“Having a methodical and committed approach ensures sales are there when we need them”
A major Australian strawberry grower says that while the industry as a whole needs to support export growth, not every grower needs to supply overseas markets to get better prices and create additional sales opportunities.
Jamie Michael is a director at Ti Produce Marketing Pty Ltd, based in Western Australia, which grows and wholesales strawberries for the domestic market and exports across Asia, the Middle East and New Zealand. He says that while Australia has a good reputation in the international market, so do many other countries, adding that it would be a bad idea if everyone chose to export as it would create competition between them. when there is enough international competition as there is.
“Exporting perishables is both risky and expensive, so why bother?” he said. “It’s the same reason why we don’t sell all of our fruit to the place closest to where we produce – if we spread the total production of the country over the largest population base, everyone gets the best performance. The industry just needs everyone to support export development and support every opportunity to reap the rewards from the domestic market and ensure that the need to serve a broader population base is met by someone whose the whole industry will benefit from exports. . We must not just provide exports when there is oversupply and prices are cheap and then stop when things improve. Export markets are no different from Australian markets – consistency is key. Having a methodical and committed approach ensures sales are there when we need them. The dumping of fruit in export markets actually causes more damage than we get out of it.
Mr. Michael explained that unless you have a unique and exclusive product and full control over where and how it can be sold, it will behave like any free market, following the rules of supply and Requirement. He warned that export prices may not always match domestic prices because in Australia there are obstacles for importers such as quarantine and logistics which means the price is too high for d other countries export their fruits to the country. Abroad, there is potential for competition with cheaper fruit.
“This means that most export markets will generally pay the same price as the domestic market for similar, freely available products,” he said. “If an Australian product returns a higher price overseas than here, then an exporter will take a product from here and send it overseas. Less supply of fruit here and more supply of fruit abroad means the price here goes up and down there until we reach equilibrium – the net export return ends up pretty much equal to the net return in the domestic market. ‘export significantly higher than domestic prices for a long time. This means that having a strong export sector is often overlooked as they are often not obvious or apparent. The benefits are definitely there because if we consider at the height of the season what would happen if we add the export volumes in the domestic market, then we can think about the export benefits.
Ti Produce began in 2003, sourcing produce from local growers in Western Australia and exporting it overseas, not only strawberries, but also melons and mangoes to the United Arab Emirates, fruit to core in Hong Kong and China, as well as Pink Lady apples in the UK. According to Michael, soon after, supply-side factors, a strengthening domestic market and international competition led them to withdraw from apples and stone fruits to specialize in strawberries.
“We thought that was where the growth opportunity was in terms of creating a more cohesive export market for strawberries,” Michael said. “We were geographically and logistically well placed, and our peak season coincided with a gap in the market between the US and New Zealand seasons, and it was really underserved from Australia. However, exports were risky, freight was expensive and raising money Very often producers only really turned to export when there was a glut in the market, but because (export) markets weren’t being served consistently with the right quantity, importers were quite predatory when dealing with our product, so complaints were high and prices were low, and we weren’t maximizing our potential.”
The company says a key part of its strategy was to build its reputation and market share in its existing markets, especially as the Middle East opened up and Thailand signed a free trade agreement. . Mr. Michael says that after increasing promotional activities in the market, the industry was rewarded with greater confidence and began to receive more regular import programs. Fifteen years ago, Ti Produce launched its own strawberry production to support its supply base and give it the opportunity to engage in foreign markets, so that it has its own fruit and consolidates the fruit of other producers. It also acts as a service and processing provider for other exporters to strengthen supply chains.
Image source: TiProduce website.
But he admits that the last few years have been particularly difficult for all export programs due to the COVID-19 pandemic, where the lack of flights and up to five times the cost of sea transport have also led to a lack of consumer confidence. This has limited opportunities, but maintains that exports are still a valuable part of the industry in the future and should be maintained and strengthened.
“We are currently paying the highest airfreight prices in 25 years,” Mr. Michael said. “So we have up to six times the increase in freight costs compared to the pre-COVID period. This, coupled with our record farmgate prices, will most likely see the lowest export tonnage since we started. There are challenges for us, but despite this, the interest of overseas customers is still very strong and understands the rising costs that producers are facing, and they factor higher prices into their programs and are testing higher retail prices to see how they can make things work and Exporting will be tough for the next few years, but as long as the industry continues to focus on producing the right product, to go moving forward in opening up new markets and continuing to support our old ones, exporting will be an important relief valve in the years to come.”