Minister moves on live sheep exports

The Minister for Agriculture and Water Resources David Littleproud (pictured) has said he accepts accept all the recommendations made by the McCarthy Review into live sheep exports, following disturbing footage emerged last month of almost 2,500 sheep dying from heat stress during a trip to the Middle East last year.

“We accept all 23 recommendations made by Dr McCarthy, noting that further testing and consultation is needed to understand and implement Recommendation 4 on Heat Stress Risk Assessment,” Littleproud said in a statement.

“There will be immediate changes that impact now on the live sheep trade during the current Middle Eastern Summer and there will be changes that will be take more time to introduce.

“The live sheep trade will move now to the allometric stocking density system, which takes into account animal weight and size. This means sheep will get up to 39 per cent more space and reducing stocking densities by up to 28 per cent. This change will affect shipments during the Middle Eastern Summer this year.”

The minister said he plans to introduce a Bill increasing penalties and creating a new offence of profiting from poor animal welfare outcomes.

Under this offence, a director of a company could face 10 years prison or $2.1 million fine.

An individual convicted under the same offence would face 10 years and $420,000 fine.

For a company, the fine will be $4.2 million, three times the benefit gained, or 10 per cent of the company’s annual turnover, whichever is greater.

Under the current Australian Meat and Livestock Act, penalties will increase from the current five years prison and/or a $63,000 fine for an individual to 8 years prison and/or $100,800 fine.

For a company the fine will be increased from $315,000 to $504,000.




Growing trade and investment at Beef Australia 2018

An international delegation is exploring trade and investment opportunities at Beef Australia 2018.

The national beef expo, held in Rockhampton every three years, showcases Australian capability and opportunities to invest and partner across both northern and southern Australian cattle production supply chains.

Australia’s beef exports were worth $7.1 billion in 2016-17. Increasing these exports will create new Australian jobs and drive economic growth.

The Turnbull Coalition Government is working to grow Australia’s exports, such as beef, as part of our plan for a stronger economy through trade agreements.

The trade agreements the Coalition has delivered have reduced or eliminated tariffs, driving Australian beef exports. According to Meat and Livestock Australia, the benefits of the trade agreements with Korea (KAFTA), Japan (JAEPA) and China (ChAFTA) are expected to be worth an additional $20 billion to the Australian red meat and livestock industry over the next 20 years.

The recently concluded Trans-Pacific Partnership (TPP-11) and the Peru-Australia Free Trade Agreement (PAFTA) will offer further improvements. In 2016-17, total beef exports to the TPP-11 countries were valued at $2.6 billion.

The delegation, hosted by Austrade, includes representatives from major trading partners such as China, the United States and emerging markets like Vietnam, Turkey, Pakistan and Latin America.

They are meeting with Australian producers, suppliers and ag-tech companies, undertaking site visits to various locations across the beef supply chain in New South Wales and Victoria, including properties, processing plants and food manufacturing centres and touring the SMART Farm Innovation Centre at the University of New England.

Australia has a growing reputation for innovation and Beef Australia 2018 will showcase new technology across a range of applications, including herd management, supply chain traceability, animal health and remote livestock monitoring.

2018 budget cautiously welcomed by SME exporters

Last night’s Federal Budget contained some, but not a lot of, good news for SME exporters, according to a leading export-focused industry body.

“Overall, this is positive budget for SME exporters,” said Heath Baker, head of policy at the Export Council of Australia (ECA). “But it’s an incremental step forward, not a major leap.”

“The government has rightly been a champion of trade and has trumpeted its achievements in signing FTAs,” said Baker. “But if you want to grow trade, FTAs are only part of the answer. This budget goes some way to addressing SME exporters’ other needs—but there’s still more to be done.”

The ECA welcomes the $20 million allocated to establish an SME export hubs program, as well as extending funding for the export growth centres. These programs should help many SMEs make the jump into international business and we look forward to seeing the detail.

DFAT’s economic diplomacy efforts receive a valuable injection of $15 million. This will go towards expanding FTA outreach, helping businesses better access DFAT’s economic and security insights, as well as developing a strategy to address the ‘non-tariff measures’ that stop businesses from exporting. Austrade has received a small boost, including $3.2 million to develop a new national brand. Future budgets will need to commit significant money to implementing this brand if it has any chance of succeeding.

Australia’s offshore agricultural counsellors play an essential role in facilitating trade in food and agriculture—adding six new counsellors is a wise investment. We also welcome additional funding for initiatives to increase agricultural access in key markets.

Getting goods out of Australia should become a little easier with additional infrastructure spending, including the $400 million Port Botany line duplication. There’s also a $10.5 million commitment to complete a business case for a ‘single window’ for international trade—but this is slow progress given that implementing a single window was a 2016 election commitment.

Aviation security will tighten, which could complicate exporters’ supply chains. While exporters accept the need to ensure aviation safety, these measures need to be implemented in a business-friendly way, and supply chain participants will need adequate time to adjust.

On the down-side, the Export Market Development Grant is still underfunded. This blunts some of the good measures in place to grow exports, as new exporters will only be able to fully realise international opportunities if they invest in building their brands overseas. Underfunding EMDG means they will lack the certainty and confidence to fully commit to building their brands.

Impact of non-tariff barriers on grains exports exposed

The Government is working with the grain industry to address non-tariff barriers to Australia’s grain exports trade, to reduce costs and increase market access for our grain growers.

