Chapter 3
Issues facing the Australian citrus industry
3.1
In addition to the concerns raised regarding the current industry
structure, regional representation, and the allocation of levy funds, the
committee received evidence in relation to a number of other issues of concern
– both to individual citrus growers and the citrus industry more generally.
3.2
The following chapter outlines some of the issues currently facing the
Australian citrus industry. These issues include the increasing costs of
production and the impact of export fees and charges and imported juice
concentrate on the viability of Australian producers. Also discussed is the
intransigent problem of Australia's food labelling laws – specifically in
relation to orange juice and juice products.
3.3
This chapter also outlines the problems raised by growers in relation to
Australia's export markets. In particular, it discusses the extent to which
Australia is encouraging and facilitating exports (and the development of new
export markets) and what can be done to remove any impediments to Australian
producers growing overseas markets.
Production costs/competition from lower-cost offshore producers
3.4
Over the past 30 years, the price per tonne of juice fruit has varied
considerably. Recently, citrus growers had become hopeful that at some point
the floor price of the industry would increase as Brazil planted more sugar
cane, and both Brazil and Florida experienced problems with citrus disease.[1]
However, this has not proved to be the case, and in the last season growers
received an average return from the United States of $215 per tonne. This
scenario is problematic as 'growers need $250 per tonne (based on 40 tonne per
ha) just to cover costs.'[2]
3.5
Australian producers – particularly small producers – have been finding
it increasingly difficult to compete with large, commercial organisations. Over
recent years, additional competition – particularly from large juice importers
– has increased the strain on small producers.
3.6
The committee was told that in order to compete with international
imports, Australian growers have started to target their efforts more toward premium
markets, which in turn has resulted in increased production costs.[3]
3.7
Over recent years, there have been general increases to costs such as
chemicals, packaging, fuel and freight. However, it has been significant
increases to the cost of labour, electricity (particularly for irrigation) and
water which have been having a major impact on growers' ability to compete.
Labour costs
3.8
The committee heard that because it is difficult to automate the
production and processing of citrus to market, labour is the single largest
business cost for citrus growers. It was also noted that market variability is
one of the 'realities of farming' and that, at times, with market prices of
$100 per tonne, there is little or no incentive for producers to grow or
harvest a crop.[4]
3.9
The committee was told that labour costs – and more specifically recent
changes to employment conditions – are major reasons why the cost of production
is currently higher than returns. Sunraysia Citrus Growers (SCG) argued, for
example, that changes to employment conditions are reducing the ability of
growers to cope with irregular working hours:
SCG is disappointed that recent and proposed changes to award
conditions are limiting that flexibility. Examples include increases in penalty
rates and restrictions on working hours. Packing sheds will often operate two
shifts to manage fruit volumes during the peak of the season. These shifts may
be outside the permissible normal hours or fall on a Public Holiday, thus
attracting significantly higher rates under the Horticulture Award. These
higher costs result in lower returns to growers.
The growers we represent have no ability to pass these costs
onto anyone else and in recent years, a casual fruit picker would be receiving
greater payment than the owner of the business.[5]
3.10
This view was shared by the Costa Group (trading as AgriExchange). It
was explained that citrus is harvested manually and, due to the ripening
process and market demands, it must be picked seven days a week. It was argued
that, for these reasons, the sector needs to have flexible workplace relations
arrangements. It was also argued that:
As a seller in the domestic and international markets an increase
in labour and production costs would diminish the competitiveness of
AgriExchange in both of these markets.
AgriExchange is competing against low wage producing
countries, a threat that would be further compounded by reduced labour market
flexibility and increased costs.
This operating environment requires a spread of hours and
shift work arrangements that enable the horticulture sector to maintain a level
of flexibility and responsiveness in order to satisfy the unique seasonal
operational needs of the sector and to avoid the incursion of a substantial
increase in production costs.
This includes the retention of piecework arrangements which
provide for greater flexibility and productivity, as they are well suited to
the unique nature of the sector.
The attraction of piecework to productive pickers (and
employers) is that they can work at their own pace and earn significantly
higher rates than any minimum wage rate. The absence of this productivity
incentive would see many pickers either leave the industry or simply not be as
productive as they previously have been.[6]
3.11
In evidence, Griffith grower, Mr Frank Battistel indicated that whilst
he had no issue with the money pickers were being paid, it needed to be
acknowledged that, comparatively, Australian production costs are very high. Mr
Battistel told the committee that, for example:
We [Australia] pay $30 a bin; in South Africa, they pay $3.
Even in America, which is supposed to be a developed country or is a developed
country, they pay about $8 a bin. In South America, again, it is probably about
$3 or $4. So you can see the difference. Then we have to go and compete in Asia
and the rest of the world with those sorts of price differences.[7]
3.12
Mr Louis Sartor told the committee that high cost is relative, and can
also be viewed as a proportion of what growers receive:
If we are paying $90 or $100 a tonne to have our fruit
harvested and we are only receiving $120 a tonne, it equates to 90 per cent of
our total return. What we are not trying to do is reduce the cost as a
percentage of our return. We are trying to increase our return so that we can
go out there and pay fair market price for labour.[8]
Electricity and water costs
3.13
The costs associated with both electricity and water were described by
a number of growers as being an ever-increasing burden.[9]
Mr Robert Smyth told the committee that his family citrus business currently
collaboratively irrigates with 'approximately thirty other irrigators, with
technology which allows us all to irrigate our trees to the trees requirement,
to the extent we can pulse irrigate (several times a day)'. Mr Smyth indicated
that with the cost of electricity for the pumping of water at today's prices,
some growers are questioning whether they should have invested $6 million in
the irrigation system approximately fifteen years ago.[10]
3.14
Griffith grower, Mr Peter Taprell argued that increasingly, farmers are
finding it more difficult to cover basic farm input costs such as rates, water
charges and electricity, and as a result they have 'been forced to obtain off
farm employment to survive and provide food for their families'.[11]
3.15
Representative body CAL submitted that, in terms of production costs:
Our packing sheds and irrigation pumps are heavy users of
electricity – huge power cost increases are a drain on production and
processing (electricity costs have risen by 25 per cent due to the introduction
of the carbon tax alone).[12]
3.16
Fruit West's submission also noted that irrigation pumps are
particularly heavy users of electricity, and argued that running costs have
risen by as much as 25 per cent 'without the capacity or market mechanism to
pass on these costs through the supply chain'. Fruit West also argued that due
to the impact of rising input costs, the long term financial sustainability of
the industry is at crisis point.[13]
Water security
3.17
In addition to the cost of water, submitters also raised concerns about
water security and water trading. The committee was told that uncertain water
supply and the complications associated with water trading can cause
significant problems for producers. The committee was also told that the
efficient management of water resources is essential to ensuring the long term
sustainability of the citrus industry – particularly in the Riverland.
