NTMs of commercial significance to carrots - RMCG

M A R C H 2 0 2 1

NTMs of

commercial

significance to

carrots

Hort Innovation

Level 1 East, 1100-1102 Toorak Road, Camberwell Victoria 3124

rmcg.com.au — ABN 73 613 135 247 — RM Consulting Group Pty Ltd

Victoria — Tasmania — ACT — NSW

N T M S O F C O M M E R C I A L S IG N I F I C A N C E T O C A R R O T S

Table of Contents

Executive Summary 1

1 Introduction 3

1.1 PROJECT OBJECTIVES 4

1.2 PROJECT SCOPE 4

1.3 PROJECT APPROACH 4

1.4 DEFINING NTMS 5

1.5 THIS REPORT 6

2 Carrot export and trade 7

3 Identification of NTMs 9

4 Impact of NTMs 13

5 Focus NTMs for carrots 17

N T M S O F C O M M E R C I A L S IG N I F I C A N C E T O C A R R O T S 1

Executive Summary

Non-tariff measures (NTMs) are requirements that countries apply to traded goods separate to ordinary

customs tariffs. They are applied to ensure imported products are safe and healthy for consumers and protect

countries from harmful pests and diseases that imported goods could introduce.

For Australian producers and exporters, NTMs are a normal part of doing business however NTMs can have

an economic impact on trade by reducing access to markets and competitiveness. To facilitate collaboration

between industry and government in addressing NTMs that are unfair or overly costly barriers to trade, RMCG

were engaged to:

Identify NTMs applied to a range of Australian horticulture products and classify these according to the

United Nations Conference on Trade and Development (UNCTAD) International Classification of Non-

Tariff Measures (2019) system1

Understand the impact of these NTMs on specific commodities and more broadly across the horticulture

industry.

An overarching report documenting the NTMs placed on Australian horticultural product across thirteen key

export markets has been produced. Relevant data and information from this main report has been drawn to

produce individual commodity reports. This is the report for carrots.

The Australian carrot export landscape has experienced strong growth prospects driven by Western Australian

exporters into Middle East markets. The carrot industry, as part of the wider vegetable industry has a strong

peak industry body that has been working with governments to secure and improve technical market access.

Australian carrots are subject to a total of 17 NTMs across the 13 markets reviewed. Taiwan imposes the

highest number of NTMs (9) followed by South Korea (3) and Thailand (2). All of these NTMs relate to sanitary

and phytosanitary (S&PS) measures and are largely due to the number of quarantine pests of concern. Typical

S&PS measures include:

A systems approach (such as application of IPM approach in orchards)

Traceability requirements (record keeping and registration of producers and packhouses)

Treatment for elimination (irradiation, fumigation and cold/heat treatment)

Conformity assessment (such as inspection requirements and phytosanitary certificates).

Taiwan is the only country of those reviewed that has pests of quarantine concern. The pests of quarantine

concern for carrots include:

Burrowing nematode (Radopholus similis)

Stem nematode (Ditylenchus dipsaci)

White fringed beetle (Naupactus leucoloma).

Countries that have significant numbers of quarantine pests commonly develop a protocol to enable trade of

horticultural product to continue under strict conditions despite the presence of these pests in the exporting

country (Australia). Six of the reviewed markets have a protocol in place for the import of carrots from Australia.

These include Indonesia, Japan, South Korea, Philippines, Taiwan and Thailand.

1 International Classification of Non-Tariff Measures (2019) United Nations Conference on Trade and Development (UNCTAD)


To inform the review, data was collated via desktop research, analysis of trade and NTM data sources and

industry consultation. Forty producers, exporters and industry associations across fourteen industries were

interviewed. These interviews, in combination with desktop research identified NTMs (and related trade issues)

that commercially impact on trade.

