Northern Territory Seafood Council Export Strategy

Executive Summary December 2020 Executive Summary

2 Background and context of the engagement Over 8 weeks KPMG assessed the export potential for Northern Territory seafood and in doing so identified the ambition, current challenges and risks, but most importantly opportunities. Key initiatives were defined and mapped over the next two years for Northern Territory Seafood Council (NTSC) to execute.

WHY? HOW? There is an opportunity to crystallise NT seafood assets into a significant COVID-19 rebound opportunity. Darwin is the closest Australian capital city to growing Asian markets, connected through a 24/7 international airport and the only functional 8 weeks deep water port in Northern Australia. The Northern Territory Government has set a Q: What is the export potential for Northern Territory seafood, and if so 1 target to double economic growth by achieving at least 5% growth per annum . where?

Currently there is no strategic process to enable opportunities to be identified and 1 Inception and Market Assessment capitalised upon within the NT seafood industry. Six of the key wild catch fisheries (Aquarium, Coastal Line, Mud Crab, Offshore Net and Line, Spanish Mackerel, and This phase included; desktop research and analysis on the current state Trepang Fishery) are export approved and Barramundi Fishery has expressed of NT fisheries, analysis of participation of NT seafood exporters in interest in export markets. international export markets, assessment of market opportunities and stakeholder engagement. 2 WHAT? Opportunity and Gap Analysis KPMG has been engaged by the NTSC to lead and manage the engagement This phase included; workshop with wide range of stakeholders to gain including in depth industry stakeholder consultation and desktop research to support and prioritise key markets, identify NT seafood industry gaps understand the current situation and advise future opportunities. and areas/opportunities for improvement and understand risks involved with exporting from the NT. We conducted workshops and focus interviews to gain a detailed understanding of the NT seafood industry (and NTSC members) current state of operations, 3 Strategy and Roadmap Development identifying the step changes needed to improve and invest in for change over a eight week period. This phase included; development of the strategy identifying export objectives and opportunities in priority export markets, case study ‘success stories’, fisheries dashboard snapshots and a roadmap of initiatives over the next 2 years.

©2020 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 3 The opportunity to export seafood It is well known and appreciated that the NT is a unique and diverse part of Australia, with this uniqueness comes huge competitive advantage and opportunities that are yet to be tapped into for the seafood industry. The Territory has the space, capacity and resources to grow significantly with the right investment, and in doing so offers mutual benefits to many NT industries and contributes to ambitious economic growth targets.

HOLISTIC OPPORTUNITY EXPORT OPPORTUNITY

. Agribusiness is a culturally significant and valuable STRATEGIC LOCATION industry to the Territory. Ingrained in the culture of • many Territorians with an estimated value of $700 million The location of the Territory and its proximity to fast growing, and lucrative Asian markets offers promising opportunities to grow the presence of NT seafood and agricultural products. annually, it accounts for nearly 3% of Territory’s gross state product (GSP). Primary industry and fisheries also • The NT already has strong, historic trade relationships with its northern neighbours and within six hours air travel there are account for a significant proportion of the Territory’s non- 485 million people and strong demand for high quality seafood products. mineral export revenue. . Primary industries and fisheries are vital to many GROWTH CAPACITY remote communities and have significant links to other supporting sectors of the local economy, such • With abundant and valuable natural resources, including its seafood species, the NT has exceptional investment and growth as manufacturing, transport, packaging and distribution, potential in many industries. retail and wholesale trade. These industries are • With significant land and water resources there is space and capacity to grow, with ambitious plans to do so. fundamental to regional areas, providing economic opportunities and employment for approximately 2,410 • The Territory is relatively young compared to the rest of Australia so it can learn from other regions to accelerate growth and capitalise on these incomparable opportunities. people representing 1.8% of the NT workforce. . It has been identified as a significant investment and growth industry for the NT’s economic MUTUAL BENEFITS development. The NT Government is focusing on improving critical inputs for agribusiness namely water • With the opportunity to expand export brings additional benefits to the NT economy, development and many sectors. Some of which include: and infrastructure needs. There are also plans to improve agribusiness supply chains, increase resilience of the o Increase Indigenous communities participation in the seafood industry; workforce and enable producers to capitalise on emerging o Collective benefits of infrastructure and logistics networks; technologies. o Seafood is of local significance with an established tourism market including the “Support NT Caught” brand that can be derived into global markets. ©2020 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 4 Understanding NT Seafood Industry The NT seafood industry is made up of wild caught fisheries (commercial fishing) and aquaculture (farmed).