3.18
The Costa Group noted, for example, that the drought that has impacted
South Australia and the Murray Darling Basin over recent years has resulted in
a considerable number of citrus orchards being removed. It was also noted due
to high replacement costs and uncertain market conditions, many producers have
chosen not to replant citrus crops.[14]
3.19
The Costa Group argued that targeted public investment in infrastructure
(including irrigation schemes, urban diversion, water delivery and storage
systems) should be a priority and recommended investment in the following
project areas:
-
the reduction of wasteful evaporative losses from inadequate
storage and transmission systems (including mandatory lining and covering or
piping of all canal diversions from the river systems across the Murray Darling
Basin);
-
the elimination of all shallow or wasteful storage;
-
the measurement of water use within crops using available
technology;
-
the delivery of water through recommended water irrigation
system(s) that are appropriate for the crop being grown, and the soil type it
is being grown in;
-
the use of composts and mulch to reduce water evaporation and
improve the water retention capacity of soils; and
-
technology to identify/map soils that are best suited to certain
irrigation systems.[15]
3.20
The Costa Group also argued that, in developing the business rules of
water resource sharing, the Commonwealth Government should give recognition to
the states (in particular South Australia). It was further argued the
Commonwealth should recognise those communities reliant on the Murray Darling
Basin – for example the Riverland and citrus industry – that have historically
made sacrifices by capping irrigation diversions, rationalising water delivery
systems and adopting water conservation technologies in their own irrigation
practices.[16]
3.21
SCG also raised concerns in relation to water security, arguing that
interruptions to water supply can lead to crop failure or long term crop loss
and that uncertain water security can limit the potential for growth and have a
negative impact on investment decisions.[17]
SCG told the committee that:
Citrus growers are now highly reliant on water trade, many
having sold down water licences for financial survival. Water trade continues
to be complicated with varying state costs, carryover provisions and season
closure dates. The greatest risk in the water trade market is the lack of
licensing requirement for water brokers and no legal obligation for them to
operate trust accounts. The Government must act immediately to fix this issue
before growers suffer severe financial loss.[18]
3.22
SCG also told the committee that the Murray Darling Basin Plan had 'done
little to provide our industry with the water security and reliability required
for citrus production', and argued that the operation and integrity of high
security, reliable water licences should be guaranteed by the Government. [19]
Export and export growth
3.23
Submitters noted that opening up priority markets was essential so that
products could be marketed internationally in an affordable and achievable
manner. For example, Redbelly Citrus raised concerns at the absence of a trade
agreement between Australia and Japan for citrus fruits, for example blood
oranges, resulting in complex arrangements for citrus imports, driving up costs
and reducing competitiveness.[20]
3.24
CAL argued that improvements to trade relationships can only be achieved
by building an atmosphere of mutual respect and creating equal opportunities
with competitors, particularly in relation to Asian markets. CAL told the
committee that the Commonwealth government could assist the development of
relationships and improved trade agreements by increasing Australia's level of
participation in, and organisation of, trade visits (and other forums for
discussion). [21]
Background - export markets[22]
3.25
Over the last three years, citrus has been Australia's highest value
fresh horticulture export product and accounted for 31 per cent of the total
value of fresh fruit and vegetable exports (or A$162 million) per annum.
Although export markets are important to the Australian industry, the United
States, South Africa, and more recently Chile and China, supply the bulk of
citrus to international markets.
3.26
Australian citrus currently competes with citrus from South Africa,
Chile and Peru during the southern hemisphere season (which is between June and
November) and the United States which has a significant impact in the early
part of the season.
3.27
Oranges account for approximately 80 per cent of Australian citrus exports,
mandarins 19 per cent, and the balance of Australia's citrus exports are small
volumes of lemons and grapefruit. In 2012, Hong Kong and Japan were the major
export destinations for Australian oranges (Hong Kong 22.9 per cent of exports,
30,900 tonnes and Japan 22.1 per cent of exports, 29,800 tonnes). Significant
volumes of Australian oranges were exported to Malaysia (8.6 per cent, or 11,600
tonnes), the United States of America (8.3 per cent or 11,200 tonnes) and
Singapore (7.8 per cent, or 10,400 tonnes) with the remainder of Australia's
oranges exported to smaller markets throughout the world.
3.28
Australia is one of Japan's major suppliers of oranges, particularly
during the southern hemisphere export season. In 2012, Australia accounted for
21 per cent of all orange exports to the Japanese market and was the second
largest supplier of mandarins (accounting for 10 per cent of all exports to the
Japanese market). A growth in exports – particularly mandarins – into the
Japanese market is a major priority for the Australian citrus industry.
3.29
There has been a significant decline in the export of Australian oranges
to the United States market over recent years. Currently, the majority of oranges
exported to the United States are navels, which are primarily exported between
May and September (the non-producing months in the United States).
3.30
In the 1990s, Australia dominated the market for imported out-of-season
oranges in the United States. The United States' imports of Australian navel
oranges peaked at around 30,000 tonnes in 2007. By 2011, Australia's share of
the US market had declined to 8,000 tonnes, due largely to competition from
South Africa and, more recently, Chile.
3.31
The change over time in the value of the Australian dollar has also had
an impact on the export of Australian citrus. Between June 1990 and June 2001,
the depreciation in the real exchange rate of the Australian dollar,
contributed significantly to the growth of exports in Australian citrus.
However, the ten years from 2001 to 2011, saw the Australian dollar appreciate
by 53 per cent against a number of international currencies. As consequence of
this appreciation, the average unit export returns for Australian oranges
declined by 38 per cent during this period, despite international prices rising
in 2006, 2007 and 2010.
Export market access[23]
3.32
Gaining access to export markets with strict phytosanitary conditions,
such as Japan, China, the USA and Korea, can only be gained through bilateral
government to government negotiations. DAFF undertakes the negotiations through
which protocols are established and has responsibility for ensuring that
exports of Australian products satisfy the mandated conditions imposed by the
importing country.
3.33
Protocol conditions for entry into markets such as Japan, China, the USA
and Korea tend to be stringent due to the trading partners' concerns about the
risks posed by the introduction of pests and diseases. For example, most of
Australia's trading partners have serious concerns regarding the risks
associated with fruit flies, particularly the Queensland fruit fly (Bactrocera
tryoni), which is endemic to eastern Australia and is considered to be one
of the world's worst horticultural pests.
3.34
Different varieties of citrus have differing susceptibilities to fruit
fly, which in turn influences the mandated conditions for trade. Protocol
markets will typically impose mandatory risk mitigation measures to be
implemented against fruit fly and other quarantine pests and diseases of
concern before citrus is allowed to access the market.