These include:

Resource and logistic limitations – such as availability of authorised officers, port ‘bottlenecks’ and flight

availability (during COVID), and limited irradiation facilities

The currency and accuracy of protocols – where incorrect (or non-relevant) information has been used

to develop protocols it can result in unnecessary treatment protocols

Maximum Residue Limits (MRLs) as a current and emerging issue when there are sudden changes to

MRLs, commonly used chemicals in Australia are excluded, and supermarkets impose their own MRLs

The imposition of unreasonable NTMs due to deterioration of political relationships between countries

Actions by governments to support domestic production ahead of imports through the use of quotas

Excessive packaging and labelling requirements associated with sanitary and phytosanitary measures

Inefficient processes and lack of, or incorrect information associated with export of horticultural

products.

Airfreight costs are a key concern to the carrot industry in relation to export, particularly since the COVID

pandemic.

The impact of NTMs on the Australian horticulture industry include:

Reduced competitiveness against competitors such as Chile and Peru due to increased costs

associated with treatment, packaging and certification

Reputational damage in key markets due to poor product quality as a result of fumigation treatments

and held product at importing markets

Reduced appetite to export due to perceived risks associated with poor or inaccurate information and

political tension

An inability to forward plan due to sudden changes in quotas

Lack of market access or rejection of product at importing country when Australian exporters are unable

to meet MRLs due to sudden changes in allowed limits or the imposition of limits dictated by

supermarkets.

A C K N O W LE D G E M E N T O F C O U N TR Y

We acknowledge the Traditional Owners of the Country that we work on throughout Australia and recognise

their continuing connection to land, waters and culture. We pay our respects to their Elders past, present and

emerging and the Elders of other Aboriginal and Torres Strait Islander communities. Moreover, we express

gratitude for the knowledge and insight that Traditional Owner and other Aboriginal and Torres Strait Islander

people contribute to our shared work.


1 Introduction

Market access is critical for the Australian horticulture industry. Australian growers export approximately $2.92

billion worth of horticultural commodities annually, accounting for about 25% of Australia’s total production.

Australian horticultural exports have tripled over the last ten years, with successive Australian governments

liberalising international trade with key trading partners through a range of Free Trade Agreements (FTAs)2.

For Australian exporters, FTAs, and gains through World Trade Organisation reforms, have delivered a

reduction in tariff rates across a range of export markets, resulting in the expansion of export market

opportunities3. During this time, Australian growers have been able to capitalise on the falling exchange rate,

making Australian goods more attractive to foreign markets, and combined with the relatively moderate climatic

conditions, total exports have increased (Figure 1-1).

Figure 1-1. Australian horticulture exports, AUD:USD dollar

Although there has been general decrease in tariffs that restrict trade over this time period, we have also seen

the steady emergence of 'non-tariff measures' (NTMs), that can directly impact export markets. Approximately

half of all NTMs globally are applied to agricultural products, as governments prioritise safe food supply for

consumers, as well as biosecurity and environmental protection. Governments use a diverse range of NTMs

to achieve these objectives, and they cover a range of areas from biosecurity to labelling requirements. NTMs

are designed to improve consumer confidence in imported products and maintain an acceptable level of

biosecurity. NTMs can lead to benefits from both an import and export perspective despite additional

compliance costs. However, export markets often experience a decrease in activity as compliance costs

ultimately rise and exporting becomes less profitable4.

2 Free trade agreements include: AANZFTA, KAFTA, JAEPA, CHAFTA 3 Grains NTM project, GRDC, 2018 4 Cadot, O,. Gourdon, J,. Tongeren, F,.(2018) ‘Estimating Ad Valorem Equivalents of Non-Tariff Measures – Combing price-based and quantity-based

approaches’ OECD.

-

0.20

0.40

0.60

0.80

1.00

1.20

-

500

1,000

1,500

2,000

2,500

3,000

2001/02

2002/03

2003/04

2004/05

2005/06

2006/07

2007/08

2008/09

2009/10

2010/11

2011/12

2012/13

2013/14

2014/15

2015/16

2016/17

2017/18

2018/19

2019/20

AU

D :

USD

Exc

han

ge R

ate

Mill

ion

AU

Dp

er

year

Source : ABS via ITC Trademap; Fresh Intelligecnce analysis

Nuts

Fresh Vegetables

Fresh Fruit

USD: AUD


1 .1 PROJECT OBJECTIVES

Australia’s horticulture export industry spans a wide range of commodities (including fruit, vegetables and

nuts). Producers and exporters across these commodities vary in their level of industry representation, export

capability and understanding of NTMs. This can lead to unstructured engagement between industry and

government on cross-cutting barriers to trade, and limit potential action on resolution of market access issues.