Non-tariff barriers or non-tariff measures can include quotas on the amount of a commodity which can be exported to a certain country, difficult or expensive testing or complicated labelling.

Minister for Agriculture and Water Resources David Littleproud today welcomed the release of the government funded Grains non-tariff measures report led by Grain Trade Australia, GrainGrowers and the Grain Industry Market Access Forum, and said he was looking at ways to boost Australia’s tackling of these issues.

“Our grains industry is big business, with 75 per cent of Australia’s grain exported, creating $14.6 billion in export revenue in 2016-17,” Minister Littleproud said.

“With the successful reduction of tariffs under free trade agreements, we now need to work on reducing barriers besides tariffs.

“I’m looking at ways to give our 16 agricultural counsellors overseas more grunt as they deal with these issues every day.

“While many non-tariff measures are in place to meet legitimate biosecurity, food safety and consumer information requirements, they can also restrict trade and increase costs.

“Not only do these measures vary across the different commodities, but they range from complicated technical barriers to trade like testing and labelling requirements through to import quota restrictions, import licensing systems and complex sanitary and phytosanitary measures like maximum residue limits.

“We want our farmers to have the best chance to get the best price for their high quality produce, bringing more money back through the farmgate to keep our regional communities strong.

“We are committed to working with producers, exporters and importing countries to ensure the trading system is fair and transparent, and will work with industry on their priorities following this report.”

The grains industry will now discuss the full report, before seeking to meet with the Government about the industry’s key strategic trade measure priorities moving forward. ​

Reborn TPP good news for Australian wine and cheese makers

The Trans Pacific Partnership has been reborn as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Matthew McDonald examines the new agreement and what it means for our food and beverage industry.

The Trans Pacific Partnership (TPP), which originally was to include 12 Pacific nations, seemed dead in the water early last year when the then newly elected President Donald Trump declared that the US would not be involved in the deal.

However, at the World Economic Forum in Switzerland in January, the 11 remaining nations –  Japan, Canada, Australia, Mexico, Malaysia, Singapore, Chile, Peru, Vietnam, New Zealand and Brunei – agreed to a new deal known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Then in March, all parties signed the deal (which is also being called TPP-11). Broadly, it cuts tariffs and puts in place common laws and regulations. It is a framework under which separate 18 new bilateral deals between participating countries will sit. Australia, for example, has made new deals with Canada and Mexico.

What’s in it for Australia

From an Australian perspective, farmers and the service sector are the big winners.

In terms of agriculture, our beef exports to Japan (which were worth $2 billion in 2016-17) will be boosted by tariff reductions; and there will be new access for dairy products into Japan, Canada and Mexico.

In addition, Australia will have new access into the Japanese, Canadian and Mexican sugar markets; and there will be an elimination of all tariffs on sheep meat, as well as an elimination of many tariffs on seafood and horticulture.

Also, our cereals and grain exporters will gain new access into Japan. Significantly, for the first time in 20 years, this will include rice products.


However, agriculture isn’t the only winner. The CPTPP will eliminate more than 98 per cent of tariffs in the free trade area. Australian cheese makers, for example, can look forward to the scrapping of a range of tariffs into Japan which currently cover over $100 million of trade.

Also, Australian wine makers, who were already on a high following the recent release of record-breaking export figures for 2017, will further benefit from the news that the CPTPP will see the elimination of tariffs on wine. CEO of Wine Australia, Andreas Clark told Food & Beverage Industry News that the two core benefits for the sector are reduced tariffs and a specific annex for wine and spirits.

“The annex is an exciting part of the partnership as it provides an opportunity to remove a range of technical barriers that can impact our exports. All the parties involved in the CPTPP have agreed on a cooperative framework to remove some of these barriers, which will help streamline trade,” he said.

“The Australian grape and wine community has seen many benefits from our existing free trade agreements with the USA, Japan, Korea and China – among many others – and the CPTPP may allow additional benefits to flow back to grape and wine businesses across the country.”

Clark’s positive reaction was echoed across Australian industry.

“The deal covers 11 nations that together constitute around 30 per cent of the global economy, and four of Australia’s top 10 export markets for food and beverages. The economic weight of the TPP and common set of rules established among 11 countries will greatly support Australian food exporters, providing Australian jobs and economic growth,” said Australian Food & Grocery Council (AFGC) CEO Tanya Barden.

She pointed out that the deal will result in greater alignment and harmonisation across the region on regulation and behind-the-border trade issues and added that this is particularly relevant to the food industry, which generally face onerous import controls that differ from one nation to another.

“The parliamentary process for reviewing international trade agreements will provide an opportunity to review the TPP agreement in great detail. At the forefront of that review must be the promotion of jobs, investment and growth for Australia’s economic prosperity,” said Barden.

What are the negatives?

While the Opposition has been mostly positive about the deal, sections of the Labor Party claim some Australian workers could suffer as a result of the CPTPP. They say the establishment of labour market testing for any foreign workers are crucial. Opposition leader Bill Shorten has called for the Productivity Commission to conduct an independent analysis of the deal first. He said that if modelling shows the deal is good for the nation and Australian jobs, Labor would back it.

One important feature of trade deals not often noted by the lay person is the fact that they aren’t all about free trade. They are also investor rights agreements. As such, the deal includes an investor-statement-dispute-settlement mechanism (ISDS). This has raised fears that, as the result of the CPTPP, corporations could sue the Australian Government if Australian laws adversely affect their performance. Many point to Philip Morris suing the Australian Government for introducing plain cigarette packaging as an example of what could happen.

