1 APPLE & PEAR EXPORT OPPORTUNITIES AND GLOBAL MARKET POSITION Prepared by Wayne Prowse Fresh Intelligence Consulting July 2019 Population = Consumers = Demand 88% live in Northern Hemisphere and 82% live in Eastern Hemisphere (Eurasia) 50% live within 5 hours flying time from Hong Kong - only 3% live south of Tropic of Capricorn 44% 50% 18% 53% 82% 3% Source: Datagraver.com; Fresh Intelligence analysis GDP per capita = Purchasing Power North of tropics - North America and Europe most lucrative, China (East Coast) is the fastest developing Source: Centre for Global Development; Fresh Intelligence analysis Modern Asian consumers are seeking fresh produce at any time. • This means that : • Retailers need to source products globally if not available within Asia • Retailers are modernizing routes to market • Retailers know that high quality fresh produce drives traffic into store End point retail is changing from traditional wet markets to modern cashless online hybrid Global Fresh Produce – key facts • 2.55 billion tonnes produced in 2017 • Fruit 865.4 million tonnes • Vegetables 1.69 billion tonnes • 137 million tonnes traded in 2018 5% • Fruit 83 million tonnes 10% • Vegetables 54 million tonnes 3% Source: FAOSTAT 2017, ITC Trademap; Fresh Intelligence analysis Southern vs Northern Hemisphere share of trade SH ~ 9% of global F&V exports Southern Southern • 137m tonnes of fruit and Hemisphere Veg Hemisphere Fruit 1% 8% vegetables traded in 2018 • 61% is fruit and 39% Northern Hemisphere Veg vegetables 38% • Southern Hemisphere accounts for 15% of all fruit and 3.5% of all vegetables Northern Hemisphere Fruit exported 53% • Greater propensity for fruit to be exported to northern hemisphere NH ~ 91% of global F&V exports Global Trade in Fresh Fruit reached 83 million tonnes from 44 million tonnes in 2002 to 83 million tonnes in 2018 +3.5% per year over 10 years 90.00 80.00 + 3.5% per year Other 70.00 Rasberries & Blackberries Papaya Blueberries 60.00 Durians Cherries Strawberries Grapefruit 50.00 Kiwifruit Mangoes Caneloupe melons Million Tonnes Avocados 40.00 Dragon Fruit, Longans and tropical Pears Peaches Nectarines & Plums Lemons & Limes 30.00 Watermelons Pineapples Grapes Mandarins 20.00 Oranges Apples Bananas 10.00 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: ITC Trademap; Fresh Intelligence analysis Apples are the world’s 3rd most traded fruit • Almost 8 million tonnes of apples and 2.7 million tonnes of pears traded • Bananas account for 30 per cent of global fruit traded • Cherries have a high growth rate Mill Tonnes share 1 yr change 5 yr trend 10 yr trend Bananas 25.28 30% 8.3% 4.6% 3.8% Citrus 16.98 20% 4.8% 3.9% 2.7% Apples 7.96 10% -10.2% -1.4% 1.1% Grapes 4.74 6% 3.3% 3.9% 2.6% Pineapples 3.93 5% 14.0% 5.0% 5.1% Summerfruit 3.03 4% -10.0% 1.6% 2.9% Dragon Fruit, Longans etc. 2.70 3% -13.5% 3.1% 4.2% Pears 2.68 3% -2.9% -0.4% 1.8% Avocados 2.48 3% 16.0% 12.3% 12.2% Cherries 0.78 1% 30.3% 11.4% 9.8% Others 13.04 16% Total 83.59 100% 4.3% 3.9% 3.5% Source: ITC Trademap; Fresh Intelligence analysis Tropical Fresh Fruit Production & Distribution Large volumes of Fruit moves from producers in tropics to lucrative northern markets Tropical Fruit (year round) Source: Centre for Global Development, FAOSTAT, ITC Trademap; Fresh Intelligence analysis Temperate Fresh Fruit ProduCtion & Distribution Main movements are intra-regional, supplemented by counter-seasonal from the south Temperate Fruit (northern season) Tropical Fruit (year round) Temperate Fruit (southern season) Markets that want year round temperate fruit must import counter-season fruit. Influencers of Australian Fresh Fruit Export Growth Exchange Rates, drought, GFC, domestic market prices, FTA’s, market access, competitors, DEMAND Australian Fresh Fruit Exports by Market Tonnes 2001 - 2018 500000 ALL OTHER 450000 USD > $1 EUROPE 400000 Canada USD < 50c United States 350000 MIDDLE EAST GFC New Zealand 300000 South Korea 250000 India Taiwan 200000 Tonnes per year Viet Nam Philippines 150000 Thailand 100000 Indonesia Japan 50000 China Malaysia 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Singapore Rise of Chile Hong Kong JAEPA Source: ABS 92017) via ITC Trademap; Fresh Intelligence analysis Tri State Millennium Drought Floods ChAFTA Australian Fresh Fruit Export Growth Led by citrus and grapes benefiting from counter-seasonal demand for high