RMCG were engaged by Hort Innovation to identify Non-Tariff Measures (NTMs) of commercial significance

across a range of horticultural food export commodities. RMCG conducted a desktop review and consulted

with a range of horticulture industries to:

Identify NTMs applied to a range of Australian horticulture products and classify these according to the

UNCTAD International Classification of Non-Tariff Measures (2019) system

Identify and understand the impact of these NTMs on specific commodities and more broadly across the

horticulture industry.

The findings from this report will provide the basis for future discussion and engagement for industry and

government to work together to achieve meaningful outcomes on priority NTMs for action.

1 .2 PROJECT SCOPE

Due to the wide range of horticultural commodities exported from Australia and the number of importing

countries it was necessary at the commencement of the project to identify which commodities and markets

would be assessed. Based on discussions with Hort Innovation and Department of Agriculture, Water and

Environment (DAWE) during the inception meeting, and subsequent discussion within the project team, it was

decided to focus our assessment on:

Fourteen horticulture commodities (citrus, summerfruit, cherries, onion, potato, carrot, table grapes,

avocado, leafy greens, mango, pome fruit, berries, melons and nuts)

Thirteen markets (China, India, Japan, Vietnam, United States, New Zealand, South Korea, Thailand,

Taiwan, United Kingdom, Indonesia, Philippines, Canada).

These commodities and markets were chosen as they are:

The main horticultural commodities exported from Australia (that account for 97 per cent of Australia’s

horticultural export trade). Where commodities are not exported in significant quantities it is likely to be

due to reasons not related to NTMs (for example the lack of cost competitiveness for bananas).

Markets where Australia already has a strong trading presence, with readily available data. Hort

Innovation has previously determined that there is an arc of countries of interest stretching from Japan

to Jordan - essentially taking in Asia and Middle East. Although Australia is not generally competitive in

America or Europe for most products, the US and the UK were included as they could be potential

future markets. Unregulated markets (Singapore, Malaysia and Hong Kong) were not included as these

markets do not have significant non-tariff barriers.

1 .3 PROJECT APPROACH

To inform the review data was collated via desktop research, analysis of trade and NTM data sources and

industry consultation. This information was then analysed to develop the NTM database and reports. A

summary of the consultation outcomes is provided below (Figure 1-2). Details of the full methodology used for

this review is available in the ‘NTMs of Commercial Significance to Australian Horticulture’ report.


Figure 1-2: Dashboard summary of consultation outcomes

1 .4 DEFIN ING NTMS

To facilitate a universal language for understanding and disseminating information on what and how NTMs are

being implemented around the world, the World Trade Organisation developed an international NTM

classification system, the United Nations Conference of Trade and Development International Classification of

Non-Tariff Measures (developed in 2008, and revised in 2019). This classification system does not judge the

legitimacy, adequacy, necessity or discrimination of any form of policy intervention used in international trade.

It acknowledges the existence of policy intervention and is designed to set information out in a database format.

The classification separates NTMs into two high level categories – technical and non-technical measures.

These are broken down further into 16 total chapters (A to P) (Table 1-1), which reflect the requirements of the

importing country concerning its imports, with the exception of measures imposed on exports by the exporting

country (chapter P). Each chapter is further divided into subgroups with a depth of up to three levels (one, two

and three digits, following the same logic of the Harmonized System (HS) Nomenclature for product

classification) (e.g. A11, B851, M2).