3.35
The type of import conditions imposed by protocol markets may include
some, or all, of the following requirements (which add to the complexity of
access):
-
mandatory registration of orchards by industry and/or government;
-
mandatory integrated pest management, and the associated keeping
of records;
-
specifications for shipping containers in terms of their
construction and the technical specifications of its integrated temperature
sensors and recorder;
-
calibration of temperature sensors to record cold treatment
temperatures by a suitably qualified technician;
-
supervision of the placement of temperature sensors by a
government official;
-
verification of the cold treatment records performed by a
government official;
-
government registration of facilities involved in the export
pathway; and
-
government oversight of integrated pest management for pests of
concern to importing country.[24]
3.36
Other markets, such as Vietnam, Indonesia and the United Arab Emirates
have essentially functioned as open markets with few requirements beyond a
phytosanitary (ie. plant health) inspection by Australian authorities to ensure
freedom from pests, soil, weed, seeds and other extraneous material. However, a
number of markets (eg. Thailand and Vietnam) are currently transitioning to a
far more rigorous system of quarantine management, which will involve the
negotiation of new protocols (if Australia is to maintain access to these
markets).
3.37
Australian citrus exports are currently split between protocol and non-protocol
markets. In 2012, 65 per cent of Australian citrus exports were shipped to
protocol markets, and 35 per cent were shipped to non-protocol markets.
The role of Citrus Australia and
the Australian Government
3.38
Industry representatives argued that the opening up of markets –
particularly priority markets – is essential if Australia is to successfully
market its product internationally (in an affordable and achievable manner).
3.39
When the issue of market access was raised with representatives of CAL,
Ms Judith Damiani indicated that that the market access plan was on foot and
included areas such as market maintenance, market improvement, market
development and quarantine and non-quarantine issues. Ms Damiani also indicated
that CAL was currently targeting the Asian markets – particularly China, Korea
and Thailand.[25]
3.40
CAL's Chairman, Tania Chapman indicated that the peak body's focus is
currently on China. Ms Chapman told the committee that, three years ago
Australia exported approximately five containers to China (some via Hong Kong).
Last year that figure increased to one hundred containers and this year it is
likely to be somewhere between 300 and 400 containers – which represents a huge
growth for the Australian industry.[26]
3.41
Ms Chapman also indicated that export protocols required to be met by
growers represented one of the key barriers to doing more trade in China:
As a grower, it costs me about 2½ thousand dollars more per hectare to be
able to prepare my orchard to send to somewhere like China, Korea or Thailand.
So having to get past those stringent protocols is one of our biggest barriers,
and they are the things we really need to work on.[27]
3.42
The SCG submission agreed that the export markets of China, Korea and
Thailand do represent the best opportunity for future export growth. SCG noted
that these markets 'have been developed over the past few seasons and will
continue to grow with careful management'. SCG also noted, however, that these
emerging export markets are also relatively costly to supply due to more
stringent market access and protocol arrangements.[28]
3.43
SCG noted that there are currently impediments both at a production
level and a regulatory compliance level. It was suggested that revised protocol
arrangements – similar to those with many of our existing export markets –
would allow more rapid growth in the emerging markets. Further, SCG argued that
Australia is currently at a disadvantage because it does not enjoy similar
protocol arrangements to those of many of its competitors, and called for government
assistance to negotiate more favourable and less costly trading arrangements
and revised protocols.[29]
3.44
RedBelly Citrus, one of Australia's largest producers and marketers of
blood oranges, told the committee that Australia currently has no agreement with
Japan under which blood oranges can be exported. It was argued that way in
which the current arrangements are framed is very complex and causes
considerable problems for exporters:
In a brief example on how different access arrangements can
be: In markets like the USA, it is accepted that cold dis-infestation
procedures will work on all types of 'Orange' so no matter on what type of
orange variety, such as in my case, Blood Orange, the access arrangement will
allow for it. For the case of Japan, the arrangement is vastly different, the
acceptance of cold dis-infestation is per variety.[30]
3.45
It was argued that there are a number of things the Australian
Government could do to improve relationships with importing countries and to
create a more level playing field (particularly with Australia's competitors in
Asian markets). CAL recommended, for example, that in addition to increased
participation in trade visits and devoting additional resources to trade
negotiations, the Government:
-
devote additional resources to opening up, or improving, priority
markets;
-
assist in developing export protocols that are uniform and which
will improve our access to Asian markets;
-
partner with industry to find novel solutions to market access
obstacles;
-
progress trade between countries through building relationships
with the appropriate officials and industry sectors in corresponding countries;
-
progress Free Trade Agreements;
-
reduce the cost of quarantine inspection services; and
-
continue to support a two year transition from export
regulations.[31]
3.46
DAFF indicated that there are limitations to what can be done in terms
of improving market access, and told the committee that despite the
availability of high quality data, reliable treatment options, and efficient
export certification systems 'in the end, under the international phytosanitary
rules, the resolution of market access and market improvement requests is
ultimately determined by the importing country, and not the country initiating
the request.'[32]
3.47
However, DAFF also indicated that it was undertaking a number of
projects under the Export Certification Reform Implementation agenda which
'will deliver more efficient export certification and inspection services'.[33]
The Department noted that as part of its work in this area, a horticulture
exports industry consultative committee was to be established. It is proposed
that the committee (which includes representation from the citrus industry)
will consult widely with industry stakeholders and provide advice on ways to
improve both the export certification process and service delivery.[34]
3.48
In terms of future improvements, DAFF argued that:
These changes provide a strong foundation for Australia's
exporters, securing and improving market access and positioning Australia's
inspection and certification processes and the forefront of export industries
worldwide.[35]
Inhibitors to export and export
growth
Export fees and charges
3.49
The issue of export certification fees and charges has been covered
extensively by the committee in several previous inquiries.[36] For the purposes of this
report however, it is relevant to note that DAFF has operated some forms of
cost recovery for export certification since 1979. Under various Federal
Government policy decisions since then, the costs for most activities have been
recovered from users. Cost recovery in relation to export fees began in 1979, with
50 per cent cost-recovery; 60 per cent from 1 July 1988 and 100 per cent cost
recovery (for recoverable programs) from 1 January 1991.
3.50
DAFF operated under a full cost-recovery arrangement until 1 November
2001, when the government implemented a temporary rebate on export
certification to the value of 40 per cent of the invoiced costs. The citrus
industry (among others) returned to a full cost recovery system in 2011,
although the impact of that has been offset by a fee rebate, diminishing over
time and set to vanish completely in 2014.[37]
3.51
The submission provided by Redbelly Citrus put a compelling case about
the impact of increased fees which it recounted that 'under the new cost
structure, certification for a Category 3 country which includes the vast
majority of our Asian and North American trading partners increases from $550
per annum to $8,530 (with a transitional period where the fee is increased to
$6,730)'.