volume lines 450,615 tns Australian Fresh Fruit Exports by Product Tonnes 2001 - 2018 A$1.17 bn 500,000 450,000 USD > $1 Other 400,000 USD < 50c Banana 350,000 Kiwifruit GFC Avocados 300,000 Berries 250,000 Apples Cherries Tonnes per year 200,000 Mangoes Pears 150,000 Summerfruit 100,000 Melons Grapes 50,000 Citrus - 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source : ITC Trademap; Fresh Intelligence analysis Rise of Chile JAEPA Tri State Millennium Drought Floods ChAFTA Influencers of Apple & Pear Exports China enters the WTO, drought, competitors, export culture Apple & Pear Exports 2001 - 2018 60,000 3.00 China enters USD ~ 75c WTO USD > $1 50,000 2.50 USD < 50c 40,000 2.00 Pears 30,000 1.50 Apples AU $ per kg Tonnes per year Apple $ per kg 20,000 1.00 Pear $ per kg GFC 10,000 0.50 0 0.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: ITC Trademap; Fresh Intelligence analysis Rise of Chile JAEPA KAFTA Millennium Drought ChAFTA Apple & Pear Export Update – YTD May 2019 Apples Exports January to May 2019 Volume 1,861 tonnes -1% Value 3.58 M AUD 10% $ per kg $1.92 11% $0.19 Pears Exports January to May 2019 Volume 3,504 tonnes -39% Value 7.89 M AUD -14% $ per kg $2.25 41% $0.65 Apple & Pear Export Update – YTD May 2019 Apples Pears (44% of annual) (36% of annual) Exports of Apples to leading markets Exports of Pears to leading markets January to May 2019 January to May 2019 Tonnes A$ per kg Change LY Share Tonnes A$ per kg Change LY Share Papua New Guinea 412 $2.12 7% 22.1% Canada 1,359 $3.23 -6% 38.8% Indonesia 217 $2.39 68% 11.7% Indonesia 613 $1.73 -47% 17.5% Hong Kong 204 $2.50 42% 10.9% Singapore 421 $1.62 -39% 12.0% New Caledonia 226 $1.33 -20% 6.4% Italy * 389 $1.00 0% 20.9% New Zealand 157 $1.62 -48% 4.5% China 152 $2.03 23% 8.2% Fiji 193 $1.25 3% 5.5% Sri Lanka 198 $1.50 -25% 10.6% Papua New Guinea 109 $1.83 3% 3.1% Singapore 39 $3.30 2% 2.1% Malaysia 61 $3.14 -86% 1.8% India 117 $1.36 -80% 3.3% India 81 $1.59 -40% 4.4% Hong Kong 57 $2.03 -49% 1.6% Canada 18 $4.57 124% 0.9% Qatar 10 $5.79 63% 0.6% Other 189 5.4% United Kingdom - Total 3,504 $2.25 -39% 100% Source: IHS Global Trade Atlas; Fresh Intelligence analysis Other 141 7.6% Total 1,861 $1.92 -1% 100% Source: IHS Global Trade Atlas; Fresh Intelligence analysis *Eurostat data records price as A$2.24 Apple & Pear Export Update – YTD May 2019 • Apple Exports by State • (44% of annual) January to May 2019 New South Western South Australia Tonnes A$ per kg Change LY Wales Australia 0.2% 0.8% 0.7% Victoria 1,404 $1.16 21% Tasmania Queensland 192 $2.08 -61% Queensland 11% Tasmania 207 $1.61 28% 11% New South Wales 15 $4.42 35% Western Australia 13 $1.59 -52% Northern Territory 6 $3.07 -8% South Australia 4 $3.68 1371% Victoria 76% Total 1,861 $1.35 -1% Source: IHS Global Trade Atlas; Fresh Intelligence analysis 18 The Apple Imports by Asia were 1.4 million tonnes in 2018 India, the leading market, banned imports from China in 2018 China provided 55 per cent of the region’s apples, followed by United States, New Zealand and Chile China also imported 64,000 tonnes of apples in 2018, of which just 129 tonnes from Australia Apples Imported by Asian markets 1600000 2.00 1.80 1400000 Japan 1.60 1200000 Singapore 1.40 Malaysia 1000000 1.20 Philippines Thailand 800000 1.00 Taiwan A$ per kg CIF Tonnes per year 0.80 Viet Nam 600000 Indonesia 0.60 400000 Hong Kong 0.40 China 200000 0.20 India A$ per kg 0 - 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: ITC Trademap; Fresh Intelligence analysis 19 Pear Imports in Asia have climbed to 530,000 tonnes 80 per cent supplied by China , 7.5 per cent from South Africa, 1.7 per cent from Australia Though mostly Asian Pears emerging interest in European pears - good news !! Pear Imports by Asian markets 600000 1.80 1.60 Japan 500000 South Korea 1.40 China 400000 1.20 Taiwan Singapore 1.00 300000 India 0.80 Philippines A $ per kg CIF Tonnes per year Malaysia 200000 0.60 Thailand 0.40 Viet Nam 100000 0.20 Hong Kong Indonesia 0 0.00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 A$ per kg Source: ITC Trademap; Fresh Intelligence analysis 20 China has been importing European pears from Europe and United States – albeit 8,000 tonnes Opportunities for counter season supply unable to be fulfilled from Argentina and New Zealand US supply curtailed by the tariffs Australia has a Market AcCess request in the DAWR pool.