AgKnowledge® connecting agriculture

Apple and Pear Industry Situation Analysis 2020

Prepared to assist development of the Pome Fruit Industry Strategic Plan August 2020 æ Apple and Pear Industry Situation Analysis 2020

Pictures provided courtesy Nicole Giblett, Newton Orchards. ii Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ Contents

Executive Summary 2 Pome Orchard Business Analysis results 55 GLOBAL POME FRUIT SITUATION 9 Australian Apple and Pear Breeding Programs 60 Apples 1. global value and production 9 WESTERN AUSTRALIAN POME 2. International competitiveness FRUIT SITUATION 62 ranking 11 Apples 3. southern Hemisphere production 13 1. WA value and production 62 4. Varieties 14 2. regional production 63 5. yield 16 3. Varieties 64 6. trade 16 4. trade 75 7. consumption 20 5. consumption 66 Pears Pears 8. global value and production 22 6. WA value and production 67 9. southern Hemisphere production 25 7. regional production 67 10. Varieties 25 8. Varieties 68 11. Yield 25 9. trade 68 12. Trade 26 10. Consumption 69 13. Consumption 27 Pome fruit production relative to Global Apple and Pear Breeding Programs 28 other WA fruit industries 70 AUSTRALIAN POME FRUIT SITUATION 31 Pome fruit trade relative to other Apples WA fruit industries 72 1. national value and production 31 REFERENCES 74 2. state Production 32 3. Varieties 35 4. Quality 37 5. trade 38 6. domestic Market 41 7. consumption and consumer preferences 42 Pears 8. national Value and Production 45 9. state Pear Production 46 10. Varieties 47 11. Quality 48 12. Trade 48 13. Domestic Market 51 14. Consumption and consumer preferences 52

Pomewest would like to acknowledge the financial contribution by the Department of Primary Industries and Regional Development to the development of the 2021-25 Strategic Plan.

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Executive Summary This report was commissioned by Pomewest as the sub-committee of the Pome, Citrus and Stone Fruit Producers’ Committee of the Agricultural Produce Commission in Western Australia to assist in the review and design of the next Strategic Plan for 2021-25 to guide direction for the WA Pome Fruit Industry. The first stage of the project was to conduct this Desktop Review and Analysis of the current global, Australian and Western Australian market situation for the apple and pear industries. The report draws on a wide range of industry reports, some of which were conflicting, and web-based information. Globally apple and pear production and the export market is dominated by China and the forecast is for increased global production and consumption in the future. Currently Australia is only a small player in the world market and Western Australia lags behind the other Australian pome fruit producing states: the majority of apples and pears produced in Australia are sold domestically with minimal volumes exported. While there are many threats that may hinder future development of the Western Australian apple and pear industries, there are also many opportunities for the local industry to capitalise on in order to become more efficient, productive and competitive in the market. Apples World apple production continues to grow with 35 per cent growth in the past nine years to see global production reach around 80 million tonnes of apples. China dominates the industry and produces almost half of the total output, Europe produces 17%, then 5% or less is produced by the United States, Poland, India, Iran and Italy. The Australian apple industry produces 0.4% of global production and is ranked 35th in the world. Southern Hemisphere producers which include Argentina, Brazil, Australia, Chile and New Zealand account for around 6-8% of global production. Australia is the smallest producer of apples in the Southern Hemisphere producing 6% of Southern Hemisphere production while New Zealand accounts for 11%. New Zealand was ranked first in an international competitiveness ranking of apple producers in 2017-18 in terms of production efficiency, industry infrastructure and inputs, and financial and market factors. Australia was ranked in the middle one third. Australia’s values are below the world average in most of the categories of production efficiency including planting density which is almost half of the top performers and yield per hectare is also low. Global apple production has continued to rise over the years through increased yields and increased production efficiencies. In 2016 the global average apple yield was around 17 tonnes per hectare and it was largely dominated by China which has an average yield in excess of 18 tonnes/ha and increasing, while the rest of the world is below the global average. In 2019 Australia produced 310,875 tonnes of apples of which 30% was sent to be processed, 1% was exported and 69% was fresh supply to the domestic market. Australia’s apple production for the 2020 harvest is expected to be the lowest in six years. The planted area remains relatively stable for apple production at around 9,500 hectares. An average of 69% of apples were classified as Class 1.

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While the Australian apple industry is a small player on a global scale, within Australia it is a significant player in the fruit industry. For the year ending June 2019 the Australian apple industry was valued at $513 million, making it the fifth highest value fruit industry in the nation behind berries, citrus, table grapes and bananas. In terms of production volume, the Australian pome fruit industry (apples and pears) accounted for 425,000 tonnes, making it the second highest producing fruit industry to citrus. Victoria leads in apple production and in 2019 accounted for 48% of production, followed by New South Wales with 12% and then Queensland, South Australia, Tasmania, and Western Australia all producing around 10% of the nation’s apples. Western Australia’s apple production was 21,950 tonnes in 2018-19 which may equate to 550 hectares planted to apples assuming each hectare produces 40 tonnes. Production of apples in WA has declined by almost 19% during the past ten years. Western Australia has the lowest production per business in Australia. In 2018-19 there were a total of 117 apple growers in Western Australia, the majority located in the Manjimup/Pemberton region which produced 60% of the State’s apples, Donnybrook produced 21%, Perth Hills 14% and Jarrahdale/Dwellingup 5%. There are over 7,500 apple tree varieties worldwide. The most popular varieties worldwide (excluding China) include Golden Delicious, Royal Gala, Delicious, Fuji, Idared and Granny Smith. While China produces half of the world’s apples, 70% of their production is Fuji so overall Fuji comprises 43% of world apple production. In the Southern Hemisphere the most popular variety grown is Royal Gala, followed by Fuji and Red Delicious. Australian apple production for the fresh market in 2019 was dominated by Pink Lady followed by Gala and then Granny Smith. A number of newer club apples such as Jazz™, Kanzi™, Envy™, Smitten™, Rockit™ and Bravo™ have been increasing in production recently. Western Australia is the home of the Cripp’s Pink variety (sold as Pink Lady®) which is now the most widely grown apple nationally accounting for nearly a third of production, and more recently the Bravo™ apple. In WA Pink Lady is the most popular apple and Granny Smith is the second major variety. Market share of club varieties in WA is 17%, which is more than the Australian average. Apples are a widely traded commodity, with the share of exports in total global output being about 11% in 2019. Global sales were 8.2 million tonnes totalling US$7.2 billion in value. China leads the export market with a 12% share followed by the US at 10%, then Italy and Poland. Australia is a minor apple exporter on the world front with just 0.05% of world export volumes. Australia ranks 50th in quantity and 41st in value of exports. Apples will continue to be highly traded, fuelled by increasing consumption, trade liberalisation policies, and intense global and regional integration. Russia was the biggest importer of apples by volume with 701,000 tonnes followed by Germany at 603,000 tonnes which represented 16% of total global apple imports. In value terms, the largest apple importing markets worldwide were Germany ($482m), the UK ($424m) and Russia ($394m), together accounting for 18% of global imports. India also had a high growth in imports. In general imports are increasing in Asian, African and Middle Eastern countries. Imports declined in traditional apple consuming countries such as the UK. Australia was ranked at 140 on apple imports with minimal volumes of 732 tonnes of fresh apples imported in 2019 valued at $1.9m, down from the previous year, plus there were 1,001 tonnes of dried apples ($5.6m) and 24.2 mega litres of apple juice ($44.7m) imported. Only two states imported apples in 2019; Victoria made up 70% of the nation’s apple imports and NSW imported 30% of the total. Apples were imported from China (79%) and New Zealand (21%). Protocols exist to permit the import of apples from New Zealand, China and Japan and an import risk analysis is currently underway by DAWR to permit entry of US-grown apples. More than 99% of apples sold in Australia are locally grown therefore Australian apple exports remain low with 1-2% of total production exported each year. This is typically between 2,000-5,000 tonnes per year. For the year ending June 2019 Australia exported 4,416 tonnes worth $10.6m plus an additional 42 tonnes of dried apples ($0.3m) and 2.8 mega litres of apple juice ($4.9m) exported. The leading export markets for fresh Australian apples in 2019 were Papua New Guinea (23%), Italy (12%) and Hong Kong (11%), Indonesia and the Netherlands. Victoria is the leading state in terms of exports accounting for 72% of tonnes exported in 2019 and NSW contributed 14%. Western Australia accounted for 2.2% of exports. The majority of Western Australia apples are destined for the domestic market or freighted to the east coast; there is only a minimal amount sent for export. In 2019 WA accounted for 100 tonnes of fresh apple exports, 87 tonnes in 2018 and only 4 tonnes in 2017.

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Global apple consumption continues to trend upwards with the Asian market the main driver with forecasts indicating a market volume of 107 million tonnes by 2025. It is expected to continue to grow at a moderate pace following rising incomes and population growth as well as marketing programmes aimed at promoting healthy, balanced nutrition. China led global apple consumption at 48% and the other major consuming countries lagged far behind and below 4% was the US, India, Turkey, Iran, Poland and Russia. The world average for per capita consumption of apples is 12.2kg per year. Poland was the leading consuming country in 2016 at 67.5kg per year. In Asia per capita consumption ranges from as high as 18kg per person per year in Hong Kong to as little as 0.54kg in Indonesia. In 2017-18 Australians ate an average of 10.1kg of apples per year which amounted to more than one apple a week. In Australia, apples are top of the shopping list for many consumers with almost nine-in-ten households purchasing them roughly every three weeks. They are ranked as the third most popular fruit in dollar sales as apples have a diverse appeal across multiple meal occasions and seasons. Consumption of apples particularly grew in WA with an increase in sales and volume growth. The annual household volume purchased was 20.7kg in WA as opposed to other states that varied between 16.2 – 17.7kg per household. Based on the research and information gathered during the desktop review, a number of opportunities and threats were identified for the WA apple industry to consider in the review and design of the Strategic Plan.

Opportunities Trade • WA’s proximity to Asian markets presents an export opportunity to capitalise on the increase in consumption which is expected to continue to grow at a moderate pace with rising incomes and population growth and support from marketing programmes aimed at promoting healthy, balanced nutrition. • There’s growing demand and relatively high consumption of apples in India, a large country that is developing economically and they import a lot of apples. The Indian government’s ban on the import of Chinese apples has now been in place for almost two years. • Target export markets in non-producing Asian markets (rather than Western European markets) which include Indonesia, Malaysia, Thailand and the Philippines. • Capitalise on Australia’s reputation for high quality produce and ability to produce during the northern hemisphere off- season. Industry • Maintain quality standards including the maturity level. • Continue improvement of production efficiencies - the latest Orchard Business Analysis shows growers are getting marginally increased prices, significantly increased yields, better pack outs and resulting revenue per hectare. • Invest in professional development for growers to improve productivity. • Undertake a study tour to New Zealand to see how they re-shaped and re-invented their apple industry to become first in the ranking of international competitiveness of apple production. • Increase apple production in order to target the export market. • Further consolidation across the industry. • Identify gaps in the WA apple industry and how they can be improved. • Investigate opportunities for an apple processing plant in WA. • Capture more industry data on WA apple markets; export, processing, trade with eastern states. Varieties • Revisit varieties to determine their suitability for the growing Asian market and production efficiency that will allow the industry to thrive in a competitive apple industry. • Further increase production of Bravo to develop the export market. • Push for the development of varieties in the breeding program that are high yielding in the WA climate and suitable for the Asian palate. Marketing • Further increase apple consumption; Australian’s average consumption is 10.1kg of apples per year which amounts to more than one apple a week. • Educate consumers on the unique attributes of each apple variety as it may assist to drive greater recognition and brand loyalty. • Liaise with major retailers to support Australian product and Australian primary producers. Other • Identify characteristics of global world leaders in the apple industry that may be adopted here.

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Threats Trade • China’s dominance in the apple industry: they account for half of total global production and higher average yield (than the rest of the world) and are the leading exporters of apples. • Competition in the export market is increasingly aggressive which makes competition harder in competing with cheaper producing countries. • Australia is only a small player in a significant world commodity with only 0.4% of world production. • The risk of US grown apples being imported into Australia - an import risk analysis is currently underway by DAWR to permit entry. • Australian apple exports have fallen from around 30% of production in the 1980s to just 1% today. • Decline in exports from WA and limited export activities in comparison to other Australian states. • Decline in apple production in Western Australia (19% drop in past 10 years); potential to open up to more imports which could be another hiccup for industry. • Limited imports of apples into Australia - ensure there continues to be robust biosecurity protocols to protect the apple industry in Australia. Protocols exist to permit the import of apples from New Zealand, China and Japan. Domestic market • Continued focus on the domestic market has affected international competitiveness of Australia. • Australian apple industry reliance on the domestic market to absorb volume, and limited export activities, increases exposure to imported apples being able to compete with local product on price, quality, and variety. • Reliance and long focus on the domestic market (99% of production) has left WA in an uncompetitive position in the world market. Marketing • Australian shoppers are not loyal to a particular variety with most shoppers shopping across two to three varieties: they are happy to substitute other apple varieties when the one they purchase is unavailable. Could consumers be overwhelmed by the choice of varieties? Industry • Production efficiency of Australian producers is below world average: planting density is half of the top three performers and yield per hectare is low in comparison to other countries. • Australian Class 1 pack out was at its lowest for several years at 67% in 2019. • Costs for Australian orchardists are increasing along with post-harvest costs and wages. • WA has the lowest production per business: WA has more than 22% of the number of businesses with just under 12% of national production. • Lower extent of consolidation in WA which is almost a third of the rate of leading states such as Victoria. In 2018-19 there were 117 WA growers, a reduction from 136 in 2017-18. • Fragmentation of growers in WA is affecting profitability; lack of co-operation prevents growers achieving economies of scale. • Lack of transparency in the supply chain affects investment attraction as fund managers do not have enough farmer performance data to attract investors. Varieties • Producers are focused on domestic markets with traditional major varieties as opposed to newer club varieties. • Reluctance to change varieties and low share of club varieties. Other • Seasonal impacts on apple production in Australia such as drought, fires, frost and hail. • Economic downturn.

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Pears Global production of pears was more than 24 million tonnes in 2017, of which China again was by far the largest producer accounting for over 67% (two-thirds) of global production and producing 16 million tonnes. Argentina was ranked second with Italy third, while Australia was ranked 21st with 96,741 tonnes of pears which accounted for 0.4% of world production. The global pear harvested area stood at 1.4 million hectares. Southern Hemisphere producers including Australia account for around 5% of global pear production and within the region Australia produced about 7% and New Zealand accounted for 1%. Australia produces on average just over 100,000 tonnes of pears a year with almost all of this consumed domestically. In 2019 there were 114,496 tonnes of pears produced in Australia valued at $115.4m of which 34% was processed (dried and canned), 8% was exported and 58% of pears were supplied fresh. The planted area remains relatively stable for pear production at around 3,100 hectares. Across Australian orchards over the past five years an average of 63% of pears were classified as Class 1. The majority of Australian pear production is in Victoria which produces about 88% of total production, followed by South Australia at about 7%, Western Australia at 4%, and New South Wales, Queensland and Tasmania produce about 1% each. The number of pear growers has declined since 2000 which is believed to indicate consolidation in the industry. Western Australian pear production was 5,681 tonnes in 2018-19, produced by 77 growers. Pear production is on the decline and production is focused on the Donnybrook, Perth Hills and Manjimup areas. The most popular pear variety grown in the Southern Hemisphere (Argentina, Australia, Brazil, Chile, New Zealand and South Africa) is Packham which accounted for 35% of production in 2019. This was followed by Williams BC at 30% and other varieties comprised 26%. Beurre Bosc production was 1% of total production. Packham pears also dominate production in Australia and Western Australia. In Australia pear production is primarily made up of three varieties: Packham accounts for 60%; Williams is 20% and Beurre Bosc makes up 10% of fresh production. There are also a number of other new and upcoming varieties in Australia which include Lanya, Deliza, Piqa Boo, Goulburn River Gold, Josephine De Malines, Rico, Winter Nelis, Red Sensation and Red Anjou. It is hoped that some of these varieties will help address flat and declining domestic sales and put a renewed focus on export. The global average pear yield amounted to 18 tonnes per hectare in 2018, an increase on the previous year which is likely to continue its growth in the near future. Global exports for pears amounted to 2.8 million tonnes in 2018, jumping by 4.6% against the previous year. In value terms pear exports stood at $2.7 billion. China experienced the highest rates of growth and in 2018 they exported 544,000 tonnes, distantly followed by the Netherlands (337,000 tonnes), Argentina, South Africa, Belgium, Italy, Chile, Spain and the US. These countries represented the major exporters of pears, together achieving 86% of total exports. Australia was ranked 17th in terms of value and accounted for 0.6% of exports which was 12,710 tonnes valued at $15.63 million. Global pear imports increased 3% in 2018 to 2.7 million tonnes valued at $2.7 billion. The countries with the highest levels of pear imports in 2018 were Russia (271,000 tonnes), Indonesia (187,000 tonnes), Germany, Brazil, the UK, the Netherlands, the US, France, Vietnam, Belarus, China, Hong Kong SAR and Italy together accounting for 61% of total imports. Australia imported a total of 2.30K tonnes of pears valued at $2.83 million which accounted for 0.1% of value of global imports. Australian pear exports have dropped significantly from 18,000 tonnes in 2003 and export volumes fluctuate each year. In 2019 Australia exported 9,190 tonnes of fresh pears which is about 8% of the year’s production plus a further 109 tonnes of preserved pears were exported. The leading markets for fresh Australian pears in 2019 were New Zealand (26%), Indonesia (17%), Canada (15%), Singapore (14%) followed by Fiji (6.5%). Victoria is the main pear producing state and accounted for the majority of exported pears (93%), Western Australia only exported 27 tonnes of fresh pears which is 0.3% of total Australian pear exports. In 2019, there were no fresh pears imported into Australia however there was 2,209 tonnes of of preserved pears imported. The country with the largest volume of pear consumption was China (16 million tonnes), accounting for 66% of total consumption. Pear consumption in China exceeded the figures recorded by the world’s second-largest consumer, Italy (689K tonnes), more than tenfold. The US ranked third in terms of total consumption with a 2.7% share. The countries with the highest levels of pears per capita consumption in

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2018 were Argentina (14,247 kg per 1000 persons), Italy (11,598 kg per 1000 persons) and China (11,233 kg per 1000 persons). In 2017-18 Australians ate an average of 2.6kg pears per person a year, which is about one a month. The consumption of pears per household in Western Australia is the lowest across Australia at 5.8kg (up to January 2020), a decrease of 1.1kg compared to 12 months before. Consumption in other states was higher; the highest was 6.8kg in Queensland and New South Wales. Consumption was down across the board compared to the previous year. Based on this research and information gathered in the desktop review, a number of opportunities and threats have been identified for the WA pear industry to consider in the design of the next Strategic Plan.

OPPORTUNITIES Trade • Opportunities may emerge in export markets with increased demand forecast for pears worldwide: the market is expected to continue an upward consumption trend over the next seven years. • Countries with the highest levels of pear imports in 2018 were Russia, Indonesia, Germany, Brazil, the UK, the Netherlands, the US, France, Vietnam, Belarus, China, Hong Kong SAR and Italy, together accounting for 61% of total imports. • Capitalise on Australia’s reputation for high quality produce and ability to provide produce during the northern hemisphere off-season. Industry • Further consolidation of the pear industry. • Identify gaps in the WA pear industry and how it can be improved. • Continued improvement of production efficiencies in the orchard. • Increase pear production in order to target the export market. • Capture more industry data on WA pear markets – export, processing, trade with eastern states. Varieties • Develop new and emerging pear varieties that will revitalise the industry and profitability and put a renewed focus on the export market and arrest the decline in domestic sales. Marketing • Increase consumption of pears: drive the appeal of pears and promote them to families through targeted marketing campaigns to reinvigorate the fruit. • Communicate to consumers how to get the best eating experience from pears, as there are difficulties in display, ripeness and transportation with pears (similar to stone fruit) and which varieties are best to be eaten hard or when ripe. • Continuing to provide meal inspiration for different occasions to showcase the versatility of pears from salads to snacking may assist sales growth. • Find innovative ways to communicate the eat now/eat later strategy by variety to drive sales. Other • Identify the characteristics of global world leaders in the pear industry. THREATS Trade • The dominance of China as the largest producer of pears with 67% of global production and also the biggest exporter of pears. Australia accounts for 0.4% of world pear production. • Global production is increasing which could further squeeze Australia out of markets and run the risk of pears being imported into Australia. • Decline in pear exports from Australia: currently sits around about 8% of pear production and is minimal in comparison to other fruits exported. Domestic market • Flat and declining domestic sales for pears – there has been a loss of buying households, a reduction in the frequency of purchase and the price has increased. Industry • Pear production has been in decline for years across Australia and WA. • WA is a small player in the pear industry in Australia, the majority of pear production is in Victoria (88%) with Western Australia only accounting for 4% of production. Varieties • Large dependence on Packham pears. Marketing • Pear consumption is down – pears appeal more to the older demographic. • Pears face the same difficulties in display, ripeness and transportation as stone fruit and vary in variety between those that are best eaten when ripe to those that are best eaten hard. Communicating this information is challenging but essential to getting the best eating experience for shoppers.

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 7 æ Apple and Pear Industry Situation Analysis 2020 Fruit Industry Overview The Australian apple and pear industries are small players on a global scale, however within Australia they are a significant player in the fruit industry. For the year ending June 2019 the Australian apple industry was valued at $513 million making it the fifth highest value fruit industry in the nation behind berries which are combined ($938m), citrus ($829.3m), table grapes ($693.2m) and bananas ($594.6m). The pear industry was valued at $115.4m, making a combined value for the apple and pear industry of $628m. In terms of production volume, the Australian pome fruit industry (apples and pears) accounted for 425,000 tonnes, making it the second highest producing fruit industry to citrus which produced 744,374 tonnes in 2019. Despite a high production level, Australia exports a relatively small proportion of its apples and in 2019 it exported only 4,416 tonnes and 9,190 tonnes of pears. Australia exports 1-2% of total marketable production of apples and 8% of pears. Imports were minimal for apples at 732 tonnes. In 2015/16 Western Australia produced $477m worth of fruits. The top five fruits by value are avocados, strawberries, apples, grapes and melons (excluding watermelons). Apple is the largest fruit industry by quantity. WA’s apple production has remained stable in the five years to 2015–16, when quantities were about 27,650t worth $58 million. Apples represented 12% of the state’s total fruit crop value in 2015–16. The WA pear industry came in behind oranges and nectarines. Pears were valued at $11 million in 2015-16 with 5,999 tonnes produced, and pears represented 2.2% of the state’s fruit crop. Production trends (from 2011-12 to 2015-16) in selected fruits in Western Australia showed that pears had a 15.3% decline in production and a 14.7% reduction in the real price. Apples had a minimal increase of 0.5% in production and a 2.8% increase in real price. Avocadoes had a four times increase in production and 73% increase in real price, and there was double-digit growth in the production and value of strawberries. In 2017 WA exported $38m worth of fruits. Western Australia was ranked fifth in Australian fruit exports with a 3.6% share valued at $38m. WA’s contribution declined from 3% to 2.4% between 2009 and 2013 and jumped to 3.6% in 2017. Growth was mainly driven by increased strawberry exports. WA is the largest exporter of strawberries (with 86% share) and second largest exporter of avocados (15%) and watermelons (12%) nationally. WA is ranked 4th in the export of pears and 7th in apple exports. In terms of trends in WA fruit exports over time watermelon and strawberries have seen significant increases from 2013-17, while the apple industry has seen an 82% reduction in exports and there was a 34% decrease in pear exports. Australian Pome Orchard Preformance The productivity and economic performance of Australian pome orchard businesses across Australia can be summarised with the findings of the Orchard Business Analysis (OBA), which is published by APAL. Some of the key findings from the 2018 report include: • Average gross yield in 2018 was 43.9t/ha, and 2019 was forecast at 46.5 t/ha. • Fruit quality measured by Class 1 pack out was 68% in 2018, forecast to be similar at 69% in 2019. • Average yield 2008-12 was 36t/ha while the 4 years 2016-19 averaged 10t/ha higher at 46t/ha. • Pack outs have also slowly improved over the 10 years of the Model orchard. Class 1 pack out is also trending up, though the 2018 year did not conform to the upwards trend most likely reflecting challenges with weather events for the crop (major hail event in South Australia). • Average class 1 prices are also increasing (general trend from 2013-18) as is revenue/ha. • In 2018 the model orchard harvested a total of 4,387 bins (1,755t) over the 40 planted hectares. The class 1 recovery averaged 68% (1,188t), with the remainder split between Class 2 (13%) and process (19%) production.8 In general growers are getting marginally increased prices, significantly increased yields, better pack outs and resulting revenue per hectare, but these have been necessary increases to match the increasing costs that orchardists are facing. This results in a variable cash orchard surplus per hectare over the past 10 years, with no real increasing or decreasing trend.

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GLOBAL POME FRUIT SITUATION Apples 1 Global Value and Production

The global apple market increased from 65.7 million tonnes in 2007 to 89.3 million tonnes in 2016, which corresponds to an upward trend of apple consumption at an average annual growth rate of 3.5% per year over nine years. In wholesale prices the value of the global apple market stood at US$52.9 billion in 2016.36 In 2017 global production of apples amounted to 83.1 million tonnes, down from 2016. China produced 50% and Europe 17% of the total. Other important producers with 3-5% of the world total were the United States, Turkey and Poland.21 World production for 2019-20 was forecast to be 75.7 million tonnes, a rebound in production of nearly five million tonnes from the previous year with rebounding production in China more than offsetting sharply lower production in the European Union. Higher world trade is expected as a result of China’s improved supplies.28

Source: https://www.freshplaza.com/article/9169972/global-apple-production-from-1961-to-2017/24 China is the leading producer of apples worldwide with almost half of the share. The top twenty producers form 87% of the world production. Australia is not a major producer with just 0.4% of the world apple production ranking at 35.21/25 China’s apple production amounted to around 41m tonnes in 2017. The European Union came in second place with just over 9.5mt of apples.21 In terms of individual countries, the second largest contributor is the United States producing 5.1mt in 2017, making apples the second most produced fruit in that country, behind grapes but ahead of oranges. Nearly every state in the US produces apples, but 70% of the apples are produced in the state of Washington. In the US the apple is the second most commonly consumed fruit. The main varieties of apples in the US are McIntosh, Rome, Gala and Red Delicious.23/22 Global apple production increased by 27% during the past decade. China is the major force behind the growth, with an increase of 49%. Production growth is more than double that of the population growth resulting in a 13% increase in per capita consumption during the period. Percentage growth in production was the highest for Poland followed by Uzbekistan among the top 20 producers. Production from Russia and Iran went down by 30%.25

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 9 æ Apple and Pear Industry Situation Analysis 2020 Top twenty producers of apple excluding China - trends (2007-2017) Top twenty producers of apple excluding China – trends (2007-2017) Production and trends (excluding China)

USA 5,174 25.5%

Turkey 3,032 23.4%

Poland 2,441 134.8%

India 2,265 39.5% Production and production trends Iran 2,097 -29.6% World apple production for the year 2017 was 83 million tonnes. China leads the Italy 1,921 -13.9% production with almost half the share. Top Chile 1,766 26.2% twenty producers form 87% of the world production. Australia is not a major producer 1,711 -4.0% France with just 0.4% of the world apple production Russia 1,639 -30.0% ranking 34.

Brazil 1,301 16.6% Apple production increased by 27% during past decade. China is the major force Ukraine 1,076 42.6% behind it, with an increase of 49%. Uzbekistan 1,029 104.7% Production growth is more than double that of the population growth resulting in a 13% Argentina 995 -0.5% increase in per capita consumption during South Africa 924 30.5% the period. Percentage growth in production was the highest for Poland followed by Morocco 821 92.2% Uzbekistan among the top 20 producers.

Egypt 799 43.1% Production from Russia and Iran went down by 30%. North Korea 782 23.2%

Japan 735 -12.5%

Mexico 714 41.4%

0 1,000 2,000 3,000 4,000 5,000 6,000 -50.0% 0.0% 50.0% 100.0% 150.0% Production tonnage 2017 % growth in production

Source: Apple production and trade - Insights from the World, Australian and WA markets25 In terms of area harvested for apples in hectares (ha), the total area harvested in the world for apples was 4,933,841 hectares in 2017, down 6.8% from 5,293,340 hectares in 2016.21 China has the greatest apple production area, followed by India and Russia.21

List of countries by area harvested for apples Global market outlook 2019/20

Source: https://en.wikipedia.org/wiki/List_of_ Source: https://cdn.freshplaza.com/2018/0223/ countries_by_apple_production21 AppleOutputBIG.jpg24 The global market outlook for 2019/20 is that most European countries have a reasonable production, with Poland as a major exception as the volumes there have dropped by no less than 40%. China, South Africa and the United States are all happy with the current season and satisfied with their volumes. There is some uncertainty regarding exports. The Indian boycott on Chinese apples has been in place for almost two years, and the Russian embargo is still having an impact on the global market. According to exporters from various countries, Brexit has so far changed little when it comes to exports to the United Kingdom.24

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The Australian apple sector sees a lot of potential in India. It is a large country that is developing economically. Partly thanks to the growing demand for quality products, India could become an interesting market in the coming five years. Apple and Pear Australia Ltd (APAL) recently visited the country and found opportunities to export branded apples. Varieties such as the BRAVO™ and Pink Lady® could be very successful there.24 After achieving success in the US, the Cosmic Crisp® apple is now also being launched in Australia. This is happening thanks to an exclusive agreement between Red Rich Fruits and Proprietary Variety Management. The Pink Lady dominates the market, with a 41% share, followed by the Gala (23%) and the Granny Smith (18%).24

2 International competitiveness ranking New Zealand 1 Chile 2 United States 3 World Apple Review 2018 has done an international competitiveness South Korea 4 ranking of apple producers based on three comparative performance Italy 5 measures: France 7 Japan 8 1. Production efficiency. South Africa 9 2. Industry infrastructure and inputs. Canada 10 Germany 11 3. Financial and market factors. Austria 13 United Kingdom 14 Measures of production efficiency are: Australia 15 a. Percent change in production from 2009-11 to 2015-17. Brazil 16 Argentina 17 b. Relative variability of production between 2007-2017. Spain 18 c. Percentage of acreage on non-bearing. China 19 Portugal 20 d. Percent of new varieties in production. Poland 21 e. Planting density. Turkey 22 Greece 23 f. Average yield. Mexico 24 Czechia 25 Serbia 26 Slovenia 27 Slovakia 28 Hungary 29 Bulgaria 30 Russian Federation 31 India 32 Romania 33 Source: World Apple Review 2018 New Zealand ranks first in the competitiveness ranking both in 2017 and 2018. Production efficiency is the highest in South Korea followed by New Zealand. New Zealand, Chile, Italy, Japan and France ranked in the top one-third, in all of these indicators.25 Australia’s position is in the middle one third in all of these three comparative performance measures. Australia ranks 15th in competitiveness ranking both in 2017 and 2018. When it comes to individual measures, Australia’s production efficiency has eroded compared to 2017. Australia’s values are below the world average in most of the categories of production efficiency. Planting density, which is an indicator of production efficiency is 605 for Australia, which is almost half of that of the top three performers; New Zealand, Chile and the United States at 1200, 1159 and 1150 respectively. Yield per hectare is also low. However, when it comes to relative variability of production between 2007 and 2017, Australia has a value of 1.2, which indicates that the investment in infrastructure is better matched to the needs from year to year.25 “The countries in the top one-third in the infrastructure and input category have modernised their packing, storage and marketing systems as their industries have grown. Countries serving domestic or neighbouring markets have not faced similar pressure and have lagged accordingly.” (World Apple Review 2018)25 Continued focus on the domestic market for a long term would have affected the international competitiveness of Australia. Percentage of production exported is plotted against the international competitiveness ranking to assess the correlation between the two.25

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 11 æ Apple and Pear Industry Situation Analysis 2020

Percentage of production exported and international cpmpetiveness ranking* Percentage of production exported and international competitiveness ranking* 35 %

80.0% . 0 International competitveness ranking 33 Comments*

7 6 Percentage of production exported 32 31 30 The correlation between the 30 percentage of production 70.0% 29 28 exported and international

% 27 competitiveness ranking is . 8 26 25 n g d found to be moderate with a 5 9 k i % t e 60.0% 25 correlation coefficient of -0.33. % . 8 o r 24 a n . 2

5 3 23

5 2 Some of the small producers

22 e s r n e x p

o 50.0% 21 20 such as South Korea and v e n % c t i Japan maintain the 20 t i % % . 5 t i d u 19 . 5 . 5 competitveness, still having o 4 2 p e r 0

% 18 4 4 0

m domestic market as the major f p 40.0% . 6 17 o %

c o sales avenue. On the contrary, 3 6 l % e 16 % 15 . 6 . 7 . 3 15 n a countries like Serbia and 3 2 o 3 1 n t a g % t i 3 1 14 Poland export a high . 7 c e

13 n a

r 30.0%

r proportion of their production, % 2 6 t e . 8 P e still rank low in international 11 10 I n 2

% competitiveness. However; % 10 . 6 % 20.0% 9 . 8 New Zealand, which has the . 4 1 7 1 6 8 highest proportion of export to 1 5 7 %

. 3 production, ranks first in 5 1 0 international competitveness.

