Cauliflower Carrots

89 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 87 Celery Celery Celery Carrots Thailand Carrots Broccoli Cauliflower Carrots Celery Philippines Malaysia Singapore Indonesia Cauliflower Carrots Celery Broccoli Cauliflower Carrots Celery Broccoli Cauliflower Carrots Celery Cauliflower Carrots Celery Broccoli Cauliflower Carrots Celery Broccoli Cauliflower Carrots Celery Broccoli Cauliflower Carrots Celery Broccoli Cauliflower Carrots Celery 6.4 Supply Chain Cost Structures Carrots Cauliflower Carrots Celery Cauliflower Carrots Celery Broccoli Cauliflower Carrots Celery Broccoli Cauliflower Carrots Celery Cauliflower Carrots Celery Capsicum Broccoli Cauliflower Carrots Celery Capsicum Broccoli Cauliflower Carrots Celery Broccoli Cauliflower Carrots Celery The Supply Chain Cost Structure matrix below gives an indication of inclusive costings, from port of embarkation to port of discharge. Costs from the farm gate to the port are not covered (as they naturally vary greatly), nor from the discharge port to the retail shelf or restaurant kitchen. The matrix is intended to provide a basis on which growers / exporters can make some assessment of costs to reach the market and therefore the financial viability of a market opportunity where import buying prices are known. Sea Freight The first and most important cost component is the type of cargo container needed and the mode of transport to be used. To transport these types of vegetables via ocean freight and maintain a post-harvest cool chain, the cargo container needs to be refrigerated (otherwise known as a 'reefer'), or 'Controlled Atmosphere' / 'Modified Atmosphere' (CA / MA) containers. CA or MA containers usually cost approximately USD$1,000 (AUD$1850) more than standard 'reefers' and are not usually necessary when shipping into Asia, since shipping times are relatively short. Reefers come in 20 or 40 foot versions which can be hired at Full Container Load (FCL) or Less than a Container Load (LCL) cost basis. The FCL weight for a 20ft reefer must not exceed 25,400 kilograms, whilst the 40ft reefer must not exceed 30, 480 kilograms. As well as the container-hiring fee, the shipping firm adds a 'Port Service Charge' that includes the cost of handling the cargo at the port of loading and the port of destination. Due to limitations of space in the Supply Chain Matrix we have also included in this Port Service Charge the price of documentation, lifting on and lifting off (LO/LO) and the BAF (Bunker Adjustment Factor) which is essentially the cost for the ship's fuel.

90 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 88 Many countries receiving fresh fruit and vegetable produce from Australia require documentation stating it is free from infestation and disease. The Australian Quarantine and Inspection Service (AQIS) charges for Phytosanitary and Export Documentation, also a charge for shipment inspection and audit is incurred. AQIS fees are: Documentation Phytosanitary certificate $20 Export permit $36 Fee for Service Inspection/audit/documentation $31 per 15 minutes The freight forwarder organises shipping schedules etc and charges fees for this, with the level of fees usually dependant upon the amount of cargo being shipped. Import duties exist in all countries under study except Hong Kong and Singapore. These duties / taxes are usually the responsibility of the importer. One needs to determine when obtaining information on landed / import prices in a particular market, whether the price you are being told is with / without import duty - usually it will be with duty. Value added taxes (VAT) apply to imports but also apply to local produce and are not shown here. Import duties for the 5 vegetables are noted below for each of the 10 prospective export destinations. Country Import Duty China 30% Hong Kong Duty Free Indonesia 5% Japan 5% Malaysia 5% Philippines 10% Singapore Duty Free South Korea 30% Taiwan 28% Thailand 46% or THB (Thai Bart) per Kg whichever is higher. We cannot calculate a monetary figure for these in the charts below as they are a % of the total selling price and thus vary with each circumstance. The column 'Cost AUD$ per Kg' in the sea freight charts is the costs from port of loading to port of discharge for a theoretical 20' reefer containing 22 tonnes of fresh vegetables and in the air freight chart for a 1.5 tonne AVE shipment. It is intended to provide an indicative figure of costs from loading to discharge.