Table 1-1:UNCTAD – International Classification of Non-Tariff Measures (2019) by chapter

IMP

OR

TS

Technical measures

A Sanitary and phytosanitary measures (SPS)

B Technical barriers to trade (TBT)

C Pre-shipment inspection and other formalities

Non-technical measures

D Contingent trade-protective measures

E Non-automatic import licensing, quotas, prohibitions, quantity-control measures and other restrictions not including sanitary and phytosanitary measures or measures relating to technical barriers to trade

F Price-control measures, including additional taxes and charges

G Finance measures

H Measures affecting competition

I Trade-related investment measures

J Distribution restrictions

K Restrictions on post-sales services

L Subsidies and other forms of support

M Government procurement restrictions

N Intellectual property

O Rules of origin

Exports P Export-related measures

PEOPLE INTERVIEWED INDUSTRIES REPRESENTED EXPORT MARKETS REVIEWED

40 14 13

NUMBER OF INTERVIEWEES BY STAKEHOLDER TYPE

21Industry

Association

TYPE OF STAKEHOLDER

Industry

Association

52%

Service Provider

8%

Exporter

20%

Producer

20%

4TYPES Producer Exporter

8 8

SURVEY RESPONSES

4

Service

Provider

3


1 .5 THIS REPORT

An overarching report documenting the NTMs placed on Australian horticultural product across key export

markets has been produced. The report discusses the impact of these NTMs on horticultural industries and

identifies opportunities for the reform, or improvement in application, of identified commercially relevant

measures in each market.

The target audience for the report is Australian horticultural producers; exporters and industry representatives;

government policy analysts, regulatory officials and trade negotiators.

The report covers:

Australian carrot export and trade data (Section 2)

Identification of NTMs (Section 3)

Impact of NTMs (Section 4)

Focus NTMs for carrots (Section 5).

Relevant data and information from this main report has been drawn to produce individual commodity reports.

This is the report for carrots.


2 Carrot export and trade

The Australian carrot export landscape has experienced strong growth prospects driven by Western Australian

exporters into Middle East markets. The carrot industry, as part of the wider vegetable industry has a strong

peak industry body that has been working with governments to secure and improve technical market access.

In 2020 Australia exported 113,337 tonnes, or around 34 per cent of its fresh carrot production, which was a 4

per cent increase by volume from the previous year and valued at AU$71million. The trade has been

consistently above 100,000 tonnes for several years and is the largest vegetable export product by volume

and value. Almost all exports are by sea and have been largely unaffected by COVID-19 impacts.

Despite strong performance in Middle East markets and in Singapore and Malaysia carrots have been limited

to no trade into the main Asian protocol markets. There are trade restricting measures in several markets and

carrots are prohibited from entry into China although market access negotiations are pending.

China is the world’s largest producer of carrots and also is the main competitor in most Asian and Middle East

markets, exporting more than 700,000 tonnes into the region.

The volume and unit value of carrots exported from Australia, the importance of each market to Australia and

Australia’s relative position in each market are presented in Figure 2-1 and Table 2-1. These illustrate the

importance of strategic markets to Australia, and also highlight the lack of trade to strategic protocol markets.

While Australia has up to 50 per cent market share in some non-protocol markets, the presence in the main

Asian protocol markets is limited.

Figure 2-1: Volume (tonnes) of Australian carrots exported

- 5,000 10,000 15,000 20,000 25,000 30,000 35,000

China

Japan

Viet Nam

Indonesia

Thailand

India

South Korea

Phil ippines

Taiwan

New Zealand

United States

Canada

United Kingdom

Hong Kong

Singapore

Malaysia

United Arab Emirates

Saudi Arabia

Qatar

Rest of World

Tonnes

Markets in Study

Other Significant

Markets


Table 2-1: Importance of each market to Australia, and of Australia to each market.

The “Listed Countries” include all the markets that are have been included in this NTM assessment, which

includes most of the regulated markets in Asia in addition to New Zealand, United States, Canada and United

Kingdom.

The “Other Significant Markets” include the unregulated markets in Asia and the Middle East where there are

fewer trade barriers to inhibit trade other than logistics of distance, distribution and market competition.

The “Export Tonnes” for Australia is the latest Calendar Year 2020 data while the “Total Tonnes Imported” is

the measure of imports recorded by each market from all origins for the 2019 Calendar Year since the 2020

data was not released at the time of writing. The market share is thus indicative allowing for some differences

in the reporting periods and reports methods. The table is ranked according to total horticulture exports and is

consistent for all products.