10.0% 5 8 . 5 % 7 . 8 %

6 . % This pattern is seen in some of

5 . 9 % 4 4 . 3 % 3 3 . 9 % the other leading countries as 3 . 2 % 2 . 1 % 1 . 9 % 1 . 5 % 2 1 . % well such as South Africa, Italy 0 . 3 % 0 . 1 % 0.0% 1 0 . % 0 l y y s y d a a a a e a a n a a a a a and Chile. l i i l i i i a l i i m o n z i i l c a c e c e n y c o n d a n n n d a e a i k i b i a g d i o a r t i a h a k e t i a r a n a r a I t a c h i l s t r l h r a n a t u e a n I n n g n a C r v a e x i v e n l u m B r r r g d n g

S p *Netherlands is excluded from the C s t r J a p r a A f r S e o z e o K o r e a T n u A u F P o S t a e M G r o m g e d e C C t h B u d list because of the re-exports P o S l H t h S l Z A u e R G e u K i A r u t e w

i Competitiveness ranking is done by d F e n n S o S o t e World Apple Review N a U n i U u s i R

Source: Apple production and trade - Insights from the World, Australian and WA markets 25 * Competitiveness ranking is done by World Apple Review 25 The correlation between the percentage of production exported and international competitiveness ranking is found to be moderate with a correlation coefficient of -0.33. Some of the small producers such as South Korea and Japan maintain the competitiveness, still having domestic market as the major sales avenue. On the contrary, countries like Serbia and Poland export a high proportion of their production, still rank low in international competitiveness. However, New Zealand, which has the highest proportion of export to production, ranks first in international competitiveness. This pattern is seen in some of the other leading countries as well such as South Africa, Italy and Chile. New Zealand ranks first in the international competitiveness of apple production. For production efficiency it ranks second. New Zealand’s apple industry ranked number one in 1995 in international competitiveness but lost that position afterwards and went through a period of catastrophe. Prices fluctuated widely for twenty years and hit an all-time low in 1997. Many growers and packers exited the industry, with grower numbers halving in 12 months. Declining consumption in the traditional western market, global over production and emergence of low-cost producers such as Chile and South Africa were part of the reasons for this trend. New Zealand exports 76% of its production, mostly to Asian countries.25 The industry was forced to re-shape and re-invent itself. Initially they tried to cut costs, but lost focus by competing against Chile. Despite this situation, the industry turned itself around and is the top ranked industry in international competitiveness consecutively in 2017 and 2018.25 Specific strategies adopted included: • Consolidation of growers from 2000 to 400. • A focus on the industry’s strengths, including proximity to the markets, capitalised on promoting their great environment in which to grow apples with a clean green image. • Investment in personal development for growers to learn how to become more productive. • An industry focus on Asia, with varieties purpose-grown for an Asian palate.25 These changes have resulted in a thriving apple industry. It has consolidated, collaborated, and innovated resulting in increased productivity, with the average grower now producing 100 tonnes per hectare. The industry was worth $700m in 2016 with a vision to increase the value to $1billion by 2020 (Source: Fiona Hall, presentation during Nuffield conference).25/29

12 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

A significant proportion of the apple farms in New Zealand are owned or leased by the integrated fruit companies that grow, pack, store and export. Based on the data from World Apple Review 2018, New Zealand orchards experienced a shift from traditional varieties such as Braeburn to more widely accepted club varieties. Share of Braeburn has come down from almost one third in 2005 to around 13% in 2017. Royal Gala is the main variety cultivated. Yield per hectare is very high due to the varieties cultivated and efficient management practices.25 A few Gippsland fruit growers visited selected New Zealand orchards as part of a study tour organised by Horticulture Innovation Australia and Fruit Growers Victoria. Some of the interesting facts were the pace of replacement of old varieties, orchards are regrafted quickly to adopt the varieties tailored to the market. One major grower observes 80:80:80 rule throughout his orchard. Any block which doesn’t yield 80t/ hectare, doesn’t have 80% pack out rate and doesn’t have 80% colour on every piece of fruit, needs to be revisited. It is a way of ensuring efficiency in production. Australia had only a 67% pack out rate in 2016-17, and expected to reach 72% in 2017-18 (Apple and Pear Australia).25 Asia is the major market for New Zealand exports now. Newer club varieties such as Envy and the Pacific series are increasingly planted or grafted in most of the orchards mainly for the Asian palate. Participants observed several blocks of Jazz that have been cut and grafted over after only 2 years of production. Club varieties are a major player in New Zealand as on every orchard visit, at least one variety like Jazz, Envy, Smitten, Sonia or the Pacific series was grown.(Source: Crisera, Fruit Growers Victoria)25 3 Southern Hemisphere production

Southern Hemisphere producers including Australia account for around 6-8% of global production. Countries in this hemisphere include Argentina, Australia, Brazil, Chile, New Zealand and South Africa. Australia is the smallest producer of apples in the Southern Hemisphere and produces about 6% of apples and New Zealand accounts for 11%. The forecast showed that the 2020 apple Southern Hemisphere crops are expected to reach 5,003,000T. This represents a small decrease of 1% compared to the 2019 crop. Exports are expected to remain stable at 1.725m T.24 Notably, only two countries in the region are forecast to see fewer apples for 2020 - Australia and Chile - while in comparison, WAPA expects that all producing countries will remain stable or increase in production.27

Of the countries in the region, Australia saw the most significant decline in production – with a forecast 11% decrease in apple volumes from last season. Chile will also likely experience a decrease in crops of about 8% year-on-year. 27 New Zealand apple production, in contrast, is actually expected to rise 6% from 2019.SOUTHERN All other HEMISPHERE countries in the APPLE southern PRODUCTION hemisphere will probably remain stable in production or increase – like, for example South Africa and Brazil who expect 5% and 4% increases respectively.27 SOUTHERN HEMISPHERE APPLE PRODUCTION So uthern Hemisphere Apple Production

Source: Southern Hemisphere Forecast 202026

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æ Apple and Pear Industry Situation Analysis 2020

4 Varieties

There are over 7,500 apple tree varieties worldwide. The most common apple varieties in the world are the Red Delicious, Gala, Granny Smith, Golden delicious, Lady, Baldwin, McIntosh, Honey crisp, Fuji and Cortland. Throughout the world the top ten varieties formed 72% of the world production excluding China. China forms almost 50% of the world apple production and 70% of the Chinese production is Fuji. Hence Fuji forms about 43% of the world apple production. FujiVa risie thetie saccepted variety in the North East Asian market.25 Some of the club varietiesM acreatesjor vari e‘inducedties cultiv scarcity’ated in th bye w limitingorld exc theludi nsupplyg Chin a(with breeders allowing for aW limitedorld exc lunumberding Chi ntoa (grow),2017) to keep the prices high.25 The most popular varieties worldwide (excluding China) include Golden Delicious (16.8%), Royal Gala (14.1%), Delicious (12.3%),Comm eFujints (7.7%), Idared

(6%) and Granny Smith (5.3%). Top ten varieites formed 72% of the world production excluding China. China forms almost 50% of the world apple production and 70% of the Chinese production is Fuji. Hence Major varieties cultivated in the world (excluding China) 2017 Fuji forms about 43% of the world apple production. Fuji is the accepted variety in North East Asian market. Braeburn 2.0% Royal Gala Cripps Pink Some of the club varieties creates 'induced scarcity' by 14.1% 2.6% limiting the supply (with breeders allowing for a limited number to grow), to keep the prices high. Delicious 12.3% According to world apple review, four broad cateogries of apple varieties co-exist in the world apple market.

Jonathan 1. Traditional Majors. These include Red Delicious, 1.3% Elstar Golden Delicious and Granny Smith varieties that have been Jonagored 1.4% widely grown for decades. 2.0% 2. New Majors. These include varieties that have been Jonagold introduced since the 1980s, and are now widely planted 3.1% Fuji around the world. They include Gala/Royal Gala, Fuji, 7.7% Braeburn, Jonagold/Jonagored, Elstar and Cripps Pink/Pink Idared Lady. 6.0% 3. Regional or Local Varieties. These are varieites those remained popular in a limited number of districts, but have not Granny Smith Golden Delicious gained wide acceptance elsewhere. However, they remain 5.3% Braeburn Golden Delicious 16.8% Reinette firmly established with loyal producers and consumers. Cortland Granny Smith Rome Beauty Cripps Pink Honeycrisp Royal Gala 4. New Varieties. The variety has just been released by an Delicious Idared original breeding program. Elstar Jonagold Empire Jonagored Source: World Apple Review 2018 Fuji Jonathan Gloster McIntosh Source: World Trade Review 201830 ; Apple production and trade - Insights from the World, Australian and WA markets25

World Apple Review identifies four categories of apple varieties co-existing in the world apple market.25 1. Traditional Majors - these include Red Delicious, Golden Delicious and Granny Smith varieties that have been widely grown for decades. 2. New Majors - these include varieties that have been introduced since the 1980s and are now widely planted around the world. They include Gala/Royal Gala, Fuji, Braeburn, Jonagold/Jonagored, Elstar and Cripps Pink/Pink Lady. 3. Regional or Local Varieties - these are varieties those remained popular in a limited number of districts but have not gained wide acceptance elsewhere. However, they remain firmly established with loyal producers and consumers. 4. New Varieties - the variety has just been released by an original breeding program.28/25 In terms of the Southern Hemisphere the most popular variety grown in Argentina, Australia, Brazil, Chile, New Zealand and South Africa is Royal Gala which accounted for 38% in 2019 This is followed by Fuji and Red Delicious which made up 15% and 13% respectively. Braeburn was the one of the least popular varieties.

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SOUTHERN HEMISPHERE APPLE PRODUCTION

SOUTHERN HEMISPHERE APPLE PRODUCTION

Apple and Pear Industry Situation Analysis 2020 æ

Varietal propotions* in the world, New Zealand and Western Comments Australia Pink Lady is the largest cultivated variety in Australia follwed by Gala. In Australian varietal composition, the category 'other apple' refers to the club varieties. Australia Western Australia Data source for WA varieties is Agriculture Produce Commission. According to this, WA has a high Sun downer, Golden and Red delicious, Fuji share of processing and 'other' category. WA do not 38.0% Gala Fuji have a processing plant, hence this high proportion 22.0% Cripps Pink 5.0% of processing apple could be because lower levy is 24.1% Granny Smith charged for processing apples, hence may not be Granny Smith 13.2% true. In WA, Pink Lady forms 24% of the cultivation, Granny Smith is the second major variety. 15.0% Kanzi 0.7% 26 Sundowner Share of club varieties varies between the states. Source: Southern Hemisphere Forecast 2020 3.3% Tasmania has the largest share and Victoria has Other apple A major difference in the varietal pattern between Australia and New Zealand is the dominance of newer Royal Gala Processing the lowest. Share of WA on club varities is 17%, 10.0% 20.2% more than the Australian average. Release of Bravo club varieties such as Envy, Jazz, Pacific series in New Zealand Pcultivation.ink Lady Comments 9.9% Varietal propotions* in the world, New Z35e.0a%land and Western could be a major factor behind this trend, as in other While the share of traditional majors such as Granny Smith is around 15% in Australia and WA, it is veryPi nk Lady is the largest cultivated variety in indicators of efficiency, such as consolidation in the Australia business, WA lags behind. small at less than 3% in New Zealand.25 Australia follwed by Gala. In Australian varietal composition, the category 'other apple' refers to the Share of other varieties (club varieties) in the Gala is the largest variety cultivated in New New Zealand club varieties. Varietal proportiAonusst*r ainli athe world, New Zealand and WestWernest eArustn Aruasltiaralia varietal composition of Australian states Zealand. Braebun, Fuji and Jazz are other major Australia New Zealand Data source for WA varieties is Agriculture Produce varieites. Commission. According to this, WA has a high A major difference between the varietal pattern share of processing and 'other' category. WA do not Sun downer, Golden and Red delicious, Fuji Braeburn Australia between Australia and New Zealand is the \ 38.0% Gala Fu1j3i .5% have aW perostceernss Ainugs tpralaliant, hence this high proportion Royal Gala 10.0% dominance of newer club varieties such as Envy, 22.0% Cripps Pink 5.0% of processin1g7 .a0p%ple could be because lower levy is 28.4% Jazz, Pacific series in New Zealand cultivation. 24.1% Granny Smith charged for processing apples, hencNeS mWay not be Envy Victoria 13.0% While the share of traditional majors such as 13.2% true. In WA, Pink Lady forms 24% of the cultivation, Granny Smith 5.9% 5.0% Granny Smith is around 15% in Australia and WA, it Granny Smith is the second major variety. 15.0% Kanzi is very small at less than 3% in New Zealand. Fuji Sundowner 0.7% Share of club varieties varies between the states. 9.1% The force of intertia is evident from Australian Pink L3a.3d%y Tasmania has the largest share andQ Vuiecetonrsiala nhdas Granny Smith 8.0% variety proportions, with traditional majors such as Other apple 6.1% Royal Gala Processing the loweTsat.s mShaanriae of WA on club varities is 17%, Jazz 2.5% Granny Smith still forming 15% of the varietal mix. 10.0% Pacific Ros9e.9% 20.2% more than2 0th.0e% Australian average. Release of Bravo Pink Lady 9.0% South Australia This also shows the increased focus on domestic 3.7% could be a major factor behind this1 7tr.e0n%d, as in other 35.0% Pacific Queen market. WA's focus is mainly on traditional majors indicators of efficiency, such as consolidation in the 9.6% * 'Other' category is not included (except for Australia, where it refers to club varireties) in and new majors category. .. the chart, hence the total wbilul nsoint eadsds ,t oW 1A00 %la)gs behind. Share of other varieties (club varieties) in the Source: Apple productionNew Zande atradelan -d Insights from the World, Australian and WA markets25 Gala is the largest variety cultivated in New * ‘Other‘ category is not included (except for Australia, where it refersva rtoie clubtal varieties)compo ins theitio chart,n o fhence Aus thetra totallian will s tnotat eadds to Zealand. Braebun, Fuji and Jazz are other major 100%) varieites.

A major difference between the varietal pattern Braeburn Australia between Australia and New Zealand is the 13.5% Western Australia Royal Gala 17.0% 10.0% dominance of newer club varieties such as Envy, 28.4% NSW Jazz, Pacific series in New Zealand cultivation. Envy Victoria 13.0% While the share of traditional majors such as 5.9% 5.0% Granny Smith is around 15% in Australia and WA, it is very small at less than 3% in New Zealand. Fuji 9.1% Pink Lady Queensland The force of intertia is evident from Australian Granny Smith 6.1% Tasmania 8.0% variety proportions, with traditional majors such as Jazz 2.5% Granny Smith still forming 15% of the varietal mix. Pacific Rose 20.0% 9.0% South Australia This also shows the increased focus on domestic 3.7% 17.0% Pacific Queen market. WA's focus is mainly on traditional majors 9.6% * 'Other' category is not included (except for Australia, where it refers to club varireties) in the chart, hence the total will not add to 100%) and new majors category. ..

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5 Yields

The total planted area has declined over time although global apple production has continued to rise, through increased yields. In 2016 the global average apple yield was around 17 tonnes per ha which has continued to increase over time. China’s domination of the apple industry is also reflected with their average yield which is in excess of 18 tonnes/ha and increasing whereas the ‘rest of the world’ is below the global average.

World: Trends in Average Apple Yields, 2000-2016 (metric tons per hectare) 20.000

18.000

16.000

14.000

12.000

10.000

World China ROW 8.000 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Source: World Apple Review 201837

6 Trade

Apples are a widely traded commodity, with the share of exports in total global output being about 10% from 2007 to 2016. High trade intensity is determined mainly by the needs in imported products due to insufficient local production, especially off-season. Apples will continue to be highly traded, fuelled by increasing consumption, trade liberalisation policies, and intense global and regional integration.32 Global apple exports reached 8.2m tonnes in 2019, remaining constant against 2018. Overall, exports saw a relatively flat trend pattern. The pace of growth was the most pronounced in 2015 with an increase of 11% against the previous year. As a result, exports reached the peak of 9.3m tonnes. From 2016 to 2019 the growth of global exports remained at a somewhat lower figure.38 In value terms, apple exports dropped to US$7B in 2019. The total export value increased at an average annual rate of +1.2% from 2007 to 2019; the trend pattern remained consistent, with somewhat noticeable fluctuations being recorded throughout the analysed period.38 The shipments of the five major exporters of apples, namely Poland, China, Italy, the U.S. and Chile, represented more than half of total exports. From 2007 to 2019, the biggest increases were in Turkey, while shipments for the other global leaders experienced more modest paces of growth.38 In US dollar value terms, China ($1.2B), the US ($962M) and Italy ($841M) were the countries with the highest levels of exports in 2019, with a combined 44% share of global exports. Chile, New Zealand, France, South Africa, Poland, Serbia, Moldova, Belgium and Turkey lagged somewhat behind, together comprising a further 39%.38

16 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

Among continents, European countries sold the highest dollar worth of exported fresh apples during 2019 with shipments valued at $2.7 billion or 38% of the worldwide total. In second place were Asian exporters at 23.8% while 14.2% of international apples sold originated from North America.31 Latin America excluding Mexico but including the Caribbean accounted for 10.4% worth, trailed by Oceania at 8.2% mostly New Zealand, then suppliers in Africa at 5.4%. Below are the 15 countries that exported the highest dollar value worth of apples during 2019.31

1. China: US$1.2 billion (17.8% of total exported apples) 2. United States: US$961.6 million (13.7%) 3. Italy: US$841.2 million (12%) 4. Chile: US$602.9 million (8.6%) 5. New Zealand: US$566.6 million (8.1%) 6. France: US$433.6 million (6.2%) 7. South Africa: US$374 million (5.3%) 8. Poland: US$367.3 million (5.2%) 9. Netherlands: US$239.2 million (3.4%) 10. Japan: US$133 million (1.9%) 11. Serbia: US$118.6 million (1.7%) 12. Moldova: US$108.6 million (1.6%) 13. Spain: US$106.5 million (1.5%) 14. Belgium: US$94.7 million (1.4%) 15. Turkey: US$89.7 million (1.3%) The listed 15 countries shipped 89.8% of global apples exported in 2019 by value. Among the top exporters, the fastest-growing apples exporters since 2015 were: Moldova (up 504.7%), Turkey (up 78.6%), New Zealand (up 30.5%) and Poland (up 23.8%).31 Australia was listed at number 40 and exported US$6.8 million dollars of apples in 2019, a reduction of 10.8% from 2018. Five top suppliers posted declines in their exported apples sales namely: Belgium (down -32.2%), France (down -29.9%), Italy (down -12.5%), United States (down -6.3%) and South Africa (down -2.4%).31 In 2017, world apple exports were 9.5 million tonnes. Only 11% of the production is exported. China leads the exports with a share of 12% followed by the US (10%) and Poland (8%). Top ten exporters form 76% of the total exports. Australia is not a major apple exporter on the world front, with just 0.05% of the world exports. Australia ranks 50th in quantity and 41 in value of exports.25 World apple exports increased by 21% between 2007 and 2017. Double digit growth in the exports by the top two exporters; China and US. Poland, the third largest exporter, increased exports by 131%. Share of top ten exporters increased from 69% to 76% between 2010 and 2017, indicative of the more intense competition and probably the improved efficiencies achieved by the leading exporters. Belarus showed a significant increase in exports after 2014.25

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 17 æ Apple and Pear Industry Situation AnToalyp sistw 2020enty exporters of apple - trends (2007-2017)

Top twenty exporters of apple – trends (2007-2017) Export and trends

China 1,328 30.3%

Poland 1,037 130.7%

Italy 1,034 29.5% Exports and export trends USA 910 37.2% World apple exports for the year 2017 was 9.5 Chile 716 28.8% million tonnes. Only 11% of the production is exported. China leads the exports with a share Iran 604 115.6% of 12% followed by the US (10%) and Poland South Africa 553 65.4% (8%). Top ten exporters form 76% of the total exports. Australia is not a major apple exporter France 535 -22.8% in the world front, with just 0.05% of the world New Zealand 345 7.0% exports. Australia ranks 50th in quantity and 41 in value of exports. Netherlands 225 -40.4%

Moldova 222 183.3% World apple exports increased by 21% between 2007 and 2017. Double digit growth in the Turkey 201 1986.1% exports by the top two exporters; China and US. Serbia 198 166.3% Poland, the third largest exporter, increased the exports by 131%. Share of top ten exporters Belgium 163 -52.5% increased from 69% to 76% between 2010 and Spain 134 38.6% 2017, indicative of the more intense competition and porobably the improved efficiencies Argentina 78 -72.6% achieved by the leading exporters. Belarus Greece 75 135.4% showed a significant increase in exports after 2014. Please see the import section for Belarus 59 1496.7% explanation. Brazil 55 -50.5%

Azerbaijan 32 -56.5%

0 200 400 600 800 1,000 1,200 1,400 0.0% 1000.0% 2000.0% Exports tonnage 2017 % growth in exports

Source: Apple production and trade - Insights from the World, Australian and WA markets25

The average apple export price stood at $853 per tonne in 2019, which is down by -6.6% against the previous year. In general, the export price, however, recorded a relatively flat trend pattern. The pace of growth appeared the most rapid in 2011 when the average export price increased by 14% year-to-year. Global export price peaked at $913 per tonne in 2018, and then fell in the following year. Prices varied noticeably by the country of origin; the country with the highest price was New Zealand ($1,311 per tonne), while Turkey ($350 per tonne) was amongst the lowest. From 2007 to 2019 the most notable rate of growth in terms of prices was attained by China, while the other global leaders experienced more modest paces of growth.38 In 2019, global apple imports shrank slightly to 8m tonnes. Overall imports however showed a relatively flat trend pattern. The most prominent rate of growth was recorded in 2015 when imports increased by 14% against the previous year. As a result, imports reached the peak of 9.7m tonnes. From 2016 to 2019, the growth of global imports remained at a somewhat lower figure.38 In value terms, apple imports shrank modestly to US$7.2B in 2019. The total import value increased at an average annual rate of +1.6% from 2007 to 2019; the trend pattern remained consistent, with only minor fluctuations being recorded in certain years.38 Russia (701K tonnes) and Germany (603K tonnes) represented roughly 16% of total imports of apples in 2019. The UK (342K tonnes), Egypt (297K tonnes), Bangladesh (252K tonnes), India (250K tonnes), the Netherlands (242K tonnes), Belarus (222K tonnes), Vietnam (219K tonnes), Spain (218K tonnes), Canada (202K tonnes) and China, Hong Kong SAR (189K tonnes) followed a long way behind the leaders.38

18 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

Below are the 15 countries that imported the highest dollar value worth of apples during 2019.31

1. Germany: US$482.2 million (6.7% of imported apples) 2. United Kingdom: US$423.8 million (5.9%) 3. Russia: US$394 million (5.5%) 4. Vietnam: US$352.9 million (4.9%) 5. Netherlands: US$267.9 million (3.7%) 6. Taiwan: US$255.1 million (3.6%) 7. India: US$253.1 million (3.5%) 8. Hong Kong: US$252.2 million (3.5%) 9. United States: US$239.3 million (3.3%) 10. China: US$219 million (3%) 11. Indonesia: US$216.9 million (3%) 12. Canada: US$213.2 million (3%) 13. Thailand: US$211.7 million (2.9%) 14. Bangladesh: US$204 million (2.8%) 15. Saudi Arabia: US$185.8 million (2.6%)

Australia was ranked at 140 with US$968,000 of imported apples, which was 21.9% less than that imported in 2018. In 2019, the average apple import price amounted to $897 per tonne, declining by -1.6% against the previous year. Over the past twelve-year period, it increased at an average annual rate of +1.2%. The most prominent rate of growth was recorded in 2011 when the average import price increased by 13% y-o-y. Over the period under review, average import prices reached the peak figure at $911 per tonne in 2018, and then reduced modestly in the following year.38 Prices varied noticeably by the country of destination; the country with the highest price was Vietnam ($1,608 per tonne), while Belarus ($285 per tonne) was amongst the lowest. From 2007 to 2019, the most notable rate of growth in terms of prices was attained by Vietnam, while the other global leaders experienced more modest paces of growth.38 Among the above countries, the fastest-growing markets for apples since 2015 were: Vietnam (up 825.9%), Bangladesh (up 135.7%), Indonesia (up 56%) and China (up 49.3%). Those countries that posted declines in their imported apples purchases were led by: United Kingdom (down -13.8%), Thailand (down -9.7%), Germany (down -4.7%) and Saudi Arabia (down -3%). By value, the listed 15 countries purchased 58.1% of all apples imported in 2019.31 In 2017 Germany was the biggest apple importer in the world with a share of 9% of the imported quantity followed by Russia (8%) and Belarus (5%). Some countries such as US, France, Italy and Belarus are listed in the top twenty exporters as well as importers. Share of imports by top twenty importers have grown from 60% to 73% between 2008 and 2018.31 Imports by Russia fell by 24%, which may be because of the sudden imposition of a fresh produce import ban from the European Union. Imports by Belarus showed the highest increase of 437%. Exports from Belarus also increased around the same period. Belarus shares a border with Russia and the import jump started around 2013, when Russia banned the fresh produce import from the EU. Hence instead of sending it directly to Russia, EU would have sent produce through Belarus. If that is the case, there is no real increase in imports by Belarus, it’s just the shifting of imports from one country to another.31 India also had a high growth in imports. In general, imports are increasing in Asian, African and Middle East countries. Imports declined in traditional apple consuming countries such as the UK.31

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 19 æ Apple and Pear Industry Situation Analysis 2020Top twenty importers of apple - trends (2007-2017) Top twenty importers of apple – trends (2007-2017) Import and trends

Germany 790 18.2%

Russian Federation 706 -24.2%

Belarus 483 437.3%

United Kingdom 396 -27.2% Import and import trends

Iraq 373 Germany is the biggest apple importer in the world with a share of 9%

India 331 409.0% of the imported quantity followed by Russia (8%) and Belarus (5%). Some countries such as US, France, Italy and Belarus are listed in the Mexico 281 27.8% top twenty exproters as well as importers. Share of imports by top Netherlands 253 -29.5% twenty importers have grown from 60% to 73% between 2008 and 2018. Bangladesh 234 381.1% Imports by Russia fell by 24%, could be because of the sudden Canada 217 20.4% imposition of fresh produce import ban from European union. Import by Egypt 211 268.8% Belarus showed the highest increase of 437%. Exports from Belarus also increased around the same period. Belarus shares border with 206 -20.5% Spain Russia and the import jump started around 2013, when Russia banned UAE 191 29.7% the fresh produce import from EU. Hence instead of sending it directly to Russia, EU would have sent it through Belarus. If that is the case, 185 26.7% Saudi Arabia there is no real increase in imports by Belarus, it's just the shifting of France 170 -6.9% imports from one country to another.

Taipei, Chinese 167 37.5% India also had a high growth in imports. In general, imports are USA 165 -20.1% increasing in Asian, African and Middle East countries. Imports declined in traditional apple consuming countries such as UK. Hong Kong, China 164 88.0%

Thailand 162 72.6%

Indonesia 154 5.8%

0 200 400 600 800 0.0% 200.0% 400.0% Import tonnage 2017 % growth in imports

Source: Apple production and trade - Insights from the World, Australian and WA markets25 7 Consumption

According to the report, World: Apple Market Report Analysis and Forecast to 2025, there was an upward trend in apple consumption with the Asian market was the main driver. Apple consumption is expected to continue to grow at a moderate pace following rising incomes and population growth as well as marketing programmes aimed at promoting healthy, balanced nutrition.32 The main driver behind the growing apple consumption is the dynamically developing Asian market (primarily China) where, thanks to sustainable urban growth and rising living standards, the demand for high-quality fruit will continue to grow. An increasing number of consumers are demanding fresh fruit, which is becoming possible due to development of storage technologies. The performance of the market is forecast to continue its upward trend, which is expected to bring the market volume to 107 million tonnes by 2025.36 China (48% in 2016) dominated global apple consumption. The other major consuming countries lagged far behind: the United States (4%), India (3%), Turkey (3%), Iran (3%), Poland (3%) and Russia (3%).32 The highest annual growth rates of apple consumption from 2007 to 2016 were recorded in Poland, with +15.2% growth, India and China, with +7.2% and +5.4% growth respectively. China significantly strengthened its share in terms of the global consumption from 41% in 2007 to 48% in 2016. Poland increased its share by only +2 percentage points; the share of India remained stable. By contrast, the share of Russia declined (-2 percentage points) over the period under review.32 Amongst the leading consuming countries, high levels of per capita consumption were recorded in Poland (67.5 kg per year in 2016), Turkey (35.4 kg per year), Iran (34.7kg per year) and China (31.4 kg per year), which was significantly higher than the world average of 12.2 kg per year. In these countries, per capita consumption experienced mixed trends. In Poland and China per capita consumption grew notably by +15.2% and +5.2%, respectively; Iran had a negative trend of per capita consumption (-1.8%); the level of consumption in Turkey was relatively stable.32

20 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

As outlined below from 2015-2017, the estimated per capital consumption of fresh apples was 18.27kg across 35 countries, a 58% increase over 16 years. With the removal of China from the equation, consumption decreases considerably which is reflective of Asia being the main driver of consumption.