Trade Minister Steve Ciobo responded to the fears by saying Australia will retain the right to make its own legislation and that the fears were unfounded.

FTA Portal expanded to boost Australian services exports

Australia’s services sector can better access the full potential of our Free Trade Agreements, with a recent upgrade to the award-winning (FTA) Portal.

The expansion offers Australian services providers up-to-date guidance on selling to overseas customers, travelling overseas to supply services, and establishing a competitive global presence.

Portal upgrades now include information on the commitments FTA partners have made available to Australia’s architectural, engineering, legal, accounting, auditing and taxation sectors.  These sectors accounted for more than $8.5 billion in services exports last year. Other sectors will be added by the end of June 2018.

The Turnbull Coalition Government is committed to helping Australian businesses grow and create new jobs through increased exports.

The Portal won ‘Best Applications Development’ at the Australian Government ICT Awards in 2016 and attracts around 2,600 unique users each week.  It is a key instrument in helping Australian businesses make the most of international trade agreements.

The Portal already provides free information on tariffs and rules of origin, helping traders identify opportunities in specific markets. It also includes an interactive tool to compare bilateral and regional FTAs to identify the best access for exports.

A recent study of FTA Utilisation, commissioned by the Department of Foreign Affairs and Trade and conducted by PwC, found commitments to liberalise services are still new territory for businesses. The expanded Portal is designed to help Australian services providers better understand how trade agreements can assist their businesses.

Goods and services commitments in new FTAs, such as the recently signed TPP-11, will be added to the Portal once the agreements enter into force.

NSW to host inaugural food expo in India

Premier Gladys Berejiklian today announced a NSW Food Expo will be held annually in India to showcase NSW food and beverage exporters to one of the world’s fastest growing markets.

Berejiklian made the announcement in New Delhi overnight, alongside Indian food industry representatives, chefs and food writers.

“The inaugural NSW Food Expo will help farmers and producers showcase their clean, safe and fresh produce to Indian buyers in a market where middle class numbers are tipped to swell from 250 million to 550 million people by 2025,” Berejiklian said.

“We will take a delegation of food and beverage exporters to Mumbai in September to take part in this new Expo to promote NSW products ranging from fresh fruit and vegetables to meat, dairy and processed foods like jams, honey, pasta, and even ready meals.

“This will provide our producers with a major opportunity to showcase the fantastic quality and diversity of our State’s food and beverage industry and connect our best export companies with potential Indian buyers and growing markets.

“NSW agricultural exports to India, including vegetables, fruits, wheat, oils and much more, grew almost 200 per cent to reach $760 million in 2016-17 and there is massive potential for further growth.”

Berejiklian said NSW has a growing international reputation as a provider of clean and green produce with the State’s worldwide exports of food and beverage products growing 4.6 per cent in 2016-17 to top $5 billion for the first time.


Review of sheep exports to Middle East during northern summer

Minister for Agriculture David Littleproud has announced the terms of reference for the short, sharp review into sheep exports to the Middle East during the northern summer.

Minister Littleproud said the review will consider information including scientific literature, outcomes of recent voyages and reports from observers.

“The footage I saw recently from voyages in 2017 shocked me. After meeting with the stakeholders last Monday, I announced this review on the Tuesday,” Mr Littleproud said.

“The review will consider stocking density on ships, bedding and animal waste management, ventilation and heat stress risk.

“It will also consider and evaluate the potential use of air conditioners, and conditions placed on recent voyages, which includes the independent observer paid employed by the Department of Agriculture.

“The review will identify any improvements in how the current standards, known as the Australian Standards for Export of Livestock or ASEL, can be administered or executed.

“The review will also consider the number and skills of the crew in managing animal health and welfare, contingency planning and reporting. The TOR allows for Dr McCarthy to delve into other issues he considers worth exploring.

“Transparency builds trust. We need to let the light shine in. It’s important we get this trade right for our farmers.”

This short, sharp review will complement the review into the investigative capability, powers and culture of the independent regulator as well as the ASEL review (which was already running) as Minister Littleproud takes decisive action to address the issues raised in the past fortnight.

The review will be complete in time to make any recommended changes to the 2018 northern summer trade.

Australian wine exports setting new records

Australian wine exports continue to set records, with a new high for the average value of bottled wine exports of $5.74 per litre and exports to China (including Hong Kong and Macau) increasing by 51 per cent for the year to March 2018 to reach $1.04 billion – a first for exports to a single country – according to data released by Wine Australia today.

Wine Australia Chief Executive Officer Andreas Clark said the 12 months to March saw exports increase by 16 per cent in value to reach $2.65 billion – the highest value in a decade – and volume also increased by 10 per cent to a near-record level of 844 million litres or 94 million 9 litre case equivalents.

Clark said as value growth outpaced volume growth, the average value per litre of all Australian wine exported increased by 5 per cent to $3.14 per litre.

The value of bottled wine exports increased by 15 per cent to $2.15 billion, the highest value since 2009.

The average value of bulk wine also increased, by 8 per cent to $1.05 per litre, the highest value since 2009.

Higher value wine exports grew substantially with exports of wine above $10 per litre reaching a new peak of $779 million for the year to March 2018.

Clark said the high quality of Australian wine plus historically low Northern Hemisphere harvests were driving the demand for Australian wine exported in bulk containers, leading to growth in both volume, which grew by 10 per cent to 462 million litres, and the total value of exported bulk wine, which grew by 19 per cent to $486 million.

