Berri Citrus Industry Summit

Speech by the Australian Deputy Prime Minister and Minister for Trade, The Hon Tim Fischer to the Berri Citrus Industry Summit
Senate Chamber, Old Parliament House, Canberra, 2 December 1998

(Check Against Delivery)

I am grateful for the opportunity to address this important citrus industry meeting being organised by Berri. I hope the meeting today will be able to make a valuable contribution to the wider efforts of the industry to map out a successful and forward-looking vision.

Over the past five years the Australian citrus industry has worked incredibly hard to meet challenges in both the domestic and overseas markets. It has been tough. But there are runs on the board and I salute the industry for its efforts. In particular, the industry's success in becoming a net exporter of high quality fresh fruit and opening up new export markets has been impressive.

Export Success

Exports of citrus products, mainly fresh oranges but also juice products, have grown from $A99 million in 1993/94 to $A158 million in 1997/98. Significantly, exports in 1997/98 were slightly up on the previous year, a notable achievement given the drop in overall demand in some of our Asian markets.

The Asian region still accounts for a healthy $A108 million of citrus exports. But it is encouraging that the industry has been able to compensate, to an extent, for the overall decline in sales to Asia by increasing exports to other parts of the world. The rise in our exports to the US is particularly noteworthy, jumping from $A19 million in 1996/97 to $A35 million in 1997/98.

Exports are now a key part of the industry's focus for the future. Overall, the export of fresh fruit represented approximately 21 per cent of the total citrus production in the 1997/98 season. Importantly too, the growth in exports has far outstripped the growth in imports of citrus products.

Strong Competition

The Brazilian industry plays a key role in determining world prices for fresh and processed citrus products. But as many of you would know the Brazilians have suffered a "double whammy" over the last eighteen months. They have been hit by the effects of El Nino as well as by diseases such as citrus canker. As a direct result the price of frozen concentrated orange juice rose to a five year peak of $US 1550 per tonne in June this year.

I know that many in the citrus industry feel that, despite your best efforts in improving the efficiency of your operations from the planting stage through to processing and marketing, things do not seem to get better.

I would be the first to acknowledge that you face an intensely competitive environment. But there are significant opportunities arising from expanding demand and growing trade in agricultural products. This has been enhanced through the inclusion of agriculture in the global framework of WTO trade rules following the Uruguay Round of negotiations in 1995. It has also been complemented by the Coalition Government's renewed focus on bilateral market access where we are able to go the "hard yards" to fight for improved access at the bilateral level.

For citrus this has already resulted in some improvements in access to key Asian markets, as well as the US and New Zealand - but there is still a long way to go. Afterall there is no such thing out there as a level international trade playing field.

The Government's Push for Expanded Trade

While we encourage industry to keep ahead of the game, the Government also accepts that it has a responsibility to help you. The Citrus Market Diversification Program and the Supermarket to Asia strategy, for example, have been particularly effective in identifying and opening up specific market opportunities.

And we continue to approach the issue of improving market access in a comprehensive and cohesive manner, including through the Market Development Task Force and through the market access facilitators in the Department of Foreign Affairs and Trade.

We have negotiated access to some previously closed markets such as Taiwan in the course of negotiating a package of concessions and commitments for that economy's accession to the WTO. This access is limited, but it is a foot in the door of a market with real promise. We have also secured improved access to New Zealand and the USA following acceptance of fruit fly area freedom status.

I know that for growers with fruit on the trees, improving market access appears to be a slow process. Let me assure you, we keep pushing for all unjustified quarantine barriers to be removed, and arrangements on fumigation treatments and inspection to be set in place as soon as possible in all potential markets. But it does take time, and involves detailed technical procedures and considerable resources both in Australia and in other markets.

The citrus industry itself has an important role in guiding the Government in these efforts by identifying market access priorities. To this end, we have set in place arrangements for the industry to work closely with Government through the access negotiation processes I have just mentioned, as well as through the activities of the Australian Horticultural Corporation and the Horticultural Market Access Committee.

Agriculture Negotiations in the WTO

At the global level, we are currently focusing on Australia's objectives in the WTO negotiations on agriculture which will resume next year. These negotiations are a major opportunity to achieve substantial gains on agricultural market access, including for horticultural products such as citrus fruit.

World agriculture markets are still highly distorted. There remain too many subsidies and too many barriers to real market access. This discriminates against Australian producers who are generally globally competitive. This process of continuing, fundamental reform is therefore essential.

The Government's partnership with industry will play a key role in ensuring that we get the best possible outcome during the forthcoming negotiations. Close cooperation and consultation will be critical.

The domestic environment

The Government also recognizes the importance to you of the domestic market. Tax reform, on which I will speak further in a moment, is a key aspect of this. And the Government has also taken other important steps such as improved labelling laws, revised anti-dumping procedures and the establishment of a WTO consistent safeguards mechanism to provide scope for remedies from unfair import competition.

Tax reform is vital to both domestic and export market success. In essence, the Government's tax package will benefit the industry by reducing the cost of inputs and simplifying current tax procedures which, as I am sure you are all aware, are cumbersome and inefficient.

Under our reform plan, broad industry costs will fall noticeably. By Treasury estimates, costs for agricultural industries will fall by 2.8 per cent. And exporters will be refunded all GST paid on their inputs for the first time ever. This includes inputs on which they currently pay wholesale sales tax such as office computers and GST paid on government services such as those provided by Austrade.

In the transport sector - which accounts for a large proportion of your costs - the removal of wholesale sales tax and the introduction of the GST will reduce the cost of motor vehicle purchases and fuel. GST registered businesses will pay less for petrol and diesel. For petrol the saving will be around 7 cents per litre. And the Government will replace the diesel fuel rebate scheme with an expanded GST diesel fuel credit arrangement.

In addition, on-road business using heavy vehicles and railways will get a GST credit equal to around half the excise paid on diesel. This means that the effective excise rate will fall from 43 cents per litre to 18 cents per litre. This will significantly reduce the cost of bringing Australian exports from farms and factories to the ports.

And as exporters, not only will your costs come down, but most importantly, the exports of goods and services will be GST-free. This will help preserve a competitive edge in the international marketplace.

Conclusion

This summit brings together a wide selection of interests - growers, processors, marketers. All have an important stake in the industry and in defining the industry's future successes. I wish you well in your deliberations, which I hope will make an important contribution to the wider debate taking place in the industry at present. There are plenty of challenges, and plenty of opportunities. Working together, I firmly believe we can secure a positive future for your industry.