Global Results: Estimated Per Capita Consumption of Fresh Apples, Selected Countries and Periods, 2001-2017 (kilograms) Country 2001-03 2008-10 2015-17 15-17 v 01-03 (kg) (kg) (kg) (% change) All 35 Countries 11.54 14.44 18.27 + 58.3 Excluding China 10.61 11.22 10.91 + 2.8 Excluding China and Russia 11.08 11.34 10.88 - 1.8 Source: World Apple Review 201837

On average, countries in Western Europe have a per capita consumption of 13.36kg which is about seven times higher than the average per capita consumption of non-producing East Asian countries (1.89). Greece has the highest per capita consumption among Western European countries and UK has the lowest. Hong Kong (grey trade to China needs to be excluded) has the highest among non-producing East Asian countries and Indonesia has the lowest.25 However, the per capita consumption has increased by 60% from 2000 levels for the non-producing countries, while it declined by 20% for the Western European countries. This indicates more of a stable market in the Western Europe and growing one on the other side. 25 All of the analysed countries in Western Europe experienced a decline in per capita consumption during this period. UK, which was the most important traditional export market for WA, has a consumption of just 7.61kg per person per year, which is 34% less than the total analysed country average of 11.53.25 All non-producing countries in East Asia, except Singapore increased the per capita consumption over this sixteen year period. Per capita consumption is as high as 18kg per person per year in countries like Hong Kong, while it is as little as 0.54 in countries like Indonesia. That is, an individual in Indonesia consumes just over half a kilogram of apples in a year.25 Per capita consumptionPe ar ndca itspit agro cowtnshu –m cpotmiopna raisnond i btsetw greenow tWeh -st cernom Euparoperiso na ndbe tween Western Europe and non non-producing East Asian countries producing East Asian countries Western European countries On average, countries in Western Europe has a per capita consumption of 13.36 Country which is about seven times higher than the average per capita consumption of non Greece 19.51 -3.5% producing East Asian countries (1.89). Greece has the highest per capita Netherlands 19.27 -3.4% consumption among Western European countries and UK has the lowest. Hong Kong Austria 19.06 -20.5% (grey trade to China needs to be excluded) has the highest among non producing Italy 17.68 -11.0% East Asian countries and Indonesia has the lowest. Germany 17.24 -5.6% However, the per capita consumption has increased by 60% from 2000 levels for the Denmark 16.58 -15.7% non producing countries , while it declined by 20% for the Western European France 14.15 -11.9% countries. This indicates more of a stable market in the Western Europe and growing Sweden 13.54 -9.7% one on the other side. EU-11 13.36 -20.1% All of the analysed countries in Western Europe experienced a decline in per capita Belgium 12.98 -26.0% conumption during this period. UK, which was the most important traditional export Spain 12.06 -29.6% market of WA, has a consumption of just 7.61 kg per person per year, which is 34% United Kingdom 7.61 -17.7% less than the total analysed country average of 11.53. 0 5 10 15 20 -30.0% -20.0% -10.0% 0.0% All non producing countries in East Asia, except Singapore increased the per capita Per capita consumption 2015-17 % growth in per capita consumption consumption over this sixteen year period. Per capita consumption is as high as 18kg per person per year in countries like Hong Kong, while it is as little as 0.54 in Non producing East Asian countries countries like Indonesia. That is, an individual in Indonesia consumes just over half a kilograms of apples in an year. Country Hong Kong 18.01 135.7% Size of the opportunity

Singapore 7.30 -19.3% These trends indicate the necessity of WA to focus on non producing Asian markets rather than the Western European markets. If Indonesia achieves a per capita 7.27 18.0% Taiwan consumption of half of that of the world average, potential required quantity of apples Malaysia 3.68 17.9% additionally (in addition to the current consumption) would be 1.3 million tonnes without accounting for the population growth. This is 51 times that of current WA Thailand 2.78 308.8% production. Similar is the case with other countries in the list where per capita consumption is growing from a low base. Additional requirement for Malaysia would Subtotal 1.89 60.2% be more than 57,000 tonnes , Thailand would be 188,000 tonnes and Philippines would be 420,000 tonnes; all without counting population growth. In summary, closer Philippines 1.50 68.5% to 2 million tonnes of apples would be required additionally only by four countries in Indonesia 0.54 68.8% this region (with Indonesia leading) if they achieved at least half of the world average per capita consumption in apples. 0 5 10 15 20 0.0% 200.0% 400.0% Per capita consumption 2016 % growth in per capita consumption Source: Apple production and trade - Insights from the World, Australian and WA markets25 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 21 æ Apple and Pear Industry Situation Analysis 2020 Pears 8 Global Value and Production

The estimated total world production for pears in 2017 was 24,168,309 metric tonnes, an increase of 2.1% from 23,676,110 tonnes in 2016. China was by far the largest producer, accounting for over 67% (two- thirds) of global production and producing 16,410,000 tonnes while Australia was ranked 21 with 96,741 tonnes of pears in 2017, which accounted for 0.4% of world production.21 Production by Country >100,000 tonnes 10,000–100,000 tonnes

In 2018 the global pear production stood at 25m tonnes, surging by 1.8% against the previous year. The total output volume increased at an average annual rate of +1.5% over the period from 2008 to 2018; the trend pattern remained relatively stable, with only minor fluctuations being observed throughout the analysed period. The pace of growth was the most pronounced in 2011 when production volume increased by 6.2% year-to-year. The global pear production peaked at 26m tonnes in 2014; however, from 2015 to 2018, production stood at a somewhat lower figure. The general positive trend in terms of pear output was largely conditioned by a mild increase of the harvested area and measured growth in yield figures.33 The ‘World Pear Market Analysis Forecast, Size, Trends and Insights’ report outlined the value of pear production amounted to $27.7B in 2018 estimated in export value. The total output value increased at an average annual rate of +3.1% over the period from 2008 to 2018; the trend pattern indicated some noticeable fluctuations being recorded over the period under review. The most prominent rate of growth was recorded in 2013 with an increase of 16% against the previous year. The global pear production peaked at $31.3B in 2014; however, from 2015 to 2018, production stood at a somewhat lower figure.33

22 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

China (17m tonnes) remains the largest pear producing country worldwide, comprising approximately 68% of total production. Pear production in China exceeded the figures recorded by the world’s second-largest producer, Argentina more than tenfold. Italy ranked third in terms of total production with a 3.1% share.33 In China pear production increased at an average annual rate of +2.2% over the period from 2008-2018. The remaining producing countries recorded the following average annual rates of production growth: Argentina (+2.6% per year) and Italy (-0.0% per year).33 World production for 2019/20 is forecast up 13 percent from 2018/19 season to 23.1 million tonnes as gains in China more than offset weather induced losses in the European Union. Higher output in China is expected to boost global trade.28 China’s production is projected to rebound from last year’s frost-damaged crop, surging over 20% to 17 million tons on favourable weather. Improved supplies are forecast to drive exports up almost 40% to 500,000 tons on higher shipments, especially to Indonesia and Vietnam. Imports, though small, are also forecast up, rising to 15,000 tons as successful EU marketing campaigns rouse interest in Western pear varieties.28 EU production is forecast down over 400,000 tons to 2.2 million as nearly all Member States experienced crop-damaging weather. Exports are expected to plummet nearly 30% to 220,000 tons on reduced output, while the lower supplies are expected to boost import demand by 12,000 tons to 180,000.28 US production is unchanged at 726,000 tons as higher yield in California on good weather conditions offsets losses in Washington resulting from fire blight disease, hail, and heavy rain. USDA’s National Agricultural Statistics Service surveyed industry and published a U.S. forecast for pear production in the August 2019 Crop Production report. Exports are expected up slightly to 150,000 tons on improved deliveries to top markets, including Mexico, Canada, and India. Higher shipments from China and South Korea are expected to help lift imports, forecast up 7,500 tons to 80,000. 28 Argentina’s production is forecast unchanged at 590,000 tons on normal weather conditions. The industry continues to struggle with rising input costs and lack of investment. Exports are also expected to remain steady at 300,000 tons on sustained demand from Northern Hemisphere markets.28 Chile’s production is expected to see a drop of 25,000 tons to 227,000, a third straight year of reduced output as drought lowers yield and planted area continues to decline. Shrinking supplies are expected to lower exports 13,000 tons to 117,000, its lowest level since 2013/14.28 South Africa’s production is projected up slightly to 415,000 tons on normal winter rainfall and new plantings coming into production. With nearly 60% of production exported on average, higher supplies are expected to raise exports 5,000 tons to 245,000.28 Russia’s production is forecast slightly higher to 245,000 tons on improved output in non-commercial, or household, orchards. Imports are expected to ease again, down to 253,000 tons, as consumers continue to lean towards less expensive fruit. However, Russia remains the world’s top pear importer.28

Latest forecast on file: Pears, Fresh % World Production

Source: https://apps.fas.usda.gov/psdonline/app/index.html#/app/topCountriesByCommodity#table12534

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 23 æ Apple and Pear Industry Situation Analysis 2020

In 2018 the global pear harvested area stood at 1.4m hectares, approximately mirroring the previous year. Overall, the pear harvested area continues to indicate a slight contraction. The most prominent rate of growth was recorded in 2011 with an increase of 2% against the previous year. The global pear harvested area peaked at 1.6m ha in 2013; however, from 2014 to 2018, harvested area stood at a lower figure.33

Source: https://en.wikipedia.org/wiki/List_of_countries_by_pear_production21 Driven by increasing demand for pears worldwide, the market is expected to continue an upward consumption trend over the next seven years. Market performance is forecast to retain its current trend pattern, expanding with an anticipated CAGR of +1.9% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 28m tonnes by the end of 2025.33

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9 Southern Hemisphere Production

Southern Hemisphere producers including Australia account for around 5% of global pear production.

Countries in this hemisphere include Argentina, Australia, Brazil, Chile, New Zealand and South Africa. In 2019 Australia was the fourth biggest producer of pears in the Southern Hemisphere behind Argentina,

South Africa and Chile. Australia produced about 7% of pears and New Zealand accounted for 1% in 2019.

The forecast showed 2020 Southern Hemisphere pear crops are expected to reach 1,276,000 tonnes. The pear crop is expected to decrease by 3% compared to 2019. Export is expected to decrease by 2% to

691,660 SOUTHERN tonnes. 26HEMISPHERE PEAR PRODUCTION

SOUTHERN HEMISPHERE PEAR PRODUCTION Sout SOUTHERNhern Hemis HEMISPHEREphere pear prodPEAR uctiPRODUCTIONon SOUTHERN HEMISPHERE PEAR PRODUCTION

Source: Southern Hemisphere Forecast 202026

10 Varieties

The most popular variety grown in the Southern Hemisphere in Argentina, Australia, Brazil, Chile, New

Zealand and South Africa is Packham’s which accounted for 35% of production in 2019. This was followed by Williams BC at 30% and other varieties comprised 26%. Beurre Bosc production was 1% of total production in the Southern Hemisphere.

Source: Southern Hemisphere Forecast 202026

11 Yield

The global average pear yield was 18 tonnes per hectare in 2018, increasing 2.8% against the previous year. The yield figure increased at an average annual rate of +2.8% over the period from 2008 to 2018; the trend pattern remained consistent, with only minor fluctuations being recorded throughout the analysed period. The growth pace was the most rapid in 2017 with an increase of 7.2% against the previous year. The global pear yield peaked in 2018 and is likely to continue its growth in the near future.33

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 25 æ Apple and Pear Industry Situation Analysis 2020

12 Trade

Global exports of pears amounted to 2.8 million tonnes in 2018, jumping by 4.6% against the previous year. Overall pear exports continue to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2014 when exports increased by 5.7% year on year. The global exports peaked at 2.8m tonnes in 2008 however, from 2009 to 2018 exports stood at a somewhat lower figure.33 In value terms, pear exports stood at US$2.7 billion (IndexBox estimates) in 2018. The most prominent rate of growth was recorded in 2013 when exports increased by 11% year-to-year. In that year, global pear exports reached their peak of $2.8B. From 2014 to 2018, the growth of global pear exports failed to regain its momentum.33 In 2018 China (544K tonnes), distantly followed by the Netherlands (337K tonnes), Argentina (317K tonnes), South Africa (302K tonnes), Belgium (288K tonnes), Italy (158K tonnes), Chile (156K tonnes), Spain (145K tonnes) and the U.S. (132K tonnes) represented the major exporters of pears, together achieving 86% of total exports.33 Australia was ranked 17th for pear exports and accounted for 0.6% of exports which was 12.71K tonnes valued at US$15.63 million.39 From 2008 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by South Africa, while the other global leaders experienced more modest paces of growth. In value terms, China (US$602 million), the Netherlands (US$381 million) and Argentina (US$294 million) were the countries with the highest levels of exports in 2018, with a combined 48% share of global exports.33 China experienced the highest rates of growth with regard to exports, in terms of the main exporting countries over the last decade, while the other global leaders experienced mixed trends in the exports figures.33 In 2018 the average pear export price amounted to $962 per tonne, approximately reflecting the previous year. Over the period under review, the pear export price continues to indicate a relatively flat trend pattern. The growth pace was the most rapid in 2013; an increase of 15% year on year. In that year, the average export prices for pears reached their peak level of $1,127 per tonne. From 2014 to 2018, the growth in terms of the average export prices for pears failed to regain its momentum.33 There were significant differences in the average prices amongst the major exporting countries. In 2018, the country with the highest price was Italy ($1,299 per tonne), while South Africa ($636 per tonne) was amongst the lowest. From 2008 to 2018, the most notable rate of growth in terms of prices was attained by China, while the other global leaders experienced more modest paces of growth.33 Global imports amounted to 2.7 million tonnes in 2018, rising by 3% against the previous year. In general pear imports continue to indicate a mild contraction. The pace of growth appeared the most rapid in 2017 with an increase of 7.3% year-to-year. Over the period under review, global pear imports reached their peak figure at 3.1 million tonnes in 2008; however, from 2009 to 2018, imports failed to regain their momentum. In value terms, pear imports amounted to US$2.7B (IndexBox estimates) in 2018. Over the period under review, pear imports continue to indicate a measured drop. The growth pace was the most rapid in 2017 with an increase of 13% year on year. Over the period under review, global pear imports attained their peak figure at $3.3B in 2008; from 2009 to 2018 imports failed to regain their momentum.33 Australia imported a total of 2.30K tonnes of pears in 2018 valued at $2.83 million which accounted for 0.1% of value of global imports.39

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The countries with the highest levels of pear imports in 2018 were Russia (271K tonnes), Indonesia (187K tonnes), Germany (185K tonnes), Brazil (158K tonnes), the UK (138K tonnes), the Netherlands (129K tonnes), the US (123K tonnes), France (116K tonnes), Vietnam (100K tonnes), Belarus (83K tonnes), China, Hong Kong SAR (82K tonnes) and Italy (80K tonnes), together accounting for 61% of total imports.33 From 2008 to 2018, the most notable rate of growth in terms of imports, amongst the main importing countries, was attained by Belarus, while the other global leaders experienced more modest paces of growth.33 In US dollar value terms Germany ($244million), Russia ($202 million) and Indonesia ($147 million) were the countries with the highest levels of imports in 2018, together accounting for 22% of global imports. Brazil, Vietnam, the US, the UK, the Netherlands, France, Italy, Belarus and China, Hong Kong SAR lagged somewhat behind, together accounting for a further 37%.33 In 2018, the average pear import price amounted to $994 per tonne, stabilizing at the previous year. Overall the pear import price continues to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2013 an increase of 7.4% against the previous year. In that year, the average import prices for pears attained their peak level of $1,108 per tonne. From 2014 to 2018, the growth in terms of the average import prices for pears remained at a lower figure.33 Prices varied noticeably by the country of destination; the country with the highest price was Vietnam ($1,414 per tonne), while China, Hong Kong SAR ($577 per tonne) was amongst the lowest. From 2008 to 2018 the most notable rate of growth in terms of prices was attained by Vietnam, while the other global leaders experienced more modest paces of growth.33 13 Consumption

The country with the largest volume of pear consumption was China (16 million tonnes), accounting for 66% of total consumption. Pear consumption in China exceeded the figures recorded by the world’s second-largest consumer, Italy (689K tonnes), more than tenfold. The US (658K tonnes) ranked third in terms of total consumption with a 2.7% share.33 From 2008 to 2018 the average annual rate of growth in terms of volume in China stood at +2.1%. The remaining consuming countries recorded the following average annual rates of consumption growth: Italy (+0.2% per year) and the US (+0.9% per year). In value terms China ($17.5B) led the market. The second position in the ranking was occupied by Italy ($887M) followed by the US.33 The countries with the highest levels of pear per capita consumption in 2018 were Argentina (14,247kg per 1,000 persons), Italy (11,598kg per 1,000 persons) and China (11,233kg per 1,000 persons). From 2008 to 2018 the most notable rate of growth in terms of pears per capita consumption amongst the main consuming countries was attained by Argentina, while the other global leaders experienced more modest paces of growth.33

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 27 æ Apple and Pear Industry Situation Analysis 2020 Apple and Pear Breeding Programs Globally there are many breeding programs for pears and apples; one report indicated there were 100 active apple breeding programs in the world which makes it impossible to identify them all but some of the programs are outlined below: æ New Zealand Prevar was established to globally commercialise the new apple and pear cultivars bred in New Zealand by research organisation Plant & Food Research (PFR) to assist Australian and New Zealand growers to achieve sustainable profits from new cultivars. This will require complementary Northern Hemisphere commercialisation to provide market demand, achieve critical mass and brand investment. Prevar exclusively contracts with Plant & Food Research to undertake the apple and pear breeding with Prevar determining the cultivar breeding themes. Since its establishment, Prevar has delivered 12 cultivars to New Zealand and Australian growers. Brands that have been developed by Prevar and are in production across Australia include Piqa®Boo®, Rockit® and Smitten™ licensed to Freshmax, Lenswood Co-operative and Montague respectively. Website -https://prevar.co.nz/

æ Spain The Hot Climate Programme (HCP) was initiated in 2002 by Plant & Food Research and IRTA to address challenges that were being experienced by Spanish growers, particularly those of the Catalan region, with traditional apple and pear varieties. Several new varieties have been identified in the HCP with potential for commercialisation and the programme partners including grower group Fruit Futur, who began investing in the programme in 2003, have selected T&G Global as their preferred partner for managing the commercialisation of the varieties worldwide. T&G Global has had success in bringing world-leading varieties to international markets including award-winning JAZZ™ and Envy™ apples which are sold in 60 countries across Europe, US and Asia. æ China Shennong Variety Management Ltd. is an Intellectual Property company that manages the importation, propagation, evaluation, and commercialisation of new fruit varieties throughout the Chinese provinces. SVM is a New Zealand foreign-owned company that was established in 2006. The company is based in Shenzhen, servicing local farmers and businesses. The company’s objective is to manage and protect IP for domestic and international variety owners in China and also to represent Chinese plant breeders in the international market and enable them to access foreign retailers. Since the company’s inception Shennong Variety Management Ltd has established trial sites in the key horticultural production provinces of China. Shennong Variety Management Ltd is the representative of Associated International Group of Nurserymen in China. Through its shareholders and AIGN® membership, the company has vast experience in the production and protection of intellectual property. Website - http://www.shennong.co.nz/

æ United States The Washington State University apple breeding program began in 1994 to develop new varieties suited to the unique climate of central Washington and that are available to Washington growers. Washington is the leading apple producing state with over 60% of US production. Many of the new varieties developed in the world are not well adapted to growing conditions in central Washington or available to the majority of Washington growers. This program is attempting to address both these challenges: • Producing new improved apple varieties especially suited to growing conditions. • Producing new dwarfing, precocious rootstocks for pears.

28 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

The Washington State University apple breeding program goal is to produce apples of a high eating quality with particular factors of outstanding flavour, texture and juiciness. The breeding program is a traditional breeding program, hybridizing parents with desirable traits. Promising seedlings are selected from large populations and their fruit is evaluated in the laboratory for eating quality and suitability for long-term storage. The first release from the program, ‘WA 2’, was offered to Washington State growers for evaluation in December 2009. This was followed by ‘WA 5’ in 2010 and ‘WA 38’ in 2012. Several other elite selections have been planted in commercial grower trials in central Washington. The WSU apple breeding program recently released Cosmic Crisp® WA38 an eye-catching, large, dark red apple with a remarkably firm, crisp, and juicy texture that also stores well. The apple has outstanding eating quality, exceptional flavour, ample sweetness and sufficient tartness to impart real character. The first commercial trees were planted in 2017. In contrast to several other fruit crops, the US pear industry lacks appropriate rootstocks on which to establish modern high-density orchards. Without appropriate rootstocks, there is a reluctance to plant new high-quality scion cultivars that can enhance consumer satisfaction and increase the profitability of the pear industry. The adoption of several other orchard innovations rests on the availability of rootstocks, for example improved production efficiency, worker safety and reduced pesticide inputs. In many international pear producing regions, production systems for pears mirror those of apples as they rely on dwarfing quince rootstock. In the PNW, growers have been reluctant to transition to current commercially available quince rootstocks since they lack cold hardiness. A recent collaborative effort by the US pear industry and research community has resulted in the development of a roadmap to focus attention on urgent needs. The long-term goal is to revive and modernize the US pear industry and to increase its sustainability by enhancing orchard efficiency. Progress towards this goal was started recently by the establishment of the Pear Genomics Research Network (PGRN) which brings together researchers and industry representatives of the major pear producing areas in the US, namely Washington, Oregon and California.

Website - http://tfrec.cahnrs.wsu.edu/breed/ The University of Minnesota has been breeding apples, berries, grapes, ornamental trees and shrubs, flowers, and grasses for over 150 years. The desire for locally grown, fresh, and delicious food resonated with the early plant breeders at the University of Minnesota. The development of ‘Honeycrisp’ is recognised as one of the top 25 innovations of the decade by the 2006 Better World Report. Since ‘Honeycrisp’ trees were introduced in 1991 millions’ have been planted, producing excellent fruit that is enjoyed by consumers all over the US. Research scientists manually and painstakingly cross-pollinate flowers in much the same way that it occurs in nature. With the most recent U of M introduction of the MN55 cultivar under the Rave® brand (aka First Kiss® in MN), breeders set out to create an apple with the texture of ‘Honeycrisp’ and a more sprightly flavour that would be ready to harvest earlier in the season. To accomplish this, they made hundreds of crosses and generated thousands of trees. The ultimate winner was a cross between ‘Honeycrisp’ and an early season variety from the University of Arkansas known as AA44. The result is a crisp, flavourful apple ready to harvest and sell in mid-to-late August. Taste remains the primary concern for our apple breeders and First Kiss®/Rave® apples deliver by offering a well-balanced sprightly flavour when picked at full maturity. Four other U of M brands of apples with distinctive traits -Zestar!®, SnowSweet®, SweeTango®, and Frostbite™ - continue to delight consumers with their unique flavour profiles. Website - https://mnhardy.umn.edu/ The Apple Rootstock Breeding program which was initiated in 1968 is based in Geneva, NY. It was initiated with the objective of developing rootstock genotypes that increased orchard productivity and reduced pesticide input. In 1998 the Cornell University rootstock breeding program was converted to a joint breeding program with the United States Department of Agriculture (USDA) with a USDA plant breeder as the lead scientist and with several Cornell scientists as co-operators. From the 30 year effort in apple rootstock breeding a large number of disease resistant, productive selections have been developed and are in the process of being delivered to the industry.

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 29 æ Apple and Pear Industry Situation Analysis 2020

The aim of the program is to develop new productive, disease resistant apple rootstocks using modern selection techniques. In the next 2 years the program is poised to deliver five new productive apple rootstocks to US growers that are resistant to fire blight and soil borne diseases. In addition in the next five years it will deliver research into genotypes that are amenable to mechanisation and labour efficiency. Website - https://www.ars.usda.gov/northeast-area/geneva-ny/plant-genetic-resources-unit-pgru/docs/national- apple-rootstock-breeding-program/

æ South Korea The National Institute of Horticultural and Herbal Science (NIHHS) has dedicated apple and pear breeding programs. The mission of the Apple Research Institute located at Gunwi is the development of new apple varieties, evaluation of genetic resources, establishment of apple production systems, and development of diseases and pest management system including integrated pest management. In South Korea the preference for small-sized and low-acidity apples is increasing with the growing number of one person households and the aging of the population. In addition, the increase in consumption of imported fruits reduced the consumption of apples. In the initial stage of dissemination of apple cultivated varieties, technology was transferred to many seedling enterprises and seedlings are actively distributed in farmhouses. The first shipments of ‘Arisoo’ and ‘RubyS’ were cooperatively shipped with an agricultural cooperatives federation, resulting in improved market recognition and price stabilisation. Through the demonstration project of the Rural Development Administration, seedlings and cultivation technologies were distributed to 9 cities of the main apple growing regions. In particular, Gimcheon (‘Hwangok’), Yecheon (‘Picnic’) and Jeongseon (‘Honggeum’) are establishing a production complex and laying the groundwork for local specialisation of cultivars. These cultivars have received great popularity. The Pear Research Institute, located at Naju focuses on breeding pear and persimmon and blueberry and their distribution, along with integrated pest management, reducing production cost and renovating production systems. The pear industry scale is decreasing in South Korea due to aging of producers, urbanisation, and cultivation of a single cultivar ‘Nittaka’. Demand for high quality and eco-friendly safe production is increasing so it is necessary to expand the pear cultivation area using specialised local province brands and new cultivars.

Website - http://www.nihhs.go.kr/eng/main/mainView.do

æ Belgium Better3fruit focuses on breeding apples and pears and developing new varieties. Every year they create 35,000 new varieties. After years of selecting, only a few of those make it that meet the standards in terms of appeal, eating experience, storage capacity, production, pack-out, disease tolerance. Website - http://www.better3fruit.com/ There are also breeding programs located in Canada, Japan, Russia, South Africa, Italy, Poland, France, Germany, Switzerland, Austria, Brazil, the Netherlands and more.

30 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

AUSTRALIAN POMEƉƉůĞƐ FRUIT SITUATION ƉƉůĞƐ

2017 2018 2019 &ƌĞƐŚƉƉůĞKǀĞƌǀŝĞǁ Year Ending June Apples Value Value % YoY Value % YoY ƉƉůĞƉƌŽĚƵĐƟŽŶŽĐĐƵƌƐĂĐƌŽƐƐĂůůƐƚĂƚĞƐŝŶ Production (t) 319,686 315,183 -1% 310,875 -1% 1 National ValueƵƐƚƌĂůŝĂ͘,ĂƌǀĞƐƟŶŐƚLJƉŝĐĂůůLJŽĐĐƵƌƐďĞƚǁĞĞŶ and Production Production ($m) $ 497.2 $ 465.3 -6% $ 512.8 +10% &ĞďƌƵĂƌLJĂŶĚDĂLJ͘zĞĂƌ-ƌŽƵŶĚĂǀĂŝůĂďŝůŝƚLJŝƐ Producing Trees (000 Trees) 11,645 11,421 -2% 11,421 - ŵĂĚĞƉŽƐƐŝďůĞƚŚƌŽƵŐŚƚŚĞƵƐĞŽĨĐŽŶƚƌŽůůĞĚ Fresh Export Volume (t) 4,950 5,058 +2% 4,416 -13% Apple production in AustraliaĂƚŵŽƐƉŚĞƌĞƚĞĐŚŶŽůŽŐLJ͘ averages around 300,000t a year. Around 73% is consumedFresh fresh Export with Value ($m)the $ 12.7 $ 11.3 -12% $ 10.6 -6% &ŽƌƚŚĞLJĞĂƌĞŶĚŝŶŐ:ƵŶĞϮϬϭϵ͗ Fresh Import Volume (t) 1,053 1,145 +9% 732 -36% remainder going to processing and juicing.6 In 2019 there were 310,875 tonnes of applesFresh produced Import Value and ($m) $ 2.4 $ 2.9 +17% $ 1.9 -35% · ϯϭϬ͕ϴϳϱƚƉƌŽĚƵĐĞĚĂŶĚǀĂůƵĞĚĂƚΨϱϭϯŵ valued at $513 million, of which 30% was sent to be processed, 1% was exported and 69% wasFresh freshSupply (t) supply 223,234 219,115 -2% 213,711 -2% ǁŝƚŚϯϬйƐĞŶƚƚŽďĞƉƌŽĐĞƐƐĞĚ͘ which consisted of 87% into the retail sector and 13% into food service. The wholesale valueFresh Supplyof the Wholesale fresh Value ($m) $ 554.5 $ 519.5 -6% $ 572.6 +10% · dŚĞǁŚŽůĞƐĂůĞǀĂůƵĞŽĨƚŚĞĨƌĞƐŚƐƵƉƉůLJǁĂƐ Supply per Capita (kg) 9.11 8.79 -4% 8.48 -4% supply was $573 million, with $496m distributed into retail and $76.8m into food service.2 Processing Ψϱϳϯŵ͕ǁŝƚŚΨϰϵϲŵĚŝƐƚƌŝďƵƚĞĚŝŶƚŽƌĞƚĂŝůĂŶĚΨϳϲ͘ϴŵŝŶƚŽĨŽŽĚƐĞƌǀŝĐĞ͘ ^ŽƵƌĐĞƐ͗^͖͖W>͖&s/t͖'d͖DWΘ;&ƌĞƐŚůŽŐŝĐŶĂůLJƐŝƐͿ includes dried apples and· ϵϭй beverages.ŽĨƵƐƚƌĂůŝĂŶŚŽƵƐĞŚŽůĚƐƉƵƌĐŚĂƐĞĚĂƉƉůĞƐ͕ďƵLJŝŶŐĂŶĂǀĞƌĂŐĞŽĨ By contrast the ‘Apple & Pear Crop EstimateϵϰϱŐ 2020’ reports Australian 3 apple production in 2019ƉĞƌƐŚŽƉƉŝŶŐƚƌŝƉ͘ was 288,542 tonnes which was valued at $512 million. DĂũŽƌƉƉůĞWƌŽĚƵĐƟŽŶƌĞĂƐ · dŚĞƐƵƉƉůLJƉĞƌĐĂƉŝƚĂǁĂƐϴ͘ϱŬŐ͕ďĂƐĞĚŽŶƚŚĞǀŽůƵŵĞƐƵƉƉůŝĞĚ͘ ƉƉůĞƐĂƌĞŐƌŽǁŶŝŶĂůůƵƐƚƌĂůŝĂŶƐƚĂƚĞƐ͘dŚĞŵĂũŽƌƉƌŽĚƵĐŝŶŐĂƌĞĂƐŝŶĐůƵĚĞ Fresh Apple Supply Chain – Year Ending June 2019 &ƌĞƐŚƉƉůĞ^ƵƉƉůLJŚĂŝŶ—zĞĂƌŶĚŝŶŐ:ƵŶĞϮϬϭϵ ^ƚĂŶƚŚŽƌƉĞŝŶYƵĞĞŶƐůĂŶĚ͖ĂƚůŽǁĂŶĚKƌĂŶŐĞŝŶEĞǁ^ŽƵƚŚtĂůĞƐ͖ƚŚĞ 'ŽƵůďƵƌŶsĂůůĞLJ͕'ŝƉƉƐůĂŶĚ͕zĂƌƌĂsĂůůĞLJĂŶĚƚŚĞDŽƌŶŝŶŐƚŽŶWĞŶŝŶƐƵůĂŝŶ Consumermetrics sŝĐƚŽƌŝĂ͖ƚŚĞ,ƵŽŶsĂůůĞLJĂŶĚEŽƌƚŚtĞƐƚdĂƐŵĂŶŝĂ͖ĚĞůĂŝĚĞ,ŝůůƐŝŶ^ŽƵƚŚ 4,416t Fresh Export 185,031t ƵƐƚƌĂůŝĂ͖ĂŶĚŽŶŶLJďƌŽŽŬĂŶĚDĂŶũŝŵƵƉŝŶtĞƐƚĞƌŶƵƐƚƌĂůŝĂ͘ $10.6m Retail 91% 945g 8.5 kg $496m

1% 87% 310,875t 213,711t Production 69% Fresh Supply $513m $573m 13% 30% 100% 28,680t ^ƚĂŶƚŚŽƌƉĞ Food Service $76.8m 732t Processing 93,480t Fresh Import ĂƚůŽǁ $1.9m ŽŶŶLJďƌŽŽŬ DĂŶũŝŵƵƉ ĚĞůĂŝĚĞ 'ŽƵůďƵƌŶsĂůůĞLJ 0% ,ŝůůƐ zĂƌƌĂsĂůůĞLJͬ DŽƌŶŝŶŐƚŽŶ ^ŽƵƌĐĞƐ͗^͖͖ƉƉůĞƐΘWĞĂƌƐƵƐƚƌĂůŝĂ>ŝŵŝƚĞĚ;W>Ϳ͖&s/t͖'d͖DWΘ;&ƌĞƐŚůŽŐŝĐ ^ŽƵƌĐĞ͗W> ,ƵŽŶsĂůůĞLJ Source: Horticulture InnovationŶĂůLJƐŝƐͿ Australia Limited, Australian Horticulture Statistics Handbook 2018/192 The gross apple production for the 2020 harvest wasϮϬϭϴͬϭϵƵƐƚƌĂůŝĂŶ,ŽƌƟĐƵůƚƵƌĞ expected to be the lowest in six yearsϮϬϭϴͬϭϵƵƐƚƌĂůŝĂŶ,ŽƌƟĐƵůƚƵƌĞ with an ϱϲ ^ƚĂƟƐƟĐƐ,ĂŶĚŬ ^ƚĂƟƐƟĐƐ,ĂŶĚŬ ϱϳ estimated 255,597 tonnes (-11.4% from 2019, -4.8% from 2018).. The changeϭϳͬϬϯͬϮϬϮϬ in productionϭϳͬϬϯͬϮϬϮϬ volume is primarily attributable to a reduced Granny Smith, Pink Lady and Gala crop in most growing regions which is generally seen as a response to a very hot and dry 2018/19 season. This is further impacted by reduced average fruit size across most apple varieties for the 2020 forecast relative to the 2019 harvest. Bushfires in NSW and South Australia have also impacted national production volumes. Hail significantly affected the Western Australian crop and is expected to reduce pack-outs. Extreme drought conditions in northern NSW and Queensland are likely to see reduced volumes from these two areas.3

Australian Apple Production 2015-2020 2015 2016 2017 2018 2019 2020 Forecast Production (tonnes) 295,196 308,298 313,730 268,355 288,542 255,596 Production ($m) 556 541 512 491 512 Plantings (ha) 9594 9610 9495 9460 9550 9625 National Class 1 pack out 215,764 216,771 224,077 198,534 193,965 182,136 % Class 1 pack out 73% 68% 71% 68% 67% 71% Source: Horticulture Innovation 2/3; APAL 1, ABS4 The planted area remains relatively stable for apple production at around 9,500 hectares. Across Australian orchards over the past five years an average of 69% of apples were classified as Class 1. Aside from fresh apple production, apples are also grown and dried in smaller quantities in the Goulburn Valley in Victoria where apples grown for drying account for 36% of dried tree fruit production, second to apricots (47%).2

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 31 æ Apple and Pear Industry Situation Analysis 2020

While the Australian apple industry is a small player on a global scale, within Australia it is a significant player in the fruit industry. For the year ending June 2019 the Australian apple industry was valued at $513 million, making it the fifth highest fruit industry in the nation, behind berries which are combined ($938m), citrus ($829.3m), table grapes ($693.2m) and bananas ($594.6m). In addition, the pear industry was valued at around $115.4 million, making a combined value for the apple and pear industry of $628 million.2 In terms of production volume, the Australian Pome fruit industry (apples and pears) accounted for 425,000 tonnes, making it the second highest producing fruit industry to citrus which produced 744,374 tonnes in 2019.2 Despite a high production level, Australia exports a relatively small proportion of its apples and in 2019 it exported only 4,416 tonnes and 9,190 tonnes of pears. Imports were minimal for apples at 732 tonnes.2 Australia exports 1-2 per cent of total marketable production of apples and 8% of pears.1 2 State Production

Apples are grown in all Australian states. The major producing areas include Stanthorpe in Queensland; Batlow and Orange in New South Wales; the Goulburn Valley, Gippsland, Yarra Valley and the Mornington Peninsula in Victoria; the Huon Valley and North West Tasmania; Adelaide Hills in South Australia and Donnybrook and Manjimup in Western Australia.