Australian carrot exports to Indonesia increased 10-fold in 2020 though only to 369 tonnes and was the only

recorded supplier to the market although China has supplied Indonesia in previous years. Similarly, Australia

was a key supplier to Taiwan, albeit at low volumes, when the market is open to imports to supplement the

local suppliers particularly in periods of adverse weather.

Listed Countries Export

Tonnes

(2020)

Share of

AUS export

Unit Value

FCR

Total Tonnes

Imported (2019)

Indicat ive

Australian share

of market

China 0.0% $0.00 96 0.0%

Japan 1,702 1.5% $0.83 82,922 2.1%

Vietnam 0.0% $0.00 30,845 0.0%

Indonesia 369 0.3% $0.68 36 1025.0%

Thailand 2,803 2.5% $0.63 111,141 2.5%

India 0.0%

South Korea 0.0% 105,342 0.0%

Philippines 2 0.0% $5.00 158 1.3%

Taiwan 930 0.8% $0.61 1,149 80.9%

New Zealand 0.0% 26 0.0%

United States 0.0% 229,136 0.0%

Canada 0.0% 113,021 0.0%

United Kingdom 0.0% 39,529 0.0%

Other Significant Markets

Hong Kong 4,532 4.0% $0.68 14,362 31.6%

Singapore 13,661 12.1% $0.65 25,426 53.7%

Malaysia 15,024 13.3% $0.63 92,209 16.3%

United Arab

Emirates 31,622 27.9% $0.61 89,453 35.4%

Saudi Arabia 21,279 18.8% $0.64 57,697 36.9%

Qatar 9,564 8.4% $0.61 21,168 45.2%

Rest of World 11,848 10.5% $0.61 1,644,919

Export Trade 113,337 100.0% $0.63 2,658,635 4.3%


3 Identification of NTMs

Australian carrots are subject to a total of 17 NTMs across the 13 markets reviewed. The distribution of these

NTMs is displayed in Figure 3-1.Taiwan imposes the highest number of NTMs (9) followed by South Korea (3)

and Thailand (2).

Figure 3-1: Number of carrot NTMs per country

All of these NTMs relate to sanitary and phytosanitary (S&PS) measures (UNCTAD Chapter A) (as shown in

Figure 3-2) and are largely due to the number of quarantine pests of concern.

Figure 3-2: Number and type of S&PS NTMs (UNCTAD A) applied to Australian carrots

Pests (A11), 3

Geographical restrictions on eligibility (PFAs) (A12), 1

Systems approach (A13), 1

Hygienic requirements (A4), 1

Product registration and approval requirement (phytosanitary certificate and inspection requirements) (A8), 7

Traceability requirements (regarding origin of product, processing and distribution) (A85), 4

N T M S O F C O M M E R C I A L S IG N I F I C A N C E T O C A R R O T S 1 0

Pests of quarantine concern to countries are identified as UNCTAD chapter A11 (prohibited for phytosanitary

reasons). Taiwan is the only country of those reviewed that has pests of quarantine concern. The pests of

quarantine concern for carrots include:

Burrowing nematode (Radopholus similis)

Stem nematode (Ditylenchus dipsaci)

White fringed beetle (Naupactus leucoloma).

Countries that have significant numbers of quarantine pests commonly develop a protocol to enable trade of

horticultural product to continue under strict conditions despite the presence of these pests in the exporting

country (Australia). The protocols contain processes and requirements (NTMs) that provide confidence to the

importing country that despite the presence of the quarantine pest in the country of production, systems have

been implemented that ensure that the product is free of the pest. Typical NTMs applied to protocol markets

include:

A systems approach (application of IPM approach in orchards)

Traceability requirements (record keeping and registration of growers and packhouses)

Treatment for elimination (irradiation, fumigation and cold/heat treatment)

Conformity assessment (such as inspection requirements and phytosanitary certificates).

Common NTMs applied by a protocol market are shown in Figure 3-3.

Figure 3-3: Where NTMs are applied in the export of Australian horticulture to protocol markets

Six of the reviewed markets have a protocol in place for the import of carrots from Australia. These include

Indonesia, Japan, South Korea, the Philippines, Taiwan and Thailand. Importing Australian carrots is prohibited

by Canada, China, India, New Zealand and the United States. The United Kingdom and Vietnam allow the

import of Australian carrots, but only through various quality assurances that make exporting carrots to the

United Kingdom or Vietnam not viable for Australian carrot producers.