3.52
Redbelly Citrus told the committee that:
This is a tenfold increase in fees which to a newly
established business, in the current business and export environment,
represents a huge barrier to contemplating an export program. How many other businesses
such as ours, that were going to register to test overseas markets will not do
so now? How many export dollars are being kept out of the country because of
this decision?[38]
3.53
DAFF indicated that there were numerous reasons behind the decision to
remove the fee rebate and move to full cost recovery in relation to export fees
and charges. The committee was told:
Increasingly, Australia‘s trading partners are seeking to
protect their phytosanitary status by imposing more stringent import
conditions. Accompanying these reforms, Australia is experiencing a significant
increase in the demands from our export markets to justify Australia‘s claims
regarding its pest status and the competence (efficacy) of the treatments we
offer to manage pests of concern, particularly Queensland fruit fly.
In the face of these pressures, DAFF has expended
significantly more effort to maintain existing market access and to protect the
commercial viability of the Australian citrus industry. The maintenance of
market access in the face of changes by a foreign government has been a
priority for the department.
Given the large number of horticultural commodities exported
from Australia, the department's market access responsibilities extend to
delivering outcomes for the broader horticultural community. There is a high
degree of competition for access to the department's resources to pursue and
improve market access.[39]
3.54
The Murray Valley Citrus Board (MVCB) noted that approximately 50 per
cent of the fruit grown in the Murray Valley region is exported. It was argued,
therefore, that export market access is 'absolutely vital to citrus growers in
the Murray Valley'[40].
It was also noted that whilst they have access to a number of markets, the
protocols which they are currently required to meet are onerous and costly to
implement – both on-farm and post-harvest.
3.55
MVCB argued for improved protocols and additional market access to
enable the industry to be more competitive with other southern hemisphere
producers and exporters. It was also noted that, in terms of expenditure:
The cost of compliance through government charges such as
those imposed by AQIS are stifling export opportunity. With recent moves to
full cost recovery by AQIS, growers are now less inclined to send product to an
export destination, and this at a time when Australia needs more export income
not less. Export licence fees have also recently risen.[41]
3.56
SCG also raised concerns about export charges, and argued that, to date,
the industry has seen very little benefit in return for the fee increases:
Despite huge increases in AQIS fees to export establishments,
industry has not received improved or more efficient service. Due to the nature
of our industry, late orders and logistics delays are often inevitable. AQIS
operations are often not flexible enough to work concurrently with our industry
needs. Whilst there have been some improvements, such as the registration of
in-house inspectors, more measures are needed to achieve optimum efficiency.[42]
3.57
DAFF told the committee that the new cost recovery arrangements were
based on an option put forward by the Department (and which had the support of
some industry sectors). DAFF submitted that this particular option was implemented
on the basis that it:
-
represented the most equitable distribution of costs across all
horticulture exporters;
-
is financially stable and will be able to respond to changes in
the demand for services; and
-
complies with the requirements of the Government's Cost Recovery
Guidelines.[43]
3.58
DAFF argued that the new fees and charges which were implemented on 1
July 2012 'corrects significant under-collection in previous years and
addresses complaints from export certification users about the previous service
delivery arrangements'.[44]
DAFF also argued that the new arrangements provide more streamlined export
certification arrangements which, in time, will reduce the cost of export
certification.[45]
3.59
At the same time, however, DAFF acknowledged that not all benefits of
the new system would be available immediately. It was noted that, to offset
registration charges, $6.5 million in transitional funding had been made
available to horticulture exporters until 2014. DAFF argued that this funding
would assist the industry to move to the new fee structure, give exporters the
opportunity to get used to the new arrangements and, if necessary, make
adjustments to the way they do business.[46]
3.60
The committee was told that the transitional funding is being provided
through a $6 million fee rebate over three years ($2.7 million for 2011–12,
$2.2 million for 2012–13 and $1.1 million for 2013–14). The department also
indicated that:
For the transitional funds in 2011–12, approximately $1.7
million was used to erase the operating deficit of the Horticulture Export
Program, with the remaining $1 million being applied as a retrospective rebate
to all fees and charges collected in 2011-12.
The $2.2 million for 2012–13 will offset the establishment
registration charges for all three tiers to a common base level of $1800, with
the $1.1 million to further offset registration charges in 2013–14. This means
an exporter who may face a tier three $8530 annual registration charge will
receive a rebate of $6730, reducing their fee to $1800.[47]
Australia's food regulation system and food labelling
3.61
The issues associated with food labelling have been of particular concern
to the Australian citrus industry for a number of years. At the same time,
industry has raised concerns about the problems associated with the regulation
of imported OJC, quality testing and possible chemical contamination.
Background
3.62
DAFF and the Department of Health and Ageing (DoHA) work collaboratively
with New Zealand and Australian state and territory governments, through the
COAG Legislative and Governance Forum on Food Regulation (the forum), to
develop food regulation policy. Food Standards Australia New Zealand (FSANZ) is
responsible for developing agreed national food standards, having regard to
policy guidance from the forum. State and territory governments develop and
administer food legislation, which gives legal force to the requirements of the
Australia New Zealand Food Standards Code (the Code). State and territory
governments, together with local governments, are responsible for monitoring
compliance of food (with legal requirements within their jurisdiction) and
responding to food safety incidents.[48]
3.63
DAFF is responsible for the administration of the relevant legislation
(the Quarantine Act 1908 and the Imported Food Control Act 1992
(IFC Act)) at the border. All imported food must meet Australian biosecurity
requirements first, before then being subject to the requirements of the IFC
Act. The Imported Food Inspection Scheme (IFIS), administered by DAFF under the
IFC Act, is a risk-based inspection scheme that aims to ensure that imported
foods comply with the code. If unsafe or non-compliant imported food is
identified, it is re-exported or destroyed or, in some cases, treated in order
to bring it into compliance.[49]
3.64
Country of origin requirements in the Code have been designed to impose
a positive, mandatory obligation on food suppliers to label (with the country
of origin) most food products for retail sale in Australia. This requirement
applies equally to both domestically produced and imported foods. The standard
requires a country of origin statement on most packaged food and on unpackaged
fresh and processed fruit, vegetables, nuts, fish, fresh pork and preserved
pork products. From July 2013, country of origin labelling is also required on
unpackaged beef, sheep and chicken meat. Country of origin labelling is
enforced by the states and territories, and by DAFF, for imported foods at the
border.