Stanthorpe

Donnybrook

Manjimup Batlow Adelaide Hills Goulburn Valley Yarra Valley / Mornington Huon Valley

Victoria has always consistently led apple production in Australia. In 2019 it accounted for 48%, followed by New South Wales with 12% and then Queensland, South Australia, Tasmania and Western Australia all producing around 10% of the nation’s apples.

Australian Apple Production per state 2017-2020 (F) in kilograms State 2017 2018 2019 2019% 2020 (F) Victoria 145,939,452 125,592,584 137,645,076 48 119,638,216 NSW 34,887,156 29,671,419 33,273,529 12 27,512,693 Queensland 34,927,270 28,099,080 29,966,264 10 25,678,766 South Australia 27,605,258 29,558,139 29,941,508 10 26,586,598 Western Australia 37,076,082 25,659,973 27,967,006 10 25,323,809 Tasmania 33,295,178 29,773,453 29,749,039 10 30,856,482 TOTAL 313,730,396 268,354,648 288,542,422 100 255,596,564 Source: Horticulture Innovation Australia ‘Apple & Pear Crop Estimate 2020’ 3

32 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

æ Victoria Victoria is the major growing area of apples and pears in Australia. Victorian orchards produced around 133,028 tonnes of apples in 2015-16 worth approximately $250m. The main varieties of apples grown in Victoria are Cripps Pink (sold as Pink Lady®), Granny Smith and Royal Gala. Victoria also produces dried apples. Apples grown for drying in the Goulburn Valley accounted for 36% of dried fruit production in Australia in 2018-19, second to dried apricots (47%).2 7 æ New South Wales There are approximately 80 growers in NSW, predominantly centred around Orange and Batlow. Cripps Pink (marketed as Pink Lady®) and Royal Gala have overtaken Red Delicious as the most widely grown varieties in NSW and a number of new varieties such as Kanzi®, Jazz™ and Bravo™ are being planted.7 æ Queensland In 2017 there were approximately 32 apple growers in Queensland, many of whom have farmed for generations and who also grow stone fruit, pears and cherries. The main apple varieties grown in the Granite Belt at present include: Pink Lady®, Royal Gala, Granny Smith and Red Delicious.7 æ South Australia South Australia produces around 10% of Australia’s apple production, predominantly Cripps Pink (sold as Pink Lady®), Royal Gala, Fuji and Granny Smith, although there is a strong trend towards planting the newer varieties of Rockit®, MiApple®, Red Love, Jazz™, Kanzi™ and Envy™, with an estimated 15% of planted area growing newer varieties in 2017. South Australian fresh apple exports have been increasing over the past three years and processed apple juice and dried apples are also exported. There are currently about 1.5 million apple trees in South Australia, grown by around 60 apple growers, of which about 40 growers primarily produce apples; the remainder produce apples with other mixed enterprises. Most apple growers in SA (80%) have small holdings of less than 20ha; the remaining 20% in excess of 20ha. Apple orchards in SA are almost all family-owned and run.7 æ Tasmania The “Apple Isle” has built a reputation for premium quality apples, capitalising on its status as one of the world’s few remaining pristine environments, it’s seasonal advantage which enables it to send high quality fresh fruit to Northern Hemisphere markets when local production is not available. As an island, Tasmania has a natural quarantine advantage and is recognised nationally and internationally for Area Freedom status for Fruit Fly. The State moratorium on GM means Tasmania is also GM-free. Tasmania is perfect for growing just about any variety of apple. There are approximately 50-60 apple growers in the State. Between 30 and 35% of the total crop is exported; the main markets being Taiwan, Singapore, Malaysia and the Philippines. Another 20–25% is sold interstate (mainly Sydney, Brisbane and Melbourne). A further 15% of the crop is consumed in Tasmania with the remainder processed. Many growers sell direct to the public.7 æ Western Australia Home of the Cripps Pink variety (sold as Pink Lady®), now the most widely grown apple nationally accounting for newly a third of production, and more recently the Bravo™ apple, Western Australia has a proud tradition of apple innovation and production. Many of the orchardists still operating in WA are fifth or sixth generation. There are 120-130 apple growers in WA, predominantly in the south west, but also in the Perth Hills in combination with stone fruit. In 2015-16 they produced 34,376 tonnes. (Ag. Commodities, 2015-16) The main varieties grown are Cripps Pink, Royal Gala and Granny Smith, but new varieties include Bravo™, Jazz™ and Kanzi™.7 Source: APAL website ‘Industry Statistics’1

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 33 ApApplep lien dinudsAutprsyptr liyen iiAnn udAsuutsrstatrrlyiaa li in-a A- ustralia - CoCmopmapraisroisnCo oonmf o ppfr aporrdiosudocuntic otnifo panrn oaddn ucdoc ctnioosnonsl iaodnlaidti aoctonion inns o itnlhi dteha ietni odinnud siuntrs ythrye industry

AusAtruaslitar aplirao dpurocdeudc aebAdo uausbtt or2au6lti5a 2, 0p60r5o0,0d t0uo0cne ntdoe nsan boeofs ua otp f2p a6lep5sp, 0ilne0 s02 i0tno1 n27n0-1e18s7 .-o 1Vf8 iac. ptVopriclieatos l reiina d2les0a 1ad7ps-p 1ale8p .p Vlreoic dptourorcidtaiou lncet aiaodnnsd a enpxdpp leox rptpsro.o rVdtsuic.c tVtoioricinato airnniacdr i eneacxsrpeoadrs tisets.d Vs iihtcsat osrerhi ain rie np cirnroe dpaursocedtidou ncitt sifo rsonhm far ro3em9 i%n 3 p9tor%o 4d t7uo%c 4t,i7o a%nn ,fd ra oSnmod u 3St9ho%ut hto 47%, and South AusAtruaslitar afrlioam fr o7m% 7to% 1A t1uo%s 1t.r1 aW%liaA. W'fsro Asmh'sa 7sr%eh ad treoec 1dli1ne%ecdl.in WferodAm 'fsr o 1sm2h% a1r 2eto% d 1 et0oc%l i1n.0e%d .from 12% to 10%.

VictVoriciato hriaas h juast ju3s6t% 3V 6oi%fc t ohorefi a tnh hueam nsbu jeumrs bot ef3 rb6 ou%fs bionufe stshinsee sn sueemvseb enev rwe ointfh wb 4uit7sh%i n4e 7os%fs pe orsof edpvuroecdntiou wncit,ti hole n4a,7 dle%inag do itfno pg ar ot ohd iuagc hht iipogrnho, dpleuroacdtiouinncgt i potoen r a pb ehurisg bihnu epssirnso edosufs c6 to2iof5 n6 t 2op5ne nrt oebnsun.s eWinseA. sW as cAoc foa 6uc2cn5ot uftonrnt jnfuoesrst j.u Wsntd Aue nra dc1ec0ro% u1 n0ot%f fto hore fj uthset under 10% of the æ prodpurocdtiounct,i ohno,w heovweer vhpearorsApple dh 2ua3cs%t i2o 3no%,f hta hoendfw tbehuvese biPrn uhesasainse r2s3 sIndn%eas to inof anustthtaioellyn b.a uryWllsyiA.n W eShsaAituatiss eh stah nse a tlhtoioewonn eloaswltly ep .An srWot dpAura ochdlytaiousnc sistt hipoeen rl op2020bweures bsintu epssirnso ednsuasct itnoioanntai olplyne arin llbdyu icisnaidntiencsagst it nhngea ttlihoewn aelolrlwy e eixnrtd eeincxtat eotinfn tcg o tfnh cseo lnloidswaoetlirdo eanxt.i toQennu.t e Qoeufn ecsoelannsdola lhindadas th itoahnse. tbQhiegu gebeigsngtselasntd has the biggest levelel ovef lc ofn csonlidsaotlidoant lieaovnned al honafd sc h oaan sps roaol idpduraoctditoiounnc ta ioonfnd a ohbfao asub ta o9 up7tr0 o9 dt7ou0nc ntoieonsnn poeefs r a pbbeuorsu bitn u9es7sins0.e tsosn.nes per business. Comparison of production and consolidation in the industry

ProPdroudctuiocntio (nt) (2Pt)0r o21d07u1-1c78t-i1o8n (t) 2017-18 NuNmubmebr eorf obfu bsNiunuseminssebesesr eo2sf0 b21u07s1-1i7n8-e1s8ses 2017P-1r8oPdroudctuiocntio (nt) (pPt)er opr deburu cbstiuinosenins (set )s2 sp0 e21r07 b1-1u78s-1in8ess 2017-18

25,62650,660 29,62791,671 25,660 29,671 69 69 69 128 128 12.31%2.3% 128 12.3% 9.6%9.6% 11.11%1.1% 9.6% 11.1% 29 29 29 200 200 430 430 200 430 22.72%2.7% 22.7% NSWNSW NSW 28,02989,099 28,099 5.2%5.2% 5.2% 625 625 625 10.51%0.5% 10.5% 80 80 QLDQLD 80 QLD 14.21%4.2% SA SA 14.2% SA TASTAS TAS 125,152953,593 125,593 Vic Vic Vic 969 969 969 56 56 56 532 532 532 46.84%6.8% 29,7427693.,87%73 29,773 201 201 201 WA WA WA 9.9%9.9% 9.9% 369 369 369 11.11%1.1% 11.1% 35.73%5.7% 35.7%

ProPdroudctuiocntio (nt) (2Pt)0r o20d07u0-0c78t-i0o8n (t) 2007-08 NuNmubmebr eorf obfu bsNiunuseminssebesesr eo2sf0 b20u07s0-0i7n8-e0s8ses 2007P-0r8oPdroudctuiocntio (nt) (pPt)er opr deburu cbstiuinosenins (set )s2 sp0 e20r07 b0-0u78s-0in8ess 2007-08

31,53218,528 44,94143,91331,528 44,913 152 152 152 11.91%1.9% 11.9% 207 207 207 152 152 152 16.91%6.9% 16.9% 22.42%2.4% 16.41%6.242%.4% 16.4% 295 295 295 330 330 330 35,43856,486 35,486 58 58 58 13.41%3.4% 13.4% 6.3%6.3% 6.3%

103 103 103 104,100042,002 104,002 612 612 612 19,21596,256 19,256 11.11%1.1% 11.1% 336 336 336 39.23%9.2% 39.2% 7.3%7.3% 7.3% 315 315 90 90315 90 30,23202,222 30,222 34.13%4.1% 9.7%9.374%.1% 9.7% 187 187 187 11.41%1.4% 11.4%

Source: Radhakrishnan, Manju; DPIRD ‘Apple Production and Trade; 201925 Australia produced about 265,000 tonnes of apples in 2017-18. Victoria led apple production and exports. Victoria increased its share in production from 39% to 47%, and South Australia from 7% to 11%. WA’s share declined from 12% to 10%. 25 Victoria has just 36% of the number of businesses even with 47% of production, leading to a high production per business of 625 tonnes. WA accounts for just under 10% of the production, however has 23% of the businesses nationally. WA has the lowest production per business nationally, indicating the lower extent of consolidation. Queensland has the biggest level of consolidation and has a production of about 970 tonnes per business.25 Comparative trends in production and consolidation in the industry Comparative trends in production and consolidation in the industry

Change in production Growth in production per business 60.0% 53.5% 100.0% 97.6% 50.0% 89.3%

40.0%

s 80.0% e

30.0% s i n u n

b 66.1%

i o

20.8% r c t e

u 20.0% p

d 58.4% 58.3%

n 60.0% o r i o p

10.0% c t u i n

d

e 45.5% o

g 1.1% r n p

0.0% a

i n 40.0% -1.5% C h h 31.6% -10.0% w t o r G -20.0% -18.6% -20.8% 20.0% -30.0% -33.9% -40.0% 0.0% AUS NSW QLD SA TAS Vic WA AUS NSW QLD SA TAS Vic WA

CoSource:mments Radhakrishnan, Manju; DPIRD ‘Apple Production and Trade; 201925 Only South Australia and Victoria experienced a growth in production, the biggest decline happend in New South Wales. Australian production was stable, didn't keep up with Onlythe po pSouthulation gro wAustraliath, marginally iandncreas eVictoriad by 1.1% du rexperienceding the past decade. a growth in production, the biggest decline happened in NewTradit ioSouthnally prod ucWales.tion per bu s inAustralianess is the lowes t iproductionn WA, and the sam ewas trend costablentinuted t illbut 2017 -1didn’t8. Produc tkeepion per b uupsine sswith was 4 7the% low epopulationr than the Australia ngrowth; average in it 2007-08, and it is 58% lower than the Australian average after ten years. marginally increased by 1.1% during the past decade. Traditionally production per business is the lowest in All of the producing states showed an increase in production per business, a proxy for the extent of consolidation in the business. However growth in production per business is WA,the lo andwest in theWest esamern Austra ltrendia and hig continuedhest in South Aus ttoralia .2017-18. WA's growth is Productiononly half of that of t hpere Au sbusinesstralian average .was 47% lower than the Australian 25 averageConsolidati oinn in 2007-08,WA industry is p randogress iting is at a58%lmost o nlowere third of tthanhe rate othef that oAustralianf leading states saverageuch as Victor iaafter. ten years. All of the producing states showed an increase in production per business, a proxy for the extent of consolidation in the business. However, growth in production per business is the lowest in Western Australia and highest in South Australia. WA’s growth is only half of that of the Australian average. Consolidation in the WA industry is progressing at almost one third of the rate of that of leading states such as Victoria.25

34 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

3 Varieties

In 2019 Australian apple production for the fresh market was dominated by three main varieties: • Pink Lady, also known as Cripps Pink, a green skinned apple with a pink to light red blush. A cross between Golden Delicious and Lady Williams, Pink Lady accounted for 34% of fresh production. • Gala (including Royal Gala), a medium round apple, typically bright red with a pale-yellow blush. Royal Gala apples accounted for 26% of fresh production. Comments Varietal propoti• oGrannyns* in Smith, the thewo mostrld ,common New Z blockeala greennd a applend W accountedestern for 16% of fresh production.2/3 Australia Pink Lady is the largest cultivated variety in Australian Apple Variety Production (kilograms) 2015-2020 (F) Australia follwed by Gala. In Australian varietal composition, the category 'other apple' refers to the Variety 2015 2016 2017 2018 club va2019rieties. 2020 F AustraliaGala 59,592,000 65,951,275Western Au71,826,424stralia 72,165,334 69,055,993 65,867,892 Data source for WA varieties is Agriculture Produce Pink Lady 97,857,000 106,309,845 104,732,852 104,749,470 Com98,841,623mission. Accordin86,589,414g to this, WA has a high share of processing and 'other' category. WA do not Sun downer, Golden and Red delicioGurannys, Fuj iSmith 48,490,000 49,656,747 52,027,148 40,675,278 50,132,520 39,959,456 38.0% Gala Fuji have a processing plant, hence this high proportion R2ed2.0 D%elicious 23,298,000 Crip16,858,836ps Pink 5.16,556,7340% 14,531,177 of pro13,011,137cessing apple co10,422,260uld be because lower levy is 24.1% Granny Smith charged for processing apples, hence may not be Fuji 24,332,508 23,749,124 23,338,602 22,610,520 20,141,197 16,372,964 Granny Smith 13.2% true. In WA, Pink Lady forms 24% of the cultivation, Sundowner 16,603,951 15,939,344 14,841,063 4,882,010 Grann4,239,756y Smith is the sec3,146,691ond major variety. 15.0% Kanzi Golden Delicious 7,275,757 Sundo8,317,044wner 8,623,5690.7% 5,990,024 Share6,440,602 of club varieties v5,475,285aries between the states. Other (inc club) 17,600,114 3.320,857,523% 21,756,400 26,758,288 Tasm26,679,593ania has the larg27,762,602est share and Victoria has Other apple Royal Gala Processing the lowest. Share of WA on club varities is 17%, TOTAL10.0% 295,049,330 307,639,738 313,702,792 292,362,101 288,542,421 255,596,564 Pink Lady 9.9% 20.2% more than the Australian average. Release of Bravo 35.0% Source: Horticulture Innovation Australia ‘Apple & Pear Crop Estimate 2020’3 and ‘Apple and Pear Cropcould E bstimatee a ma 2019’jor fa 5ctor behind this trend, as in other indicators of efficiency, such as consolidation in the Share of club varieties varies between the states; Tasmania has the largestbu sshareiness, WandA la gVictorias behind .has the lowest. The share of clubSh avarietiesre of o tinh eWAr v aisr 17%,ietie mores (clu thanb va theriet iAustralianes) in th eaverage. The release of Bravo™ New Zealand 25 Gala is the largest variety cultivated in New could be a major factor behindvariet athisl c otrend.mposition of Australian states Zealand. Braebun, Fuji and Jazz are other major varieites. Share of other varieties (club varieties) in the varietal composition of Australian states A major difference between the varietal pattern Braeburn Australia between Australia and New Zealand is the 13.5% Western Australia Royal Gala 17.0% 10.0% dominance of newer club varieties such as Envy, 28.4% NSW Jazz, Pacific series in New Zealand cultivation. Envy Victoria 13.0% While the share of traditional majors such as 5.9% 5.0% Granny Smith is around 15% in Australia and WA, it is very small at less than 3% in New Zealand. Fuji 9.1% Pink Lady Queensland The force of intertia is evident from Australian Granny Smith 6.1% Tasmania 8.0% variety proportions, with traditional majors such as Jazz 2.5% Granny Smith still forming 15% of the varietal mix. Pacific Rose 20.0% 9.0% South Australia This also shows the increased focus on domestic 3.7% 17.0% Pacific Queen 25 market. WA's focus is mainly on traditional majors 9.6% Source:* Radhakrishnan,'Other' category isManju; not inc DluPIRdedD (e ‘Applexcept f oProductionr Australia, wandher eTrade; it refe r2019s to club varireties) in the chart, hence the total will not add to 100%) and new majors category. .. The forecast for gross apple production in 2020 is estimated to be lower than the volume harvested in 2019. The change in production volume is primarily attributable to a reduced Granny Smith, Pink Lady and Gala crop loads in most growing regions which is generally seen as a response to a very hot and dry 2018/19 season.3 In terms of changes in varieties over time, the popularity of Sundowner has decreased by 45.7% since 2018, followed by Red Delicious (21.6%), Golden Delicious (17.8%) and Fuji (15.3%). The varieties that have seen the greatest increase include other apples which includes new and upcoming varieties (20.3%) and a marginal increase in Royal Gala (2.9%) and Granny Smith (1.2%).3

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 35 æ Apple and Pear Industry Situation Analysis 2020

National: gross volumes by variety Change Change 2019- 2018- NATIONAL 2017 2018 2019 2020F 2020 2020 Estimated Gross Volume (kg) Royal Gala 23% 71,826,424 20% 64,042,269 24% 69,055,993 26% 65,867,892 -4.6% 2.9% Pink Lady 33% 104,732,852 31% 96,670,378 34% 98,841,623 34% 86,589,414 -12.4% -10.4% Granny Smith 17% 52,027,148 13% 39,466,652 17% 50,132,520 16% 39,959,456 -20.3% 1.2% Red Delicious 5% 16,556,734 4% 13,294,418 5% 13,011,137 4% 10,422,260 -19.9% -21.6% Fuji 7% 23,338,602 6% 19,339,252 7% 20,141,197 6% 16,372,964 -18.7% -15.3% Sundowner 5% 14,841,063 2% 5,794,969 1% 4,239,756 1% 3,146,691 -25.8% -45.7% Golden Delicious 3% 8,623,569 2% 6,661,016 2% 6,440,602 2% 5,475,285 -15.0% -17.8% Other Apple 7% 21,756,400 7% 23,085,694 9% 26,679,593 11% 27,762,602 4.1% 20.3% (Inc. clubs) Total Apple 313,702,791 268,354,647 288,542,422 255,596,563 -11.4% -4.8% Source: Horticulture Innovation Australia ‘Apple & Pear Crop Estimate 2020’ 3 Across the different states there are similarities with Pink Lady, Gala and Granny Smith varieties high in production. Note that ‘other apple varieties’ are also very popular. A number of newer club apples such as Jazz™, Kanzi™, Envy™, Smitten™, Rockit™ and Bravo™ have been increasing in production recently. There are also a number of new and upcoming apple varieties. New plantings are predominantly managed/ club varieties with continual replacement of traditional Gala and Pink Lady with high-colour strains. Some of the new and upcoming varieties include Redlove in South Australia which is a red-fleshed apple variety. It was the brainchild of a Swiss fruit breeder and looked like a cross between an apple and a tomato. The colour is a big drawcard. It came into production in 2018 and is being produced by around 30 growers.11 Kanzi® is another variety where production is gearing up. The variety is currently grown in 83 orchards around Australia including in the regions of Batlow (NSW), Yarra Valley (Vic), Adelaide Hills (SA), Manjimup (WA), Huon (Tas). Over the past decade demand has continued to be in front of supply and due to controlled marketing and planting, the strong demand is expected to continue. 2020 is the last year of planting trees and by 2024 trees are expected to hit full maturity and harvest is estimated to be around 12 million kilograms of Kanzi® apples a season. The main focus is the domestic market and key export opportunities will also be explored for Kanzi® apples.12 Bravo™ apples are the result of crossing the popular Cripps Red and Royal Gala apple varieties. The variety was released for trials in 2014 in Australian orchards and in 2016 the first Bravo™ apples went into retail. They are grown across the country by over 80 growers who have invested $29.5m to establish this new variety of apple. Demand is growing within Australia and with sales to Singapore, Hong Kong and Dubai.

Australian Apple Variety Production (kilograms) per state in 2019 Gross (kg) Total Vic NSW SA WA Qld TAS Gala 69,055,994 27,798,663 9,969,597 6,738,073 6,393,865 6,811,217 11,344,579 Pink Lady 98,841,623 57,637,577 7,975,677 12,364,170 7,814,154 8,598,318 4,451,727 Granny 50,132,520 32,262,223 3,845,416 3,095,328 4,132,640 5,867,088 929,825 Smith Red 13,008,139 3,016,734 3,524,965 506,627 865,519 4,046,268 1,048,026 Delicious Fuji 20,141,198 5,482,116 4,011,576 2,851,769 3,745,880 1,138,013 2,911,844 Sundowner 4,239,756 789,977 534,086 360,905 437,658 1,045,286 1,071,844 Golden 6,440,602 3,391,000 329,573 207,150 2,512,879 Delicious Other (inc 26,679,592 7,266,787 3,412,213 3,695,063 4,367,140 2,460,074 5,478,315 clubs) TOTAL 288,539,424 137,645,077 33,273,530 29,941,508 27,964,006 29,966,264 29,749,039 Source: Horticulture Innovation Australia ‘Apple & Pear Crop Estimate 2020’ 3

36 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

4 Quality

In 2019 the class 1 pack out was at its lowest for several years at 67%, further improvement is expected in 2020 with an average of 71% of the total apple crop likely to meet class 1 specifications.

Australian Apple Variety Production (kg) and quality 2019 Variety Kilograms % of total Class 1 pack out Planted area Fruit Size production (ha) (grams) Gala 69,055,993 26% 66% 2,550 162 Pink Lady 98,841,623 34% 70% 3,275 163 Granny Smith 50,132,520 16% 64% 1,210 167 Red Delicious 13,011,137 4% 70% 385 171 Fuji 20,141,197 6% 61% 800 180 Sundowner 4,239,756 1% 64% 135 150 Golden Delicious 6,440,602 2% 68% 175 170 Other (inc. clubs) 26,679,593 11% 68% 1,020 TOTAL 288,542,421 100% 67% 9,550 Source: Horticulture Innovation Australia ‘Apple & Pear Crop Estimate 2020’ 3

In 2020 fruit size is expected to be reduced in most apple varieties.

