The horticulture sector can expect gradually increasing returns over the medium term, with the gross value of horticultural production growing from a projected $9.5 billion in 2014-15, to $9.8 billion by 2019-20, in today’s money.
The sector will be buoyed by the weaker Australian currency and increasing opportunities in Asia, as free trade agreements with Korea, Japan and China take effect and see tariffs pared back or eliminated.
The weaker currency is also expected to boost the fortunes of Australian processors. But ABARES warned imports, predominantly of processed product, will continue to increase strongly and that will continue to bring pressure to bear on the sector locally.
The value of fruit and nut production, excluding wine grapes, should remain steady next year at around $4.2 billion after increasing about 7 per cent this financial year.
The gross value of vegetable production is also forecast to improve in line with domestic market requirements, to around $4.3 billion in 2019-20, ABARES says. That continues a trend over more than a decade that saw overall vegetable value increase from $3.2 billion (in today’s money) in 2000-01, to almost $4 billion in 2012-13.
Fruit exports should also keep increasing in the medium term, continuing a growth trend recorded over the past four years that saw fruit exports grow by $240 million between 2010-11 and 2013-14, in today’s money. Fresh grape exports ($146 million), all citrus ($56 million), cherries ($26 million) and mangoes ($10 million) all recorded strong export value growth over that period.
That was a significant turnaround after a decade of decreasing fruit exports overall.
ABARES said the value of Australian fruit exports will strengthen a little to $732 million in 2014-15, and increase slowly to around $750 million (in 2014-15 dollars) by 2019-20.
Orange, apple and other fruit juices dominated the fruit import category in 2013-14, and ABARES estimates that imports of processed fruit products have increased from $445 million in 2001-02 to $757 million in 2013-14.
In the fresh category, kiwifruit, oranges, grapes and avocados were the largest imports in 2013-14, with the United States the biggest player by value. The US primarily sent counter-seasonal citrus, grapes, peaches and cherries to Australia in that period, and ABARES notes that the demand for counter-seasonal fresh produce in other countries presents an opportunity for Australian horticultural exporters.
Vegetable exports were 8 per cent higher in the first half of 2014-15, largely thanks to the weaker Australian dollar, and ABARES says that trend should continue for the rest of the year.
While vegetable exports contracted from $470 million in 2000-01 to $277 million in 2013-14 (in today’s money), ABARES is tipping that decline will slow down over the medium term, as the weaker Australian dollar makes Australia more competitive in export markets, and as tariff reductions in Korea, Japan and China start to flow through.
But the forecaster warns Australian exporters still have “limited capacity” to compete with low-cost exporters, despite the weaker dollar, and the value of vegetable exports should stabilise around $300 million in today’s money, out to 2019-20.
Imports will continue to be a factor in the vegetable category over the medium term, dominated by processed vegetables from New Zealand, Italy, China and the United States. Processed potatoes, beans and tomatoes are the most significant imported products, with tomato ketchup and other sauces also imported in large volumes.
ABARES reports that all vegetable imports grew to $882 million in 2013-14; just 8 per cent of that, or $71 million, was fresh produce.
Australia exported more than twice the value of fresh vegetables as it imported in 2013-14.