91 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) Supply Chain: Port of Departure: Brisbane Mode of Transport Destination Freight Size Freight Rate 1 Port Service Charges 2 AQIS Costs 3 Sea Freight Busan (South Korea) 20' Reefers 2, ' Reefers 4,246 1, Yokohama (Japan) 20' Reefers 2, ' Reefers 4,246 1, Kaohsiung (Taiwan) 20' Reefers 2, ' Reefers 4,069 1, Hong Kong (SAR China) 20' Reefers 2, ' Reefers 4,158 1, Shanghai (China) 20' Reefers 3, ' Reefers 5,131 1, Manila (Philippines) 20' Reefers 3, ' Reefers 5,113 1, Laem Chabang (Thailand) 20' Reefers 2, ' Reefers 4, Tanjung Pelepas (Malaysia) 20' Reefers 2, ' Reefers 4, Jakarta (Indonesia) 20' Reefers 2, ' Reefers 4, Singapore (Singapore) 20' Reefers 2, ' Reefers 4, Prices above do not include GST.

92 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) Supply Chain: Port of Departure: Melbourne Mode of Transport Destination Freight Size Freight Rate 1 Port Service Charges 2 AQIS Costs 3 Sea Freight Busan (South Korea) 20' Reefers 2, ' Reefers 4,554 1, Yokohama (Japan) 20' Reefers 2, ' Reefers 4,643 1, Kaohsiung (Taiwan) 20' Reefers 2, ' Reefers 6,161 1, Hong Kong (SAR China) 20' Reefers 2, ' Reefers 3,929 1, Shanghai (China) 20' Reefers 2, ' Reefers 4,197 1, Manila (Philippines) 20' Reefers 2, ' Reefers 5, Bangkok (Thailand) 20' Reefers 2, ' Reefers 4, Port Kelang (Malaysia) 20' Reefers 2, ' Reefers 4, Jakarta (Indonesia) 20' Reefers 2, ' Reefers 4, Singapore (Singapore) 20' Reefers 2, ' Reefers 4, Prices above do not include GST.

93 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) Supply Chain: Port of Departure: Sydney Mode of Transport Destination Freight Size Freight Rate 1 Port Service Charges 2 AQIS Costs 3 Sea Freight Busan (South Korea) 20' Reefers 2, ' Reefers 4,308 1, Yokohama (Japan) 20' Reefers 2, ' Reefers 4,308 1, Kaohsiung (Taiwan) 20' Reefers 2, ' Reefers 4,308 1, Hong Kong (SAR China) 20' Reefers 2, ' Reefers 4,219 1, Shanghai (China) 20' Reefers 3, ' Reefers 5,206 1, Manila (Philippines) 20' Reefers 3, ' Reefers 5, Bangkok (Thailand) 20' Reefers 2, ' Reefers 4, Port Kelang (Malaysia) 20' Reefers 2, ' Reefers 4, Jakarta (Indonesia) 20' Reefers 2, ' Reefers 4, Singapore (Singapore) 20' Reefers 2, ' Reefers 4, Prices above do not include GST.

94 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) Supply Chain: Port of Departure: Fremantle Mode of Transport Destination Freight Size Freight Rate 1 Port Service Charges 2 AQIS Costs 3 T Sea Freight Busan (South Korea) 20' Reefers 2,862 1, ' Reefers 4,830 1, Yokohama (Japan) 20' Reefers 2,862 1, ' Reefers 4,830 1, Kaohsiung (Taiwan) 20' Reefers 2,415 1, ' Reefers 4,204 1, Hong Kong (SAR China) 20' Reefers 2,415 1, ' Reefers 4,204 1, Shanghai (China) 20' Reefers 3,041 1, ' Reefers 5,188 1, Manila (Philippines) 20' Reefers 3,041 1, ' Reefers 5,188 1, Bangkok (Thailand) 20' Reefers 2, ' Reefers 3,488 1, Port Kelang (Malaysia) 20' Reefers 2, ' Reefers 3,399 1, Jakarta (Indonesia) 20' Reefers 2, ' Reefers 3,488 1, Singapore (Singapore) 20' Reefers 2, ' Reefers 3,399 1, Prices above do not include GST,