Fruit size data (grams) for 2018, 2019 and 2020 estimate. These numbers represent grower supplied data (project) and a forecast derived from OrchardNet’s fruit size monitoring database Grower panel average fruit size OrchardNet growth curve derived (as % relative difference to 2019) Fruit size (g) 2018 2019 2020F Gala 165 162 155 (-4.3%) Pink Lady 168 163 159 (-2.4%) Granny Smith 167 167 159 (-4.7%) Red Delicious 176 171 159 (-7.1%) Fuji 188 180 170 (-5.6%) Sundowner 165 150 - Golden Delicious 167 170 - Source: Horticulture Innovation Australia ‘Apple & Pear Crop Estimate 2020’ 3

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 37

ƉƉůĞƐ ƉƉůĞƐ

ϮϬϭϴͬϭϵ&ƌĞƐŚƉƉůĞWƌŽĚƵĐƟŽŶďLJ^ƚĂƚĞ ^ĞĂƐŽŶĂůŝƚLJďLJƉƉůĞsĂƌŝĞƚLJ dŚĞƐĞĂƐŽŶĂůĂǀĂŝůĂďŝůŝƚLJŽĨƐŽŵĞŵĂũŽƌǀĂƌŝĞƟĞƐŝƐƉƌŽĮůĞĚŝŶƚŚĞƚĂďůĞďĞůŽǁ͘ TAS NSW Variety 18/19 Tonnes Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 10% 14% SA Pink Lady 89,132 10% Royal Gala 50,001 Granny Smith 39,131 WA Sundowner 2,174 10% Other 36,957 æ Apple andProcessing Pear Industry93,480 Situation Analysis 2020 QLD VIC Availability legend High Medium Low None 10% 46% 5 Trade^ŽƵƌĐĞ͗W> &ƌĞƐŚƉƉůĞ/ŶƚĞƌŶĂƟŽŶĂůdƌĂĚĞ ^ŽƵƌĐĞ͗W> &ƌĞƐŚƉƉůĞ^ĞĂƐŽŶĂůŝƚLJďLJ^ƚĂƚĞ AustralianƵƐƚƌĂůŝĂŚĂƐƚƌĂĚŝƟŽŶĂůůLJďĞĞŶĂŶĞƚĞdžƉŽƌƚĞƌŽĨĨƌĞƐŚĂƉƉůĞƐ͕ƚLJƉŝĐĂůůLJĞdžƉŽƌƟŶŐ apple imports and exports remain low with 1-2% of total production exported each year which State 18/19 Tonnes Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun is typicallyďĞƚǁĞĞŶ betweenϮ͕ϬϬϬ 2,000-5,000-ϱ͕ϬϬϬƚŽŶŶĞƐ tonnesƉĞƌLJĞĂƌ͘&ŽƌƚŚĞLJĞĂƌĞŶĚŝŶŐ:ƵŶĞϮϬϭϵ͕ƵƐƚƌĂůŝĂ per year. For the year ending June 2019 Australia exported 4,416 New South Wales 42,463 tonnes. ĞdžƉŽƌƚĞĚThe freshϰ͕ϰϭϲƚŽŶŶĞƐ apple exports͘dŚĞĞdžƉŽƌƚƐĂŶĚŝŵƉŽƌƚƐŽǀĞƌƚŚĞůĂƐƚϱĮŶĂŶĐŝĂůLJĞĂƌƐŝƐ and imports over the past five financial years is periled in the graph below, 2 Victoria 141,908 where importsƉƌŽĮůĞĚŝŶƚŚĞŐƌĂƉŚďĞůŽǁ͕ǁŚĞƌĞŝŵƉŽƌƚƐĂƌĞĐŽƵŶƚĞĚĂƐŶĞŐĂƟǀĞƚŽŶŶĞƐ͘ are counted as negative tonnes. Queensland 32,785 Western Australia 31,823 Net fresh apple internEĞƚ&ƌĞƐŚƉƉůĞ/ŶƚĞƌŶĂƟŽŶĂůdƌĂĚĞational trade South Australia 29,713 6,000 Tasmania 32,183 4,950 5,058 5,000 4,665 Imports 732 4,416 Availability legend High Medium Low None 4,000 ^ŽƵƌĐĞ͗W> 3,000 2,134 DĂŝŶƉƉůĞsĂƌŝĞƟĞƐ 2,000 ůƚŚŽƵŐŚƚŚĞƌĞĂƌĞĐƵƌƌĞŶƚůLJĂŶƵŵďĞƌŽĨǀĂƌŝĞƟĞƐŐƌŽǁŶŝŶƵƐƚƌĂůŝĂ͕ƉƌŽĚƵĐƟŽŶ 1,000 ĨŽƌƚŚĞĨƌĞƐŚŵĂƌŬĞƚŝƐĚŽŵŝŶĂƚĞĚďLJϯŵĂŝŶǀĂƌŝĞƟĞƐ͘dŚĞƐĞŝŶĐůƵĚĞ͗ 0 WŝŶŬ>ĂĚLJ͕ĂůƐŽŬŶŽǁŶĂƐƌŝƉƉƐWŝŶŬ͕ĂŐƌĞĞŶƐŬŝŶŶĞĚĂƉƉůĞǁŝƚŚĂƉŝŶŬƚŽůŝŐŚƚ -1,000 ƌĞĚďůƵƐŚ͘ĐƌŽƐƐďĞƚǁĞĞŶ'ŽůĚĞŶĞůŝĐŝŽƵƐĂŶĚ>ĂĚLJtŝůůŝĂŵƐ͕WŝŶŬ>ĂĚLJĂƉƉůĞƐ (tonnes) trade International 619 732 883 1,053 ĂĐĐŽƵŶƚĞĚĨŽƌϰϭйŽĨĨƌĞƐŚƉƌŽĚƵĐƟŽŶ͘ -2,000 1,145 'ĂůĂ;ŝŶĐůƵĚŝŶŐZŽLJĂů'ĂůĂͿ͕ĂŵĞĚŝƵŵƌŽƵŶĚĂƉƉůĞ͕ƚLJƉŝĐĂůůLJďƌŝŐŚƚƌĞĚǁŝƚŚĂ 2014/15 2015/16 2016/17 2017/18 2018/19 ƉĂůĞLJĞůůŽǁďůƵƐŚ͘ZŽLJĂů'ĂůĂĂƉƉůĞƐĂĐĐŽƵŶƚĞĚĨŽƌϮϯйŽĨĨƌĞƐŚƉƌŽĚƵĐƟŽŶ͘ 'ƌĂŶŶLJ^ŵŝƚŚ͕ƚŚĞŵŽƐƚĐŽŵŵŽŶďůŽĐŬŐƌĞĞŶĂƉƉůĞŝŶƵƐƚƌĂůŝĂ͕ĂĐĐŽƵŶƚĞĚĨŽƌ Fresh Exports Fresh Imports Net Trade ŽĨĨƌĞƐŚƉƌŽĚƵĐƟŽŶ͘ ϭϴй Source:^ŽƵƌĐĞ͗'d Horticulture Innovation Australia Limited, Australian Horticulture Statistics Handbook 2018/192

ϮϬϭϴͬϭϵƵƐƚƌĂůŝĂŶ,ŽƌƟĐƵůƚƵƌĞ An additional 1,001ϮϬϭϴͬϭϵƵƐƚƌĂůŝĂŶ,ŽƌƟĐƵůƚƵƌĞ tonnes of dried apples were imported (value $5.6m) for the year ending June 2019, ϱϴ ϱϵ ^ƚĂƟƐƟĐƐ,ĂŶĚŬ ϭϳͬϬϯͬϮϬϮϬ while 42ϭϳͬϬϯͬϮϬϮϬ tonnes were^ƚĂƟƐƟĐƐ,ĂŶĚŬ exported (value $271,317). Australia also imported 24.2 mega litres of apple juice (value $44.7m), while exporting 2.8 mega litres of apple juice worth $4.9 million.2

Australian Apple Trade 2017 2018 2019 Fresh export volume (t) 4950 5058 4416 Fresh Export value ($m) $2.7 $11.3 $10.6 Dried apple export volume (t) 42 Dried apple export value ($m) $0.3 Apple juice export volume (kL) 2,878 Apple juice export value ($m) $4.9 Fresh Import volume (t) 1,053 1,145 732 Fresh Import value ($m) $2.4 $2.9 $1.9 Dried apple import volume (t) 1,001 Dried apple import value ($m) $5.6 Apple juice import volume (kL) 24,280 Apple juice import value ($m) $44.7 Source: Hort Innovation Australia Limited, Australian Horticulture Statistics Handbook 2018/192

Victoria is the leading state in terms of exports accounting for 72% of tonnes exported in 2019 and NSW contributed 14%. Western Australia accounted for 2.2% of exports. In terms of imports, there were only two states that imported apples in 2019; Victoria was 70% of the nation’s apple imports and NSW 30%.

38 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

Fresh Apple Imports and Exports by State Imports by state destination (Tonnes) Exports by state of production origin (Tonnes) Year Ending June 2017 2018 2019 Year Ending June 2017 2018 2019 Victoria 585 813 509 Victoria 2,008 3,225 3,204 New South Wales 432 282 223 Queensland 1,351 995 635 Queensland 36 50 - Tasmania 442 213 388 Other < 0.5 < 0.5 - 0 Western Australia 4 87 100 TOTAL 1,053 1,145 732 New South Wales 105 106 30 Other 1,039 434 59 TOTAL 4,950 5,060 4,416 Source: Horticulture Innovation Australia Limited, Australian Horticulture Statistics Handbook 2018/192

Australia currently exports apples to a number of countries including the United Kingdom, Papua New Guinea, the United Arab Emirates and Thailand. Small volumes are also supplied to other Asian markets including Singapore, Hong Kong, China and Taiwan.6 The leading markets for fresh Australian apples in 2019 were Papua New Guinea (23%), Italy (12%) and Hong Kong (11%). The imported apple market was dominated by China (79%).2

Exports have fallen from around 30% of production in the 1980s to just 1% of apple production. Currently the Australian apple and pear industries are working towards increasing exports by 10% of marketable yield by 2027. The following countries have been identified as prime prospect markets for apple exports: the United Kingdom, Hong Kong, Singapore, US, UAE, Thailand and Europe.1 Australia’s reputation for high- quality produce and ability to provide produce during the northern hemisphere off-season are considered the main advantages to driving export growth.6

Fresh Apple Imports and Exports by Country Imports by state destination (Tonnes) Exports by state of production origin (Tonnes) Year Ending Year Ending June 2017 2018 2019 June 2017 2018 2019 China 698 594 580 PNG 949 865 1,032 New Zealand 355 550 152 Italy - 453 521 TOTAL 1,053 1,145 732 Hong Kong 343 428 493 Indonesia 671 401 396 Netherlands 105 412 334 Other 2,882 2,501 1,640 TOTAL 4,950 5,060 4,416 Source: Hort Innovation Australia Limited, Australian Horticulture Statistics Handbook 2018/192 While protocols exist to permit the import of apples from New Zealand, China and Japan (an import risk analysis is currently underway by DAWR to permit entry of US-grown apples), 99.7% of apples sold in Australia are locally grown owing to commercial considerations, robust biosecurity protocols and commitment by major retailers to support Australian primary producers.1 The industry’s reliance on this domestic market to absorb volume, and limited export activities, increases exposure to imported apples being able to compete with local product on price, quality, and variety. A renewed focus on quality, expansion of branded varieties and the recent joint establishment of the Strategic Marketing Panel by APAL and Hort Innovation aims to develop a marketing strategy that will revitalise domestic consumption, as well as driving overseas export opportunities in the longer term.1

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 39 æ Apple and Pear Industry Situation Analysis 2020

2018 top 10 import countries of Australian Apple

Source: APAL website ‘Industry Statistics’ 1 In 2017 Australia exported more than $1b worth of fruits. Table grapes, oranges and mandarins represent 75% of total exports by value. Other major fruit exported include cherries, peaches and nectarines with a combined share of 7%. These fruits totalled 82% of national exports by value. Apple exports were minimal compared to other fruits.13 Exports of each fruit category increased between 2013 and 2017, compared to the previous five-year period. Table grapes, oranges and mandarins drove growth in national exports. Share of table grapes and oranges declined slightly from 2009 even though the value increased, however both value and share of mandarins and cherries increased from 2009 to 2017. Apple exports declined 26.3% from 2009-2013 ($7.86m to $5.79m) and increased 104.2% from 2013 to 2017 to $11.82m and the volume continues to be insignificant compared to other fruit exports.13 Fruit exports from Australia — 2017 Australian export value (2017) Australia exported more than $1b worth Australian export value (2017) Apricots of fruits in 2017. Table grapes, oranges $2.09m and mandarins represent 75% of total exports by value. Other major fruit Avocados exported include cherries, peaches and Apples $11.66m nectarines with a combined share of $11.82m Cherries 7%. These fruits totaled 82% of national $51.40m exports by value. Plums Cranberries and blueberries Exports of each fruit category increased $16.14m $4.49m between 2013 and 2017, compared to the previous five-year period. Table Grapefruit Watermelons $2.79m grapes, oranges and mandarins drove $9.24m growth in national exports. Share of table grapes and oranges declined Kiwifruit slightly from 2009 even though the $3.20m value increased, however both value Table grapes and share of mandarins and cherries $373.31m Lemons and limes increased from 2009 to 2017. $6.61m

Strawberries $29.41m Mandarins $148.15m

Pears Mangos $14.79m $30.95m Others Peaches and nectarines $8.47m $33.60m Melons $25.81m Oranges $274.09m

DPIRD ‘Fruit exports – Australia versus WA’ May 201913 Fruit exports — Australia vs Western Australia 10

40 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

Share of states in the export of fShareruits f roof mstates Austr ainlia the export of fruits from Australia (continued) Share of states in the export of fruits from Australia (continued)

Plums ($16m) Pears ($15m)Apples ($12m)

VIC $7.8m 48.1% VIC $13.2m 89.4% NSW $6.6m 41.0% QLD $0.8m 5.5% WA $1.1m 6.7% NSW $0.6m 3.9% VIC $5.6m 47.5% TAS $0.2m 1.3% WA $0.0m 0.3% QLD $0.2m 1.3% NSW SA $0.0m 0.2% QLD $3.6m 30.3% SA $0.2m 1.2% NT TAS $0.0m 0.0% SA $1.2m 10.4% QLD NT $0.1m 0.4% NT $0.0m 0.0% SA TAS $0.6m 5.0% TAS VIC NSW $0.6m 4.9% NSW WA Avocados ($11m) Watermelons ($9m) NT $0.1m 1.2% NT QLD WA $0.1m 0.7% QLD $7.8m 67.2% QLD $6.1m 66.2% SA WA $1.7m 14.5% WA $1.1m 12.0% TAS 13 Source: VICDPIR$1.2mD ‘Fruit10.2% exports – Australia versus WA’ May 2019NSW $0.7m 7.9% VIC NSW $0.9m 7.3% Lemons VICand$0.5m limes5.6% SA $0.1m 0.5% NT $0.4m 4.4% WA TAS $0.0m 0.0% ($7m) SA $0.3m 2.8% 6 DomesticNT $0.0m 0.0% Market TAS $0.0m 0.0%

Fruit exports — Australia vs Western Australia 37 QLD $3.1m 47.2% Within Australia to the end of January 2020, major supermarketsSA $1.8m accounted27.8% for 68.7% of the total apple market by volume, and non-supermarkets led over other supermarkets,VIC $1.0m 15.2% with 21.8% and 9.5% respectively. Major supermarkets include Coles, Woolworths and Aldi.NSW Other$0.5m supermarkets8.1% are all other full service supermarkets not included in major supermarkets and non-supermarketsTAS $0.0m 0.7% include all others such as green WA $0.0m 0.3% grocers, markets and specialty stores that are not full service supermarkets.10 NT $0.0m 0.0% Retailer volume (KG) share of trade retailer Volume (KG) Growth Fruit exports — Australia vs Western Australia 38

Copyright © 2020 The Nielsen Company Source: Harvest to Home website10 The dollar share of apple trade in major supermarkets was 72.8%. Dollar sales for major supermarkets rose by 1.6%. Non-supermarkets make up 17.2% of dollar share of trade. Dollar sales were growing slightly (2.4%).10

Retailer dollar ($) share of trade retailer Dollar ($) Growth

Copyright © 2020 The Nielsen Company

Source: Harvest to Home website10 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 41 æ Apple and Pear Industry Situation Analysis 2020

7 Consumption and consumer preferences

In 2017-18 Australians ate an average of 10.1kg of apples per year which amounted to more than one apple a week.1 While this is the highest that apple consumption has been in years it is less than the global average of 12.2kg in 2016.

Fresh apple consumption (kg/yr/person)

Source: APAL website ‘Industry Statistics’1 In a Nielsen review of the performance of apples and pears for the year up until the end of January 2020, it was found that apples are top of the shopping list for many Australians with almost nine-in-10 (88%) of households purchasing this crunchy treat. Apples are purchased roughly every three weeks and households spend an average of $64 on apples annually. Ranked as the third most popular fruit in dollar sales, apples have a diverse appeal across multiple meal occasions and seasons. From cosy winter nights enjoying warm apple crumble, to salads and bircher muesli in summer, and a snacking favourite all year round.10 Apples are a competitively priced fruit; in the past year the average price increased 2.4% compared to the average price of total fruit which went up 7.2%. Last year apples remained flat in volume sales (+0.3%) against an overall declining fruit category (-2.4%).10 Over the past few years new varieties have come onto the market with varying degrees of success; however the stalwarts of the apple category are Pink Lady branded varieties, Granny Smiths, Royal Gala and Red Delicious.10

Apples dollar share by variety/type which of the foloowing varieties/types/kinds of apple are you aware of (Multi answer)?

Source: Harvest to Home website10

42 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

Over the past three years Nielsen has measured 16 types of apples sold in the category. In general, Australian shoppers are not loyal to a particular variety with most shoppers shopping across two to three varieties. The search is on for the next Pink Lady, but with just four of the 16 varieties making up 80% of the category, could consumers be overwhelmed by choice among the new varieties? Nielsen consumer research shows that shoppers have relatively low awareness of new varieties and are happy to substitute other apple varieties when the one they purchase is unavailable. This suggests that education on the unique attributes of each variety may assist to drive greater recognition and brand loyalty.10 The percentage of buying households fell over the last 52 weeks to 87%, in comparison to the prior year (88%). Average occasions fell by 0.2, to 16.4 over the last 52 weeks. An average household spent $63.78 over the past 52 weeks, compared to $62.64 during the prior year. Household purchase by weight for apples remained unchanged.10

What % of households buy per year How often do households buy per year

How much ($) do households spend How many (KG) do households buy per year per year

Source: Harvest to Home website10

In terms of both dollar apple sales and volume growth, Western Australia grew the most, with 0.8% (for dollar sales), and 8.2% (for volume). 10

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 43 æ Apple and Pear Industry Situation Analysis 2020

Key Metrics by state

Source: Harvest to Home website10 In terms of dollar share, apples comprised 16.1% compared to berries which led the competitive set with 27.9%. When looking at volume share, bananas (32.7%) led the competitive set, with apples making up 24.9%.10

Dollar sales share of competitor fruit Volume (kg) share of competitor fruit

Source: Harvest to Home website10

44 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020

WĞĂƌƐ WĞĂƌƐ

2017 2018 2019 &ƌĞƐŚWĞĂƌƐKǀĞƌǀŝĞǁ Apple and Pear Industry Situation Analysis 2020Year æ Ending June Value Value % YoY Value % YoY tŚŝůĞƉĞĂƌƐĂƌĞƉƌŽĚƵĐĞĚŝŶĂůůƐƚĂƚĞƐŽĨƵƐƚƌĂůŝĂ͕ Production (t) 111,733 118,948 +6% 114,496 -4% ƚŚĞǀĂƐƚŵĂũŽƌŝƚLJŽĨƉĞĂƌƐĂƌĞŐƌŽǁŶŝŶƚŚĞ Production ($m) $ 127.1 $ 101.6 -20% $ 115.4 +14% Pears 'ŽƵůďƵƌŶsĂůůĞLJƌĞŐŝŽŶŽĨsŝĐƚŽƌŝĂ͘,ĂƌǀĞƐƟŶŐ Producing Trees (000 Trees) 1,465 1,354 -8% 1,354 - ƚLJƉŝĐĂůůLJŽĐĐƵƌƐďĞƚǁĞĞŶ&ĞďƌƵĂƌLJĂŶĚƉƌŝů͘ Fresh Export Volume (t) 7,130 12,467 +75% 9,190 -26% zĞĂƌ-ƌŽƵŶĚĂǀĂŝůĂďŝůŝƚLJŝƐŵĂĚĞƉŽƐƐŝďůĞƚŚƌŽƵŐŚ Fresh Export Value ($m) $ 12.2 $ 19.6 +60% $ 16.4 -16% 8 National VƚŚĞƵƐĞŽĨĐŽŶƚƌŽůůĞĚĂƚŵŽƐƉŚĞƌĞƚĞĐŚŶŽůŽŐLJ͘alue and Production Fresh Import Volume (t) - - - - - &ŽƌƚŚĞLJĞĂƌĞŶĚŝŶŐ:ƵŶĞϮϬϭϵ͗ Fresh Import Value ($m) $ - $ - - $ - - Pear production in· Australiaϭϭϰ͕ϰϵϲƚ ǁĂƐƉƌŽĚƵĐĞĚǀĂůƵĞĚĂƚaverages just over Ψϭϭϱ͘ϰŵ100,000͕ tonnes of pears a year with almostFresh all Supplyof this (t) 58,595 59,428 +1% 66,136 +11% ǁŝƚŚ6ϯϰйƐĞŶƚƚŽďĞƉƌŽĐĞƐƐĞĚ͘ Fresh Supply Wholesale Value ($m) $ 128.5 $ 93.5 -27% $ 121.1 +30% consumed domestically. According to the Horticulture Innovation Australia 2018/19 handbookSupply in per 2019 Capita (kg) 2.39 2.38 >-1% 2.62 +10% · dŚĞǁŚŽůĞƐĂůĞǀĂůƵĞŽĨĨƌĞƐŚƐƵƉƉůLJǁĂƐΨϭϮϭ͘ϭŵ͕ǁŝƚŚ there were 114,496t of pears produced valued at $115.4 million with 34% processed. Eight per^ŽƵƌĐĞƐ͗^͖͖W>͖&s/t͖'d͖DWΘ;&ƌĞƐŚůŽŐŝĐŶĂůLJƐŝƐͿ cent was  ĚŝƐƚƌŝďƵƚĞĚŝŶƚŽƌĞƚĂŝůĂŶĚ ĚŝƐƚƌŝďƵƚĞĚŝŶƚŽĨŽŽĚƐĞƌǀŝĐĞ͘ exported and 58% ofΨϭϬϵŵ pears were supplied freshΨϭϭ͘ϴŵ which consisted of 90% heading to the retailΎEŽƚĞ͗&ŝŐƵƌĞƐŚĂǀĞďĞĞŶŵŽĚŝĮĞĚĨƌŽŵƚŚŽƐĞƉƵďůŝƐŚĞĚŝŶƚŚĞƉƌĞǀŝŽƵƐĞĚŝƟŽŶŽĨƚŚĞ sector and 10% into food service.· ϲϬй TheŽĨƵƐƚƌĂůŝĂŶŚŽƵƐĞŚŽůĚƐƉƵƌĐŚĂƐĞĚĨƌĞƐŚƉĞĂƌƐ͕ďƵLJŝŶŐĂŶĂǀĞƌĂŐĞŽĨ wholesale value of fresh supply was $121.2m with $109m distributedŚĂŶĚŬ;ϮϬϭϳͬϭϴĞĚŝƟŽŶͿ͘ into retail and $11.8m distributedϴϮϬŐ intoƉĞƌƐŚŽƉƉŝŶŐƚƌŝƉ͘ food service. 2 DĂũŽƌWĞĂƌƐWƌŽĚƵĐƟŽŶƌĞĂƐ · dŚĞƐƵƉƉůLJƉĞƌĐĂƉŝƚĂǁĂƐϮ͘ϲŬŐ͕ďĂƐĞĚŽŶƚŚĞǀŽůƵŵĞƐƵƉƉůŝĞĚ͘ WĞĂƌƐĂƌĞƉƌŽĚƵĐĞĚĂĐƌŽƐƐƵƐƚƌĂůŝĂ͕ĂůƚŚŽƵŐŚƚŚĞŵĂũŽƌŝƚLJŽĨƉƌŽĚƵĐƟŽŶŽĐĐƵƌƐ Fresh Pears Supply&ƌĞƐŚWĞĂƌƐ^ƵƉƉůLJŚĂŝŶ Chain – Year Ending— JuzĞĂƌŶĚŝŶŐ:ƵŶĞϮϬϭϵne 2019 ŝŶsŝĐƚŽƌŝĂĂƌŽƵŶĚ'ŽƵůďƵƌŶsĂůůĞLJ͕zĂƌƌĂsĂůůĞLJĂŶĚ'ŝƉƉƐůĂŶĚ͘KƚŚĞƌŐƌŽǁŝŶŐ Consumermetrics ĂƌĞĂƐĂůƐŽŝŶĐůƵĚĞ^ƚĂŶƚŚŽƌƉĞŝŶYƵĞĞŶƐůĂŶĚ͖ĂƚůŽǁŝŶEĞǁ^ŽƵƚŚtĂůĞƐ͖ƚŚĞ 9,190t ,ƵŽŶsĂůůĞLJŝŶdĂƐŵĂŶŝĂ͖ĚĞůĂŝĚĞ,ŝůůƐŝŶ^ŽƵƚŚƵƐƚƌĂůŝĂ͖ĂŶĚDĂŶũŝŵƵƉŝŶ Fresh Export 59,717t $16.4m Retail tĞƐƚĞƌŶƵƐƚƌĂůŝĂ͘ 60% 820g 2.6 kg $109m

8% 90% 114,496t 66,136t Production 58% Fresh Supply $115m $121m 10% 34% 0% 6,420t Food Service $11.8m - 'ŽƵůďƵƌŶ Processing 39,170t Fresh Import $0.0m sĂůůĞLJ 'ŝƉƉƐůĂŶĚ 0% zĂƌƌĂsĂůůĞLJ

Source: Horticulture^ŽƵƌĐĞƐ͗^͖͖ƉƉůĞƐΘWĞĂƌƐƵƐƚƌĂůŝĂ>ŝŵŝƚĞĚ;W>Ϳ͖&s/t͖'d͖DWΘ;&ƌĞƐŚůŽŐŝĐ Innovation Australia Limited, Australian Horticulture Statistics Handbook 2018/192 ŶĂůLJƐŝƐͿ The latest ‘Apple and Pear Crop Estimate 2020’ report also produced by Horticulture Innovation reported that 93,761 tonnes of pears were produced in 2019, a 10%ϮϬϭϴͬϭϵƵƐƚƌĂůŝĂŶ,ŽƌƟĐƵůƚƵƌĞ drop in production from the previous year.ϮϬϭϴͬϭϵƵƐƚƌĂůŝĂŶ,ŽƌƟĐƵůƚƵƌĞ The ϭϳϰ ^ƚĂƟƐƟĐƐ,ĂŶĚŬ ^ƚĂƟƐƟĐƐ,ĂŶĚŬ ϭϳϱ forecast for gross pear production for the 2020 harvest is expected to be similarϭϳͬϬϯͬϮϬϮϬ around 93,175ϭϳͬϬϯͬϮϬϮϬ tonnes (-0.6% from 2019, -11.0% from 2018).3 This reduction in gross volume is predominately driven by reduced WBC (-4.9%) and Packham’s volumes. The “other pear” category volumes, predominantly Corella and Beurre Bosc, is estimated to be higher in the 2020 harvest relative to 2019. The class 1 pear pack out corresponds to an average of 56% of the pear crop being likely to meet class 1 specifications. This is reduced relative to the 2019 average pack out (62%) with the primary cause being limb and leaf rub related to windy spring conditions in the Goulburn Valley. 3

Australian Pear Production 2015-2020 2015 2016 2017 2018 2019 2020 Forecast Production (tonnes) 105,243 104,928 96,741 103,748 93,761 93,175 Production ($m) 125 91 121 91 Plantings (ha) 3209 3180 3150 3095 3015 3015 National Class 1 pack out 39,320 40,713 48,467 50,967 45,690 40,804 % Class 1 pack out 62% 66% 63% 61% 62% 56% Source: Horticulture Innovation 2/3; APAL 1, ABS4

The planted area remains relatively stable for pear production in Australia at around 3,100 hectares. Across Australian orchards over the past five years an average of 63% of pears were classified as Class 1. Aside from fresh pear production, pears are also processed. More than 20,500 tonnes of pears grown in Victoria’s Goulburn Valley are sent direct for processing. Dried pears accounted for less than 1% of dried fruit production and canned pears make up 19% of fruit grown for canning in Australia behind pineapples (33%) and summer fruit (39%).2/3

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 45 æ Apple and Pear Industry Situation Analysis 2020

9 State Pear Production

The majority of pear production is in Victoria which produces about 88% of total production, followed by South Australia at about 7%, Western Australia at 4%, and New South Wales, Queensland and Tasmania produce about 1% each.6

Goulburn Valley

Gippsland Yarra Valley

Source: Hort Innovation Australia Limited, Australian Horticulture Statistics Handbook 2018/192 Pears are produced across Australia, although the majority of production occurs in Victoria around the Goulburn Valley, Yarra Valley and Gippsland. Other growing areas include Stanthorpe in Queensland; Batlow in New South Wales; the Huon Valley in Tasmania; Adelaide Hills in South Australia and Manjimup in Western Australia. The number of pear growers has declined since 2000 which is believed to indicate a consolidation where smaller scale growers are leaving the industry and medium and large-scale growers are taking over their production.6

Australian Pear Production per state 2017-2020 (F) in kilograms State 2017 2018 2019 2019% 2020 F Victoria 84,772,633 92,438,726 82,359,207 88 81,887,485 NSW 102,410 202,205 212,315 <1 201,699 Queensland 252,382 190,257 239,971 <1 243,235 South Australia 6,419,634 6,061,006 6,427,697 7 6,106,312 Western Australia 3,714,619 4,039,690 3,736,713 4 3,923,549 Tasmania 1,479,775 816,476 785,450 1 813,373 TOTAL 96,741,453 103,748,360 93,761,353 100 93,175,653 Source: Horticulture Innovation Australia ‘Apple & Pear Crop Estimate 2020’ 3

46 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

10 Varieties

Pears are also referred to as a pome fruit. Pome fruits are from the Rosaceae family and also include fruits like apples and quinces. There are several different varieties of pears grown in Australia, however production is primarily made up of three types of pears: • Packham, a green pear that is the most popular variety in Australia. Packham pears accounted for 60% of fresh production. • Williams, a green pear that turns yellow as it ripens. Williams pears accounted for 20% of fresh production. Beurre Bosc, known for its distinctive russet brown skin, accounted for 10% of fresh production.9

Australian Pear Variety Production (kilograms) 2015-2020 (F) Variety 2015 2016 2017 2018 2019 2020 F Packham 44,570,000 42,713,736 46,117,975 49,188,112 46,550,827 45,483,599 WBC 28,420,000 26,173,209 34,332,942 33,163,453 32,537,549 30,934,694 Pears Other 32,200,000 36,041,067 17,138,262 22,212,356 14,672,978 16,757,361 TOTAL 105,190,000 104,928,012 97,589,179 104,563,921 93,761,354 93,175,654 Source: Horticulture Innovation Australia ‘Apple & Pear Crop Estimate 2020’ 3 and ‘Apple and Pear Crop Estimate 2019’ 5 In terms of changes in varieties over time, the popularity of WBC has decreased by 16.3% since 2018, followed by ‘other pears’ (8.8%) and Packham pears (7.9%). Other pear varieties are the only ones that are expected to increase in production compared to last year.3

National: gross volumes by variety Change Change 2019- 2018- NATIONAL 2017 2018 2019 2020F 2020 2020 Estimated Gross Volume (kg) Total Apple Packham 47% 46,117,975 51% 49,405,431 50% 46,550,827 49% 45,483,599 -2.3% -7.9% WBC 35% 34,332,942 38% 36,947,302 35% 32,537,549 33% 30,934,694 -4.9% -16.3% Pears Other 18% 17,138,262 19% 18,380,625 16% 14,672,978 18% 16,757,361 14.2% -8.8% Total Pear 97,589,180 104,733,357 93,761,354 93,175,654 -0.6% -11.0% Total Pome Fruit 411,291,971 373,088,004 382,303,776 348,772,217 -8.8% -6.5% Source: Horticulture Innovation Australia ‘Apple & Pear Crop Estimate 2020’ 3 While Packham and Williams’ bon chrétien are the most common pear cultivars grown there are also some smaller areas of Beurre Bosc and Corella. There are also a number of other new and upcoming varieties which include Lanya, Deliza, Piqa Boo®, Goulburn River Gold®, Josephine De Malines, Rico®, Winter Nelis, Red Sensation and Red Anjou. In 2019 the first mixed container of Goulburn River Gold® and Rico® branded pears were sent to Thailand. Rico® are one of the premium-branded Australian pears launching in Asia as part of a renewed focus on export.1 This is the first commercial season for the Rico® pear; a club variety that is grown in Tatura, in North Victoria. These pears are specially grown for export and while they are currently being shipped to Thailand the plan is to achieve further growth on the Asian market.24 Flat and declining domestic sales have had pear growers under pressure for some time and the latest market research shows that new and exciting brands like the blushing Rico®, bright red Piqa Boo® and the juicy, Asian-like Papple pear variety are bringing differentiation back to the category, and early indications are there that consumers will pay a premium.1 Accompanied by a quirky marketing campaign and featuring the tagline “Finally a pear with personality”, it is hoped that Rico® will appeal to a whole new generation of pear eaters with its appealing bright red blush helping it to stand out on-shelf.1 The Australian POME Fruit Improvement Program (APFIP) is responsible for the breeding and development of new pear varieties in Australia. Among the pears in the pipeline is one with an amazing deep orange colour that consistently performs in the extreme 40 degree-plus Shepparton heat, maturing in mid- February. It does not share the same internal qualities of the PiqaBoo® but the plant breeders have recognised the ability of this pear to colour in extreme heat and have been using this and its genes in breeding crosses.1 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 47 æ Apple and Pear Industry Situation Analysis 2020

Other areas of the interspecific breeding are producing pears with tree growth and precocity traits more like apples. These types of features together with an increased adoption of precocious pear rootstocks have the potential to see an end to the old adage that you “plant pears for your heirs”.1

Australian Pear Variety Production (kilograms) per state in 2019 Gross (kg) Total Vic NSW SA WA Qld TAS Packham 46,550,827 40,491,860 95,209 3,754,793 1,644,154 123,914 440,897 WBC 32,537,549 30,700,750 85,688 1,145,530 523,140 17,123 65,318 Pears Other 14,672,980 11,166,598 31,419 1,527,374 1,569,420 98,934 279,235 TOTAL 93,761,356 82,359,208 212,316 6,427,697 3,736,714 239,971 785,450 Source: Horticulture Innovation Australia ‘Apple & Pear Crop Estimate 2020’ 3 In terms of the pear varietal breakdown across Australian states, while Victoria dominates pear production they are still heavily reliant on the traditional varieties of Packham and WBC along with New South Wales. South Australia, Western Australia, Queensland and Tasmania are focused on other pear varieties along with Packham pears which account for 60% of Australian pear production. WĞĂƌƐ WĞĂƌƐ

