Trade Update: July - December 2009

Trade : 01-03-2010

Summary

Recent trade data provides encouraging signs that the sharp deterioration in the vegetable industry’s trade situation over recent years has ended.

Australia’s deficit in trade in vegetables narrowed to $156 million during July-December 2009 from $199 million in the corresponding period of the previous year.

The smaller deficit mainly reflected a 12.4% decline in the value of imports following their surge between 2005 and the early months of 2009. The reduction in the trade deficit was assisted by a 3% increase in vegetable exports, which remain below their level in the corresponding period of 2006.

Exports

The modest improvement in Australian vegetable exports during July-December 2009 was driven by a strong rise in frozen exports, which more than offset declines in the fresh and processed categories.

Fresh vegetable exports fell by 2.5% in the latest period, reducing their share of total vegetable exports in the second half of 2009 to 57.5%. Frozen exports share of the total rose to 16.0% in this period, close to the share of processed vegetable exports that fell to 16.5%.

The recent increase in ‘other vegetables’ from their low in 2007 continues with the latest increase reflecting a strong rise in exports of potato seeds for sowing.

New Zealand displaced Japan as Australia’s leading market for vegetable exports and there were strong increases in exports to Indonesia, Malaysia, Papua New Guinea and Qatar.

Export performance remains disappointing in a longer-term context with exports in July-December 2009 only two-thirds of their value in the corresponding period of 2001.

Imports

Imports of vegetables and vegetable products fell by 12% in the latest reporting period, interrupting a long run of strong increases in preceding years.

The decline reflected sharp falls in the value of frozen and processed vegetables, down by 24% and 17% respectively over the reporting period, the first reductions since 2002 and 2003.

Fresh vegetable imports rose by 26% in July-December 2009 to $28.6 mn, their highest-ever. Other vegetable imports by 9% to $54.4 mn, also a record level.

Imports from New Zealand, China and Italy, provided 52% of Australia’s vegetable imports in July-December 2009, up from 49% in the same period of 2008.

Imports from North America fell sharply, with large declines in frozen potatoes from Canada and processed vegetables from the United States. The strongest rise was in imports from India, which became Australia’s 9th most important source of vegetable imports.

While the latest trade figures provide some encouragement, Australia’s international trade in vegetables remains heavily in deficit. The competitiveness of imports has made inroads into the domestic market, while export performance has generally been lacklustre over recent years

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