Table 3-1 provides a summary of NTMs by country according to the UNCTAD international classification of

NTMs. The NTMs identified during consultation and desktop research have been classified by chapter and

then by specific chapter. For ease of use the NTMs have been summarised and the terminology has been

modified. The full list of NTMs classified by product, country, UNCTAD chapter and the specific reason for that

chapter (i.e. type of pest) is provided in the NTM Database available from Hort Innovation on request.

The prevalence and impact of these NTMs across the Australian horticulture industry was explored during

stakeholder consultation with the key themes and impact discussed in Section 4. NTMs of particular concern

for the carrot industry are discussed in Section 5.


Table 3-1: Summary of NTMs applied to carrots by 13 export markets

Country China Japan Indonesia South

Korea

Thailand Canada New

Zealand

Philippines Taiwan Vietnam India United

Kingdom

United

States

Total NTMs 1 1 3 2 1 9

UNCTAD

CHAPTER

DESCRIPTION

A Sanitary and phytosanitary measures 1 1 3 2 1 9

A11 Pests 3

A12 Geographical restrictions on eligibility (PFAs) 1

A13 Systems approach 1

A4 Hygienic requirements 1

A8 Product registration and approval requirement

(phytosanitary certificate and inspection

requirements)

1 1 1 1 3

A85 Traceability requirements (regarding origin of

product, processing and distribution) 1 1 2


4 Impact of NTMs

Extensive consultation with stakeholders across the 13 horticulture industries reviewed identified a number of NTMs (and other industry issues) commercially

impacting on the export of Australian horticultural product. These are listed below and discussed in further detail in Table 4-1. Commercial impacts on industry

predominately relate to:

The use of inaccurate or out of date information in protocols

Inefficient processes and lack of information regarding common export procedures

Politics impacting on trade (including the use of quotas)

The cost of meeting protocol requirements including treatment of product, certification and packaging requirements

Resource and logistic limitations

Industry capacity and readiness to export.

Table 4-1: NTMs of commercial significance

NTM EXPLANAT ION IMPACT

Maximum Residue Limits (MRLs)

MRLs were identified as a current and emerging issue for export of Australian horticultural commodities. The most difficult aspects of MRLs to manage are:

▪ Sudden changes to MRLS – product might already be in transit when changes occur which will mean that product will be rejected at the importing country

▪ Countries with ‘positive’ lists – if chemicals are not listed and it is found during testing it is assumed that there is a zero MRL for these chemicals

▪ Exclusion of certain chemicals widely used in Australia – apples are commonly stored for long periods in Australia using 1-MCP. However, this product is not permitted in Europe. 1-MCP seeps into wood and walls therefore new storage facilities need to be built if exporters wish to send product to European markets

▪ When supermarkets dictate the MRLs – for example a number of European supermarkets (such as Tesco) will identify the MRLs they will accept, and this is usually based on European standards. They will then extend these limits to other countries where their supermarkets are based (such as Asia). These MRLs are highly restrictive

▪ CODEX – not all countries are members of CODEX. Codex standards and related texts are voluntary in nature. They need to be translated into national legislation or regulations in order to be enforceable

▪ MRL testing time in important countries – consignment can be held for up to 4 days while testing of produce sample is undertaken (e.g. China, Taiwan).

▪ Rejection of product at importing country

▪ Difficulty meeting set MRLs due to differences in permitted pesticide usage between countries

▪ Need to build new facilities (i.e., apple storage sheds).



Resource/logistic

limitations Resource limitations impact on the ability to export fruit efficiently in a number of ways including:

▪ Authorised Officers – within Australia there are limited numbers of officers to sign off on required processes (e.g. melons for Japan), protocols can be interpreted differently by authorised officers due to ambiguity in the wording, and the fee provided to officers (by importing country) may be quite low which means that it can be difficult to obtain their services in a timely manner (e.g. onions). While the authorised officer program has been a positive (e.g. table grapes) some countries don’t accept this (Korea only wants Korean officers to authorise)

▪ Ports – Brisbane port was quoted as struggling to manage the volume of horticultural product during peak periods of export (e.g. citrus)

▪ COVID – the reduced number of flights, particularly out of Melbourne, has impacted on the ability of exporters who rely on air freight to deliver product (e.g. cherries)

▪ Treatment facilities – while there are now two irradiation facilities (one in Melbourne and one in Brisbane) the Melbourne facility has not been approved by Vietnam which means that fruit imported by this country must still go through the Brisbane facility. This can create delays during peak export season.