95 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 94 Notes: All prices are given in Australian Dollars. *20ft Reefer Cost per Kilogram worked out at a cargo weight of 22,000 kilograms. *40ft Reefer Cost per Kilogram worked out at a cargo weight of 26,000 kilograms. #Please note when local charges are paid in Australia 10% GST is applicable. 1 Freight Rates are always given in US Dollars. They have been converted to Australian Dollars at approximately AUD 1= USD 55.9 (Which was taken from the currency converter listed above on 12/072002). 2 Port Service Charges include: Port Service Charge (PSC) x 2. Origin Terminal Handling Charge (OTHC) x 2. Lift On/Lift Off (LO/LO) x 2. Bunker Adjustment Factor (BAF). Documentation and the Freight Forwarders fee. [ x 2 refers to the charges at the Port of Loading and the Port of Discharge. ] 3 AQIS charges include: Phytosanitary Certificate. Export Permit. Inspection/Audit. Sources: Maersk Sealand ( Cosco/5 Star Shipping ( Pacific Asia Express ( Powerhouse Excon Freight Forwarders FXConverter -164 Currency Converter ( AQIS ( Air Freight The charges involved with airfreight are similar in structure to those for sea freight, except that airfreight volumes are smaller and unit costs are higher. The major advantage into Asian destinations is that the cargo can be at the point of discharge within one day of departure. The main ways of sending cargo by airfreight is in containers or on pallets (ULD's = Unit Load Devices). There are different ULD's for different purposes and different aircraft. A particular type of ULD used for fresh vegetables is an AVE, the cartons or boxes of produce being stacked inside. AVE's have a gross weight of some 1,540 kilograms. Many other types of ULD's are available but to avoid complications we will assume a typical vegetable shipment goes in an AVE. Similar to sea freight there are a host of charges other than the freight charge involved with exporting by airfreight. The first is the Fuel Surcharge (FUEL) which is similar to the BAF for sea freight. The airlines add this fee due to current world oil and AVGAS (Aviation Fuel) prices. The second is the War Risk Surcharge (WAR). This is an insurance fee charged in case the aircraft is grounded at any airport due to insurgency. Thirdly, a Terminal Security Fee (SEC) is charged by QANTAS Freight on all airlines it handles due to the world's current political climate and the need for added security. The WAR and SEC are not set rates, but a per kilogram rate. Finally, handling charges are added including a fee for Documentation and Loading. Unloading fees have for this example been assumed as identical to loading fees.

96 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 95 Port Service Charges Destination FUEL WAR SEC Documentation Loading Unloading Seoul AVE: $70 $0.10/kg N/A $90 AVE: $90 PLT:$150 PLT:$150 Narita AVE: $70 $0.10/kg 0.03/kg $90 AVE: $90 PLT: $150 PLT:$150 Kaohsiung $0.10/kg $0.10/kg N/A $90 AVE: $90 PLT:$150 Hong Kong AVE: $70 $0.10/kg 0.03/kg $90 AVE: $90 PLT:$150 PLT: $150 Shanghai $0.10/kg $0.10/kg N/A $90 AVE: $90 PLT:$150 Manila AVE: $70 $0.10/kg 0.03/kg $90 AVE: $90 PLT:$150 PLT:$150 Bangkok AVE: $70 $0.10/kg 0.03/kg $90 AVE: $90 PLT:$150 PLT:$150 Kuala Lumpur AVE: $70 $0.10/kg 0.03/kg $90 AVE: $90 PLT: $150 PLT:$150 Jakarta $0.60/kg $20.00/kg 0.03/kg $90 AVE: $90 PLT:$150 Singapore AVE: $70 $0.10/kg 0.03/kg $90 AVE: $90 PLT: $150 PLT:$150 AVE: $90 PLT:$150 AVE: $90 PLT:$150 AVE: $90 PLT:$150 AVE: $90 PLT:$150 AVE: $90 PLT: $150 AVE: $90 PLT:$150 AVE: $90 PLT:$150 AVE: $90 PLT:$150 AVE: $90 PLT:$150 AVE: $90 PLT:$150 Note: AVE represent Aircraft Cargo Container PLT represents Aircraft Cargo Pallet N/A represents Not Applicable * All prices are given in Australian Dollars Source: CT Freight ( These charges are a mixture of fixed costs and costs that vary with the quantity being shipped, consequently there is no fixed charge that applies in all situations. Thus freight costs need to be assessed each time. In the cost structure model that follows, the rates are for cargo exported from Sydney. CT Freight Forwarders investigated the best prices and most effective carriers to each destination and found that across the board rates do not vary substantially from the Sydney rates, thus costs ex-sydney have been used for Brisbane, Melbourne and Perth as well. The model also shows in the 2 nd last column the total shipment cost per Kg assuming a 1.5 tonne shipment in an AVE container. This cost is simply to provide an indicative cost only based on the particular scenario. It does not include land transport to the port of loading, nor import duties or customs clearance charges at the port of discharge.