3.65
Under the Competition and Consumer Act 2010 (CCA), a good
(including food) must pass the following tests to use a 'Made in' claim:
-
the good must have been 'substantially transformed' in the
claimed country; and
-
at least 50 per cent of the cost to produce the product must have
been incurred in that country.[50]
3.66
In accordance with the CCA, goods are 'substantially transformed' in a
country if they undergo a fundamental change in that country in form,
appearance or nature such that the goods existing after the change are new and
different goods from those existing before the change. The ACCC is of the view
that the reconstitution of imported concentrated fruit juice into fruit juice
for sale—whether or not Australian water, sugar preservatives and packaging is
used, may not constitute substantial transformation.[51]
Health, nutrition and labelling
3.67
CAL argued that as the problems associated with poor nutrition and
obesity continue to grow, Governments have a role to play in encouraging the
increased consumption of fruit and vegetables. CAL pointed to an opportunity
for Governments to take advantage of the health benefits of citrus fruit in
particular. It was argued that clearer policies around health claims would also
assist food industries in promoting the consumption of their products.[52]
3.68
CAL argued that consumers have a 'fundamental right to know where their
food comes from', and expressed disappointment that there had been a lack of
support shown for a new 'country of origin framework' as recommended by the
2011 review of food labelling law and policy (the Blewett review).[53]
3.69
It was further argued that:
Unfortunately, as country of origin information on whole
oranges (and other fruits) has improved, labelling on packaged and bottled
foods has not. A company can get around the Food Standards Code by calling
itself "Australian-owned", but it could be making its products
offshore. It may also be stating something is "Made in Australia",
when it is made from mainly imported foods and then packaged here.[54]
3.70
CAL told the committee that the opportunity exists for governments to
work with industry to create less confusing and misleading labelling
(particularly on fruit juices). The opportunity also exists for governments to
assist industry with health claims and country of origin labelling on packaged
products and encourage the increased consumption of fruit and vegetables.[55]
Domestic consumption of citrus
3.71
CAL told the committee that it has been using promotional programs in an
effort to increase the domestic consumption of citrus. It was argued that
targeted promotional programs, coupled with the expansion and adoption of the
Australian Citrus Quality Standards, are positive steps toward improving
consumer perception and repeat purchase of fresh fruit.[56]
3.72
The Costa Group indicated that it was supportive of CAL's efforts to
increase the domestic consumption of citrus – including its use of various
promotional programs and the adoption of the Australian Citrus Industry
Standards. In addition, the Costa Group argued that:
-
the various 'Australian Made' and 'Buy Australian' campaigns have
been effective in promoting consumer awareness of domestically grown and made
products;
-
'country of origin' labelling has helped consumers identify and
differentiate between domestic produce and that which is imported;
-
promoting the health benefits of citrus consumption is a key way
to increase consumer awareness of Australian grown citrus; and
-
the National Preventative Health Agency should work closely with
the food production sector to develop public health campaigns and promote
healthy eating (to counter preventable illnesses such as diabetes, heart
disease and certain types of cancer) – citrus fruit can, and should, play a
major role in such programs.[57]
Country of origin labelling
framework
3.73
As noted previously in this chapter, the issue of food labelling has
been an area of some concern to the citrus industry for some time. Whilst the
issue has been considered in some detail by various organisations, government
departments and parliamentary committees over recent years,[58] issues surrounding
country-of-origin labelling are complex and have yet to be resolved.
3.74
DAFF's submission to the inquiry outlined the current position in
relation to food labelling:
Mandatory country of origin labelling statements required by
the code must be consistent with the general prohibitions on false and
misleading claims in the Competition and Consumer Act 2010 (CCA). If a food
supplier chooses to make a 'Made in', 'Grown in' or 'Product of' claim, the
claim must be consistent with the country of origin representation safe harbour
provisions of the CCA.
The Australian Consumer Law, which forms Schedule 2 of the
CCA, contains prohibitions against misleading or deceptive conduct and against
false or misleading representations, including in relation to the place of
origin of goods.
The CCA specifies that, where goods satisfy certain
requirements, it is permissible to make specific origin claims in relation to
those goods without contravening the law. Claims in relation to which
requirements have been specified include 'Product of', 'Grown in', and the
general origin claim (usually referred to as the 'Made in' claim). The CCA is
enforced by the Australian Consumer and Competition Commission (ACCC).[59]
3.75
During this inquiry, the committee took specific interest in labelling
of orange juice and juice products, and in particular the extent to which
consumers could be misled by the name of a product, notwithstanding that its
country of origin labelling, though inconspicuous, may be clear and accurate.
3.76
Griffith citrus grower, Mr Frank Battistel indicated that labelling has
been an issue of ongoing concern for the industry. Mr Battistel referred to the
Blewett Review[60]
– a review of food labelling law and policy completed in January 2011 – and
noted that very few, if any, of the review's 61 recommendations had been
implemented. Mr Battistel argued that processors were still being allowed to
blend imported products with Australian products and call it 'made in
Australia' and that current labelling laws continue to mislead consumers into
thinking they are buying an Australian product when that is not the case.[61]
3.77
The MVCB also suggested that Australia's labelling laws 'urgently need
overhauling' and argued that:
... Currently labelling laws provide manufacturers with the
opportunity to state that their product is ‘manufactured in Australia with
local and imported product’. There is no requirement to provide consumers with
more information about how much of it is imported and how much is Australian
grown.[62]
3.78
Griffith and District Citrus Growers (GDCC) told the committee that
because the Australian market for grocery products is highly competitive, it is
increasingly important for producers to 'deliver a point of difference to
survive'. GDCC also argued that the lack of progress in improving Australia's
labelling laws – particularly in relation to identifying the country of origin
– is an ongoing concern.[63]
3.79
CAL argued that, in relation to the issue of food labelling, consumers
'have a fundamental right to know where their food comes from',[64]
and pointed to a number of the current problems associated with food labelling:
Unfortunately, as country of origin information on whole
oranges (and other fruits) has improved, labelling on packaged and bottled
foods has not. A company can get around the Food Standards Code by calling
itself "Australian-owned", but it could be making its products
offshore. It may also be stating something is "Made in Australia",
when it is made from mainly imported foods that are then packaged here.
The industry is increasingly alarmed at how confusing and
misleading labelling on fruit juices can be for consumers. We are renewing our
calls for simpler and more accurate product information.[65]
3.80
CAL expressed support for a new 'country of origin' framework – as
recommended in the Blewett Review – and suggested that government support and
assistance should be provided to assist industry with health claims and country
of origin labelling on packaged products.[66]
Local content/minimum content
3.81
The citrus industry continues to debate these issues and has been giving
consideration to several systems designed to strike an appropriate balance
between providing consumers with sufficient information to make informed
purchasing decisions; meeting Australia's international obligations and
minimising adverse impacts on compliant food producers and traders.
