Agri-Food Trade Service

Agriculture, Food and Beverage Sector - Profile - Australia

November 2007

Ms. Ilsa Embleton
Trade Commissioner
Canberra, Australia

1. Sector Overview

Australia is a major producer and exporter of agricultural products. In 2006, Australian agriculture, food and beverages exports totalled approximately $21.7 billion¹, of which 70% was exported throughout the Asia-Pacific region.

Although Canada and Australia produce many of the same agricultural commodities, the two countries remain significant trading partners. Two way agri-food trade between Canada and Australia exceeded $650 million in 2006.

Agri-food exports to Australia have been a significant success for Canadian companies, reaching $185 million in 2006 and representing 10% of total exports to Australia.

Successful and Growing Agri-food Export Products

Canadian pork exports are growing annually and are worth over $125 million, making it the 4th largest export to Australia accounting for 70% of total agri-food exports. Despite the pressure for consumers to buy domestically produced foodstuffs, the doubling of sales from $61.3 million in 2001 to $125 million in 2006 shows significant success in Canada's ability to penetrate the Australian agri-food market.

Other top agri-food exports include canned salmon, food preparation products, maple syrup and whiskey.

Key Participants

More than 85% of products sold in the Australian supermarkets are imported or supplied by multinational companies with operations based in Australia. Canada is the leading supplier of pork, with 43% market share of total imports, followed by Denmark (34%) and the United States (23%).

International relationships play a key role in Australia's agricultural commodities sector. Australia's strongest relationship is with neighboring New Zealand. The two countries enjoy free movement of goods due to extensive free trade agreements. Other key sources of agricultural imports include the United States, Thailand, Brazil and the United Kingdom.

Canadian companies present in the market include, inter alia, McCains, Olymel, MapleLeaf Pork, duBreton Pork, Inniskillian Ice-wine, Camp Maple Syrup, LB Maple Treats, Clearwater Seafood, Atoka Cranberries, Iceberg Vodka, Ganong Bros., Hydratech Innovations and Unibroue.

2. Market and Sector Challenges (Strengths and Weaknesses)

Strengths and Opportunities

The Australian agricultural commodity market is highly competitive. A strong commitment among consumers to buy Australian-made products is fuelled by pressure from farmers and government. Furthermore, Australia produces many of the same commodities as Canada. Therefore, Canadian exporters will find good opportunities catering to niche markets. Australian consumers are typically adventurous and are drawn toward innovative products.

Organic/Natural

The organic food industry in Australia is growing at a relatively rapid rate with no sign of slowing. The Australian organic retail market is forecast to grow by 20 to 25% annually, while domestic production growth is forecast at 10 to 15% per year. This means a significant amount of product is imported to meeting rising demand. Opportunities for Canadian companies to bring organic processed or dried products into Australia are significant.

Primary imports include juice, pasta, grains, rice, sauces, jams, and syrups. Canada has a significant opportunity and market advantage in the imported organic lentils market as Canadian organic lentils are currently the only ones permitted entry into Australia.

Coles, one of Australia's two largest supermarket chains, was the first chain to introduce their own range of certified organic products. There are now over 150 organic items sold in 686 Coles supermarkets nationally. Woolworths, the other leading chain, also stocks a wide range of organic items on their shelves. Coles supermarkets are currently looking for a number of organic private label suppliers.

Functional Foods

Canadian interest is growing in the Australian health/functional food market as demonstrated by an increase in enquiries received by the High Commission. Canadian companies will find opportunities in the Australian functional foods /neutraceuticals sub-sector. The Australian functional foods market has seen rapid growth in the last decade. This trend is likely to continue as a result of changing population demographics (ageing population), and the effects of lifestyle diseases (obesity and diabetes). New regulations on the promotion of health-related claims with food products are expected to be in place in mid 2007 and there is a unique opportunity for Canadian companies to be first to market with new products which can, for the first time, communicate the product's health benefits.

Pork

An increasing number of domestic pork processors are using imported pork in their business operations. Canadian pork exporters have an excellent reputation in the Australian market. According to Australian importers and industry sources, Canada is the preferred source of imported boneless pork legs over U.S. suppliers as Canadian companies typically provide a more consistent supply of higher quality products and are more committed to the Australian market. This growing demand for imported pork presents opportunities for Canadian pork producers.

Cold Beverages

The fruit/tea drink category dominates the cold beverage sector. In 2005, its overall growth by grocery volume was 80%. Australian importers are looking new for private label suppliers in fruit drinks particularly cranberry juice and soft-drinks.