“Every country in Australia’s top 10 bulk wine destinations recorded an increase in average value, especially Germany, the largest importer of wine in the world, where average values for bulk wine increased by 20 per cent from $0.87 to $1.05 per litre,” said Clark.

He explained that wine exports to China had grown as wine tariffs had dropped again in January 2018, in line with the China–Australia Free Trade Agreement.

The tariff would be removed completely in January 2019, providing Australian wine exporters with a competitive advantage over key producers such as France, Italy and Spain.

“Mainland China has now overtaken the USA to become Australia’s second largest export market by volume. Pleasingly there was very strong growth at all price points as imported wine becomes more approachable and is increasingly consumed by middle-class drinkers and seen as suitable for consumption at informal gatherings and while relaxing at home.”


Clark said that while the commercial end of the USA market was in decline, contributing to the drop in volume, there had been strong growth in the premium sectors. For wines $10 per litre and over, the strongest contribution came from the $30–49.99 segment, which increased in value by 25 per cent to $5 million.

According to IRI Worldwide, in 2017, Australian sales in the USA off-trade market declined by 1 per cent in value but there was strong growth in two price segments. At US$8–11.99 per bottle, Australian sales doubled while at US$20–24.99 per bottle grew by 22 per cent.

Exports to the United Kingdom (UK), Australia’s largest export destination by volume, increased in value by 9 per cent to $373 million and in volume by 8 per cent to 241 million litres. Average value increased slightly by 1 per cent to $1.55 per litre.

In the UK off-trade retail market Australian sales increased by 2 per cent in value in 2017, maintaining the nation’s long-held number one position in the UK retail market according to market data analysts, Nielsen.

On the domestic front, Australian wine sales in the off-trade retail market increased by 3 per cent in value to $3.5 billion in the 12 months ended 4 March 2018, with the strongest growth occurring in the $15–30 per bottle segment according to IRI MarketEdge.

Clark said excellent vintage conditions in Australia would sustain the sector’s growth as the relatively cool, dry summer had produced high-quality grapes and winemakers are excited about the exceptional quality of the 2018 vintage wines.

“Wine Australia is already reaching out to producers to remind them that now is the time to set their vineyards up for an outstanding 2019 vintage.”

Australia ‘piggy in the middle’ of trade war between US and China

According to business information analysts IBISWorld, Australia stands to be caught in the middle of a trade war between the United States and China, as the world’s two largest economies launch increasingly retaliatory tariffs at each other. While some local industries may become more exposed to risk as a result, IBISWorld believes Australia will also have the rare opportunity to seize export market share in both markets.

“Australia is one of the best-placed countries in the world to reap the gains of a trade war, due to our natural advantage of having ease of access to maritime trading with both major economies,” said Mr Jason Aravanis, Senior Analyst at IBISWorld. “In addition, Australia has beneficial bilateral free trade agreements with both China and the US, which provide more stability to international trade.

“While the trade war presents opportunities for some sectors, others will likely be at greater risk, as Australia is being caught between its largest trade partner and its largest investor; between the economy we rely on and the nation we look to for our security.”

Why USA and China matter to Australia

According to IBISWorld, the United States and China are both vital trading partners for Australia, but for different reasons. China is Australia’s largest two-way trading partner, accounting for 17.7% of all imports into Australia and 29.6% of Australian exports in 2016-17. As such, the Australian economy is intrinsically tied to the performance of the Chinese economy. Many industries rely on Chinese demand for exports, or Chinese supply of imported production inputs.

The United States is Australia’s third largest trading partner, after Japan. However, the United States is the largest foreign investor in Australia, with over $860 billion invested in 2016. In contrast, China is only the seventh largest investor in Australia.

Australian winners

As China and the United States increasingly lock each other out of their domestic markets, certain Australian industries have the ability to seize market share.

“The Australian agricultural sector is likely to be one of the largest winners, as China has enacted tariffs on popular US food products,” said Mr Aravanis.

In 2017-18, China is expected to account for 25.1% of export demand in the Australian Wine Production industry, and this is forecast to grow in response to a 15% tariff imposed on US wines this month. Similarly, a 25% Chinese tariff on US soybeans will create massive opportunities for the Australian Grain Growing industry, particularly as China consumes about two-thirds of global soybean production each year. Rising demand for premium meats in Chinese households has led to strong growth in Australia’s Meat Processing industry, and this industry’s performance is expected to further improve as a 25% tariff is imposed on US meats. Other Australian agricultural industries are also likely to benefit, including fruit and seed industries.

According to IBISWorld, some Australian industries also have the opportunity to gain market share in the United States, however Australian exports are likely to encounter greater competition from other countries in this market, such as Canada, Brazil, and the European Union.

“As the United States has imposed a 25% tariff on steel and 10% tariff on aluminium from China, the Australian Black Coal Mining and Aluminium Smelting industries may experience greater demand from US clients. In addition, US tariffs on Chinese chemicals, medicinal products, and electronic components are likely to create opportunities for Australian firms,” said Mr Aravanis.

Australian losers

Despite the positive gains for some Australian industries, others are likely to be negatively affected by a trade war.

“On a macro-economic scale, a downturn in either Chinese or US GDP growth is highly likely to undermine the growth of Australia’s GDP. This could lead to an increase in unemployment, as well as a sustained hit to business confidence as the stability of trade liberalisation in undermined,” said Mr Aravanis.