97 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) Chain: Port of Departure: Sydney "ansport Destination Freight Size Freight Rate 1 Port Service Charges 2 AQIS Costs 3 Total Freight Charges Cost AUD$ per Kg* Impo ight Seoul (South Korea) AVE 2, , PLT , Narita (Japan) AVE 2, , PLT 4,950 1, , Kaohsiung (Taiwan) AVE 2, , PLT 5,300 1, , Hong Kong (SAR China) AVE 1, , D PKT 3,300 1, , D Shanghai (China) AVE 1, , PLT (Currently Unavailable) Manila (Philippines) AVE 1, , PLT 3,500 1, , Bangkok (Thailand) Kuala Lumpur (Malaysia) AVE PLT AVE 900 2,450 1, , CO CO CO CO CO CO 1,523 3,663 1, % or whiche 46% or whiche PLT 2,600 1, , Jakarta (Indonesia) AVE Flat Rate: $0.60/kg , PLT Flat Rate: $0.60/kg 1, , Singapore (Singapore) AVE 1, , D PLT 2,800 1, , D e do not include GST.

98 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 97 Notes: All prices are given in Australian Dollars. *AVE Total Freight Charge worked out at an AVE cargo weight of 1500 kilograms. *PLT Total Freight Charge worked out at an PLT cargo weight of 4500 kilograms. #Please note when local charges are paid in Australia 10% GST is applicable. 1 Air Freight Rates are given in Australian Dollars (Rates are from CT Freight). 2 Port Service Charges include: Fuel Surcharge (FUEL) which is charged by most airlines due to current world oil prices. War Risk Surcharge (WAR) which is charged due to the world's current political climate. Terminal Security fee is charged by QANTAS Freight for all airlines they handle. Handling Charges include Documentation, the Freight Forwarders fee. Loading and Unloading. 3 AQIS charges include: Phytosanitary Certificate. Export Permit. Inspection/Audit. Sources: CT Freight ( AQIS ( Note: Prices are based on quotes given in June/July Information Sources: CT Freight Pty Ltd (Specialist AirFreight Forwarders) Maersk Sealand Australia Pacific Asia Express Shipping Company Powerhouse Excon Freight Forwarders. Cosco 5 Star Shipping Lloyds List DCN Qantas Freight

99 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) OPPORTUNITIES AND THREATS 7.1 Australia's Overall Performance in Asian Markets In order to rate Australia's export performance into Asia, we prepared a table showing each market and their total imports of each of the nominated vegetables. We compared this with Australia's exports to each of those markets and expressed this as Australia's market share of imports: AUSTRALIA'S SHARE OF IMPORTS - BY VEGETABLE, BY COUNTRY Vegetable Market Total Imports (Mt) Australian Exports (Mt) Australia's Market Share (%) Capsicum China Hong Kong (All Capsicums) Hong Kong (Sweet / Bell Capsicums) 1, % 23% Taiwan 1, Korea Japan 16, Philippines Thailand % Malaysia % Singapore % Indonesia % Carrots China Hong Kong 25,887 7,454 29% Taiwan 3,247 1,851 57% Korea 10, % Japan 43,583 4,305 10% Philippines Negligible Negligible 100% Thailand 7,847 3,133 40%

100 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 99 Malaysia 31,089 24,704 79% Singapore 12,830 10,538 82% Indonesia % Cauliflower / Broccoli China Hong Kong 8, % Taiwan 6, % Korea % Japan - Cauliflower Japan - Broccoli , <1% Philippines % Thailand % Malaysia 16,335 14,558 89% Singapore 13,886 9,927 71% Indonesia % Celery China 7, Hong Kong 10, Taiwan 7, % Korea Japan 6, Philippines % Thailand % Malaysia 1,827 1,031 56% Singapore 3, % Indonesia %