WILD CATCH AQUACULTURE Overview: Overview: FAST FACTS: • The gross value of production (GVP) of • The value of aquaculture production in the FAST FACTS: wild caught seafood in the Northern NT decreased by 26% in 2017–18 to Aboriginal Land Territory increased by 9% in 2017-18 $25.6 million following a higher than Rights across 85% reaching $47.8 million, outpacing average production value of $34.4m 2016- of the NT’s National GVP for wild-catch at 3% in 17. Over the longer term, the value of Farmed Barramundi is a key coastline the same period. Over the longer term, aquaculture in the NT grew by 2% from seafood product with a value NT wild catch fisheries have 2008-18. of $22.8m Mud Crabs are a high experienced a compound annual • Despite the low growth in this emerging value species with a growth rate of 5% over the ten year sector, confidence is strong and supported Home to Australia's Every $1m created in value of $9.8m period to 2018. output value from by investment in large scale projects. largest producer of NT is home to fishing creates • A number of niche species have also Barramundi and aquaculture • The major aquaculture activities for the programs of $400k in the rest of been identified as having growth 40% of Australia’s 2 Northern Territory include Pearl Oyster farmed Barramundi Giant Clams the NT economy potential and established demand in (Pinctada maxima) culture and Barramundi is produced from Black Jewfish swim- export markets. These include Trepang, farming (Lates calcarifer), in addition to a the NT bladders are worth Pearl Oyster meat, Black Jewfish between number of other species. Other Finfish are $500-$900/kg bladder and Shark fin. growing strongly and Total value of worth $15.5m FISHERIES: FISHERY AND SPECIES GROWN • AQUARIUM • PEARL OYSTER • PEARL OYSTERS • BLACK LIPPED $25.6m Emerging species for Aquaculture commercial production Total value of OYSTERS • BARRAMUNDI • OFFSHORE NET and • BARRAMUNDI programs of include Trepang, Pearl $47.8m LINE • TREPANG propagated corals w/ Oysters and Black • COASTAL NET • GIANT CLAMS heavy investment in Jewfish • SPANISH • ORNAMENTAL R&D to improve • COASTAL LINE MACKEREL PLANTS and FISH 14 wild production. Total volume of • DEMERSAL • TIMOR REEF catch Total volume of 2,342 tonnes fisheries 6,224 tonnes • MUD CRAB • TREPANG

©2020 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 5 What we heard from industry – opportunities The industry has expressed positivity for the opportunities that export could provide to the Territory including upskilling, improved industry collaboration and marketing benefits.

Create ‘brand NT’ leveraging Australia’s reputations globally around clean, safe and OPPORTUNITIES Emerging product opportunities and healthy seafood investment in aquaculture

Focus on high value, niche products that Opportunity to collaborate and create an NT Leverage recent investment in cold storage are considered premium in export markets industry brand and product/s and a vapour heat treatment infrastructure to support export

Shared responsibility between government Explore new and emerging premium agencies and industry to promote Australian Focus on available freight space is needed product options to support growth e.g. seafood in global marketplace to get product to market Barramundi swim bladder

Support and create opportunities for Upskill industry about how to become ‘export Further understanding of export markets Indigenous participation and economic ready’ development of Indigenous businesses by the industry

Collaboration between complimentary There is untapped demand for Australian Leveraging the potential for further processing to occur locally, opening producers to consolidate volumes and export seafood products in the global market by larger volumes of products to customers leveraging existing trade relationships opportunities to value add to products

“In a few years Darwin will be a different “Export opportunities would be viable if we “We need to articulate brand "NT" - telling the story will place, there are new trade opportunities” could rent a co-share space for processing” help promote our high quality and high value products”

“There are examples of companies already “NT seafood has an established 'brand' of “Export markets are important for reducing exporting out of the north” clean, fresh, delicious and sustainable” seasonal demand swings” ©2020 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 6 What we heard from industry – challenges The industry acknowledges there are multiple hurdles to overcome and substantial risks threatening the social license to operate and accessibility to waters, however overall the attitudes are receptive to potential to improve export and willing to work together to make it happen.

Lack of cost effective, frequent air freight CHALLENGES Uncertainty around Blue Mud Bay options to support export growth from Darwin negotiations and access to fishing grounds

Siloed behaviour and lack of collaboration as Lack of volume and consistency of supply Lack of industry/‘brand NT’ marketing, to compete and meet demand in export an industry; culture of ‘this is how we have Australia’s presence is minimal at global events always done it’, no consolidation of produce markets, need to focus on niche, high value products in order to have a competitive Maintaining quality and integrity from advantage Understanding and acquiring knowledge production through to export market e.g. about the intricacies of export/target Careless handling and durability of storage Increased geopolitical risks as seen with market dynamics and keeping on top of on board due to only narrow body aircraft recent commodity trade wars between Australia shifting demand in both domestic and export being available (no air cargo containers to and China markets secure cargo onboard)