▪ Delays in transport and delivery of commodity after harvesting leads to reduced product quality at market and potential reputation damage.

Currency and accuracy

of protocols

The currency of information used for developing protocols can be an issue. Where incorrect (or non-

relevant) information has been used to develop protocols it creates unnecessary challenges and cost for exporters. This can include:

▪ Requiring treatment for pests on commodities that are not hosts – for example avocados are not recognised as a host for fruit fly in Australia but the protocol for some importing countries (NZ) requires that avocados are treated to ensure no presence of fruit fly

▪ Inconsistency between countries regarding treatment/acceptance of fruit fly – one county might recognise pest free areas (PFAs) but others not. Importing countries have different expectations regarding the information required to gain market access and demonstration of freedom from certain pests. It would be helpful to have consistent international standards regarding this and ensure that protocols are based on modern science. Some treatment requirements act as a “barrier” as they impact produce quality (e.g. fumigation or cold treatment of cherries (Taiwan protocol requirement)), where the preference would be for irradiation

▪ Outdated protocols – the protocol for export of Australian grapes to the US identifies that a systems approach (including fumigation) must occur to ensure grapes are free from Light Brown Apple Moth (LBAM). Previously the US did not have this pest but now they do

▪ Only permitting certain varieties - Japan will currently only accept Red Globes, Crimson, Thomson seedless (95% of export varieties). Growers would like to export other (potentially better) varieties but the protocol has been established for these varieties only. However, other countries (such as Chile) can send other varieties.

▪ A systems approach (including treatments such as fumigation) can reduce the attractiveness of products to consumers (people don’t want to eat highly treated products).

▪ Requiring extra treatments and processes can increase costs for Australian exporters and reduce their cost competitiveness against competitors such as Chile and Peru.



Politics impacting on

trade

Where political relationships have deteriorated between Australia and other countries there is a concern

that NTMs could be used to stop trade. China was commonly cited as the biggest concern, where a small incident/breach could stop trade. Examples cited included:

▪ The requirement for 100% inspection of consignment on arrival which would result in time delays

▪ Request for COVID safe certificates.

▪ Export of product to countries such as China could reduce or stop. Exporters may see China as too high risk.

Protectionism (domestic

policy within importing countries)

Actions by governments to support domestic production and/or encourage use of local production ahead

of imports can impact market access and opportunity. This is particularly evident in Indonesia and Thailand where an import quota system is used. This can:

▪ Reduce the volume of product that can be exported to these countries

▪ Create uncertainty as quotas can be changed without much notice

▪ Affect who can accept product - if the quota is managed in country it may be offered only to certain importers. Exporters in Australia then have to know whether the importer has a quota or not.

▪ Growers and exporters are unable to forward plan as quotas are changed at the last minute.

Industry capacity/readiness to export

Some horticultural industries do not have the capacity or ‘readiness’ to export. This can include:

▪ Not growing suitable varieties for export markets – for commodities such as apples this can take forward planning as trees take several years to mature

▪ Opportunistic trading – focussing on prices received for product (which in the short term may be better) rather than building relationships with importers (for long term trading gain)

▪ Lack of business skills – particularly at developing relationships. Examples were discussed where good relationships have helped get products through despite difficult protocols for product going to Thailand

▪ Lack of available resources – such as dedicated industry export officers (citrus, table grape) or export readiness focused programs (apple and pear). This also impacts on an industry’s ability to undertake relevant R&D to support market access / protocol development.

▪ Reduced level of export

▪ Focus on domestic markets (and potential for over-supply)

▪ Difficulty in establishing long term trading partners

▪ Lack of investment in export suitable varieties

▪ Lack of understanding of the requirements for exporting.