101 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 100 In summary: > We perform far better in South East Asia than we do in North East Asia. > We perform poorly in most of the nominated markets with capsicum and celery. > We perform well with carrots into South East Asia but only fairly with carrots into North East Asia. > We perform well with cauliflower / broccoli into South East Asia but poorly with cauliflower / broccoli into North East Asia. > Opportunities exist 7.2 Broccoli Although it can be grown all year round broccoli quality can be less reliable as a summer crop. It is also regarded as difficult to grow with any level of quality in the tropics (HRDC Benchmarking report, 1995). Quality of broccoli from China drops in their summer period especially in their rainy season (August / September / October), consequently seasonal opportunities can present themselves in northern hemisphere markets provided a quality product is offered. Opportunities we see are: Japan Despite the Ito Yokado buyer's negative remarks to us, opportunities would seem to exist for Australian broccoli into Japan using either sea or air freight. We dominate markets like Malaysia yet our share of the Japanese market is < 1%. China (at least up to year 2000) has a weakness in supply in the northern hemisphere summer (April - October), a period in which Australia can supply. The main competitor in this period is the USA, who exported some 25,000 tonnes into Japan in 2000, yet does not do well with broccoli exports into other markets except Canada. Prices ex USA into Japan average AUD2.700 per tonne (versus China AUDI,700 per tonne). These figures are well above the prices we achieve in for example Malaysia (AUDI,300 approx per tonne) and even Hong Kong (AUD2.278 per tonne). Flights from Australia to Japan are 2-3 times daily and freshness (which the Japanese consumer values highly) and a high outturn should not be a problem. Sea freight is possible with shipping times (Maersk) of 8 days ex Brisbane to Yokohama, 12 days ex Melbourne, and 15 days ex Sydney. Fremantle to Yokohama takes 18 days. Producers / exporters in South Eastern Queensland have already successfully demonstrated sea freight of broccoli to Japan from April to mid-september. It is important however to supply what the Japanese market wants - the USA offer broccoli in three categories being - florets (small pieces in a bag), bunches

102 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 101 (the side shoots from the plant), and 'crown cut' (main shoots with a short stem about 4 pieces per kg). The 'crown cut' variety or 'crown broccoli is well established in the USA and in Japan - it has become the benchmark in Japan and consumers expect broccoli to be like this. Long term, China might pose a threat all year round but will take a long time to match, if ever, favourable perceptions of Australian product being safe from chemicals and pesticides, an attribute which Japanese consumers value greatly. Hong Kong Despite Australian exports of broccoli to Hong Kong falling recently, we are not convinced that this trend cannot be reversed. Australian broccoli exports to Hong Kong are sourced from Qld (June to September) and Victoria (April - December). 65% (95 tonnes out of 147 tonnes) of Australian broccoli exported to Hong Kong in 2001 came from Qld and sea transit times from Brisbane to Hong Kong, by Maersk for example, are 15 days. Maersk shipping time Oakland (USA) to Hong Kong is 14 days so it would appear we are not disadvantaged against the USA in time to market, at least from Queensland. The Dairy Farm supermarket buyer we interviewed advised that supermarkets do not want broccoli which is iced. A 21 day shelf life for broccoli under ideal post harvest conditions should mean sea shipment out of Brisbane to Hong Kong is viable or at least worthy of trial. Similarly, shipping time from Fremantle to Hong Kong is 10 days bringing it well within the product's post harvest life. Sea transit times ex Melbourne are 19 days (Maersk) which are most likely excessive for broccoli. Although China supplies good quality broccoli in the northern winter, their quality leaves a lot to be desired in the HK summer and it is reported difficult to obtain good quality broccoli in HK at that time. Lesser opportunities exist in: Malaysia Opportunities to increase exports of broccoli over our summer / early autumn period would appear worthy of further research. Overall broccoli imports into Malaysia are down during this period and supply of quality product ex West Australia or Tasmania (January to March) should be possible. Singapore Similar to Malaysia, opportunities appear to exist to increase our share of the market over the December / January / February / March period for those regions such as Tasmania that can supply good quality during that period. General Most broccoli exports from Australia are shipped by air. The reason given is that the markets want it fresh and shipping by air plus packed in ice ensures this. This however comes at a price penalty and we feel better use of sea freight is

