![While China will remain a strong export destination for Australian produce, ABARES has warned about the over-reliance on a single trade partner. Picture Shutterstock While China will remain a strong export destination for Australian produce, ABARES has warned about the over-reliance on a single trade partner. Picture Shutterstock](/images/transform/v1/crop/frm/F96xjWybVc3FcQiiSwA3u6/6ed9dbfe-6080-4d73-a376-430a1ea72d34.jpg/r0_0_4032_2267_w1200_h678_fmax.jpg)
HORTICULTURE'S reliance on China as a done deal for exports needs a rethink according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).
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In the horticulture section of the ABARES Agricultural Commodities Report March quarter 2023, released this week, the research organisation highlighted the sharp drop in exports to China and the subsequent impacts.
"Between 2019-20 and 2021-22 the value of horticulture exports to China fell by $309 million causing the value of all Australian horticultural exports to fall 8 per cent," the report said.
"China is and will remain an important trade partner and export destination.
"However, the experience of the last three years highlights that over-reliance on a single export destination can be detrimental to the value of the sector as a whole."
For fruit specifically, exports are estimated to have fallen by $300 million between 2019-20 and 2022-23, mainly due to falling demand from China, largely reflecting impacts of COVID-19 and the Chinese government's policy responses.
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"As such it is important for industry and government to continue working together to maintain and improve market access to current and new export destinations," ABARES said.
And that's precisely what's happening within the industry.
The report said expansions in Australia's bilateral and multilateral trade relationships have seen the value of horticultural exports increase significantly.
"In response to increased overseas demand Australian growers have invested heavily in area expansions and have begun growing produce so that it matches the shape, colour and flavour profile desired in foreign markets," it said.
It echoed a fact that has been well-known within the industry for some time now, that there is little growth potential in relying on homegrown consumption.
"Domestic markets are unable to service the volumes now being produced by horticultural growers and a loss of market access to key export destinations could result in significant losses to Australian growers," ABARES said.
Prior to the outbreak of COVID-19, the fruit and nut export price index rose strongly, driven largely by improved market access to China and increased variety in the production output mix which allowed Australian producers to receive a price premium for high quality produce.
"In recent years, the export price index has begun to level out as demand from China and other international markets has been hampered by inflationary pressures and lock down measures," the report said.
"It is expected that the fruit and nut export price index will be flat in 2022-23 before rising at a subdued rate over the outlook period.
"This is due to lower demand from China which is not expected to immediately recover to pre-COVID19 levels, and a healthy supply of tree nuts available globally.
"In a situation categorised by lower global growth and reduced demand from Southeast Asia and China it is expected that export prices for fruit and nuts would begin to trend downward."
Overall though, the value of horticulture exports is forecast to rise 21pc to a new record of $4 billion in 2023-24.
The rise in exports signals a return to the long-term trend of strong growth in exports that occurred between 2010-11 and 2019-20.
"It is expected that improvements in access to labour, low water prices, improved logistics and less volatile weather in Australia in 2023-24 will allow producers to grow more premium grade produce with less quality downgrades than in recent years," ABARES said.
"Higher quality produce is shipped to export markets overseas and receives higher prices."
India holds hope
THE ABARES report pointed to the Australian-India Economic Cooperation and Trade Agreement has holding high potential for opening new markets through the elimination and reduction of some tariffs.
"In 2021-22 the value of horticulture exports to India was approximately $119 million," the report said.
"As India continues to grow and trade barriers on horticulture products fall it is expected that this market will become increasingly attractive for Australian exporters.
"Tariff reductions on key export focussed industries such as citrus and nuts are likely to see the most immediate benefits as they already had a presence in the Indian market prior to the removal of the tariffs.
"There is also upside potential for industries who do not currently have a market presence in India such as avocados.
"However, their success in India will be dependent on consumption preferences, cold storage, and managing important biosecurity measures which can provide nontariff barriers to markets."
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