There are also growing opportunities in the sports and energy drink segment as these products achieved volume growth of 16% and 30% respectively.

Bottled water consumption grew by 13% in 2005. Water is becoming a scarce commodity in Australia due to a prolonged drought. There has been talk at the State government level of introducing recycled water for drinking. Should this eventuate, it is expected demand for bottled water will rapidly increase.

Nutritious Snacks

The nutritious snack category is one of the fastest growing categories in Australia's supermarket industry. Consumer demand for healthy/nutritious snacks have increased over the last 5 years fuelled by government policies related to the so-called "obesity epidemic" in the country.

Fish and Seafood

There is an opportunity for Canadian companies to export crustaceans and molluscs to Australia. There is particular interest in Canadian scallops and squid. According to industry sources, Canadian scallops are considered to be of better quality compared to other imported competitors and are currently primarily sold in high end restaurants and hotels.

Market Challenges/Issues

Quarantine and Market Access Issues

Despite Canada's success in this sector, Australia maintains very stringent quarantine regulations which can often present non-tariff barriers for Canadian agri-food exports. Import permits are required for fresh produce and some products are prohibited.

Canadian salmon and pork are two significant agricultural commodities that have experienced difficulties with Australia's stringent quarantine regulations. The WTO ruling in 2000 against Australia's 25 year ban on salmon was an important step for Canadian exporters.

In the past two years, the Canadian High Commission in Canberra has successfully resolved and defended two significant pork market access barrier issues. We stand ready to provide advocacy and assistance to Canadian companies as required.

Local Commitment

The "Buy Australian" campaign is a significant force. Australian owned and manufactured products are advertised as such and there is reasonably high consumer awareness in respect of buying Australian made products. Imported products must compete with Australian made products and are now required to comply with Australia's country of origin labelling requirements.

Regulations

Australian labelling & advertising laws are different from Canada. This may require some changes to food labels. The Canadian High Commission can offer guidance in this regard.

Canadian Government Contacts

Canadian High Commission in Canberra
Commonwealth Ave, Canberra 2600
Contact : Ilsa Embleton, Trade Commissionner
E-mail: ilsa.embleton@international.gc.ca
Internet: www.canada.org.au/

Agriculture and Agri-Food Canada
930 Carling Ave.
Ottawa, ON K1A 0C5
Contact: Fumiko Kitano, Policy Analyst
E-Mail: kitanof@agr.gc.ca
Internet: http://www.agr.gc.ca/

Foreign Affairs and International Trade Canada
125 Sussex Dr.
Ottawa, ON K1A 0G2
Internet: www.infoexport.gc.ca/

Canadian Food Inspection Agency (CFIA)
59 Camelot Dr.
Nepean, ON K1A OY9
E-Mail: cfiamaster@inspection.gc.ca
Internet: www.inspection.gc.ca/

Australian Quarantine and Inspection Service (AQIS)
Tel: (612) 6272 3999
E-Mail: foodimp@aqis.gov.au
Internet: www.aqis.gov.au/

Australian Government Contacts

Australian High Commission in Canada
50 O'Connor St, Suite 710
Ottawa, ON K1P 6L2
Tel: (613) 236 0841
Fax: (613) 236 4376
Internet: www.ahc-ottawa.org/

Biosecurity Australia
Tel : (612) 6272 3933
Fax : (612) 6272 3307
E-Mail: biosecurityaustralia@daff.gov.au
Internet: www.biosecurityaustralia.gov.au/

Australian Industry Contacts

Food and Beverage Importers Association
35 Spring St, Suite 205, Level 2
Bondi Junction, NSW, 2022, Australia
Tel: (612) 9386 1520
Fax: (612) 9387 6539
Internet: www.fbia.org.au/

Useful Internet Sites

• Agriculture and Agri-Food Canada--Agri-Food Trade Service: http://ats.agr.ca/
• Canada in Australia: http://www.canada.org.au/
• Canadian Australian Chamber of Commerce: http://www.canauscham.org.au/
• Canadian Trade Commissioner Service--InfoExport: http://www.infoexport.gc.ca/
• Food and Agriculture Organization of the United Nations: http://www.fao.org/
• Industry Canada--Strategis: http://strategis.ic.gc.ca/
• International Business Opportunities Centre (IBOC): http://www.e-leads.ca/
• Team Canada Inc--exportsource: http://exportsource.gc.ca/

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[1] All figures are in C$ unless otherwise noted.