“Some industries are highly exposed to the risk of a trade war. Major mining industries such as the Iron Ore Mining industry could be affected by a slowdown in Chinese economic growth, which would lead to far lower export prices and total demand. Tourism in Australia would also likely be negatively affected, as a hit to consumer confidence in both China and the United States would encourage consumers to postpone luxury expenses such as international holidays.”

Despite these challenges, IBISWorld believes the overall Australian economy is well placed should a trade war eventuate, at least relative to the conditions of other global economies. However, a trade war would likely lead to an overall decline in economic prosperity for Australia.

Tariffs imposed by China and the United States against each other:

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Export Council of Australia launches business survey

The Export Council of Australia (ECA) has launched the 2018 edition of Australia’s International Business Survey (AIBS). AIBS is a collaboration between the ECA, the Australian Trade and Investment Commission (Austrade), and the Export Finance and Insurance Corporation (Efic).

As the largest annual study of its kind, AIBS provides crucial understanding and insight into Australia’s international business activity, and in evaluating the impact of international economic trends on Australian businesses.

“AIBS 2018 will continue to build on the foundation we have established over the last four years and drive new insights into the international perspectives and outlooks of Australian businesses,” ECA CEO Alina Bain said.

“Considering the current international environment, it is a crucial time for Australian businesses to have their voices heard on the issues that affect them the most,” Ms Bain added.

Last year, over 1,000 AIBS respondents painted a picture of an ambitious and diversified Australian international business community. Respondents provided vital insight into the use of Australia’s network of free trade agreements, including benefits beyond increased exports in areas like standards recognition.

AIBS 2017 also illustrated the increasingly important role of innovation in fueling the international growth of Australian companies, with nearly half of respondents having introduced some sort of product or service innovation to improve their export sales.

“This year, AIBS insights will include attitudes toward emerging markets as well as the use of new trade-enabling technologies,” Bain said.

The information collected by AIBS plays a vital role in informing the trade debate in Australia, and in assisting organisations like the ECA to provide services that best support Australian businesses along their international journey.

Aus online sales to China thriving – Tmall report

The 2017 Tmall Global Annual Consumers Report has revealed Australia has moved into third spot, on the list of importer countries into China, on Alibaba’s business-to-consumer (B2C) platform. This is up from fourth spot in 2016.

Led by strong demand from Chinese consumers for Australia’s health and nutrition supplements, baby products and milk powder, Australia ranked behind only Japan and the United States, and ahead of Germany and South Korea.

Managing Director of Alibaba Group, Australia and New Zealand Maggie Zhou said: “Since opening our ANZ headquarters in Melbourne last year, we have worked harder than ever to support the success of Australian businesses in China. These incredible results for Australian merchants demonstrate that we are succeeding in our mission to make it easier for local businesses to do business anywhere. With 515 million annual active consumers now using our China retail marketplaces the opportunity for Australian businesses remains enormous, and we are excited to be part of the China journey for even more local brands in 2018.”

The 2017 Tmall Global Annual Consumers Report was jointly published by Tmall Global and CBNData, a big data-based business research and integrated marketing communications strategy platform. Elsewhere, it found that Chinese post-millennials have become the main purchasing power for imported products, with content and emotional interaction becoming a major factor in driving consumers’ decisions when buying imported products.

The report highlighted that people born in the 1990s have now become the biggest spenders on imported products, which come from a more diverse range of countries and are consumed more frequently throughout the year.

Tmall Global sustained its position as the largest B2C e-commerce platform for imported products in China, with a market share of 27.6% in the fourth quarter of 2017. There is still significant untapped potential in this sector, with the report estimating annual growth of 20% in transaction volume and a market scale of RMB620 billion by 2019.


New TPP, minus US, signed in Chile

Australia and 10 other nations signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in Santiago on Thursday.

The deal, also known as TPP-11, is the reborn version of the Trans Pacific Partnership which collapsed last year after the US pulled out of the deal. The US is conspicuous as the only one of 12 nations involved in the original deal to not sign the new deal.

The other 10 nations apart from Australia to sign the deal are Canada, Japan, New Zealand, Mexico, Chile, Peru, Vietnam, Malaysia, Brunei and Singapore.

“The Agreement is one of the most comprehensive trade deals ever concluded and will eliminate more than 98 per cent of tariffs in a trade zone with a combined GDP worth $13.7 trillion,” Minister for Trade, Tourism and Investment, Steven Ciobo (pictured) said in a statement.

“Australian farmers, manufacturers, service providers, small businesses and all exporters are the big winners as they will be able to sell more of their goods and services in a free trade area that spans the Americas and Asia.”

Highlights of the TPP-11 include new reductions in Japan’s tariffs on fresh, chilled and frozen beef, (Australian exports worth $2.1 billion in 2016-17); new access for dairy products into Japan, Canada and Mexico, including the elimination of a range of cheese tariffs into Japan covering over $100 million of trade; and new sugar access into the Japanese, Canadian and Mexican markets.


Wine Australia appoints Regional General Manager Greater China

Wine Australia has appointed experienced China hand, David Lucas, to the new role of Regional General Manager Greater China.

Wine Australia Chief Executive Officer, Andreas Clark said David’s background was ideal to help the Australian wine sector grow and defend the Greater China market.

“David has spent the past 20 years in Asia and has significant experience within the wine and spirits categories across North Asia,”  Clark said.