3.82
The GDCC told the committee that Australia's current position in
relation to labelling has been allowing manufacturers to 'take the easier
adoption of labelling practice to confuse the shopper'. It was argued that
including the packaging (as well as the product it contains) to prove a product
to be proportionally an Australian product, does not reflect the true
percentage of the actual, consumable product which is contained in the package.
The practice of including the packaging was described as very misleading –
particularly when the product derives a significant proportion of its contents
from an imported source.[67]
3.83
The MVCB noted that in the past, and prior to free trade agreements, the
citrus industry had benefited from local content laws which required that any
juice sold in Australia had to contain a certain amount of Australian grown
product. It was argued that:
A return to this local content requirement would provide a
significant outlet for citrus fruit that has not met the high standards
required for the fresh fruit market. Currently much of this fruit is dumped for
stock feed with no financial return to the grower.[68]
3.84
The committee was told that consumers continue to raise concerns about
the ambiguity of orange juice labelling. SCG argued for a clear standard to be
imposed: which highlights the actual quantity of fresh or concentrate juice in
a product, and the countries in which the fruit was grown, by proportion. SCG
also suggested that:
A guaranteed minimum Australian juice content of 25% would
give consumers confidence in the product. A minimum content would also underpin
our industry by providing an economic outlet for lower grade fruit thus
reducing pressure on domestic fresh markets.[69]
Impact of imported fruit juice
concentrate
3.85
Industry representatives also expressed concerns about the impact the
importation of cheap orange juice concentrate (OJC) – particularly from Brazil
– is having on the industry.[70]
3.86
The committee was told that the Australian fruit juice industry requires
approximately 500,000 metric tonnes of citrus annually, and that currently
Australia's citrus industry can only supply approximately 250,000 metric tonnes
of valencias. To cover the annual shortfall, Australia imports OJC from a range
of countries, including Mexico, the United States, Israel and the Netherlands.
However, the Australian Beverages Council indicated that Brazil is currently
the largest exporter of OJC and noted, for example, that in 2010, imports from
Brazil consisted of 89.6 per cent of the total OJC imports for that year.[71]
3.87
The committee was told that Brazil's competitive advantage over
Australia in the production of OJC is largely due to lower input costs –
particularly in relation to labour and transport. Brazil also enjoys better
growing conditions and larger-scale growing operations with lower unit
production costs.
3.88
The MVCB indicated that it had major concerns about the levels of OJC
currently being imported into Australia and argued that:
-
a significant amount of OJC is currently entering Australia at
lower than cost in order to move stock from these countries which produce it;
and
-
the onus should be on the country exporting OJC into Australia to
provide that they are not selling it at less than the cost of production.[72]
3.89
Submitters expressed concerns about Brazil's labour practices, Brazilian
processors' 'cartel behaviour', and questioned how Brazil is able to sell
concentrated juice so cheaply. Mr Frank Battistel argued, for example:
Only recently a Brazilian judge has ordered four of the major
processors in Brazil to pay $227 million in compensation for a decade of
illegal labour practices. In the 90's Brazilian major processors also took part
in a cartel formation and price fixing to their suppliers for fruit and on this
occasion paid $100 million to their government to prevent further
investigations, and agreed to stop anti-competitive behaviour of price fixing.
The investigation appropriately named (Operation Fanta) while all this was
taking place we the Australian Citrus farmers were asked to compete with cheap
imported concentrate ...[73]
3.90
Similar comments were also made by Mr Bart Brighenti who noted that the
same Brazilian companies involved in cartel behaviour have also been found to
have been in breach of their own country's labour laws. Mr Brighenti suggested
that Australian citrus growers should be compensated for having to compete with
imported OJC from Brazil, and questioned the cost of Brazilian concentrate:
There is also enough evidence supplied to shoe the cost of
growing Brazilian oranges to be around AUD$190.ton [sic], so it is beyond me
how it can be delivered here as concentrated juice for such low prices without
dumping.[74]
3.91
Citrus Growers Graham and Barbara Eipper summarised the views of a
number of industry representatives when they argued that:
The competition for Australian juice is always shadowed by
the importation of Brazilian concentrate – not only is this an insult to our
industry it is bitter as reflected in the taste of the re-constituted drinks for
sale to the public. Coupled with this importation there is always the fear more
juice factories in Australia will close doors leaving no option but to bulldoze
trees which have taken 20 years of care to reach their prime.[75]
Chemical contamination
3.92
A number of submitters also raised concerns about the amount of a
particular chemical found in imported juice concentrate. The committee was told
that in 2012, cheap imported OJC was being dumped on the Australian market
because it was found to have to contain traces of a chemical called
carbendazim. In his submission to the inquiry, citrus producer Mr Frank
Battistel argued that both the 'USA and Europe had rejected this concentrate,
but it was below the Maximum Residue Level (MRL) set by Australia'.[76]
Mr Battistel also argued that because the orange concentrate was being offered
at a cost below the cost of production, an anti-dumping case should have been
investigated.[77]
3.93
At the committee's hearing in Griffith, Mr Battistel restated his
opinion that there should have been an investigation into dumping –
particularly in 2012 when there had been 'Brazilian concentrate basically being
offered to processors only for refrigeration costs and transport'.[78]
3.94
The committee asked Mr Battistel whether he had any knowledge of the
cost of the concentrate and whether he was aware of CAL being involved in
dumping cases – or cases against Brazilian OJC. Mr Battistel responded by
saying that because he was not interested in purchasing the OJC, he did not
actually ask about the price. However, he went on to argue that:
As to the other part of the question, I was going to say that
it is a typical example of our peak body asleep at the wheel. Who else should
be putting a dumping case in: us as an individual farmer or the peak body who
represents everyone? I know the majority of their big levy payers – their
members – do not grow valencias, and maybe that is the issue, but last year we
dumped a hell of a lot of fruit on the ground for no other reason than that the
stuff coming in was cheaper to use.. There was fruit being dumped left, right
and centre. We had no access to use it whatsoever. ... Why didn't we investigate
a dumping case? It was a perfect opportunity last year. I think we could have
won the case.[79]
3.95
SCG also felt very strongly about overseas competitors which 'often
operate under less stringent regulatory arrangements'. SCG raised the issue of
what it described as a 'double standard' – particularly regarding permits and
residue limits in relation to specific chemicals. It was submitted that, for
example, there is currently a zero tolerance for the use of carbendazim within
Australia.[80]
However this same chemical appears to have been allowed in imported juice:
A case in point involved the chemical Carbendazim last year.
This chemical has been banned from use in Australia for a number of years with
a zero tolerance. Last season, Carbendazim was found in Brazilian Orange Juice
concentrate imported into Australia by a large multinational beverage company.
Use of this contaminated product had been banned in the United States but was
allowed in Australia.