103 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 102 practical and under-utilised. Sea freighted broccoli would better compete against Chinese supplies and could find a niche where iced product is not that important. More frequent use of sea freight especially targeting new customers / market niches in Asia markets is a recommendation in section Cauliflower Cauliflower is not as popular as broccoli in most Asian markets however at least one market differs: Taiwan Buyer interviews confirmed cauliflower outsells broccoli in Taiwan. Australia's cauliflower exports to Taiwan grew 135% to 350 tonnes in 2001 with over 95% supplied from West Australia. The USA has been the main player in Taiwan but with their admission into the World Trade Organisation (WTO) early 2002, the market is more accessible. Currently the USA is the major supplier with shipments mainly in the period April to November (peaking in July to September) and Australia a marginal player July to November. Opportunities to build both market size and market share for cauliflower appear to exist. Japan Cauliflower is not that popular in Japan and imports are minimal. Volumes through wholesale markets are however low in the June /July /August / September period as are imports and this may present a small opportunity for Australia. 7.4 Carrots Opportunities generally exist in the first half of each year targeting New Zealand's share of Asian markets, especially in the transition period around June. (This also would seem to suggest New Zealand as an export destination for Australian carrots). There are also many end uses for carrots - retail supermarkets and wet markets, food service, juicing, etc and the variety and quality requirements vary. We need to ensure we target end uses where appearance, quality, and taste are more important than price. Taiwan Australia's exports of carrots to Taiwan grew from 1,500 /1,800 tonnes in year 2000 (depending on whose figures you use) to almost 5,000 tonnes in West Australia and to a lesser extent Tasmania have shared this growth. Prospects for future growth would seem good given Taiwan's entry into the WTO.

104 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 103 In addition, New Zealand supplies in year 2000 entered the market around April / May and continued until around August. Australia took over at that time and continued supply until around December. An opportunity may exist to take share from New Zealand in their supply window through supply ex West Australia (Nantes / Berlicum) or Tasmania (Kuroda). Japan China is now the dominant supplier to Japan (almost 50% share of imports) with prices (AUD$600) well below Aust / NZ. Australia has only a 10% share of the fresh carrot import market and should be capable of improvement. Carrots can be seasonal in quality and yields and Japanese domestic production is reported as at a low point in their mid - winter January / February period. Northern hemisphere imports also appear quite low at this time, especially from the low cost suppliers China and Taiwan, whilst New Zealand usually begins entering the market from March onwards. Opportunities to substantially build sales of Kuroda types in this January / February period would seem to exist as would opportunities to take business from New Zealand in March to May. Rich red volcanic soils with the right climatic conditions currently make the north west of Tasmania the only significant area for production of Kuroda carrots. Experience has shown they are difficult to grow in sandy soils. A Victorian government Dept of Natural Resources and Environment report felt opportunities also existed in Japan to promote Nantes carrots for processing. 7.5 Celery There is a general opportunity to export celery to Asia but Australian exports are relatively minor at approx 2,500 tonnes in 2001 and mainly to Singapore, Malaysia, and 200 tonnes to Taiwan. The USA dominates the market and in total exported some 35,000 tonnes in 2000 to the 10 markets under study. This included traditional Australian vegetable markets like Malaysia (40% share of imports), and Singapore (85% of imports) where we have a good reputation for vegetables generally plus a shorter and cheaper supply chain than the USA. Singapore buyers said the USA product was cheaper than the Australian product, longer shelf life, and better packaging. Australia was criticised for inconsistent size, less pieces per carton, and more expensive. This is providing the USA with a foothold for other products into these traditional Australian markets. There appears no reason why Australia could not compete in the export celery market. It was felt Australia could grow celery as good as the USA but it required Australian growers to provide the varieties, and pack sizes that Asian markets want, to invest in post harvest processing technology and equipment (especially use of hydro-vac cooling), and to provide markets with continuity of supply. Any scale advantages that the USA held should be possible to negate with even a 20% share of USA exports to Asia.