11 QualityWĞĂƌƐ WĞĂƌƐ ͕ĂŶĂƩƌĂĐƟǀĞƉŝŶŬͬƌĞĚďůƵƐŚĞĚƉĞĂƌ͕ĂĐĐŽƵŶƚĞĚĨŽƌ ŽĨƉƌŽĚƵĐƟŽŶ͘ WĞĂƌƐ ϮϬϭϴͬϭϵ&ƌĞƐŚWĞĂƌƐWƌŽĚƵĐƟŽŶďLJ^ƚĂƚĞ WĞĂƌƐŽƌĞůůĂ ϭй ŽƌĞůůĂ͕ĂŶĂƩƌĂĐƟǀĞƉŝŶŬͬƌĞĚďůƵƐŚĞĚƉĞĂƌ͕ĂĐĐŽƵŶƚĞĚĨŽƌ^ĞĂƐŽŶĂůŝƚLJďLJWĞĂƌsĂƌŝĞƚLJ ϭйŽĨƉƌŽĚƵĐƟŽŶ͘ ϮϬϭϴͬϭϵ&ƌĞƐŚWĞĂƌƐWƌŽĚƵĐƟŽŶďLJ^ƚĂƚĞThe class 1 pack out for pears has been very consistent over the past few years to average out at 62%. ϮϬϭϴͬϭϵ&ƌĞƐŚWĞĂƌƐWƌŽĚƵĐƟŽŶďLJ^ƚĂƚĞ ŽƌĞůůĂ͕ĂŶĂƩƌĂĐƟǀĞƉŝŶŬͬƌĞĚďůƵƐŚĞĚƉĞĂƌ͕ĂĐĐŽƵŶƚĞĚĨŽƌ^ĞĂƐŽŶĂůŝƚLJďLJWĞĂƌsĂƌŝĞƚLJdŚĞƐĞĂƐŽŶĂůĂǀĂŝůĂďŝůŝƚLJŽĨƐŽŵĞŵĂũŽƌǀĂƌŝĞƟĞƐŝƐƉƌŽĮůĞĚŝŶƚŚĞƚĂďůĞďĞůŽǁ͘ ϭйŽĨƉƌŽĚƵĐƟŽŶ͘ However, it is expected to decline QLDto 56% in 2020 with a drop in class 1 pack out predicted for both Variety 18/19 Tonnes Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Packham and WBC varieties.3 ^ĞĂƐŽŶĂůŝƚLJďLJWĞĂƌsĂƌŝĞƚLJ<1% dŚĞƐĞĂƐŽŶĂůĂǀĂŝůĂďŝůŝƚLJŽĨƐŽŵĞŵĂũŽƌǀĂƌŝĞƟĞƐŝƐƉƌŽĮůĞĚŝŶƚŚĞƚĂďůĞďĞůŽǁ͘ QLD Packham 47,456 dŚĞƐĞĂƐŽŶĂůĂǀĂŝůĂďŝůŝƚLJŽĨƐŽŵĞŵĂũŽƌǀĂƌŝĞƟĞƐŝƐƉƌŽĮůĞĚŝŶƚŚĞƚĂďůĞďĞůŽǁ͘Variety 18/19 Tonnes Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun <1% WA William 14,689 AustralianQLD Pear Variety Production (kg)5% andSA quality 2019 Packham 47,456 VIC Variety 18/19 Tonnes Jul Aug Sep OctBeurreNov BoscDec Jan Feb7,533Mar Apr May Jun <1% 88%WA 5% William 14,689 % of total CorellaPlanted area753 Average Fruit Size WĞĂƌƐ VIC 5% SA TASPackhamWĞĂƌƐ 47,456 WA Beurre Bosc 7,533 88% Variety 5%Tonnes 1% productionWilliam 14,689Class 1 pack out Others (ha) 4,520 (grams) 5% SA Corella 753 VIC TAS NSWBeurre Bosc 7,533 Processed 39,170 88% Packham5% ŽƌĞůůĂ͕ĂŶĂƩƌĂĐƟǀĞƉŝŶŬͬƌĞĚďůƵƐŚĞĚƉĞĂƌ͕ĂĐĐŽƵŶƚĞĚĨŽƌ46,550,827 50% Others63%ϭйŽĨƉƌŽĚƵĐƟŽŶ͘4,520 1,310 182 ϮϬϭϴͬϭϵ&ƌĞƐŚWĞĂƌƐWƌŽĚƵĐƟŽŶďLJ^ƚĂƚĞ 1% <1% Corella 753 TAS NSW Processed 39,170 Availability legend High Medium Low None WBC1% ^ĞĂƐŽŶĂůŝƚLJďLJWĞĂƌsĂƌŝĞƚLJ32,537,549 Others 35% 4,520 60% 755 190 <1% ^ŽƵƌĐĞ͗W> ^ŽƵƌĐĞ͗W> PearsNSW Other dŚĞƐĞĂƐŽŶĂůĂǀĂŝůĂďŝůŝƚLJŽĨƐŽŵĞŵĂũŽƌǀĂƌŝĞƟĞƐŝƐƉƌŽĮůĞĚŝŶƚŚĞƚĂďůĞďĞůŽǁ͘14,672,978 Processed16% 39,170 Availability64% legend 950High Medium 188 Low None <1% QLD Availability legend^ŽƵƌĐĞ͗W> High Medium Low None ^ŽƵƌĐĞ͗W> &ƌĞƐŚWĞĂƌƐ^ĞĂƐŽŶĂůŝƚLJďLJ^ƚĂƚĞTOTAL Variety 93,761,35418/19 Tonnes Jul Aug101%Sep Oct Nov Dec Jan62%Feb Mar&ƌĞƐŚWĞĂƌƐ/ŶƚĞƌŶĂƟŽŶĂůdƌĂĚĞApr May Jun3,015 <1% Packham 47,456 ^ŽƵƌĐĞ͗W> 3 &ŽƌƚŚĞLJĞĂƌĞŶĚŝŶŐ:ƵŶĞϮϬϭϵ͕ƵƐƚƌĂůŝĂĞdžƉŽƌƚĞĚϵ͕ϭϵϬƚŽŶŶĞƐ͘dŚĞĞdžƉŽƌƚƐĂŶĚ ^ŽƵƌĐĞ͗W> &ƌĞƐŚWĞĂƌƐ^ĞĂƐŽŶĂůŝƚLJďLJ^ƚĂƚĞState Source:18/19 Horticulture Tonnes Jul InnovationAug Sep OctAustraliaNov Dec ‘AppleJan & FebPearMar CropApr EstimateMay&ƌĞƐŚWĞĂƌƐ/ŶƚĞƌŶĂƟŽŶĂůdƌĂĚĞJun 2020’ WA New South Wales 228 William 14,689 ŝŵƉŽƌƚƐŽǀĞƌƚŚĞůĂƐƚϱĮŶĂŶĐŝĂůLJĞĂƌƐŝƐƉƌŽĮůĞĚŝŶƚŚĞŐƌĂƉŚďĞůŽǁ͕ǁŚĞƌĞ 5%State SA 18/19 Tonnes Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun &ŽƌƚŚĞLJĞĂƌĞŶĚŝŶŐ:ƵŶĞϮϬϭϵ͕ƵƐƚƌĂůŝĂĞdžƉŽƌƚĞĚϵ͕ϭϵϬƚŽŶŶĞƐ͘dŚĞĞdžƉŽƌƚƐĂŶĚ &ƌĞƐŚWĞĂƌƐ^ĞĂƐŽŶĂůŝƚLJďLJ^ƚĂƚĞVIC Victoria 103,602 Beurre Bosc 7,533 &ƌĞƐŚWĞĂƌƐ/ŶƚĞƌŶĂƟŽŶĂůdƌĂĚĞ 88% New South Wales5% 228 ŝŵƉŽƌƚƐĂƌĞĐŽƵŶƚĞĚĂƐŶĞŐĂƟǀĞƚŽŶŶĞƐ͘ State 18/19 Tonnes Jul Aug Sep OctQueenslandNov 12Dec Jan TradeFeb312Mar Apr MayCorellaJun 753 &ŽƌƚŚĞLJĞĂƌĞŶĚŝŶŐ:ƵŶĞϮϬϭϵ͕ƵƐƚƌĂůŝĂĞdžƉŽƌƚĞĚŝŵƉŽƌƚƐŽǀĞƌƚŚĞůĂƐƚϱĮŶĂŶĐŝĂůLJĞĂƌƐŝƐƉƌŽĮůĞĚŝŶƚŚĞŐƌĂƉŚďĞůŽǁ͕ǁŚĞƌĞϵ͕ϭϵϬƚŽŶŶĞƐ͘dŚĞĞdžƉŽƌƚƐĂŶĚ VictoriaTAS 103,602 New South Wales 228 1% Western Australia 4,048 Others 4,520 ŝŵƉŽƌƚƐĂƌĞĐŽƵŶƚĞĚĂƐŶĞŐĂƟǀĞƚŽŶŶĞƐ͘EĞƚ&ƌĞƐŚWĞĂƌƐ/ŶƚĞƌŶĂƟŽŶĂůdƌĂĚĞ Queensland 312 ŝŵƉŽƌƚƐŽǀĞƌƚŚĞůĂƐƚϱĮŶĂŶĐŝĂůLJĞĂƌƐŝƐƉƌŽĮůĞĚŝŶƚŚĞŐƌĂƉŚďĞůŽǁ͕ǁŚĞƌĞ Victoria 103,602 NSW South Australia 5,228 Processed 39,170 Western Australia 4,048 The Australian pear industry has beenŝŵƉŽƌƚƐĂƌĞĐŽƵŶƚĞĚĂƐŶĞŐĂƟǀĞƚŽŶŶĞƐ͘ in decline for years; since 2004 pear14,000 production in Australia has Queensland 312 <1% Tasmania 1,078 EĞƚ&ƌĞƐŚWĞĂƌƐ/ŶƚĞƌŶĂƟŽŶĂůdƌĂĚĞ 12,467 South Australia 5,228 Availability legend High Medium Low None 12,260 Western Australia 4,048 declined by about 40 per cent. Exports have alsoEĞƚ&ƌĞƐŚWĞĂƌƐ/ŶƚĞƌŶĂƟŽŶĂůdƌĂĚĞ dropped from14,000 18,000t in 12,0002003 to about 8,000t each Tasmania 1,078 Availability legend ^ŽƵƌĐĞ͗W>High Medium Low None 12,467 ^ŽƵƌĐĞ͗W> South Australia 5,228 year. It is hoped that new and upcoming varieties will revitalise the industry and12,260 profitability.14 Australia 14,000 9,190 Availability legend^ŽƵƌĐĞ͗W> High Medium Low None 12,000 10,000 Tasmania 1,078 currently exports about 8% of its production of pears each year.12,260 For the year ending12,467 7,649June 2019 Australia &ƌĞƐŚWĞĂƌƐ^ĞĂƐŽŶĂůŝƚLJďLJ^ƚĂƚĞ &ƌĞƐŚWĞĂƌƐ/ŶƚĞƌŶĂƟŽŶĂůdƌĂĚĞ 7,1309,190 Availability legend High Medium Low None 12,000 10,000 State 18/19 Tonnes Jul Aug Sep Oct Nov^ŽƵƌĐĞ͗W>Dec Jan Feb MarDĂŝŶWĞĂƌǀĂƌŝĞƟĞƐApr May exportedJun 9,190&ŽƌƚŚĞLJĞĂƌĞŶĚŝŶŐ:ƵŶĞϮϬϭϵ͕ƵƐƚƌĂůŝĂĞdžƉŽƌƚĞĚ tonnes, an 11% reduction compared toϵ͕ϭϵϬƚŽŶŶĞƐ the previous͘dŚĞĞdžƉŽƌƚƐĂŶĚ year.7,649 The8,000 exports and imports over 2 7,1309,190 New South Wales 228 ^ŽƵƌĐĞ͗W> dŚĞƌĞĂƌĞĂŶƵŵďĞƌŽĨǀĂƌŝĞƟĞƐŐƌŽǁŶŝŶƵƐƚƌĂůŝĂ͕ƉƌŽĚƵĐƟŽŶĨŽƌƚŚĞĨƌĞƐŚthe past five ŝŵƉŽƌƚƐŽǀĞƌƚŚĞůĂƐƚϱĮŶĂŶĐŝĂůLJĞĂƌƐŝƐƉƌŽĮůĞĚŝŶƚŚĞŐƌĂƉŚďĞůŽǁ͕ǁŚĞƌĞfinancial years is profiled in the10,000 graph below.7,649 8,000 6,000 Victoria 103,602 DĂŝŶWĞĂƌǀĂƌŝĞƟĞƐ 7,130 ŵĂƌŬĞƚŝƐĚŽŵŝŶĂƚĞĚďLJϯŵĂŝŶǀĂƌŝĞƟĞƐ͘dŚĞƐĞŝŶĐůƵĚĞ͗ŝŵƉŽƌƚƐĂƌĞĐŽƵŶƚĞĚĂƐŶĞŐĂƟǀĞƚŽŶŶĞƐ͘ 8,000 Queensland 312 DĂŝŶWĞĂƌǀĂƌŝĞƟĞƐdŚĞƌĞĂƌĞĂŶƵŵďĞƌŽĨǀĂƌŝĞƟĞƐŐƌŽǁŶŝŶƵƐƚƌĂůŝĂ͕ƉƌŽĚƵĐƟŽŶĨŽƌƚŚĞĨƌĞƐŚ Net Fresh Pears International trade 6,000 4,000 Western Australia 4,048 ŵĂƌŬĞƚŝƐĚŽŵŝŶĂƚĞĚďLJϯŵĂŝŶǀĂƌŝĞƟĞƐ͘dŚĞƐĞŝŶĐůƵĚĞ͗WĂĐŬŚĂŵ͕ĂŐƌĞĞŶƉĞĂƌƚŚĂƚŝƐƚŚĞŵŽƐƚƉŽƉƵůĂƌǀĂƌŝĞƚLJŝŶƵƐƚƌĂůŝĂ͘WĂĐŬŚĂŵ EĞƚ&ƌĞƐŚWĞĂƌƐ/ŶƚĞƌŶĂƟŽŶĂůdƌĂĚĞ dŚĞƌĞĂƌĞĂŶƵŵďĞƌŽĨǀĂƌŝĞƟĞƐŐƌŽǁŶŝŶƵƐƚƌĂůŝĂ͕ƉƌŽĚƵĐƟŽŶĨŽƌƚŚĞĨƌĞƐŚ 6,000 4,000 South Australia 5,228 ƉĞĂƌƐĂĐĐŽƵŶƚĞĚĨŽƌϲϯйŽĨĨƌĞƐŚƉƌŽĚƵĐƟŽŶ͘ 2,000 ŵĂƌŬĞƚŝƐĚŽŵŝŶĂƚĞĚďLJϯŵĂŝŶǀĂƌŝĞƟĞƐ͘dŚĞƐĞŝŶĐůƵĚĞ͗WĂĐŬŚĂŵ͕ĂŐƌĞĞŶƉĞĂƌƚŚĂƚŝƐƚŚĞŵŽƐƚƉŽƉƵůĂƌǀĂƌŝĞƚLJŝŶƵƐƚƌĂůŝĂ͘WĂĐŬŚĂŵ 14,000 (tonnes) trade International Tasmania 1,078 12,467 ƉĞĂƌƐĂĐĐŽƵŶƚĞĚĨŽƌtŝůůŝĂŵƐϲϯйŽĨĨƌĞƐŚƉƌŽĚƵĐƟŽŶ͕͘ĂŐƌĞĞŶƉĞĂƌƚŚĂƚƚƵƌŶƐLJĞůůŽǁĂƐŝƚƌŝƉĞŶƐ͘tŝůůŝĂŵƐƉĞĂƌƐĂĐĐŽƵŶƚĞĚ 12,260 4,000 2,000 0

WĂĐŬŚĂŵ͕ĂŐƌĞĞŶƉĞĂƌƚŚĂƚŝƐƚŚĞŵŽƐƚƉŽƉƵůĂƌǀĂƌŝĞƚLJŝŶƵƐƚƌĂůŝĂ͘WĂĐŬŚĂŵ (tonnes) trade International Availability legend High Medium Low ĨŽƌϮϬйNoneŽĨĨƌĞƐŚƉƌŽĚƵĐƟŽŶ͘ 12,000 2014/15- 2015/16- 2016/17- 2017/18- 2018/19- ƉĞĂƌƐĂĐĐŽƵŶƚĞĚĨŽƌtŝůůŝĂŵƐϲϯйŽĨĨƌĞƐŚƉƌŽĚƵĐƟŽŶ͕͘ĂŐƌĞĞŶƉĞĂƌƚŚĂƚƚƵƌŶƐLJĞůůŽǁĂƐŝƚƌŝƉĞŶƐ͘tŝůůŝĂŵƐƉĞĂƌƐĂĐĐŽƵŶƚĞĚ 2,000 0 ĞƵƌƌĠŽƐĐ͕ŬŶŽǁŶĨŽƌŝƚ͛ƐĚŝƐƟŶĐƟǀĞƌƵƐƐĞƚďƌŽǁŶƐŬŝŶ͕ĂĐĐŽƵŶƚĞĚĨŽƌ(tonnes) trade International ϭϬйŽĨ 9,190 ^ŽƵƌĐĞ͗W> tŝůůŝĂŵƐ͕ĂŐƌĞĞŶƉĞĂƌƚŚĂƚƚƵƌŶƐLJĞůůŽǁĂƐŝƚƌŝƉĞŶƐ͘tŝůůŝĂŵƐƉĞĂƌƐĂĐĐŽƵŶƚĞĚĨŽƌϮϬйŽĨĨƌĞƐŚƉƌŽĚƵĐƟŽŶ͘ 10,000 7,649 2014/15- 2015/16- Fresh2016/17- Exports2017/18- Fresh2018/19- Imports Net Trade ĨƌĞƐŚƉƌŽĚƵĐƟŽŶ͘ 7,1300 ĨŽƌϮϬйŽĨĨƌĞƐŚƉƌŽĚƵĐƟŽŶ͘ĞƵƌƌĠŽƐĐ ͕ŬŶŽǁŶĨŽƌŝƚ͛ƐĚŝƐƟŶĐƟǀĞƌƵƐƐĞƚďƌŽǁŶƐŬŝŶ͕ĂĐĐŽƵŶƚĞĚĨŽƌϭϬйŽĨ 2014/15- 2015/16- 2016/17- 2017/18- 2018/19- DĂŝŶWĞĂƌǀĂƌŝĞƟĞƐ 8,000 ^ŽƵƌĐĞ͗'dFresh Exports Fresh Imports Net Trade ĞƵƌƌĠŽƐĐ͕ŬŶŽǁŶĨŽƌŝƚĨƌĞƐŚƉƌŽĚƵĐƟŽŶ͛͘ƐĚŝƐƟŶĐƟǀĞƌƵƐƐĞƚďƌŽǁŶƐŬŝŶ͕ĂĐĐŽƵŶƚĞĚĨŽƌ ϭϬйŽĨ dŚĞƌĞĂƌĞĂŶƵŵďĞƌŽĨǀĂƌŝĞƟĞƐŐƌŽǁŶŝŶƵƐƚƌĂůŝĂ͕ƉƌŽĚƵĐƟŽŶĨŽƌƚŚĞĨƌĞƐŚ 6,000 ^ŽƵƌĐĞ͗'dFresh Exports Fresh Imports Net Trade ĨƌĞƐŚƉƌŽĚƵĐƟŽŶ͘ ϮϬϭϴͬϭϵƵƐƚƌĂůŝĂŶ,ŽƌƟĐƵůƚƵƌĞ ϮϬϭϴͬϭϵƵƐƚƌĂůŝĂŶ,ŽƌƟĐƵůƚƵƌĞ ŵĂƌŬĞƚŝƐĚŽŵŝŶĂƚĞĚďLJϯŵĂŝŶǀĂƌŝĞƟĞƐ͘dŚĞƐĞŝŶĐůƵĚĞ͗ ϭϳϲ ϭϳϳ 4,000 ^ƚĂƟƐƟĐƐ,ĂŶĚŬ^ŽƵƌĐĞ͗'d ϭϳͬϬϯͬϮϬϮϬ ϭϳͬϬϯͬϮϬϮϬ ^ƚĂƟƐƟĐƐ,ĂŶĚŬ WĂĐŬŚĂŵ͕ĂŐƌĞĞŶƉĞĂƌƚŚĂƚŝƐƚŚĞŵŽƐƚƉŽƉƵůĂƌǀĂƌŝĞƚLJŝŶƵƐƚƌĂůŝĂ͘WĂĐŬŚĂŵ ϮϬϭϴͬϭϵƵƐƚƌĂůŝĂŶ,ŽƌƟĐƵůƚƵƌĞ ϮϬϭϴͬϭϵƵƐƚƌĂůŝĂŶ,ŽƌƟĐƵůƚƵƌĞ ϭϳϲ ϭϳϳ ƉĞĂƌƐĂĐĐŽƵŶƚĞĚĨŽƌϲϯйŽĨĨƌĞƐŚƉƌŽĚƵĐƟŽŶ͘ ^ƚĂƟƐƟĐƐ,ĂŶĚŬ2,000 ϭϳͬϬϯͬϮϬϮϬ ϭϳͬϬϯͬϮϬϮϬ ^ƚĂƟƐƟĐƐ,ĂŶĚŬ

ϮϬϭϴͬϭϵƵƐƚƌĂůŝĂŶ,ŽƌƟĐƵůƚƵƌĞ (tonnes) trade International ϮϬϭϴͬϭϵƵƐƚƌĂůŝĂŶ,ŽƌƟĐƵůƚƵƌĞ ϭϳϲ ϭϳϳ tŝůůŝĂŵƐ͕ĂŐƌĞĞŶƉĞĂƌƚŚĂƚƚƵƌŶƐLJĞůůŽǁĂƐŝƚƌŝƉĞŶƐ͘tŝůůŝĂŵƐƉĞĂƌƐĂĐĐŽƵŶƚĞĚ ^ƚĂƟƐƟĐƐ,ĂŶĚŬ ϭϳͬϬϯͬϮϬϮϬ 0 ϭϳͬϬϯͬϮϬϮϬ ^ƚĂƟƐƟĐƐ,ĂŶĚŬ ĨŽƌϮϬйŽĨĨƌĞƐŚƉƌŽĚƵĐƟŽŶ͘ 2014/15- 2015/16- 2016/17- 2017/18- 2018/19- ĞƵƌƌĠŽƐĐ͕ŬŶŽǁŶĨŽƌŝƚ͛ƐĚŝƐƟŶĐƟǀĞƌƵƐƐĞƚďƌŽǁŶƐŬŝŶ͕ĂĐĐŽƵŶƚĞĚĨŽƌϭϬйŽĨ Fresh Exports Fresh Imports Net Trade ĨƌĞƐŚƉƌŽĚƵĐƟŽŶ͘ Source: Horticulture Innovation Australia Limited, Australian Horticulture Statistics Handbook 2018/192 ^ŽƵƌĐĞ͗'d 48 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 ϮϬϭϴͬϭϵƵƐƚƌĂůŝĂŶ,ŽƌƟĐƵůƚƵƌĞ ϮϬϭϴͬϭϵƵƐƚƌĂůŝĂŶ,ŽƌƟĐƵůƚƵƌĞ ϭϳϲ ϭϳϳ ^ƚĂƟƐƟĐƐ,ĂŶĚŬ ϭϳͬϬϯͬϮϬϮϬ ϭϳͬϬϯͬϮϬϮϬ ^ƚĂƟƐƟĐƐ,ĂŶĚŬ

Apple and Pear Industry Situation Analysis 2020 æ

Australian Pear Trade 2017 2018 2019 Fresh export volume (t) 7130 12467 9190 Fresh Export value ($m) $12.1 $19.6 $16.4 Preserved Pears export volume (t) 109 Preserved Pears export value ($m) $0.336 Fresh Import volume (t) Fresh Import value ($m) Preserved Pears import volume (t) 2209 Preserved Pears import value ($m) $4.6 Source: Horticulture Innovation Australia Limited, Australian Horticulture Statistics Handbook 2018/192

An additional 2,209 tonnes of preserved pears were imported in 2019, while 109 tonnes of preserved pears worh $336,000 were exported.2 Victoria is the leading state in terms of exports accounting for 93% of tonnes exported in 2019 and Queensland contributed 3%.2

Fresh Pears Imports and Exports by State Exports by state of production origin (Tonnes) Year Ending June 2017 2018 2019 Victoria 6,473 11,588 8,592 Queensland 317 468 312 New South Wales 202 292 258 Western Australia 65 27 27 South Australia 6 1 1 Other 68 92 < 0.5 TOTAL 7,130 12,467 9,190 Source: Horticulture Innovation Australia Limited, Australian Horticulture Statistics Handbook 2018/192 The leading markets for fresh Australian pears in 2019 were New Zealand (26%), Indonesia (17%), Canada (15%), Singapore (14%) followed by Fiji (6.5%) and there are also a number of other smaller markets.2 Exports have fallen from around 30% of production in the 1980s to just 1% of apple production and 6% of pear production in 2016. Currently the Australian apple and pear industries are working towards increasing exports by 10% of marketable yield by 2027. The following countries have been identified as Prime Prospect markets for pear exports. These include New Zealand, Singapore, UAE, Hong Kong, Indonesia, PNG and Canada (west coast). Full details are outlined in the ‘Apple and Pear Industry Export Development Strategy’ that was developed in 2017.1

Fresh Pears Imports and Exports by Country Exports by country (Tonnes) Year Ending June 2017 2018 2019 New Zealand 2,205 2,989 2,428 Indonesia 1,757 2,406 1,597 Canada 855 1,540 1,424 Singapore 494 1,284 1,297 Fiji 280 543 602 Other 1,539 3,705 1,843 TOTAL 7,130 12,467 9,190 Source: Horticulture Innovation Australia Limited, Australian Horticulture Statistics Handbook 2018/192

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 49

WĞĂƌƐ WĞĂƌƐ

&ŽƌƚŚĞLJĞĂƌĞŶĚŝŶŐ:ƵŶĞϮϬϭϵ͕ϮϲйŽĨĞdžƉŽƌƚĞĚĨƌĞƐŚƉĞĂƌƐǁĞƌĞƐĞŶƚƚŽEĞǁ æ Apple and Pear Industry Situation Analysis 2020 ĞĂůĂŶĚ͕ĂƐƉƌŽĮůĞĚŝŶƚŚĞĐŚĂƌƚďĞůŽǁ͘ WƌŽĐĞƐƐĞĚWĞĂƌƐ/ŶƚĞƌŶĂƟŽŶĂůdƌĂĚĞ &ŽƌƚŚĞLJĞĂƌĞŶĚŝŶŐ:ƵŶĞϮϬϭϵ͕ĂŶĂĚĚŝƟŽŶĂůϮ͕ϮϬϵƚŽŶŶĞƐŽĨƉƌĞƐĞƌǀĞĚƉĞĂƌƐ ϮϬϭϳͬϭϴ&ƌĞƐŚWĞĂƌƐdžƉŽƌƚƐďLJŽƵŶƚƌLJ 2017/18 Fresh Pears Exports by Country ǁĞƌĞŝŵƉŽƌƚĞĚ͕ǁŚŝůĞϭϬϵƚŽŶŶĞƐǁĞƌĞĞdžƉŽƌƚĞĚ͘

New Preserved Imports Zealand 26% 109t Other $366,674 20% 2,209t Indonesia $4.6m 17% Preserved Exports Fiji 7% ^ŽƵƌĐĞ͗'d Singapore Canada 14% 16%  Source: Horticulture^ŽƵƌĐĞ͗'d Innovation Australia Limited, Australian Horticulture Statistics Handbook 2018/192

In 2017 Australia&ƌĞƐŚWĞĂƌƐ/ŵƉŽƌƚƐĂŶĚdžƉŽƌƚƐďLJ^ƚĂƚĞ exported more than $1b worth of fruits. Table grapes, oranges and mandarins represent

75% of total exports by value. OtherExports major by state fruit of production exported origin (Tonnes)include cherries, peaches and nectarines with a combined share of 7%. These fruitsYear Endingtotalled June 82%2017 of national2018 2019exports by value. Pear exports were minimal 13 Victoria 6,473 11,588 8,592 compared to other fruits. Queensland 317 468 312 New South Wales 202 292 258 Exports of each fruit category increasedWestern Australia between 65 2013 27 and 2017, 27 compared to the previous five-year period. Table grapes, oranges andSouth mandarins Australia drove 6 growth 1 in national 1 exports. Share of table grapes and oranges declined slightly from 2009Other even though 68 the 92value< 0.5increased, however both value and share TOTAL 7,130 12,467 9,190 of mandarins and cherries increased from 2009 to 2017. Pear exports were non-existent in 2009 and increased 46.4%&ƌĞƐŚWĞĂƌƐ/ŵƉŽƌƚƐĂŶĚdžƉŽƌƚƐďLJŽƵŶƚƌLJ from 2013-17 to $14.79 million. The volume of pears exported are minimal in comparison Fruitto other exports Australian from fruit Australia exports. 13— 2017Exports by country (Tonnes) Year Ending June 2017 2018 2019 Australia exported more than $1b worth New Zealand 2,205 2,989 2,428 Australian Export ValueAustralian (2017) export value (2017) Apricots of fruits in 2017. Table grapes, oranges Indonesia 1,757 2,406 1,597 $2.09m and mandarins represent 75% of total Canada 855 1,540 1,424 exports by value. Other major fruit Singapore 494 1,284 1,297 Avocados exported include cherries, peaches and Apples $11.66m nectarines with a combined share of Fiji 280 543 602 $11.82m Cherries 7%. These fruits totaled 82% of national Other 1,539 3,705 1,843$51.40m exports by value. TOTAL 7,130 12,467 9,190 Plums Cranberries and blueberries Exports of each fruit category^ŽƵƌĐĞ͗'d increased $16.14m $4.49m between 2013 and 2017, compared to the previous five-year period. Table Grapefruit Watermelons grapes, oranges and mandarins drove $2.79m $9.24m ϮϬϭϴͬϭϵƵƐƚƌĂůŝĂŶ,ŽƌƟĐƵůƚƵƌĞ ϮϬϭϴͬϭϵƵƐƚƌĂůŝĂŶ,ŽƌƟĐƵůƚƵƌĞ growth in national exports.ϭϳϴ Share of ϭϳϵ table grapes and oranges declined ^ƚĂƟƐƟĐƐ,ĂŶĚŬ KiwifruitϭϳͬϬϯͬϮϬϮϬ ϭϳͬϬϯͬϮϬϮϬ ^ƚĂƟƐƟĐƐ,ĂŶĚŬ slightly from 2009 even though the $3.20m value increased, however both value Table grapes and share of mandarins and cherries $373.31m Lemons and limes increased from 2009 to 2017. $6.61m

Strawberries $29.41m Mandarins $148.15m

Pears Mangos $14.79m $30.95m Others Peaches and nectarines $8.47m $33.60m Melons $25.81m Oranges Source: APAL website ‘Industry Statistics’ 1 $274.09m

Fruit exports — Australia vs Western Australia 10 Share of states in the export of fruits from Australia Share of statesShare of in states the inexport the export of offruits fruits from Australia Australia (continued) (continued)