This double standard is not acceptable. There is a serious
credibility and integrity issue around the decision. It is a blight on our
chemical registration system and a fraud on Australian consumers.[81]
3.96
Following the hearings, the committee sought clarification from FSANZ
about the process that preceded the decisions and/or recommendations regarding
the removal of a maximum residue level (MRL) for carbendazim in imported OJC.
3.97
FSANZ indicated that whilst it is the organisation responsible for
developing standards for all food sold in Australia (whether imported or
produced domestically) it had not at any time, recommended the removal of an
MRL for carbendazim, specifically for imported OJC.[82]
3.98
FSANZ told the committee that the 'questions might be directed to a
proposal that was made, in November 2011, by the Australian Pesticides and
Veterinary Medicines Authority (APVMA) to amend the relevant food standard to
remove MRLs for carbendazim for some foods'. FSANZ also advised the committee
that:
-
the APVMA has had a limited statutory power to amend the MRL
Standard in the Food Standards Code (if it is considering an application or
variation in relation to a chemical product and considers that it is likely
that an amendment of the MRL in the Food Standards Code will be required) since
1 March 2011;
-
on 8 November 2011 the APVMA sought public comment on its
proposal to amend Schedule 1 of Standard 1.4.2 of the Food Standards Code to
remove some maximum residue limits for carbendazim, including the maximum
residue limit for citrus fruits, and to include a maximum residue limit for
onions;
-
the APVMA proposal followed a review by the APVMA of the use of
carbendazim (the APVMA had previously varied the relevant MRLs in the APVMA's
MRL Standard);
-
in early 2012, the fruit juice industry advised FSANZ that
removal of the MRL in the Food Standards Code for carbendazim for citrus fruits
could adversely affect the importation of frozen OJC to Australia and threaten
supply of orange juice and orange juice products to the domestic market; and
-
given the limitation on APVMA's statutory powers when amending
the Food Standards Code, including a limitation on its power to consider trade
issues or the desirability of an efficient and internationally competitive food
industry (matters that FSANZ is required to consider), FSANZ and the APVMA
agreed that the APVMA would discontinue its proposal to amend the Food
Standards Code and that FSANZ would prepare a proposal to consider the
variations.[83]
3.99
FSANZ acknowledged that officers met with citrus juice industry
representatives to discuss their concerns regarding 'the APVMA proposal to
remove the carbendazim maximum residue limit for citrus fruits'.[84]
Subsequently, the Australian Beverages Council wrote to FSANZ and provided a
technical report, which FSANZ took into consideration when assessing
information provided as part of Proposal M1008.[85]
It was also noted that:
During 2012 FSANZ developed a draft variation of the Code
that included certain MRLs for carbendazim (Proposal M1008). The draft
variation was, in accordance with procedures established in the Food
Standards Australia New Zealand Act 1991, sent to the Council of Australian
Governments Legislative and Governance Forum on Food Regulation convening as
the Australia and New Zealand Food Regulation Ministerial Council (Forum) on 6
November 2012. FSANZ was advised on 3 January 2013 that the Forum had agreed
not to seek a review in relation to Proposal M1008 and, accordingly, the
variation was gazetted on 18 January 2013.
The effect of the variation in relation to most citrus fruits
was to reduce the MRL from 10 milligrams per kilogram of food to 0.2 milligrams
per kilo of food.[86]
3.100
A panel of Griffith citrus growers were also asked about the issue of
carbendazim and the Government's policy in relation to this chemical:
Senator XENOPHON: ... if the government had followed
through its ban on carbendazim, which it overturned last year because of the
lobbying from some of the multinational processors, what difference would that
have made to your industry? In other words, if there were a level playing field
and you could not bring in concentrate with carbendazim, what would that have
done to your industry locally?
Mr Mancini: About a year before this whole carbendazim
issue, valencia growers were getting up to $550 a tonne. There was a severe
shortage of valencias at that time. That price became eroded basically
overnight once that whole issue of carbendazim came around. It had a
significant impact. ...
Mr Battistel: Last year we dumped, for just this
reason, about 20,000 to 25,000 tonnes of basically navels and some old season
valencias. Previous to that, we dumped very little. We actually sold it. We did
not get much for it. I think we used to get about $50 a tonne, which was about
half the picking cost, but it was always used. The processors always used that
'You've got to compete with the Brazilians and this is the figure you need to
be at,' but they bought it. Last year, they did not even buy it. They did not
want it for nothing. So we basically dumped it. That is the difference the
carbendazim made. They did not want it for $0 last year. In other years, they
wanted it but they wanted it for nothing. But last year they did not want it at
all. Like I said, it was even cheaper than getting the oranges for free,
because the processing costs were more than what they were buying the
concentrate for.[87]
3.101
Ms Judith Damiani indicated that, as peak industry body, CAL had raised
concerns regarding the importation of OJC containing carbendazim residue:
... When we found out that the United States had banned imports
while they were testing for this product that was coming in from Brazil, we
went out to the media and asked for the testing to be increased at the
Australian border. We called that because we recently had carbendazim, the
fungicide, banned for use in Australia – which is fine. The inequity of it is
to still allow the imports to come in.[88]
3.102
Ms Damiani also indicated that CAL had raised the issue of carbendazim
with the then Minister for Agriculture, Fisheries and Forestry, Senator the
Hon. Joe Ludwig (and the previous Minister) and had been told that the issue
'is between APVMA[89],
which looks after the chemical registrations in Australia, and FSANZ[90],
which looks at keeping importer trade going'.[91]
3.103
Ms Damiani went on to tell the committee that when discussing the issue
with FSANZ, she had been told that:
... their main priority – unlike APVMA, that do their registrations
in Australia – is to not disrupt trade. So they had to work around it to make
sure the imports were still coming in because that particular juice services a
particular segment of the market.[92]
3.104
Mr Geoff Parker, Chief Executive Officer, Australian Beverages Council
acknowledged that the Council had lobbied for the maintenance of the MRL in
relation to carbendazim. Mr Parker argued that had carbendazim been decreased
to a zero MRL, 'within a very short period of time the ambient juice in the supermarket
aisle – there is chilled juice or ambient, shelf-stable juice – would have
disappeared quite literally overnight.'[93]
3.105
Mr Parker told the committee that because of the Australian juice
industry's reliance on imports, there would be a very swift decline in the
supply of ambient juice. Mr Parker added that the reason the industry is so
reliant on imported OJC is:
Because there are not enough valencia oranges. We do
unfortunately hear a lot from citrus growers and Citrus Australia, and we see
on current affairs programs trees being bulldozed or fruit being left on the
tree. Unfortunately the vast majority of that, to our knowledge, is navel
oranges which cannot be used in juice. Only a very small amount of navel orange
juice can be used in a juice blend because it is too bitter. So the supply of
valencia oranges is not enough to meet the demand ...[94]
3.106
Mr Parker indicated that it was the Council's understanding that the
citrus industry's peak body had made recommendations to growers to move from
planting valencias to navel oranges. The committee then questioned the CEO
further in relation to the Council's position on aseptic juice:[95]
Senator RUSTON: What is your organisation's position
on aseptic juice or Australian concentrate? Would you consider it to be
something positive to be marketed in the marketplace if you could get the
consistency of product that you need with aseptic juice or concentrated
Australian juice? Would you actively support that on behalf of the growers?