Packaging Packaging and labelling requirements can increase costs to growers and exporters due to:

▪ Netting requirements - during transit to prevent fruit fly re-infestation

▪ Protocols - requiring the name of market to be printed onto the package label or carton (i.e. product packed for Taiwan). Once printed these labels can’t be changed. However, if a decision is made to send the product elsewhere then these labels can no longer be used and the product has to be re-packed with new labels

▪ Excessive labelling requirements - beyond what is required for normal trade/traceability/protocol. For example Korea requires individual labelling specific for each importer on every carton, even though relevant information is printed on pallet.

Counterfeit packaging/labelling - also has the potential to damage the reputation of Australian produce.

▪ Increase in costs reduces ability of growers/exporters to compete against other countries.



Inefficient processes Inefficient processes lead to frustration, time delays, increased costs and lost opportunities for industry.

Examples of where these inefficient processes were most noticeable included:

▪ Time taken - to negotiate market access (industry would like to be more involved in this process to ensure that protocols are commercially viable)

▪ Need for a physical phytosanitary certificate and country of origin certificate - which could get lost – electronic would be better

▪ Level of documentation - required to meet protocols, QA programs, and other government regulations. For example the level of documentation required for separate QA systems (e.g. HARPS, Global GAP). A standard Australian standard (with 'bolt-ons') that is accredited by the Australian government (similar to what Europe does) would be better

▪ Lack of standards/processes - at airports to ensure that produce isn’t negatively impacted in transit e.g. produce can be left on a tarmac for hours at a time. Los Angeles International airport (LAX) was provided as an example of how produce can be taken care of in a way that protects shelf life and quality.

▪ Lack of market access

▪ Protocols which are not commercially viable

▪ Added levels of bureaucracy and documentation that increase costs and time.

Lack of, or incorrect information

Due to the number of stakeholders involved (both in the supply chain and at a government level), cultural differences, and geographical distances the accuracy of information and the ability to verify it were often cited as issues which hampered the export of horticultural product. Examples included:

▪ Ability to resolve disputes - around rejection of product at the importing country – without representation in the country it is difficult to verify the claim

▪ Information available - to growers seeking to export on requirements (often they go to those already exporting to find out information). MICoR was seen to have improved but still missing all the information required

▪ Need to improve frequency and clarity of communication - between DAWE and other government departments (such as AUSTRADE) and industry.

▪ Potential rejection of shipments

▪ Low numbers of growers seeking to export (as it is seen as too difficult)

▪ Potential for frustration, delays and extra cost.


5 Focus NTMs for carrots

Carrots are one of the main vegetable exports from Australia, primarily from Western Australia, with the

majority exported to the Middle East (i.e. non protocol countries) and some SE Asian countries (e.g. Singapore,

Malaysia).

Airfreight costs, particularly since the COVID pandemic, were noted as a particular challenge for carrot

exporters.

While not directly raised in relation to carrot exports, other issues noted by vegetable industry stakeholders

may also be relevant, including:

MRLs

Quotas (e.g. Indonesia) and import permits (e.g. Philippines)

Markets chancing from non-protocol to protocol (e.g. Malaysia).

If other non-phytosanitary markets like Malaysia follow the same path (become phytosanitary markets) than it won't be possible to send there either


This report has been prepared by:

RM Consulting Group Pty Ltd trading as RMCG

Level 1 East, 1100-1102 Toorak Road, Camberwell Victoria 3124

(03) 9882 2670 — rmcg.com.au — ABN 73 613 135 247

Offices in Victoria, Tasmania, ACT and NSW

▪

Key RMCG contact

Dr Kristen Stirling

0488 908 416 — [email protected]

Document review and authorisation

Project Number: #836

Doc Version Final/Draft Date Author Project

Director review

BST

QA review

Release

approved by

Issued to

1.0 Draft 22/02/2021 K. Stirling

E. Tee

C. Wilkens

W. Prowse

A.M. Boland M. McIntosh A.M. Boland A. Baker

NTMs of commercial significance to carrots - RMCG

Documents

Transcript of NTMs of commercial significance to carrots - RMCG