Plums ($16m) Pears ($15m) Plums ($16m) Pears ($15m) VIC $7.8m 48.1% VIC $13.2m 89.4% NSW $6.6m 41.0% QLD $0.8m 5.5% WA $1.1m 6.7% NSW $0.6m 3.9% VIC $7.8mTAS $0.2m48.1% 1.3% WA $0.0m VIC0.3% $13.2m 89.4% NSW $6.6mQLD $0.2m41.0% 1.3% NSW SA $0.0m QLD0.2% $0.8m 5.5% SA $0.2m 1.2% NT TAS $0.0m 0.0% WA $1.1m 6.7% QLD NSW $0.6m 3.9% NT $0.1m 0.4% NT $0.0m 0.0% TAS $0.2m 1.3% SA WA $0.0m 0.3% TAS QLD $0.2m 1.3% NSWVIC SA $0.0m 0.2% WA AvocadosSA ($11m) $0.2m 1.2% NT Watermelons ($9m) TAS $0.0m 0.0% QLD NT $0.1m 0.4% NT $0.0m 0.0% SA QLD $7.8m 67.2% QLD $6.1m 66.2% TAS 13 Source:WA DPIR$1.7mD ‘Fruit14.5% exports – Australia versus WA’ May WA2019$1.1m 12.0% VIC $1.2m 10.2% VIC NSW $0.7m 7.9% Avocados ($11m) 50 AgknowledgeNSW $0.9m 7.3%® ­— CONNECTWA ING WatermelonsAGRICULTUREVIC ($9m) AU$0.5mGUST5.6% 2020 SA $0.1m 0.5% NT $0.4m 4.4% TAS $0.0m 0.0% SA $0.3m 2.8% NT $0.0m 0.0% TAS $0.0m 0.0% QLD $7.8m 67.2% QLD $6.1m 66.2% Fruit exports — Australia vs Western Australia 37 WA $1.7m 14.5% WA $1.1m 12.0% VIC $1.2m 10.2% NSW $0.7m 7.9% NSW $0.9m 7.3% VIC $0.5m 5.6% SA $0.1m 0.5% NT $0.4m 4.4% TAS $0.0m 0.0% SA $0.3m 2.8% NT $0.0m 0.0% TAS $0.0m 0.0%

Fruit exports — Australia vs Western Australia 37 Apple and Pear Industry Situation Analysis 2020 æ

13 Domestic market

The pear industry is relatively stable in Australia, with almost all of production consumed domestically. In the year to the end of January 2020 major supermarkets made up 68% of the total market by volume, while non-supermarkets edged ahead of other supermarkets (22% over 10%) over the same period. 67.9% of all pears dollar sales were sold through major supermarkets. Major supermarkets include Coles, Woolworths and Aldi. Other supermarkets are all other full service supermarkets not included in major supermarkets and non-supermarkets include all others such as green grocers, markets and specialty stores that are not full service supermarkets.10

Retailer volume (KG) share of trade retailer Volume (KG) Growth

Copyright © 2020 The Nielsen Company

Retailer dollar ($) share of trade retailer Dollar ($) Growth

Copyright © 2020 The Nielsen Company Source: Harvest to Home website10

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 51 æ Apple and Pear Industry Situation Analysis 2020

14 Consumption and consumer preferences

In 2017-18 Australians ate an average of 2.6kg of pears a year (about one a month1), down from 3.2kg the previous year with about 60% of Australian pear production consumed as fresh fruit and most of the remainder used for processing into juice and other products.6 In a Nielsen review into the performance of apples and pears for the year to the end of January 2020 pears did not enjoy the level of success of apples, declining in volume sales (-15.6%) while remaining flat in dollar sales (1.3%) in the past 12 months. This volume decline was predominantly driven by a loss of buying households last year (188K), resulting in just 59% of Australian households purchasing pears. Other factors contributing to the decline were a reduction in frequency of purchase and an average price increase of 20%.10 Unlike apples, pears appeal more to an older demographic with couples 35+ making up over half of pear sales. Couples aged 60+ are over-represented in pears, suggesting that promoting pears to families through targeted marketing campaigns could reinvigorate the fruit. Despite the price increase this year, pears remain a favourably priced fruit in comparison to their competitive set with a resultant appeal to low-income households.10 Pears face the same difficulties in display, ripeness and transportation that stone fruit do and vary in variety between those that are best eaten ripe to those that are best eaten hard. Communicating this information is challenging but essential to getting the best eating experience for shoppers. Continuing to provide meal inspiration to showcase the versatility of pears from salad to snacking may assist in growth.10 Finding innovative ways to communicate the eat now/eat later strategy by variety may also assist in driving sales.10

Avg Price ($) per kg of competitive set indexed to Pears

• In terms of how pears rated in terms of household expenditure, the buying percentage fell compared to the prior year to 59%. Average occasions fell by 0.8, to 7.4 over the 52 weeks up until January 2020. Household spend for the latest 52 weeks was at $18.62, compared to $17.80 for the prior year. The household purchase (by weight) for pears was at 6.4kg, a fall from 7.4kg in the prior year.10

52 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

How much ($) do households spend per year How many (KG) do households buy per year

How much ($) do households spend how many (KG) do households buy per Occasion per Occasion

Source: Harvest to Home website10

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 53 æ Apple and Pear Industry Situation Analysis 2020

Key Metrics by state

Source: Harvest to Home website10 Among its competitive set pears (3.6%) was last in dollar sales share in comparison to berries, bananas, table grapes, stone fruit and avocadoes. By volume share bananas (40.2%) led with pears making up 7.5%.10

Dollar sales share of competitor fruit Volume (kg) share of competitor fruit

54 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ Pome Orchard Business Analysis The Orchard Business Analysis (OBA) published by Apple and Pear Australia (APAL) is designed to determine the productivity and economic performance of the Australian pome fruit industry. The latest report was done in 2018 and it forecasted the 2019 result. AgFirst collected the physical and financial data from 24 orchard businesses, located throughout Australia including Stanthorpe, Orange, Batlow, Goulburn Valley, Southern Victoria, South Australia, Tasmania and Western Australia. The model size has been maintained at a 115ha property, of which 40ha is planted to pome fruit. Given the continuing variety trends in the Australian market, the variety Sundowner (Cripps Red) was replaced with Kanzi™ (Nicoter) in the model orchard’s variety mix.15 Some of the key findings from the 2018 report include: • The Australian Model Orchard’s average gross yield in 2018 was 43.9t/ha and 2019 was forecast to be to 46.5t/ha. • Fruit quality as measured by Class 1 pack out was 68% in 2018; forecast to be similar at 69% in 2019 • Average yield from 2008-12 was 36t/ha while the 2016-19 average was 10t/ha higher at 46t/ha. • Pack outs have also slowly improved over the 10 years of the model orchard. Class 1 pack out is also trending up, though the 2018 year did not conform to the upwards trend most likely reflecting challenges with weather events for the crop (major hail event in South Australia). • Average class 1 prices are also increasing (general trend from 2013 – 2018) as is revenue/hectare. • In 2018 the model orchard harvested a total of 4,387 bins (1,755t) over the 40ha planted. The class 1 recovery averaged 68% (1,188t) with the remainder split between Class 2 (13%) and process (19%) production.8 In summary the 2018 growing year yielded less than the previous two, with lower pack outs but stronger prices that resulted in a revenue per hectare just shy of 2017. 2019 is expected be stronger in yield and price which predicts a very good surplus for the year, comparable to the great result in 2008.8

Figure 1: Model orchard yield and pack out overview

Source: Orchard Business Analysis Report 2018/201915 In the Figure 1 the blue yield trend line shows the increase in gross yield since 2008 from a four year average to 2012 of 36t/ha to and average for the last 4 years (2016-19) 10 t/ha higher at 46 t/ha. Pack outs have also slowly improved over the 10 years of the model orchard with the Class 1 green line also trending up.15 Returns were good in 2018 and were forecast to continue into 2019. In general growers are getting marginally increased prices, significantly increased yields, better pack outs and resulting revenue per ha, but these have been necessary increases to match the increasing costs that orchardists are facing. This results in a variable cash orchard surplus per ha over the past 10 years, with no real increasing or decreasing trend. Table 1 summarises this information, and Figure 2 shows the returns, revenue and surplus data back to the beginning of the study.15 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 55 æ Apple and Pear Industry Situation Analysis 2020

Model orchard yield, packout, price and profitability overview 2013 2014 2015 2016 2017 2018 2019F Avg. Gross Yield (t/ha) 39.1 37.4 47.4 47.2 46 43.9 46.5 Class 1 Packout 67% 69% 66% 70% 72% 68% 69% Avg. Class 1 Yield (t/ha) 26.2 25.8 31.3 33.0 33.1 29.9 32.1 Avg. Class 1 return ($/kg) $2.06 $2.29 $1.94 $2.08 $1.93 $2.12 $2.26 Revenue per ha $59,271 $64,347 $67,032 $74,735 $69,007 $68,777 $79,737 Surplus per ha (EBITDA) $10,151 $11,314 $7,520 $13,283 $7,127 $6,357 $15,281 Source: Orchard Business Analysis Report 2018/201915 The model orchard achieved a cash operating surplus in 2018 of $254,285; or $6,357 per ha. Cash operating surplus is the same as EBITDA (earnings before interest, tax, depreciation and amortization). The range in Cash Operating Surplus (COS) varies significantly between individual orchards in the model.15 Figure 2 below shows the costs per ha over time; 2016 through 2018 have been similar in cost per ha after a drastic rise up to 2016, but that was forecast to increase again in the 2019 Forecast.15

Figure 2: Cost of production per ha over time

Source: Orchard Business Analysis Report 2018/201915 The average gross production for the model orchard in 2018 was 43.9t/ha. The range in gross yield by variety can be seen in Figure 3. Young plantings are influencing the result for Jazz and Kanzi. The Fuji variety suffers extreme biennial bearing in Australia which impacts its average yield capacity.15

Figure 3: Model gross yield by variety 2016 to 2018

Source: Orchard Business Analysis Report 2018/201915 56 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

As in all seasons, a wide range in performance exists between Australian orchards. While some of the lower yielding orchards may be due to a high proportion of young trees, the ongoing challenge for the industry is to raise the average yield across all blocks and reduce the number of under-performing blocks and orchards.15 The top orchard performances for Pink Lady demonstrate clearly that world’s best practice is possible in Australia with this variety. Royal Gala has averaged a very low 34.3t/ha in 2018 with the top grower averaging 66.3t/ha. Performance of Gala types in 2018 was hindered by high temperatures during and prior to harvest in many growing regions.15 The 2018 selling season achieved an average return of $2.12 per kg, which is higher than the past few years. Class 1 returns per kg by variety are outlined in Figure 4. WBC is the only variety that is below the previous two years, possibly due to the high level of hail damage and a generally poor pear market. Pears continue to be challenged within the local market which is generally attributed to a relative oversupply for the domestic market’s current demand levels. Kanzi™ as the recent addition to the model tends to have much higher return than the variety it has replaced (Sundowner) which results in a lift to the model average return over what it would have been with Sundowner in the model.15

Figure 4: Average model Class 1 returns by variety

Source: Orchard Business Analysis Report 2018/201915 Variability in the model gross revenue generated by variety is shown in Figure 5. Granny Smith and Pink Lady and strains again generated the highest revenues per ha in 2018.15

Figure 5: Range in model gross revenue per ha by variety

Source: Orchard Business Analysis Report 2018/201915

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 57 æ Apple and Pear Industry Situation Analysis 2020

The total cost of production for the model in 2018 is $2.58 million (including WoM1 and depreciation). This equates to $64,475 per ha, $1.47 per gross kg and $2.17 per Class 1 kg. Post-harvest costs account for $1.14m of this ($0.65 per gross kg, $0.96 per C1 kg). The breakdown of production costs on a per ha and per gross kg basis is shown in Table 2. 15

Table 2 - Overall costs of production 2108 Costs per ha ($/ha) Cost per gross kg ($/kg) Total Costs 64,475 1.42 Pre-harvest costs 28,513 0.65 On Orchard costs 35,962 0.82 Breakdown of on-orchard costs Labour 21,904 0.50 Working expenses 9,395 0.21 Overheads 2,608 0.06 Depreciation 2,055 0.05 Source: Orchard Business Analysis Report 2018/201915

Model Orchard Costs of production over time ($/ha)

Source: Orchard Business Analysis Report 2018/201915 Post-harvest costs have risen to $0.65 per gross kg representing 44% of total production costs on a gross kg basis (up from 42% in 2016). This is the total cost for packing, packaging, cool storage, freight to market and additional costs such as waxing and Smartfresh™.15 Post-harvest costs have been trending upwards since the OBA was first commissioned in 2008, though with some fluctuation (see Figure 15 below). It should be noted a quarter of the 23 orchard businesses surveyed as part of the panel operate their own pack houses, hence the post-harvest rates used in the model will be below full commercial rates offered by third-party post-harvest service providers.15 Post-harvest costs averaged $1.06/C1 kg and $0.73 per gross kg for those growers who used commercial third-party packers in 2018, compared to an average of $0.67/C1 kg and $0.50 per gross kg for those who operated their own packhouse.15

58 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

Post-harvest costs over time

Source: Orchard Business Analysis Report 2018/201915 Wage costs increased on a gross kg and per hectare basis in 2018. Harvesting wages are the largest component of wages and have now reached an average of 16 c per gross kg.15

Model labour costs per ha over time

Source: Orchard Business Analysis Report 2018/201915

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 59 æ Apple and Pear Industry Situation Analysis 2020 Australian Apple and Pear Breeding programs

The Australian Pome Fruit Improvement Program (APFIP) is a not-for-profit company that plays an important role in lifting orchard performance through the delivery of three core services: • Independent variety evaluation enabling growers to make informed decisions on the best variety for their requirements and location. • Certification of trees, budwood and rootstocks as virus-free and true to type delivering increased production through better tree health and orchard consistency. • Management of the quarantine process around imported varieties on behalf of growers, variety owners and nurseries to deliver faster access to new varieties while ensuring the industry is adequately protected from exotic disease.1 APFIP was established in 1997 and is funded on an ongoing project basis by Hort Innovation using a portion of the apple and pear research and development levy set aside specifically to fund APFIP’s work. The current project ‘Variety evaluation and tree certification services for the apple and pear industry’ (AP16004) is supported from July 2017 to June 2020.1 Since its inception APFIP has: • Played an instrumental role in securing earlier access to new varieties through the introduction of new quarantine protocols and technologies that have reduced the time in quarantine required for imported apple and pear planting stock from four years to 15 months. • Provided the industry with independent data on 139 apple and 66 pear cultivars through its variety evaluation trials to support growers in making better planting decisions. • Implemented a certification system for rootstock and trees that enables growers to access new propagating material that is free from the most detrimental viruses, is true to type and meets prescribed standards.1 APFIP operates an independent, secure and efficient evaluation network which encompasses the major temperate tree fruit growing regions of Australia. Independent and effective evaluation gives growers the information required to make decisions on variety choice relevant to their growing region, climate and operations. APFIP is an independent evaluator of varieties and is not a variety manager in Australia.1 Sites have been established in growing regions based on input from growers. With so many microclimates in each area it is important to have sites in areas that reflect as near as possible the average local conditions and soil types. These evaluation sites are planted as part of existing orchards to reflect commercial conditions. Varieties remain in a site for a maximum of seven years.1 There are seven evaluation sites across the key growing regions nationally: • Stanthorpe, QLD (August 1998) • Orange, NSW (August 1998) • Ardmona, Goulburn Valley, VIC (August 1998) • Lenswood, Adelaide Hills, SA (August 1998) • Huon Valley, TAS (August 1999) • Batlow, NSW (August 2000) • Manjimup, WA (August 2000) APFIP already has cultivars from over 15 different breeders around the globe. The aim is to increase this, with a particular focus on cultivars that will handle the increasingly extreme and warming environment experienced in many Australian growing regions. The work of the New Zealand Institute for Plant and Food Research (PFR) apple and pear breeding program is a good place to start, as the Australian industry still has access to PFR cultivars through its shareholding in the program’s commercialisation arm, Prevar. PFR cultivars receive the same rigorous evaluation as any other breeding program’s varieties.1

60 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

The Australian National Pear Breeding Program (ANPBP) based in Tatura in Victoria and conducted by the Biosciences Research Division has developed new varieties with the potential to recapture the fresh pear market. Most pears are grown using traditional methods where maximum production may take 10 years from planting and yields can be highly variable from year-to-year and from tree-to-tree. Modern orchard production systems for fresh pears requires investigation to achieve maximum yield and fruit quality.19 This project targets the Goulburn Valley fruit growing region and the project objectives are: • Investigate the mechanism and effects of rootstock, training system and planting density on tree growth, precocity, fruitfulness, yield, and fruit quality. • Explore the effects of root pruning and irrigation management on tree physiology, growth and precocity. • Explore the relationships between fruit bud type and fruit quality and investigate the principles of bud extinction of new pear varieties.19 The research contributes to productivity through: • Developing orchard management systems that produce high yields within five years of planting and sustain consistent first-rate quality fruit. • Reduced labour inputs through creating systems suitable to mechanisation. • Providing a community resource for up-skilling traditional pear growers.19

Website - http://agriculture.vic.gov.au/agriculture/horticulture/horticulture-research/profitable-pear-systems

The Australian National Apple Breeding Program (ANABP) is managed by DPIRD and based in Manjimup. This Program has developed several apple varieties including the world-famous Cripps Pink (Pink Lady™), Cripps Red (Sundowner™) and more recently Bravo (ANABP 01) which is an attractive dark burgundy apple unlike any other on the market. In screening seven commercial apple varieties Cripps Pink was found to have the highest flavonoid levels and ANABP 01 equivalent high levels. Other promising candidates are in the pipeline. ANABP varieties have been bred by traditional breeding methods, involving the crossing of parent varieties with hand and spray pollination. The apples are bred with the aim of maximising certain traits, initially eating quality, appearance, storage ability and pest and disease resistance. Maximising fruit nutrient content is increasing in desirability and project staff are looking into how to breed future varieties with high flavonoid content with the other positive traits. Website - https://www.agric.wa.gov.au/pome-fruit/breeding-healthier-apples Prevar was established in 2005 to commercialise new apple and pear cultivars bred by New Zealand’s research organisation Plant & Food Research Limited (PFR), however Prevar has benefited growers on both sides of the Tasman. Since its establishment, Prevar has delivered 12 cultivars to Australian growers. Brands that have been developed by Prevar and are in production across Australia include Piqa®Boo®, Rockit® and Smitten™ licensed to Freshmax, Lenswood Co-operative and Montague respectively. In addition to the New Zealand investments from New Zealand Apples and Pears Limited (NZAP) and PFR, Australian growers and the Australian Government have invested A$11 million in Prevar through Apple and Pear Australia (APAL), Hort Innovation, and its predecessor Horticulture Australia Limited. APAL currently holds 45% equity in Prevar. From 2019 APAL and Hort Innovation ceased funding Prevar and APAL will dilute its shareholding to allow for additional funding options to be sought. Importantly APAL and Hort Innovation have ensured the breeding pipeline will continue to benefit Australian growers for years to come. Under the new structure, APAL will retain a 16% shareholding, receive a proportion of royalties generated from any new cultivars that are commercialised globally, and exclusive commercialisation rights to any cultivars released in Australia until 2038. Website - https://prevar.co.nz/

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 61 æ Apple and Pear Industry Situation Analysis 2020

WESTERN AUSTRALIA N POME FRUIT SITUATION Western Australian Pome Industry 2018 -19 Seasonal Figures Apples Susie Murphy White Project Manager Pomewest All data is sourced from the Agricultural Produce Commission fee for service database on 25 September 2019 unless stated. 1 ValueThe 2018-19 and data was P collectedroduction for the crop sold to retailers in 2018-19. Production figures are collected at the time the produce is sold. Western Australian apple production was 21,950 tonnes in 2018-19. This equates to 550 hectares of Western Australian apple production was 21 950 tonnes in 2018-19. This equates to 550 hectares of apple trees planted assuming each hectare produces 40 tonnes. In the previous season 2017-18 WA planted apple trees assuming each hectare produces 40 tonnes. In the previous season 2017-18, WA produced 9.56% (30,628 tonnes) of the national apple production of 268,355 tonnes worth $491 million. produced 9.56% (30 628 tones) of the national apple production which was 268 355 tonne worth A steady decline in apple production and the number of apple growers is reported with significant drops $491 million (APAL/ABS statistics https://apal.org.au/programs/industry-data/industry-stats/ in production in 2013-14 and 2018-19.1/17 accessed 18/9/2019). A steady decline in apple production and number of apple growers is reported with significant drops in production in 2013-14 and 2018-19. Western Australian apple production 2007-08 through until 2018-19 season

40,000

35,000

30,000

25,000

20,000 Tonnes

15,000

10,000

5,000

0

Source: WA POME Industry 2018-19 seasonal figures report1 Figure 1. Western Australian apple production 2007-08 through until 2018-19 season. Production of apples in WA has declined by almost 19% during the past ten years. This could be partly becauseThere of are the 117 shift apple to growers club varieties in Western from Australia traditional in 2018 varieties,-19. The Manjimup where the/Pemberton newly planted Region varieties are still not bearing.produces Exports60% of the declined apples from by 83%. 26 growers, From Donnybrookanecdotal reportsproduces WA 21% consumption from 38 growers declined, Perth Hills but a figure for consumption14% from 41cannot growers be and estimated Jarrahdale because/Dwellingup data 5% on from trade 12 growers.with the Eightyeastern percent states of is the unavailable. Per capita productionorchards declined in WA are by small 32% producing which is less now than 7% 2 300less tonnes than theof apples Australian per year average.. While 5%25 of growers produced more than 200 tonnes per business producing nearly 16 000 tonnes in 2018-19 covering 400 hectares.

Apple production in 2017-18 was almost 8 000 tonnes more than 2018-19. In this last season a shift in production was reported in the Donnybrook Region where double the amount of apples were produced in 2017-18. The last quarter of 2018-19 figures are yet to be updated from one grower.

CONFIDENTIAL APC DATA

62 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

Trends in productionTrend, trade sa nind prodper cauctipita pon,rodu tcrtiaoden o fa andpp lperes in ca Aupsitatral iproda and uctiWA on of apples in WA Australia* Western Australia Western Australia 2007-08 2017-18 2007-08 2017-18 16.0 12.0 31,528 ) 268,355 T

14.0 i o 247,389 30K r 250K 11.6 14.6 a n 10.7 10.0 25,660

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s 200K n a p 10.0 e 8.0 n n o c a t 20K n

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n n a n n a r r r r t t a a i t i t i o i o n n r r o o o o i o i o i o i o n n p p o o p p c t c t i o i o c t c t c t c t W A W A u u m m c t c t u u ( ( c a u u c a I I E x p E x p

d d s c e s c e u u d d d d r r E x p E x p a a o o d d o o o o e e i t i t o o p p P r P r p p P r P r P r P r P r P r c a c a Source: Radhakrishnan, Manju; DPIRD ‘Apple Production and Trade; 201925 Australian apple production grew by more than 8% during the past ten years. Exports increased by 41%, still forming under 2% of WAthe to thasal prod moreuction. Au sthantralia 22%W ofA athepple numbertrends of apple businesses with just under 12% of national production, with has a trade surplus in apples as we import less than what we export. the lowest production perProdu cbusinesstion of apples f rinom Australia.WA declined by a Thislmost 1 9rank% durin isg t hunchangede past ten years. during the past ten years. WA has Per capita production is only 10.7 which is lower than the world average. This has This could be partly because of the shift to club varieites from traditional varieties, come down from 11.6 in 2007-08 by almost 8%. Fromthe IBIS lowestworld repor t,production perwhere businessthe newly plant enationallyd varieties are s tiindicatingll not bearing. Ex ptheorts d elowerclined by 8extent3%. of consolidation. Consolidation consumption also came down and a decline in production happened as a response From anecdotal evidences, consumption declined, but a figure for consumption can to the decline in demand. in the WA industry is progressingnot be estimated batec aalmostuse data on onetrade w ithirdth easte rofn st athetes is uratenavail aofble . that of leading states such as Victoria.25 Imports have increased from just 9 tonnes to 1145 tonnes during the past ten years. Per capita production declined by 32% which is now 7% less than the Australian Import source is mainly China followed by New Zeal2and . Regional Productionaverage. *According to FAO, Australian production is 304 tonnes for 2017.

In 2018-19 there were 117 apple growers in Western Australia, a further reduction from 136 growers in 2017-18. In 2018-19 the Manjimup/Pemberton Region produced 60% of the apples from 26 growers, Donnybrook produces 21% from 38 growers, Perth Hills 14% from 41 growers and Jarrahdale/Dwellingup 5% from 12 growers. Eighty percent of the orchards in WA are small, producing less than 2,300 tonnes of apples per year, while 5% of growers produced more than 200 tonnes per business producing nearly 16,000 tonnes in 2018-19 covering 400 hectares.17

Apple production in 2017-18 was almost 8,000 tonnes more than 2018-19. In this last season a shift in production was reported in the Donnybrook Region where double the amount of apples were produced in 2017-18.The Thedrop last in product quarterion of could2018-19 also figures be explained are yet by to the be poor updated yields fromreceived one in grower.the 201717 -18 season The dropdue in toproduction reduced bee could activity also during be explained the spring by of the2017 poor which yields was coldreceived and wet in the resulting 2017-18 in poor season due to reducedpollination. bee activity Winter during chill wasthe springlow in theof 2017Donnybrook which regionwas cold in both and seasons wet resulting which c inan pooraffect pollination. the Winter chillreturn was bloom. low in In the general Donnybrook the demand region from in retailers both seasons for apples which has declined can affect due to the economic return bloom. In general, downturn.the demand Although from retailers the state for supply apples of apples has declined was exceptionally due to economic low just before downturn. the harvest Although of 2019 the 17 state supplybegan. of apples was exceptionally low just before the harvest of 2019 began. 35,000

30,000

25,000

20,000

Tonnes 15,000

10,000

5,000

- Perth Hills Donnybrook Manjimup Total

2017-18 2018-19

Source: WA POME Industry 2018-19 seasonal figures report17 Figure 2. Western Australian apple production for each region for 2017-18 and 2018-19. Perth Hills region includes Jarrahdale and Dwellingup, Donnybrook includes Boyanup through to Bridgetown, Capel and Nannup Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 63 and Manjimup includes Pemberton orchards.

The most popular apple varieties grown in WA include Pink Lady, Granny Smith and Gala. With the biggest decrease in production occurring for Sundowners, reflecting industry practices of replacing these trees for other varieties. Increases in production were reported for Gala, Bravo and Kanzi as more trees have been planted in recent years.

10,000

9,000

8,000

7,000

6,000

5,000 Tonnes 4,000

3,000

2,000

1,000

0

2017-18 2018-19

Figure 3. Western Australian apple varieties produced in 2017-18 and 2018-19. Every effort is made to identify all varieties but sometimes known varieties are identified as Apples - Other.

CONFIDENTIAL APC DATA

The drop in production could also be explained by the poor yields received in the 2017-18 season due to reduced bee activity during the spring of 2017 which was cold and wet resulting in poor pollination. Winter chill was low in the Donnybrook region in both seasons which can affect the return bloom. In general the demand from retailers for apples has declined due to economic downturn. Although the state supply of apples was exceptionally low just before the harvest of 2019 began. 35,000

30,000

25,000

20,000

Tonnes 15,000 æ Apple and Pear Industry Situation Analysis 2020 10,000

3 Varieties 5,000

- The most popular apple varieties grown in WA include Pink Lady®, Granny Smith and Gala with the biggest Perth Hills Donnybrook Manjimup Total decrease in production occurring for Sundowners, reflecting industry practices of replacing these trees for other varieties. Increases in production were reported2017-18 for2018-19 Gala, Bravo and Kanzi as more trees have been planted in recent years.17 Western AustraliaFigure 2. isWestern the home Australian of the apple Cripps production Pink variety for each (sold region as for Pink 2017 Lady-18 ®and) which 2018- 19.is now Perth the Hills most region widely grown appleincludes nationally Jarrahdale accounting and Dwelling forup, nearly Donnybrook a third includes of production, Boyanup through and more to Bridgetown, recently theCapel Bravo™ and Nannup apple. and Manjimup includes Pemberton orchards. According to the Agricultural Produce Commission WA has a high share of processing and the ‘other apple’ category.The most WA popular does applenot have varieties a processing grown in plant,WA include so this Pink high Lady, proportion Granny Smith of processing and Gala. Withapple the could be becausebiggest a lower decrease levy is in charged production for occurringprocessing for apples, Sundowners hence, reflecting may not industrybe true. practices In WA Pink of replacing Lady forms 24% of thethese cultivation trees for and other Granny varieties Smith. Increases is the second in production major werevariety. reported Share for of Gala,club Bravovarieties and within Kanzi asWA is 17%, whichmore is more trees thanhave thebeen Australian planted in average. recent years The. release of Bravo™ could be a major factor behind this trend.25 10,000

9,000

8,000

7,000

6,000

5,000 Tonnes 4,000

3,000

2,000

1,000

0

2017-18 2018-19

Source: WA POME Industry 2018-19 seasonal figures report17 Figure 3. Western Australian apple varieties produced in 2017-18 and 2018-19. Every effort is made to identify Western Australia:all varieties gross but volumes sometimes by knownvariety varieties are identified as Apples - Other. Change Change WESTERN 2019- 2018- AUSTRALIA 2017 2018 2019 2020F 2020 2020

EstimatedCONFIDENTIAL Gross Volume APC DATA(kg) Royal Gala 19% 7,145,005 19% 4,944,984 21% 6,393,865 20% 6,131,716 -4.1% 24.0% Pink Lady 31% 11,639,863 32% 8,055,829 26% 7,814,154 25% 7,821,968 0.1% -2.9% Granny Smith 16% 5,819,932 14% 4,027,914 14% 4,132,640 12% 3,731,774 -9.7% -7.4% Red Delicious 4% 1,364,046 4% 944,042 3% 868,519 3% 803,380 -7.5% -14.9% Fuji 12% 4,403,921 12% 3,047,908 13% 3,745,880 11% 3,386,275 -9.6% 11.1% Sundowner 4% 1,480,965 4% 1,024,960 1% 437,658 1% 319,928 -26.9% -68.8% Golden 1% 311,782 1% 215,781 1% 207,150 1% 207,150 0.0% -4.0% Delicious Other Apple 13% 4,910,567 15% 3,398,553 15% 4,367,140 9% 2,921,617 -33.1% -14.0% (Inc. clubs) Total Apple 37,076,082 25,659,973 27,967,006 25,323,809 -9.5% -1.3% Source: Australian Apple and Pear Crop Estimate Report 20203

64 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

4 Trade

The majority of Western Australia apples are destined for the domestic market or freighted to the east coast; there is only a minimal amount exported. According to Horticulture Innovation Australia Limited, Western Australia accounted for 100 tonnes of fresh apple exports in 2019 and 87 tonnes in 2018. In 2017 only 4 tonnes were sent out from WA. There were no apples imported into WA.2 Western Australia experienced a shortage in apples in the 2017-18 season and the price per kilo increased and so did returns to growers. As WA produced more apples in the 2017-18 season than the 2018-19 season it was expected WA would run out of 2019 apples before the 2020 harvest.17 While the consumption of apples has gone down over the past five years, growers didn’t react to this trend, and they have continued to produce apples at the same pace, leading to oversupply. This resulted in the decline of price in the domestic market. In addition to this, improved cultivation practices and increased productivity also led to over supply resulting in a decline in price. The stone fruit industry also experienced an upward trend in production, however increased demand for exports helped that industry in improving the revenue.25 In Western Australia, growers have responded to the decline in demand by reducing production, leaving the price slightly high compared to ten years before. Both domestic and export market prices fluctuated during the past ten years, leaving a 9% rise in overall prices for the domestic product and 3% rise for exported product. Real export prices are consistently higher than domestic price except in 2017. However, the exported product is usually of higher quality than the product sold through Perth Market Authority. Export price fluctuated more vigorously than the domestic price. On average, export prices are about 27% higher than the domestic wholesale price of apples.25

Comparative trends in real price of apples Comparative trends in real price of apples 4.5 4.3

4.0 3.9

3.5 3.5 3.2

3.0 2.8 2.8 2.8 2.8 k g

2.7 r 2.5 e 2.2 p 2.2 2.5 2.3 2.1 2.3

i c e 2.1 2.0 2.1 P r 2.2 1.9 1.9 1.8 1.9 1.8 1.5 1.7 Real domestic price 1.0 Real export price

0.5

0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Comments Source: Radhakrishnan, Manju; DPIRD ‘Apple Production and Trade; 201925 According to IBIS world, consumption of apples has gone down over the past five years, but growers didn't react to this trend, and they continue to produce apples at the same pace, leading to oversupply. This resulted in the decline of price in the domestic market. In addition to this, improved cultivation practices and increased productivity also lead to over supply Note.resultin gPrices in a declin e arein pric eWA. The stwholesaleone fruit industry a lsmarketo experience dprice an upwa rd(Market trend in prod ucCity)tion, ho wandever in crexporteased dema nprice,d for expo rtits h edoeslped the innotdustry iincluden improving th esupply directrevenu eto. supermarkets. In Western Australia, growers have responded to the decline in demand by reducing production, leaving the price slightly high compared to ten years before.