Mr Parker: Absolutely. For the senators' information,
we are trying to move away from the term 'aseptic juice' because, again, it has
a negative connotation. We are moving to 'cold stored juice', which has a
slightly more positive spin. We have tried to commence discussions with Citrus
Australia around what we term to be a 'commitment to crop' – and that is a
commitment to the local crop. We have got very large processors and very small
processors. We need to have that dialogue with the citrus growers, which, up
until now, has been significantly lacking.[96]
Opportunities for growth
3.107
CAL submitted that there are a number of opportunities for growing the
Australian citrus industry, and a number of ways state and federal governments
could assist in the process.
Developing new, high-value export
markets
3.108
The Queensland Department of Agriculture, Fisheries and Forestry (QDAFF)
noted that the high Australian dollar, increasing cost of production, recent
natural disasters and competition from low cost economies have been major
impediments to export. The committee was also told, however, that over recent
years the Queensland citrus industry has continued to pursue export
opportunities and new markets – particularly in relation to high value citrus.
QDAFF also indicated that businesses have been encouraged to take 'a
whole-of-value chain approach and focus on understanding and meeting consumer
needs.'[97]
3.109
Whilst industry fragmentation and past biosecurity incursions[98]
had reduced the capacity of the industry to export, there are currently export
opportunities for high value, high quality mandarin product in both Asia and
the Middle East. The Queensland citrus industry is also focused on building
export markets for mandarins in Thailand and exploring the economic viability
of the European market. It was argued that, in addition to securing export
markets, consistency in supply and quality of product are crucial to meet
market requirements. QDAFF also stressed the importance of research and
development:
The development of new varieties tailored to the export
market is required to move the industry forward. The limited shelf life of
mandarins and inconsistencies in flesh quality are issues that need to be
addressed. Effective breeding programs and research facilitated by government
are paramount to addressing these issues.[99]
Export trade
3.110
The committee was told that unlike most Australian horticultural
industries, the citrus industry is geared to export trade – with around 45
percent of all fresh product shipped overseas. CAL argued that owing to the
importance of increasing the industry's share of existing markets (and finding
new ones), it is currently working toward the development of increased exports
to Asia and increasing market share in China, South Korea and Thailand.[100]
3.111
Whilst it is seen as a positive sign that the industry recently gained
access to the Philippines' market, CAL argued that there is a need for reform
in the area of export certification and inspection and that the Government
should work toward improving market access into other key export destinations such
as China, Korea, Japan, Thailand, Indonesia and the United States. CAL also
suggested that the Government should commit to export fee reforms with
government assistance while new efficiencies are rolled out or approved by
protocol markets.
Committee comment
3.112
The committee notes the concerns of a number of individual growers and
industry representatives regarding the high costs of production. The committee
acknowledges that in comparison to their overseas competitors, Australian
growers face greater costs in relation to electricity, water, regulation and
labour. The committee acknowledges that for some years growers have also faced
the additional problem of a high Australian dollar.
3.113
The committee is aware that, in addition to the high cost of water,
growers have concerns about both water security and water trading, and
recognises that an uncertain water supply and complications associated with
water trading are causing problems for some producers.
3.114
The committee notes the views expressed by growers and industry groups
in relation to inhibitors to export and export growth. It is clear to the
committee that the export protocols producers are currently required to meet
can be onerous, financially costly, and time consuming. The committee also
acknowledges that a number of producers are finding the increased export
certification fees and charges a considerable burden. Given the importance of
export to the Australian industry, the committee shares the concerns of
producers and notes that, to date, the industry has seen very little benefit in
return for the increased fees.
3.115
The committee recognises that the issues associated with food regulation
and labelling have been of particular concern to the citrus industry for some
time. The committee is also aware that these issues have been considered in
some detail by various organisations, government departments and parliamentary
committees (including this committee) over recent years. Unfortunately, the
issues surrounding food regulation and country-of-origin labelling are complex,
and have yet to be resolved.
3.116
The committee also shares the concerns of growers about the impact the
importation of cheap fruit juice concentrate – particularly from Brazil – has
had on the Australian citrus industry. It is clear that, due to lower regulation,
labour and transport costs, Brazil has a competitive advantage over Australia
in the production of juice concentrate. The committee also notes the evidence
which points to some Brazilian companies being involved in cartel behaviour and
in breach of their own labour laws.
3.117
The committee is also concerned about the importation, in 2012, of cheap
orange juice concentrate which was found to contain traces of the chemical
carbendazim. The committee notes concerns raised by producers who argued that
overseas competitors operating under less stringent regulatory arrangements
have an unfair advantage – particularly when there is currently a zero
tolerance for the use of carbendazim within Australia.
3.118
The committee is pleased to note that there are new opportunities for
export growth in the Asian markets. The committee supports the increased
efforts being made by the industry in relation to market access planning,
market improvement, and market development – particularly in relation to China,
Korea and Thailand.
3.119
The committee supports the industry's recommendation that Australia
increase its participation in trade visits and trade negotiations. The
committee also supports the industry's call for additional resources to be
devoted to trade negotiations, to opening up and improving access to priority
markets and to finalising free trade agreements with Australia's Asian trading
partners.
Recommendation 5
3.120
The committee believes that DAFF needs to be more responsive to the
needs, and more understanding of the capabilities, of the industry. Therefore,
the committee recommends that, in its negotiations for market access on behalf
of the Australian citrus industry, DAFF consult more closely with industry
across the supply chain regarding protocols and work to better align protocols
in new or emerging markets with existing/established markets.
Recommendation 6
3.121
The committee recommends that the Australian Government put more
resources into finalising trade agreements with export destinations for
Australian citrus, particularly those with considerable potential such as
China.
Recommendation 7
3.122
The committee recommends that the Australian Government encourage small
and emerging citrus exporters by addressing the costs of compliance and
establishment registration charges.
Recommendation 8
3.123
The committee recommends that the Australian Government take steps to
discourage the dumping of imported fruit juice concentrate, and reverse the
onus of proof onto importing countries to ensure local Australian citrus
growers are not discouraged from bringing cases to the relevant authorities –
for example, the Anti-Dumping Commission.
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