105 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 104 Some selected opportunities were: North East Asia (Taiwan / China / Hong Kong / Japan): There appears no reason why Australia cannot increase its current negligible share of the North East Asian celery market (which is < 1%) especially in our winter / springtime when local product tends to be short. Taiwan imports over 7,000 tonnes of celery from the USA, China imports over 7,000 tonnes, Hong Kong 10,000 tonnes, and Japan over 6,000 tonnes. Malaysia Opportunities to increase exports over the Jan/Feb/March/April period would seem apparent for those regions who can supply celery during in our hotter periods. Japan 7.6 Capsicum Capsicum from mainland Australia is prohibited due to fruit fly. Tasmanian grown product can access the Japan market however little capsicum is grown in Tasmania with the outdoor season too short and unreliable. Some 40 tonne is reported as grown in glasshouses with quality on a par with the Dutch product. CIF prices enjoyed by New Zealand (AUD$8,000 per tonne), South Korea (AUD$6,000) and Holland (AUD$7,200) in Japan are above average according to the Tradstat (year 2000) import data available. New Zealand and Korea supply in Japan's winter to spring whilst Holland supplies in the northern hemisphere summer to autumn. Japan's domestic production is said to peak in their spring to summer. Supply of capsicum to Japan ex Tasmanian glasshouses was reported as having been researched some two years ago and seemed practical but prices ex Korea dropped below that which was judged profitable and nothing came of the project at that time. Prices above AUD$7,000 per tonne are said to be needed to be attractive when airfreight costs (AUD$2.50 per Kg) are included. Average prices into Japan in year 2000 appeared to achieve those levels, at least from New Zealand and the Netherlands, and this may be an opportunity to be further explored, recognising the need to avoid direct price competition with Korea and recognising that considerable forward production planning and accordingly long lead times are necessary. Exports in the Japanese late summer to autumn period (August to October/November) would appear attractive since import data and reports from New Zealand exporters suggest supply ex Korea does not begin until around December, supply ex the Netherlands is starting to fade in October and NZ only commences around October. The season for Tasmanian glasshouse grown capsicums is mid- November to May.

106 Export Opportunity Evaluation Study for Australian Vegetable Industry (VG01090) 105 We need however to be sure when targetting the capsicum market that we are talking about the same vegetable given that what we call a capsicum is in Japan called a paprika. Capsicum exports using sea freight Export of capsicum to Japan by sea freight has been examined by Crop & Food Research, New Zealand in co-operation with Vegfed, with promising results (The Grower magazine, October, 2001). Sea freight could be $3 to $4 per Kg cheaper than air (from New Zealand) and is stated to better spread a production peak through arrival in the market over a longer period. Tests storing product for 3 weeks at 7-8 degrees showed that it stored well and still provided a 3 day shelf life at the end of the period. Further evaluation and shipment trials are planned. Variety of capsicum also was reported as playing a part - the thicker walled blocky types thought to offer a longer shelf life (Asiafruit Magazine, March/April, 2002 p117). These trials should be monitored by Australia although 21 day transit times to Japan are still a challenge from Tasmania. Our survey of opinions as to shelf life of capsicum varied from 14 days to 4 weeks. A combined air / sea supply chain from Australia through Singapore (overnight air to Singapore then tranship to sea freight next morning) has been established and may be worthy of exploring for capsicums from Tasmania to Japan. Australian mainland grown capsicum shipped to accessible markets such as Hong Kong, Singapore and Malaysia by sea freight (8-9 days sailing ex Brisbane) would seem feasible. Similarly the sea freight of broccoli, cauliflower, and celery appear feasible to most Asian markets (refer chart in section 6.3) saving on average AUD$1.00 per Kg before tariffs and should be re-evaluated both as an option for existing customers and to target new customers. 7.7 China China as an Opportunity China with its population of over 1 billion people and its growing affluence will eventually become the world's largest consumer market. There is however a long way to go and economic prosperity although evident in coastal cities such as Shanghai does not yet extend into the inland or western regions of China. As individual economic wealth rolls out in China, and given its opposite season to Australia, opportunities should present themselves for supply of fresh vegetables especially those that are seasonal and time sensitive. True seasonal produce should provide opportunities for supply of quality product even if the country is self-sufficient in its high season.