Both domestic and export market prices fluctuated during the past ten years, leaving a 9% rise in overall prices for the domestic product and 3% rise for exported product. Real export prices are consistently higher than domestic price except in 2017. However, the exported product is usually of higher quality than the product sold through Perth Market Authority. Export price fluctuated more vigorously than the domestic price. On average, export prices are about 27% higher than the domestic wholesale price of apples.

Considering the downward trend in the industry, it would be worth exploring the industry in detail for- - World trends in production, consumption and trade - Characteristics of world leaders - Gaps in the WA industry and how we can improve

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 65 æ Apple and Pear Industry Situation Analysis 2020

5 Consumption

In terms of both dollar sales and volume growth, Western Australia grew the most with 8.5% (for dollar sales) and 4.1% (for volume). Ninety percent of households in WA purchased apples and spent $72.87 annually and consumed 20.7kg per household – the highest consumption across Australia.10

Source: Harvest to Home website10

66 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ Pears 6 Value and Production

Western Australian pear production was 5,681 tonnes in 2018-19, produced from 77 growers. This is similarWestern to 2017-18 Australian where pear production5,073 tonnes was were 5 681 produced tonnes in 2018 by 78-19 growers., produced Thefrom national 77 growers pear. More production was 103,748pears aretonnes grown of in which the Donnybrook only 3.89% followed (5,073t) by came Perth Hillsfrom then WA Manjimup. in 2017-18 The (APAL national ABS pear statistics https://apal. org.au/programs/industry-data/industry-stats/production was 103 748 tonnes of which only 3.89% accessed (5 073 18/9/2019).tonne) coming17 from Western Australia in 2017-18 (APAL ABS statistics https://apal.org.au/programs/industry-data/industry-stats/ accessed 18/9/2019).

10,000

9,000

8,000

7,000

6,000

5,000 Tonnes 4,000

3,000

2,000

1,000

0 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019

Figure 4. Western Australian pear production 2007-08 through until 2018-19 season. Source: WA POME Industry 2018-19 seasonal figures report17 Pear varietal changes show a decreasing trend in Packham’s, Barlett, Josephine, Precose and small 7 increaseRegionals in production Production were reported in Buerre Bosc, Corrella, Gold Rush, Red Sensation and Red Duchess.

More pears3,000 are grown in the Donnybrook area, followed by Perth Hills then Manjimup. 6,000 2,500

2,000 5,000

1,500 4,000 1,000 3,000 500 Tonnes

0 2,000

1,000

2017-18 2018-19 - Figure 5. Western AustralianPerth pear Hills varieties producedDonnybrook in 2017-18 andManjimup 2018-19. Every effort isTotal made to identify all varieties but sometimes known varieties are identified2017-18 as2018-19 Pears - Other.

Source: WA POME Industry 2018-19 seasonal figures report17 Figure 6. Western Australian pear production for each region for 2017-18 and 2018-19.

The Nashi production for 2018-19 was 241 tonnes from 19 growers. With 212 tonnes of Nashi fruit coming from Donnybrook from 11 growers. Agknowledge ® ­— CONNECTING AGRICULTURE AUGUST 2020 67 In 2017-18, Australians ate an average of 10.1kgCONFIDENTIAL of apples APC DATA per year which amounts to more than 1 apple a week, and they eat around 2.6kg of pears a year, which is about one a month. (APAL ABS statistics https://apal.org.au/programs/industry-data/industry-stats/ accessed 18/9/2019). The world apple consumption is increasing with other countries eating more apples than Australians. For example New Zealanders consume 14.5 kg per person and Germans 18 kg per person each year.

Western Australia experienced a shortage in apples in the 2017-18 season and the price per kilo increased and so did returns to growers. As WA produced more apples in the 2017-18 season than the 2018-19 season it would be expected that WA will run out of the 2019 apples before the 2020 harvest.

Orchard Business Analysis Reporting 2017-18 - National Results

o Average business size 115ha with 40ha of pome fruit o Average Gross yield in 2017 46 t/ha, 2018 forecast to be 44.2t/ha o Average Gross yield has increased from 2008 36t/ha to 2017 46t/ha o Class 1 packout change 2012 67% to 2017 72% o Cost per ha have increased, good packouts but weak prices o Class 1 returns for 2017 $1.93 average o Revenue from fruit production in 2017 was $69 007 per ha (before post-harvest costs are deducted), ranges from $25 500 to $122 000 o Orchard gate return $40 514 per ha (total revenue less post-harvest costs) o Total cost of production in 2017 $64 319 per ha, $1.40 per gross kilo, post-harvest costs $0.62 per gross kilo and on-orchard costs $0.73 per gross kilo

AgFirst / APAL 2018. Australian Pome Fruit Industry Orchard Business Analysis Report 2017 Actual and 2018 Forecast

CONFIDENTIAL APC DATA

Western Australian pear production was 5 681 tonnes in 2018-19, produced from 77 growers. More pears are grown in the Donnybrook followed by Perth Hills then Manjimup. The national pear production was 103 748 tonnes of which only 3.89% (5 073 tonne) coming from Western Australia in 2017-18 (APAL ABS statistics https://apal.org.au/programs/industry-data/industry-stats/ accessed 18/9/2019).

10,000

9,000

8,000

7,000

6,000

5,000 Tonnes 4,000

3,000

2,000

1,000

0 æ Apple and Pear2010/2011 Industry2011/2012 Situati2012/2013on Ana2013/2014lysis 20202014/2015 2015/2016 2016/2017 2017/2018 2018/2019

8Figure Varieties 4. Western Australian pear production 2007-08 through until 2018-19 season. Pear varietal changes show a decreasing trend in Packham’s, Barlett, Josephine, Precose and small Pearincrease varietals in changes production show were a decreasing reported in trend Buerre in Packham’s,Bosc, Corrella, Barlett, Gold Josephine,Rush, Red Sensation Precose andand Redsmall increases in Duchess.production were reported in Buerre Bosc, Corrella, Gold Rush, Red Sensation and Red Duchess.17

3,000

2,500

2,000

1,500

1,000

500

0

2017-18 2018-19

Source: WA POME Industry 2018-19 seasonal figures report17 Figure 5. Western Australian pear varieties produced in 2017-18 and 2018-19. Every effort is made to identify Westernall varieties Australia: but sometimes gross volumes known by varieties variety are identified as Pears - Other. Change Change WES TERN 2019- 2018- AUSTRALIA 2017 2018 2019 2020F 2020 2020 Estimated Gross Volume (kg) Packham 44.0% 1,634,432 44.0% 1,777,464 44% 1,644,154 44% 1,726,362 5.0% -2.9% WBC 14.0% 520,047 14.0% 565,557 14% 523,140 14% 549,297 5.0% -2.9%

Pears Other 42.0% 1,560,140 42.0% 1,696,670 42% 1,569,420 42% 1,647,891 5.0% -2.9% CONFIDENTIAL APC DATA Total Pear 3,714,619 4,039,690 3,736,713 3,923,549 5.0% -2.9% Total Pome Fruit 40,790,701 29,699,663 31,703,719 29,247,358 -7.7% -1.5% Source: Australian Apple and Pear Crop Estimate Report 20203

9 Trade

While Australian pear exports accounted for 8% of total production (for year ending June 2019), Western Australia only exported 27 tonnes of fresh pears which is 0.3% of total Australian pear exports. Processed pears are imported into Australia, however the data is not broken up into states.2

Fresh Pears Imports and Exports by State Exports by state of production origin (Tonnes) Year Ending June 2017 2018 2019 Victoria 6,473 11,588 8,592 Queensland 317 468 312 New South Wales 202 292 258 Western Australia 65 27 27 South Australia 6 1 1 Other 68 92 < 0.5 TOTAL 7,130 12,467 9,190 Source: Horticulture Innovation Australia Limited, Australian Horticulture Statistics Handbook 2018/192

68 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

10 Consumption

While consumption of pears is poorer than apples within Australia, Western Australia is in the middle for performance in comparison to other states with only 0.4% of dollar sales in comparison. WA also had a decline of 13.7% for volume (kg) growth, second to Queensland with 12.1% decline which extended through to 18.2% reduction in volume for South Australia (including the Northern Territory). The consumption per household for WA was the lowest across Australia at 5.8kg (up until the end of January 2020), a decrease of 1.1kg compared to 12 months ago. Consumption in other states was higher; the highest was 6.8kg in Queensland and New South Wales. Consumption was down across the board compared to the previous year.10

Key Metrics by State

Source: Australian Apple and Pear Crop Estimate Report 20203

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 69 æ Apple and Pear Industry Situation Analysis 2020 Pome fruit production relative to other WA fruit industries In 2015/16 WA produced $477m worth of fruits of which 41% was avocados followed by strawberries (at 19%). The top five fruits by value are avocados, strawberries, apples, grapes and melons (excluding watermelons). These fruits form 81% of the total value of fruits produced in WA.16 Apple is the largest fruit industry by quantity. WA’s apple production remained stable in the five years to 2015-16, when quantities were about 27,650t worth $58 million. Peak production during this period was 31,435t in 2013-14 and quantities have been slightly contracting since then. Apples represented 12% of the state’s total fruit crop value in 2015–16.16 The WA pear industry came in behind oranges (2.9%) and nectarines (2.3%). Pears were valued at $11 millionFruit inproduction 2015-16 of which in Western 5,999 tonnes Australia were 2015–16produced representing 2.2% of the state’s fruit crop. Plums also(Wholesale accounted value for 2.2% in $m, of theproduction crop, followed in tonnes by mangoes and share at 2%,in %) then bananas at 1.7% and other citrus.16

FrWAuit produced prod $477mucti worthon ofin fruits We ofst whichern 41% Aust is avocadosralia followed 2015–16 by strawberries (at 19%). Top five fruits by value are avocados, (Wholesalestrawberries, value apples, in grapes$m, production and melons (excludingin tonnes water and melons). share inThese %) fruits form 81% of the total value of fruits produced in WA.

Avocados Strawberries Grapes Melons • $193m • $88m • $25m • $24m • 24 959t • 10 512t • 4534t • 20 492t • 40.6% • 18.6% • 5.2% • 5.1%

Oranges Nectarines Pears • $14m • $11m • $11m • 11 833t • 3708t • 5999t • 2.9% • 2.3% • 2.2%

Apples Plums Bananas • $58m • $10m • $8m • 27 651t • 4532t • 4151t • 12.1% • 2.2% • 1.7%

Mangoes • $9m Other citrus • 2200t • $6m • 2.0% • 1697t

DataSource: source: Fresh DPIR LogicD ‘Snapshot and trends in the production and overseas trade of fruit from WA’ December 201816 Production of WA fruit increased by 17% in the five-year period to 2015-16 from 110,000t to 129,000t. 12 Snapshot and trends in the production and overseas trade of fruits from Western Australia At the same time, the value of this production grew 62% to reach an estimated $477m. Production trends (from 2011-12 to 2015-16) in selected fruits in Western Australia showed that pears had a 15.3% decline in production, and a 14.7% reduction in the real price. Apples had a minimal increase of 0.5% in production and a 2.8% increase in real price. Avocadoes had a four times increase in production and 73% increase in real price along with a double-digit growth in the production and value of strawberries. The value of the WA citrus industry also grew significantly across this period, with the orange crop increasing 41% and mandarins 25% between 2011–12 and 2015–16.16

70 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

ProductionProduction ttrendsrends i nin s eleselectedcted fr uitsfruits (2011–12 (2011–12 to 2015–16) to 2015–16)

Apples 0.5% 3.3% 2.8%

Avocados 406.8% 778.7% 73.4%

Bananas -27.8% -54.7% -37.3%

Grapes -11.0% -3.5% 8.4%

Manderins 41.0% 25.1% -11.3%

Mangoes -26.7% -6.8% 27.1%

Melons -12.8% -10.1% 3.1%

Nectarines 7.5% 4.3% -2.9%

Oranges 56.0% 41.4% -9.4%

Other citrus -24.4% -2.9% 28.4%

Peaches 37.6% 29.1% -6.2%

Pears -15.3% -27.8% -14.7%

Strawberries 45.0% 61.6% 11.5%

0% 200% 400% 0% 500% 1000% -50% 0% 50% 100% % change in production % change in real total value % change in real price

Comments • With more than four times increase in production, avocados have also had a 73% increase in real price. • There has been a double digit growth in the production and value of strawberries as well. • The real price of bananas has declined by almost 40% with a decline in production. Competition from interstate could be one of the reasons for this. • Pears also showed a decline in both production and real price. • Share of fruits has increased by almost 5% in total fruit and vegetable production value.

Snapshot and trends in the production and overseas trade of fruits from Western Australia 13 Source: DPIRD ‘Snapshot and trends in the production and overseas trade of fruit from WA’ December 201816

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 71 æ Apple and Pear Industry Situation Analysis 2020 Pome fruit trade relative to other WA fruit industries WA exported $38m worth of fruits in 2017. Strawberries dominated WA’s fruit exports, contributing 67% of the state’s total fruit export value. Other major exports were oranges, melons, avocados, watermelons and plums with a combined share of 30%. The main driver of export growth were WA strawberries, with significant contributions from oranges during recent years. Export of avocados, melons and watermelons also increased and recorded higher growth than national exports of those fruits.13 Although WA maintained its share in the value of Australian exports (4%) due to the performance of strawberries, exports of WA table grapes, apples, peaches, nectarines and plums declined over the past decade. More recently exports of oranges and table grapes increased from WA, but are still only contributing just over 1% of the exports from Australia.13 Lack of operations with scale for export and a focus on the domestic market may be contributing factors to this performance. Historically domestic markets paid higher prices than export markets, which would have triggered the focus on domestic markets along with the difficulties in export procedures. However, trends are changing recently on a number of product lines.13 Fruit exports from Australia — 2017 West Australian export value (2017) Australia exported more than $1b worth Australian export value (2017) Apricots of fruits in 2017. Table grapes, oranges $2.09m and mandarins represent 75% of total exports by value. Other major fruit Avocados exported include cherries, peaches and Apples $11.66m nectarines with a combined share of $11.82m Cherries 7%. These fruits totaled 82% of national $51.40m exports by value. Plums Cranberries and blueberries Exports of each fruit category increased $16.14m $4.49m between 2013 and 2017, compared to the previous five-year period. Table Grapefruit Watermelons $2.79m grapes, oranges and mandarins drove $9.24m growth in national exports. Share of table grapes and oranges declined Kiwifruit slightly from 2009 even though the $3.20m value increased, however both value Table grapes and share of mandarins and cherries $373.31m Lemons and limes increased from 2009 to 2017. $6.61m

Strawberries $29.41m Mandarins $148.15m

Pears Mangos $14.79m $30.95m Others Peaches and nectarines $8.47m $33.60m Melons $25.81m Oranges $274.09m

Fruit exports — Australia vs Western Australia 10 Source: DPIRD ‘Fruit exports – Australia versus WA’ May 201913 Western Australia was ranked fifth in Australian fruit exports with a 3.6% share valued at $38m. WA’s contribution declined from 3% to 2.4% between 2009 and 2013 and jumped to 3.6% in 2017. Growth was mainly driven by increased strawberry exports. WA is the largest exporter of strawberries (with 86% share) and second largest exporter of avocados (15%) and watermelons (12%) nationally. WA is ranked fourth in the export of pears and seventh in apple exports.13

72 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

Share of states in the export of fruits from Australia Share of states in the export of fruits from Australia (continued) Share of statesShare in of statesthe export in the export of offruits fruits from from Australia Australia (continued) (continued)

Plums ($16m) Pears ($15m) PlumsApples ($16m) ($12m) Pears ($15m)

VIC $7.8m 48.1% VIC $13.2m 89.4% NSW $6.6m 41.0% QLD $0.8m 5.5% WA $1.1m 6.7% NSW $0.6m 3.9% $5.6m 47.5% VICVIC $7.8mTAS 48.1%$0.2m 1.3% WA $0.0m 0.3%VIC $13.2m 89.4% NSWQLD $6.6m$3.6mQLD 41.0%30.3%$0.2m 1.3% NSW SA $0.0m 0.2%QLD $0.8m 5.5% SA $0.2m 1.2% NT TAS $0.0m 0.0% QLD WASA $1.1m$1.2mNT 6.7%10.4%$0.1m 0.4% NT $0.0m 0.0%NSW $0.6m 3.9% SA TASTAS $0.2m$0.6m 1.3%5.0% TAS WA $0.0m 0.3% VIC NSW $0.6m 4.9% NSWNSW AvocadosQLD ($11m)$0.2m 1.3% WA Watermelons ($9m) SA $0.0m 0.2% NT SANT $0.2m$0.1m 1.2%1.2% NT TAS $0.0m 0.0% QLD WA $0.1m 0.7% QLD NT $0.1mQLD 0.4%$7.8m 67.2% QLD $6.1m 66.2%NT $0.0m 0.0% SASA WA $1.7m 14.5% WA $1.1m 12.0% TAS VIC $1.2m 10.2% TAS NSW $0.7m 7.9% Lemons and limes NSW $0.9m 7.3% VICVIC VIC $0.5m 5.6% SA $0.1m 0.5% WA NT $0.4m 4.4% 13 WA Source:Avocados($7m) DPIRD ($11m)‘Fruit exports – Australia versusTAS W$0.0mA’ May0.0% 2019 WatermelonsSA $0.3m($9m)2.8% NT $0.0m 0.0% TAS $0.0m 0.0% In terms of trends in WA fruit exports over time, while watermelon and strawberries have seen significant Fruit exports — Australia vs Western Australia 37 increases from 2013-17 theQLD apple$3.1m industry47.2% has seen an 82% reduction in exports and there was a 34% QLD $7.8m 67.2% QLD $6.1m 66.2% decrease in pear exports.13SA $1.8m 27.8% WA $1.7m 14.5% WA $1.1m 12.0% VIC $1.0m 15.2% VIC $1.2m 10.2% NSW $0.7m 7.9% Trends in Western Australia fruitNSW exports$0.5m 8.1% NSW $0.9m 7.3% VIC $0.5m 5.6% TAS Value$0.0m ($m)0.7% Value ($m) Value ($m) % change % change SA $0.1m 0.5% NT $0.4m 4.4% WA $0.0m2009 0.3% 2013 2017 2009 – 2013 2013 – 2017 TAS $0.0m 0.0% SA $0.3m 2.8% NT $0.0m 0.0% Fresh fruits excluding nuts NT $0.0m14.56 0.0% 12.43 38.10 -14.6TAS $0.0m 206.50.0% Strawberries 5.48 6.97 25.36 27.4 263.6 Fruit exports — Australia vs Western Australia 38 Oranges 0.00 0.00 3.92 Fruit-100.0 exports — Australia vs Western Australia 37 Melons (except watermelon) 2.16 1.93 3.69 -10.6 90.9 Avocados 0.67 1.40 1.69 108.9 21.3 Watermelons 0.05 0.00 1.11 -91.6 27267.8 Plums 2.76 0.86 1.08 -68.7 24.9 Table grapes 0.83 0.33 0.30 -60.9 -8.4 Mango, mangosteen, guava 0.39 0.05 0.28 -87.1 449.2 Kiwifruit 0.01 0.04 0.18 357.6 358.7 Peaches and nectarines 0.44 0.07 0.16 -84.7 131.0 Apples 1.00 0.45 0.08 -54.7 -82.1 Mandarins 0.00 0.02 0.08 946.8 432.0 Grapefruit 0.77 0.00 0.07 -100.0 Pears 0.00 0.06 0.04 -33.9 Cherries 0.00 0.00 0.03 Lemons and limes 0.00 0.00 0.02 -100.0 Apricots 0.01 0.00 0.00 -100.0 Cranberries and blueberries 0.00 0.00 0.00 Source: DPIRD ‘Fruit exports – Australia versus WA’ May 201913

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 73 æ Apple and Pear Industry Situation Analysis 2020

References

1. www.apal.org.au https://apal.org.au/news-and-resources/research-and-statistics/ https://apal.org.au/programs/more-industry-programs/apfip/ https://apal.org.au/growers-take-over-kanzi-management-in-australia/ https://apal.org.au/programs/industry-data/industry-stats/ https://apal.org.au/programs/industry-data/industry-stats/ https://apal.org.au/exporter-apple-pear/market-intelligence/ https://apal.org.au/prevar-variety-rootstock-trials-apfip/ https://apal.org.au/programs/more-industry-programs/apfip/ https://apal.org.au/thailand-pears-rico-grg/ https://apal.org.au/apfip-variety-evaluation-pears-that-will-arrive-well-before-the-heirs/ https://apal.org.au/programs/more-industry-programs/apfip/ https://apal.org.au/programs/more-industry-programs/apfip/ 2. Hort Innovation Handbook 2018/19 3. Apple and Pear Crop Estimate report 2020 4. www.abs.com.au 5. Apple and Pear Crop Estimate report 2018 6. www.agrifutures.com.au 7. https://www.aussieapples.com.au/about/#region-wa 8. APAL Orchard Business Analysis 2018 actual and 2019 forecast, Nov 2019 9. https://australianpears.com.au/ 10. www.harvesttohome.met.au 11. https://www.abc.net.au/news/rural/2018-04-11/industry-pushes-red-fleshed-apple-to-revive-consumption- woes/9641050 12. https://www.freshplaza.com/article/9212849/australian-kanzi-r-apples-set-to-continue-growth-despite- challenges-this-season/ 13. Radhakrishnan, Manju and Prince, Rohan; DPIRD; ‘Fruit Exports – Australia versus WA’; May 2019 14. https://www.abc.net.au/news/rural/2017-11-27/new-pink-pear-varieties-to-hit-supermarkets-next-year/9197590 15. POME Orchard Business Analysis 16. DPIRD ‘Snapshot and Trends in the production and overseas trends of fruit from WA’; Dec 2018 17. Murphy White, Susie; Pomewest; ‘Western Australian Pome Industry 2018-19 Seasonal Figures 18. http://pomewest.net.au/ 19. http://agriculture.vic.gov.au/agriculture/horticulture/horticulture-research/profitable-pear-systems 20. https://www.agric.wa.gov.au/pome-fruit/breeding-healthier-apples 21. https://en.wikipedia.org/wiki/List_of_countries_by_apple_production 22. https://www.statista.com/statistics/279555/global-top-apple-producing-countries/ 23. https://www.worldatlas.com/articles/top-apple-producing-countries-in-the-world.html

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24. www.freshplaza.com https://www.freshplaza.com/article/9219223/total-2018-2019-apple-production-now-estimated-at-576-850-tons/ https://www.freshplaza.com/article/9070176/global-apple-pear-breeding-programme-heats-up/ https://www.freshplaza.com/article/9212849/australian-kanzi-r-apples-set-to-continue-growth-despite-challeng- es-this-season/ https://www.freshplaza.com/article/9070854/partnership-to-commercialise-new-climate-proof-ap- ple-and-pear-varieties/ https://www.freshplaza.com/article/2171343/china-excellence-through-varietal-innovation/ https://www.freshplaza.com/article/9156688/overview-global-apple-market/ https://www.freshplaza.com/article/9189581/overview-global-pear-market/ https://www.freshplaza.com/article/9085173/overview-global-pear-market/ 25. Radhakrishnan, Manju; DPIRD ‘Apple Production and Trade’, 2019 26. Southern Hemisphere Forecast 2020 27. https://www.perishablenews.com/produce/world-apple-and-pear-association-presents-annual-southern- hemisphere-production-forecast/ 28. USDA report – Fresh Apples, Pears and Grapes world market and trade 29. Fiona Hall Nuffield report 30. World Apple Review 2018 31. http://www.worldstopexports.com/apples-exports-by-country/ http://www.worldstopexports.com/apples-imports-by-country/ 32. https://www.agriorbit.com/global-apple-consumption-continues-to-grow/ 33. https://www.globaltrademag.com/global-pear-market-russia-indonesia-and-germany-are-the-largest-importers- in-the-world/ 34. https://apps.fas.usda.gov/psdonline/app/index.html#/app/topCountriesByCommodity#table125 35. Hort Innovation; Industry Specific Impact Assessment Program – Apple and Pear ‘Development of new Pome fruit products’; Oct 2019 36. https://www.freshfruitportal.com/news/2018/06/27/asia-driving-increasing-apple-consumption-worldwide-report- finds/ 37. World Apple Review 2018 38. https://www.globaltrademag.com/global-apple-market-reached-78m-but-the-pandemic-might-put-a-drag-on- further-growth/ 39. https://www.tridge.com/intelligences/pear/export https://www.tridge.com/trades/HS1992/080820-pears-and-quinces-fresh/export/AU

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 75 æ Apple and Pear Industry Situation Analysis 2020

Other webpages reviewed:

http://pomewest.net.au/ https://www.horticulture.com.au/ https://australianpears.com.au/ http://www.wapa-association.org/asp/index.asp https://www.horticulturetrade.com.au/fruits-news/apple-pear https://www.agriorbit.com/global-apple-consumption-continues-to-grow/ https://www.horticulturetrade.com.au/fruits-news/apple-pear https://www.agriorbit.com/global-apple-consumption-continues-to-grow/ http://www.wapa-association.org/asp/index.asp https://www.agriorbit.com/global-apple-and-pear-production-show-slight-increases/ https://www.freshplaza.com/ https://www.freshplaza.com/article/9212849/australian-kanzi-r-apples-set-to-continue-growth-despite-challeng- es-this-season/ https://www.abc.net.au/news/rural/2018-04-11/industry-pushes-red-fleshed-apple-to-revive-consumption- woes/9641050 https://fruitwest.com.au/bravo.htm http://www.worldstopexports.com/apples-exports-by-country/ https://apal.org.au/thailand-pears-rico-grg/ https://www.planthealthaustralia.com.au/industries/apples-and-pears/ https://www.agric.wa.gov.au/new-generation-burgundy-coloured-apple-bravo™ https://www.agric.wa.gov.au/news/media-releases/department-applauds-arrival-new-bravo™-apple http://www.hin.com.au/networks/blush-pear-research#tab__177783 https://www.treecrop.com.au/news/australian-kanzi-apples-set-continue-growth/ https://www.horticulturetrade.com.au/fruits-news/apple-pear https://www.agriorbit.com/global-apple-consumption-continues-to-grow/ http://www.wapa-association.org/asp/index.asp https://www.agriorbit.com/global-apple-and-pear-production-show-slight-increases/ https://www.abc.net.au/news/rural/2018-04-11/industry-pushes-red-fleshed-apple-to-revive-consumption- woes/9641050 https://fruitwest.com.au/bravo.htm http://www.worldstopexports.com/apples-exports-by-country/ https://apal.org.au/thailand-pears-rico-grg/ https://www.planthealthaustralia.com.au/industries/apples-and-pears/ https://www.tridge.com/intelligences/pear http://tfrec.cahnrs.wsu.edu/breed/ https://mnhardy.umn.edu/varieties/fruit/apples/all-apple-varieties https://www.rosbreed.org/SuccessStories/AppleBreeding http://treefruit.wsu.edu/web-article/apple-breeding-program/ https://www.freshfruitportal.com/news/2020/02/12/wapa-forecast-apple-pear-production-slightly-down-in- southern-hemisphere-for-2020/ https://www.worldatlas.com/articles/top-apple-producing-countries-in-the-world.html http://www.worldstopexports.com/apples-exports-by-country/ https://www.aussieapples.com.au/about/#region-wa https://www.statista.com/statistics/279555/global-top-apple-producing-countries/ https://mnhardy.umn.edu/ https://www.ars.usda.gov/northeast-area/geneva-ny/plant-genetic-resources-unit-pgru/docs/national-apple-root- stock-breeding-program/ http://www.shennong.co.nz/ https://www.plantandfood.co.nz/page/about-us/ https://prevar.co.nz/ http://www.fruitnet.com/asiafruit/article/180151/fruit-australia-secures-rights-to-us-varieties https://www.treecrop.com.au/news/australian-kanzi-apples-set-continue-growth/ https://www.agric.wa.gov.au/pome-fruit/breeding-healthier-apples http://www.fruitnet.com/asiafruit/article/180151/fruit-australia-secures-rights-to-us-varieties https://apal.org.au/prevar-variety-rootstock-trials-apfip/ https://apal.org.au/programs/more-industry-programs/apfip/ https://australianpears.com.au/about-australian-pears/#redsensation https://www.treecrop.com.au/news/australian-kanzi-apples-set-continue-growth/ http://agriculture.vic.gov.au/agriculture/horticulture/horticulture-research/profitable-pear-systems http://www.hin.com.au/networks/blush-pear-research#tab__177783

76 Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 Apple and Pear Industry Situation Analysis 2020 æ

THE AUTHORS Agknowledge® Agknowledge® is a small company providing strategic management advice to a range of agribusiness companies and farming enterprises across Australia. Agknowledge® principals Peter Cooke and Nicol Taylor work nationally from a base in Western Australia, and combined they have over 65 years of involvement in agribusiness at all levels from strategic planning for agribusiness companies, government and industry policy, research, succession planning and business development. Agknowledge® has extensive experience of working closely with agribusinesses to assist in the development of individual business units and overall group strategy. Agknowledge® has a reputation for bringing clarity and depth of thinking to complex situations and for identifying viable strategic pathways that will build value and stand the test of time. Julia Ashby has worked with Agknowledge® since 2014 conducting one on one industry interviews on topics including: inland aquaculture opportunities, the value of grower groups, citrus industry consumer research, surveillance needs for invasive species, consultation for the WA Wild Dog Action Plan, and risk management in the Western Rock Lobster industry. Our advice and contribution is informed by: • Extensive specialist knowledge of key industry sectors and the issues that are driving operational and strategic change, a significant first-hand experience of working in roles with responsibility for strategic development, and the practical factors that may constrain the implementation of strategic initiatives. • Government strategy development experience: Agknowledge® has completed many successful strategy and innovation engagements with government. We also bring practical experience of how to develop strategy in the government context. • Industry and infrastructure experience. We draw on our team’s strong knowledge of regional industries as well as our numerous engagements in conducting industry analysis and building strategic business cases. Our robust quantitative analysis supports the qualitative perspectives, underpinned by strong analytical capabilities.

Agknowledge® ­— CONNECTING AGRICULTURE AUGUST 2020 77 AgKnowledge® connecting agriculture p: 08 9291 8111 e: [email protected]