“David has undertaken multiple roles for ASC Fine Wines, one of the largest importers and distributors of Australian wines in China, including Vice President Sales, and thus has a deep understanding of Chinese channel management.”

Prior to ASC Fine Wines, David spent many years at Bacardi and Allied Domecq developing spirits markets.

“With exports to Greater China now approaching $1 billion, it is essential that we strengthen the resources we have in the market to develop even bigger and deeper relationships,” said Clark.

“Under the $50 million Package investment, we rolled Hong Kong, Macau and Taiwan markets into the remit of our team in Shanghai. David’s channel management background across China and Asia will allow us to reinforce our ability to act as a key bridge between our wineries and brands and the market with all of its complexities, giving us a huge opportunity to continue our stunning growth.”

Willa Yang, who has managed the China team for many years, will continue as Head of Market for China reporting to David.

David commenced on Monday 26 February 2018, reporting to Stuart Barclay, General Manager Marketing.

Free trade focus overlooks lack of SMEs exporting, says export group

Australia is having the wrong debate about trade and more focus needs to be put on the small number of SMEs which are exporting, according to the Export Council of Australia (ECA).

“Trade agreements, like the TPP-11, are only as good as the companies using them. If we’re serious about boosting economic growth through trade, then trade agreements are only part of the answer. The priority must be to address the lack of SMEs in export,” said Heath Baker, head of policy at ECA.

The ECA has released its trade policy recommendations for 2018. The recommendations focus on how to encourage more SMEs into international trade.

“Australia is well behind OECD averages when it comes to both its export intensity and the contribution SMEs make to overall exports,” explained Baker.

Australia’s export intensity (its export value to GDP) is 21 per cent compared to an OECD average of 28 per cent. In G7 economies, SMEs account for around 25 per cent the value of goods exports—but SMEs only account for 14 per cent of Australia’s export value.

“Boosting Australian SME exports to the same levels as G7 countries would add around $36 billion to Australia’s GDP. There’s no reason Australian SMEs shouldn’t export at the same rates as American, British or Canadian SMEs,” said Baker said.

“Australia’s future prosperity can only be guaranteed by an economy that is open, outward-looking and competitive,” said Dianne Tipping, Chair of the ECA. “But there are simply too few Australian SMEs involved in international business. Today’s SMEs are tomorrow’s big businesses—encouraging more SMEs into trade now will strengthen Australia’s economy in the future.”


Beef and the impact of trade agreements and blockchain technology

A number of trade agreements, such as the Trans-Pacific Partnership (TPP) and a proposed Mercosur/EU trade agreement, look set to start having an impact on global beef trade in 2018. At the same time, applications of blockchain technology are now being widely developed in the food industry, with opportunities to realise benefits further up the supply chain growing, according to the RaboResearch Beef Quarterly Q1 2018.

Food and tech companies are developing blockchain as a solution in response to changing consumer preferences, and the beef sector is no exception. “While many of the early applications have been driven by the desire to increase traceability and transparency, with a focus on food safety, opportunities do exist further up the supply chain,” said Angus Gidley-Baird, Senior Analyst – Animal Protein (pictured).

Blockchain is superior to current solutions when it comes to sharing genetic traits, making it simpler to track productive performance. A chain including, among others, the producer, feedlot, farmer, and genetic organisation would be able to share performance and verify breeding values, which is all transferred in real-time in the transaction.

The shared-ledger approach of blockchain dramatically simplifies back-office processes such as transaction reconciliation and reporting: a benefit for both beef processors/packers and farmers. Previously, where reconciliation required collating and cross-checking paperwork from multiple sources, the technology now instantly reconciles the transaction between all parties.

Global highlights

Comprehensive and Progressive Agreement for Trans-Pacific Partnership

The 11-member version of the Trans-Pacific Partnership (TPP) looks set for formal signing in March (although respective governments need to sign off on the details before implementation). Gains are expected for beef-exporting countries Australia, New Zealand, Mexico, and Canada—through reduced tariffs into key global beef importer Japan, plus reduced tariffs into smaller importing countries Chile, Vietnam, and Peru.

China further opens beef market to the world

China is allowing more beef imports and importing countries, intensifying competition in the market. Chilled beef access has been granted for Argentina—the fourth country behind Australia, the US, and New Zealand to be granted such access. In frozen beef, Belarus has obtained approval, and two facilities were officially accredited in January. China has also signed a protocol for importing beef from France and the UK, and will likely begin shipments in the coming months. In addition, the first boatload of live cattle exports from northern Australia—the main live-cattle export region—arrived in January. This boatload is the strongest indication that a live-cattle trade may become more permanent.

Mercosur and EU trade agreement

A new proposal to allow Mercosur countries to send 99,000 tonnes of beef to the EU at a lower tariff level has been tabled as part of this long-running trade discussion. This is a significant volume, given total EU beef imports over the last couple of years have been between 204,000 tonnes and 270,000 tonnes. Brazil, Argentina, and Uruguay are already the EU’s main suppliers (together accounting for 63 per cent of total EU imports)—Brazil alone accounted for 107,000 tonnes in 2017. Mercosur negotiators are apparently seeking an increase, to 150,000 tonnes. This standoff may further prolong the discussions, which already run the risk of delay due to the Brazilian elections.

2018 US production looking even stronger

Predictions at the end of 2017 had US beef production growing by more than 3 per cent, or an additional 360,000 tonnes. At the start of 2018, with updated cattle numbers, favourable market conditions, and given that large areas of the US are in drought, production increases have been revised by up to about 5 per cent, or some 700,000 tonnes.