High costs for private, small business to invest Some products are prohibited in certain high Securing export licenses and vessel export to train staff and upgrade equipment value markets (e.g. China list) accreditation

Limited infrastructure to support local processing into high quality, value add Lack of knowledge, strategy and what is products prior to export (have to transport Access to skilled and reliable labour interstate) required to be ‘export ready’

“Fishing industry do not work together at all. “Quality of crew and quality of catch are both “Many small operators so we struggle to get That's a big problem that drives inefficiency and major problems for us” economies of scale for export” costs us money” “A lot of people view export markets as way of “We need to show that we are dependable and “The gap is getting the product dumping product to avoid detriment in local market” consistent in supply when undertaking any exporting’” processed and export ready” ©2020 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 7 Top 10 export markets identified Using the agreed core assessment criteria, which focuses on the ease of trade and attractiveness of the market, the key export markets were assessed and top 10 identified. These markets were validated through consultation with industry, government and commercial stakeholders, in addition to desktop research.

Core criteria used to prioritise markets Singapore Malaysia

Existing path to market

Hong Kong Vietnam

Established trading partner

Japan Indonesia Low barriers to entry

Seafood consumption/demand South Korea Taiwan

Export potential for Australian seafood products China USA

©2020 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 8 NTSC Export Strategy on a page Winning in export for the Northern Territory is enabling export capabilities through improved industry collaboration, articulation of the brand story and enhancing relationships; forming the foundations to achieve the goals of sustainability, consistency and high quality. THE AMBITION STRATEGIC GOALS

Winning in export for the Northern Territory is: SUSTAINABILITY CONSISTENCY HIGH QUALITY To be renowned in global markets for our pristine and pure environment extending Assist industry in beyond our shores and into our fisheries. Enhance and safeguard our articulating and Support the producers to position as the voice for capitalising on ‘brand Working collaboratively as an industry to enable consistent supply in the seafood industry Australia’, to enable them share our sustainable and high quality NT order to expand to export reinforcing their social to share their high quality markets seafood products with the world to license to operate seafood with global support growing protein demand markets

STRATEGIC OBJECTIVES

01.CURATE and PROMOTE THE 02. STRENGTHEN INDUSTRY 03.ENHANCE PARTNERSHIPS INDUSTRY BRAND ALIGNMENT and READINESS and RELATIONSHIPS

We will curate and optimise our industry value We will support the development and embedding of a We will continue to build on and invest in establishing proposition by clearly defining and investing in our resilient and open mindset to collaborate and align on mutually beneficial partnerships and relationships that brand story, leveraging existing reputation in export the changing needs of our members and to build will reinforce and influence export growth. markets. collective success.

Sustainability Consistency High Quality Sustainability Consistency High Quality Sustainability Consistency High Quality         

©2020 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 9 Strategic objectives and initiatives developed With a focus on improving supporting infrastructure, logistics, industry culture, collaboration and economies of scale, seven initiatives have been developed. These initiatives are aligned to high level strategic objectives for the next two years to further enable export capabilities.

THE FUTURE OPPORTUNITY STRATEGIC OBJECTIVES STRATEGIC INITIATIVES

• There is opportunity to improve the marketing of Initiative description Northern Territory seafood in export markets by 01.CURATE and PROMOTE THE curating a brand story that articulates the value INDUSTRY BRAND Explore the potential of a centralised proposition of sustainable, consistent and high quality 01.A ‘NT seafood’ brand for existing seafood. products • Australia has a well known and respected brand reputation in global markets, primarily Asian markets, Develop a marketing and branding for our clean, green and safe food. NT seafood could 01.B strategy for the NT seafood industry benefit significantly from piggybacking off this well established brand to compete in priority export markets. Facilitate industry knowledge uplift 02.A • There are clear benefits of improving collaboration as workshops an industry, to work together and capitalise on 02. STRENGTHEN INDUSTRY collective success by investigating options to improve ALIGNMENT and READINESS Explore best option for industry data and knowledge sharing and economies of scale. 02.B collaboration structures and implement • Knowledge uplift is integral to the success and enablement of exporting, therefore it is important to Assist members to initiate export upskill members in order to become export ready. 02.C readiness plans/strategies • Opportunities exist to improve collaboration across the whole value chain to explore synergies for export, both Establish/continue to develop within seafood and the wider agri-food community. 03.A relationships • Siloed behaviours of many small producers challenges the success of export for the whole industry; creating 03.ENHANCE PARTNERSHIPS Investigate inter-industry collaboration capacity constraints, disseminated culture and and RELATIONSHIPS 03.B opportunities knowledge gaps.