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04 August 2018

By Alma F. Argayoso | Senior Trade Representative | PTIC-Sydney

Published also in Business Mirror

AFEW days prior to my departure for my new posting in Sydney, Australia, the Department of Trade and Industry’s Export Marketing Bureau (DTI-EMB) organized an information session on Australia’s food regulatory system and imported food inspection scheme.

Australia is often referred to as an island continent with very stringent import requirements, making access to the Australian market quite challenging. A number of our exporters have been found non-compliant with its import requirements and as such, the information session was organized to prevent similar circumstances from occurring in the future, reduce costly delays and facilitate successful business deals between Filipino exporters and Australian buyers.

Mark Phythian, an expert from Australia’s Department of Agriculture and Water Resources who is also director for Imported Food Section, Compliance Policy Division, served as the resource speaker.

Mr. Phythian generously shared his knowledge and experiences on importing food to Australia and provided useful links on the protocols to be followed when importing food down under. He advised exporters to build a relationship and work closely with importers as they make a lot of decisions when it comes to complying with import requirements. He further stressed it is the shared responsibility of everyone in ensuring that import requirements are complied with to help keep bio-security risks from entering the country.

Market opportunities

ONE of the highlights of the information session was a presentation by EMB Director Senen M. Perlada on the market opportunities in Australia.

Australia is the Philippine’s 14th major trading partner with total bilateral trade amounting to $2.1 billion, behind most countries in the Asia-Pacific region. Despite the free-trade agreement with Australia under the Australia-New Zealand Free Trade Agreement (AANZFTA), where 96.8 percent of our merchandise exports enjoy zero tariff when exported to Australia, the Philippines has yet to maximize trade with Australia with the relatively small amount of Philippine exports to Australia—$439 million exports
versus Philippine imports of $1.69 billion.

By the year 2020, all Philippines merchandise exports will enjoy zero tariff when exported to Australia, providing greater market access for Philippine products.

The Philippines’s major exports to Australia are electrical machinery, consumer electronics, desiccated coconut and other processed food. Meanwhile, the Philippines imports copper ores and concentrates, coal, beef and wheat in order to fuel industrial production and support a growing population.

Specifically for food, the Philippines’s top exports to Australia in 2017 were coconut, processed fruits and extracts, sauces and condiments, pasta and noodles, biscuits and wafers, fruit juices, fresh and frozen tuna.

Australia has a population of over 24 million. According to the Australian Food and Grocery Council (AFGC), the fresh food, processed food and beverage sector had a total turnover of AU$110.6 billion for the period 2015 to 2016. Processed food and beverage is a AU$104.2-billion industry while fresh food is a AU$6.4-billion industry.

Food retailing is big business in Australia. Of the top 10 companies in Australia for 2017 based on revenue, the top 2 are food retailers. The biggest company in Australia with a total turnover of AU$68.73 billion is Westfarmers which owns the Coles supermarket chain. The second-biggest company in Australia, Woolworths, also owns the biggest number of supermarkets and had a turnover of AU$55.92 billion in 2017.

Westfarmers and Woolworths had bigger gross revenues than the biggest banks in Australia, such as Commonwealth Bank, Westpac and ANZ Bank. Both Westfarmers
and Woolworths also had bigger revenues than the biggest mining companies in Australia, such as BHP and Rio Tinto.

The other significant food retailers are ALDI and IGA. It is important to note that the smaller independent food retailers, such as the Asian supermarkets and mom and pop stores, comprise 21 percent of the overall food retailing in Australia.

There are currently 264,430 Filipinos living in Australia, the third largest migrant population, behind China and India. There is also a significant number of other Asian
nationals, such as Malaysians, Vietnamese and Indonesians.

Philippine food and beverages have a ready market with Australia’s Asian population and there is potential for Philippine products to make it to the Australian mainstream market.

Banana: A tall order

I WOULD be remiss if I don’t discuss the elephant in the room. For almost two decades, the Philippine government, through the Department of Agriculture (DA), has been working on market access for Philippine Cavendish bananas to enter the Australian market. In 2000 the “Import Risk Analysis [IRA] for Bananas from the Philippines” has been initiated and a draft IRA recommended that bananas are not permitted due to the risk of entry of some pests and diseases being too high to meet Australia’s level of protection. The Philippine government fought this and initiated a dispute in the World Trade Organization in October 2002.

In December 2004 a technical working group from Biosecurity Australia (BA) visited the Philippines to discuss the status of the IRA, conduct visits and inspections to various
Philippine banana plantations, and discuss market access issues.

Following years of discussion, BA issued a policy determination on March 3, 2009, which allowed the entry of Philippine bananas to Australia subject to the Quarantine
Act 1908, and the application of specific Sanitary and Phytosanitary Measures (SPS) as contained in the Final Report on IRA.

The report contained at least 12 conditions that must be complied with prior to exporting bananas to Australia. In spite of the stringent conditions set out in the IRA, the
Philippine Banana Growers Association (PBGEA) relayed the requirements outlined in the report may be possible to comply with except for two sticking points: (1) the requirement for the banana plants to have a minimum of eight sound green leaves on the day of harvest, and (2) all bunches intended for export to Australia should be covered with non-perforated bunch covers.

PBGEA explained the accepted industry norm anywhere in the world is five good leaves at harvest. This has been proven to be more than sufficient by Philippine shipments all the way to the Middle East and the United States. On the use of non-perforated bunch covers, PBGEA contends it will cause various types of fungal growth and diseases due to the lack of air circulation and build up of moisture.

Philippine government agencies have been meeting to resolve these issues and this has been the tall order of Secretary Ramon M. Lopez during my farewell courtesy visit. Considering the market opportunities in Australia, he would like to see agriculture products, such as fresh bananas and other processed products, mainstreamed in Australia.

This is what our trade office in Sydney will set out to do as we work on improving or re-balancing our trade with Australia. Indeed, we see a great deal of potential growth in the Australian market and would not want to miss out on the exciting opportunities down under!

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