Asian FTAs bearing fruit

According to new research conducted by IBISWorld, Australian fresh fruit and vegetable exports have increased significantly since Free Trade Agreements (FTA) signed with China, Japan and South Korea in 2014 and 2015 came into effect.

IBISWorld Senior Industry Analyst, Sam Johnson, says the FTAs have opened up doors for local growers to forge ties with Asian suppliers and retailers.

"Although many tariffs will remain for some years yet, Australian farmers have been busy forging supply links with wholesalers and retailers across China, Japan and South Korea," he says.

The research shows fruit producers; particularly of citrus, bananas, berries and nuts; are the biggest winners of the FTAs, with export revenue for this category growing at 19.9 per cent per year over the five years through 2016-17.

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

He adds Australian almond export performed particularly well.

"While FTAs have contributed to this success, almond growers have enjoyed larger harvests due to significant planting in 2006 and 2007," Johnson explains.

"Water shortages that adversely affected Californian growers, the world’s largest supplier of almonds, also pushed global prices upwards over 2015 and 2016."

Outdoor vegetable growers also benefited from the FTAs, with export revenue increasing at 8.9 per cent per year over the five years through 2016-17. This category is expected to generate $303.7 million in export revenue in 2016-17.

"Asparagus exports to South Korea have driven some growth over the last five years, rising in value by 123% between 2014 and 2015," Johnson says.

"Other vegetables that have been successful in China, Japan and South Korea under the FTAs include lettuces, broccoli and broccolini, beans, spinach, cabbage, cauliflower, celery and peas."

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

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

"The FTAs have provided expansion opportunities in traditional export industries, and have opened areas in which Australia was previously uncompetitive or did not have market share.

"Producers that have established partnerships with customers in overseas markets and proactively acquired market share since the FTAs started coming into effect are in a strong position to benefit from diminished trade costs once remaining tariffs are eliminated.