Looking abroad – the path to export success

Given the limited size of our local market, it makes sense for Australian food and beverage makers to export. However, according to Export Connect’s Najib Lawand, success in this endeavour is no certainty and there are some common mistakes that potential exporters should avoid.

The stars are starting to align for Australian food and beverage exporters. A range of factors including free trade deals, an attractively-valued Australian dollar, and the emergence of an ever- expanding Chinese middle class have created plenty of optimism.

However, export success is far from assured for Australian food makers. As Najib Lawand, director of Export Connect told Food & Beverage Industry News, potential exporters still need to do plenty of homework before setting out on an export path.

Choosing markets

Export Connect works with businesses, suppliers, governments, and industry bodies to help grow Australian exports.

The organisation tailors its export advisory services to meet the needs of individual businesses. In his time at the organisation, Lawand has identified some common mistakes that first-time exporters typically make. The first, he said, is not putting enough effort into choosing the right market to enter.

“Too often, businesses start their market journey solely because they’ve attended a subsidised trade show that government agencies may have run. But these markets, such as China, might not be the best market in which to launch their export journey,” he said.

Likewise, he said that the US is not the best choices for new exporters. These large markets can tie first-timers in knots if their entry strategies are not well-considered.

“China, for example, features varied and inconsistent import regulations, complicating the benefits of any openings in that market. Though it may be worthwhile, we advise against it for those who are still new to the game.”

According to Lawand, there are a few common characteristics among the markets most likely to deliver success for first-time exporters.

“These markets are both easy to deal with and hungry for our products. Often, they will have a sophisticated channel structure on the ground, and simple and clear regulations to follow. Their consumers will generally be affluent, with a high disposable income, and a large proportion of expats,” he said.

“As a wealthy city or nation, they are usually the economic hub in their region. Markets such as Dubai, Singapore and Hong Kong all fall neatly within this description.”

According to Lawand, choosing the right market should involve considering each country’s demographics. This includes whether the target consumers are locals or expats, as well as market access issues like halal certification or organic accreditation.

Najib Lawand, director of Export Connect, says potential exporters need to do their homework before choosing a destination for their products.
Najib Lawand, director of Export Connect.


“The business’ market entry strategy may also change over time. For example, the business may initially enter a market through an Australian-based trader who sells directly to a supermarket chain (this may be the best way to test a product). But after 12 months of growth, a review may show that it’s now best to have the product distributed to multiple retailers and into food service channels,” said Lawand.

“This means that pricing needs to be considered from the very start, to ensure there aren’t any increases in price when distributors are introduced into the value chain.”

Setting prices

Lawand said another common mistake suppliers make is applying a cost-plus- pricing strategy for export markets without really considering what the recommended retail price should be, and then working backwards from there.

By doing this, he said, first-time exporters often sell themselves short. It means that valuable profit, that could otherwise have been reinvested in promotions, is often left on the table.

“Businesses can only set correct prices by conducting online and in-store competitor price analysis,” said Lawand. “This research will reveal the business’ direct and indirect competitor product prices; their product claims; pack sizes; and which countries they come from, among other data to create a thorough competitor product profile.”

Ideally, businesses have the opportunity to conduct on-shelf product analysis by visiting the market themselves or having access to resources that can do this on-site research for them.

“It is important that suppliers understand the margins of their product throughout the value chain. Armed with what they believe their product should retail for, they can then work backwards and determine their export price. In this process, it is critical that an allowance is made for a promotional program, as marketing their brand is fundamental to long-term growth and success,” said Lawand.

A thoroughly planned market entry strategy is crucial for new exporters. According to Lawand, it should start with questions about consumers – who are they and where do they shop? Then, the strategy should consider possible food service channels – restaurants, hotels, cafes, duty-free, gyms, hospitals, and so on.

“You also need to think about compliance with ingredient and labelling requirements in each market; and efficient and safe transit options, including consideration for the shelf- life of the product,” said Lawand.

Doing business in foreign countries

When travelling overseas to do business, it is important to remember that you are a guest. Being respectful to your hosts and their culture is a top priority.

“Buyers from different cultures and in different markets do have their nuances. In markets where their buyers are from family-run businesses, for example, it is important to establish your connection through shared family values,” explained Lawand. “Working with corporates, on the other hand, the conversations are often short, sharp, black-and-white and to the point. So understanding your buyer’s background and work habits is important.”

Then there are the practicalities that all travelers, regardless of whether they are doing business or not, need to keep on top of.

“Understanding your markets’ festivals and celebrations can be important when building your promotional program and even for making a market visit. For example, we wouldn’t set appointments for meetings in Australia on Christmas Day,” said Lawand.

Importance of marketing

According to Lawand, marketing needs to be assessed on a case-by- case basis. However, as a general rule, in-store promotions and product placed on cash counters or shelf-ends raises brand awareness extremely effectively.

“In an e-commerce landscape, influencers and champions are a great strategy. Depending on the client, an effective way of providing this promotional support is to offer free- of-charge stock through a shipment, as opposed to giving them cash,” he said.

Lawand emphasised the importance of establishing good business relationships. He said that the key to this is understanding buyers’ backgrounds and key performance indicators; and throughout the negotiation process, continuing to be observant and respectful of buyers’ behaviours and requests.

