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Australia’s horticulture growers enjoy an excellent reputation for producing high quality, premium foods that are raised sustainably and consistently safe to eat. Australia’s high standards apply across the horticultural industry, from planting and sowing, through harvest and processing.  The China-Australia Free Trade Act (ChAFTA) recognizes the high international regard for Australian agricultural products and promises the industry improved markets and better terms than ever before experienced.

ChAFTA Drops Tariffs

Elimination of tariffs on Australia’s fruit, nut, and vegetable exports to China will have an enormous impact on the industry. In 2014, horticulture exports to China were estimated to be worth over AU $111 million, up more than ten percent from 2010. On the downside, China applied some of its highest tariffs on the produce, in some cases as much as 30 percent of crop value. The high taxes made it difficult for producers to profit substantially from their labour. ChAFTA’s terms will reduce those tariffs and then, eventually, eliminate them all together:

  • Nuts, including macadamia, pistachios, walnuts, and almonds are taxed anywhere from 10 to 25 percent. Each of those tariffs will be phased out slowly and be gone by January 1, 2019.
  • Citrus fruits are equally highly taxed, with oranges, lemons, and madnarins costing an additional 11 to 30 percent in fees.
  • All other fruit, carrying a tax burden of 10 to 30 percent, and fresh vegetables, tariffed at 10 to 13 percent, will see their fees disappear by January 1, 2019.

The industry already enjoys quarantine access protocols for many of these produce lines, allowing them into the Chinese markets more easily.  The smaller, initial tariff reductions just implemented will bring immediate advantage to this year’s produce exporters.

Almond Industry Leads the Way

It became apparent last summer that Australia’s almond industry was prepared to step up production to fill Chinese export orders. The 2014-2015 export value of the national almond crop was $522 million, a full 10,000 tonnes larger than that of 2013-2014. The export value of the 2015-2016 crop is predicted to grow to $600 M, reflecting industry growth and increased international demand.

In preparation for the increased demand, the almond industry has been expanding at a fast pace. Over the winter, more than 43,000 hectares in the Murray Valley will be planted with almond trees, increasing the orchard area by 50 percent. The new development could account for as much as a $400 M growth in the region and more than sustain its ability to respond to global almond orders. ChAFTA’s influence will undoubtedly continue to play a part in the growth of Australia’s almond industry.

And China is not the only international entity eyeing Australia’s favorite nut. Worldwide demand for almonds also remains high as the nut’s health benefits are revealed. In 2015, more than one million tonnes of almonds were consumed, with two-thirds of those being supplied by international trade.

ChAFTA Could Open New Horticulture Doors

There remain some Australian fruits not yet able to benefit from the reduced tariffs, as other barriers stand in the way. Stone fruits, for example, are still not on the allowed produce list, but the Horticulture Exporters Association (HEA) believes that that hurdle may fall in the near future. Michelle Christoe, the CEO of HEA, stated in December that gaining Chinese access for stone fruit would be a significant new marketplace for that sector of the industry. “The Chinese are coming out for a visit shortly and hopefully we’ll come to a conclusion on that discussion.”

The Chinese are Seeking High-Quality Food

China’s economic growth continues to raise its per capita income, and those newly moneyed citizens are seeking higher quality in their lifestyle choices. Better nutritional value, food safety and ingredient integrity are rising as priorities for Chinese food consumers. From Australia, they are particularly interested in fresh fruits, grains, meats, seafood and dairy, including milk powders, infant formula, cheese, milk, and butter.

For producers of these dietary staples, mainland Chinese markets are still a challenge, as quarantine and protocol requirements prevent access. However, the Chinese people are clamoring for more food varieties, and ChAFTA establishes Australia as a prime resource for those commodities.

As the Chinese-Australian partnership works to remove the barriers that exist in horticultural markets currently opened by ChAFTA, the agreements it reaches in those market sectors will inevitably pave the way for more Australian horticulture and agriculture products to enter the Chinese mainstream marketplace. Call me to find out how your horticultural enterprise can benefit from ChAFTA.

If you are interested in knowing more about China, download the first free chapters  of my book here.


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