“Most important is that you deliver on your promises. As they are on the other side of the world, trust is key to keeping this connection strong. A savvy exporter will establish trust from the beginning, and maintain it throughout the entire relationship,” he said.

Melbourne’s new international airport set to export fresh produce

The new international Airport at Avalon will not only create more than 200 jobs and increase international visitor numbers, but also be capable of exporting 14 tonnes of Victorian fresh produce every day.

According to the Victorian Government, the change will help cement Victoria’s position as the nation’s food and fibre export hub.

Minister for Industry and Employment Ben Carroll joined Minister for Tourism and Member for Lara John Eren to announce Air Asia will fly twice daily between Avalon and Kuala Lumpur, with flights expected by the end of 2018.

The project will see up to 220,000 international passengers land in Avalon each year, opening up Geelong and the Great Ocean Road to even more international visitors.

This project will have significant economic and social benefits for regional Victoria through increased tourism, new employment opportunities, and improved access to international flights.

The Labor Government has been steadfast in its support for Avalon – helping secure Jetstar’s future at the airport and investing $1.5 million in infrastructure works at the new industrial precinct, which will eventually be home to 750 new jobs, including Cotton On Group’s purpose-built distribution centre.

“This is a big day for Avalon and a game changer for regional Victoria.  We’re proud to support this project that will bring more international visitors to our state and see more quality produce exported to the world stage,” said Minister for Regional Development Jaala Pulford.

MEGATRANS2018: Take part in a Global Logistics Revolution

Gold Coast hosts second round of Pacific Alliance Free Trade Agreement negotiations

Australia is currently hosting the second round of Pacific Alliance Free Trade Agreement negotiations on the Gold Coast.

Minister for Trade, Tourism and Investment, Steven Ciobo (pictured) said in a statement the Gold Coast negotiation round, which started yesterday and will continue until 2 February, bring together trade negotiators from Australia and the Pacific Alliance – the Latin American trading bloc comprising Mexico, Chile, Colombia and Peru.

Launched in June 2017, the negotiations present an opportunity to strengthen Australia’s trade and economic relationship with these major Latin American economies.

The Pacific Alliance trading bloc remains an under-explored market for Australian exporters; and Australia’s competitive access to the economies in this bloc has been limited by high tariffs and barriers.

The Turnbull Coalition Government is pursuing the most ambitious trade agenda in Australia’s history, to allow Australian exporters access to new markets and new export opportunities.

A comprehensive and high-quality FTA will open the door to new and rapidly growing markets for Australian businesses, putting our exporters on the same footing with the United States, the European Union and Canada – who all have FTAs that give them preferential access.

This is also an opportunity to build on our negotiating experience with the recently concluded Peru-Australia FTA and the Australia-Chile FTA, to deliver enhanced outcomes in targeted areas quickly.

The upcoming round will be focused on improving access across Pacific Alliance countries for Australian goods, investment and services.

Our collective activities will complement ongoing joint efforts to bring the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) into force.

SPC fruit brands heading to China

SPC is expanding its global footprint, launching for the first time into China with its Goulburn Valley and SPC fruit brands. Announced in partnership with China State Farm Agribusiness Shanghai (CSFA Shanghai) at a formal signing ceremony in Shanghai on Thursday, this major milestone demonstrates SPC’s continued momentum and the growing demand in China for Australian produce.

“In our 100th year, we are thrilled to be able to bring our premium Goulburn Valley & SPC packaged fruit to the largest consumer market in the world,” said SPC Managing Director Reg Weine. “China represents a significant business opportunity for SPC in the years ahead, and this is an important step in realising our growth strategy.

As well as being two of Australia’s most recognised, loved and trusted food brands, the products we are taking to China come straight out of the Goulburn Valley – the renowned food bowl of Australia. We aim to leverage this reputation, as well as our heritage and provenance when launching our brands in China,” adds Weine.

CSFA Shanghai, is part of the CSFA Group Corporation, will be SPC’s master distributor in China. According to Mr Weine, “it takes significant time and resources to build brands in overseas markets and CSFA Shanghai has the dedicated personnel, sales and marketing support we need to build our brands on the ground, as well as the distribution capability to reach China’s burgeoning middle class.”

Zhao Qingyong, General Manager, China State Farm Holdings Shanghai Corp said, “We have established strong business relationships with several Australian companies and we are very pleased to be partnering with SPC to continue developing successful businesses in China”.

To give the brand a consumer face in this new market, SPC has appointed Ye Yiqian, a well- known celebrity, singer and actress, as its brand ambassador for China.

“Ye Yiqian has already injected a great amount of personality and style into our brands ahead of our launch into the Chinese market,” said Weine.

Her passion for cooking, love of food, and her deep connection with aspirational Chinese consumers is something we believe will be advantageous for our launch and will help contextualise our products for this new audience.”

SPC’s plans include bringing its premium branded products to Chinese consumers through high-end supermarkets, speciality retailers and leading on-line and e-commerce platforms.

“It’s about taking our market leading brands into markets where provenance plays a part and there is a large enough consumer segment that is affluent and willing to pay a premium for Australian produce. The Chinese market is five times the size of the Australian processed fruit market, which makes this a huge opportunity,” Weine concludes.

Victoria’s Acting Minister for Trade and Investment John Eren, says: “SPC is a great Victorian company – and we’re proud to back them as they continue to expand into new markets and export our world class produce.”

SPC has been successfully exporting to international markets for more than 90 years, including in the USA, UK, Europe, Southeast Asia, Japan and the Middle East.