OPENING ANUAL AUSTRALIAN CITRUS CONFERENCE

  • John Luxton
Associate Minister of International Trade

ROTORUA

Introduction
Special guest ladies and gentlemen. Welcome to our country. I am pleased to be here to open what I understand is the first Australian industry conference outside of Australia. I am pleased that all the countries you could have gone to, like many other people, you understandable chose to come to New Zealand.

Today I would like to give you some information on our Citrus industry, some things that are happening within it and also touch on the New Zealand /Australian relationship

New Zealand Citrus Industry
There are estimated to be close to 700 citrus growers in New Zealand. Of these growers around 220 are members of the New Zealand Citrus Growers Incorporated.

There are a small number of large growers and a large number of small growers with a total area planted of occupying 1,300ha.

The farmgate value of New Zealand's total horticultural production in the year to March 1996 was $1,313 million. The value of citrus produced in New Zealand in the 1996 March year was $12 million. This was a significant decline from the 1995 March year, when production was valued at $23 million. The estimate for the 1997 March year puts the value of citrus production at about $12 million.

Production of citrus fruit for the year ended March 1997 stood at approximately 22,000 tonnes. This is down from the previous year's production of 23,000 tonnes. Production has been declining since the year ended March 1994. Prior to this, production fluctuated considerably.

This contrasts unsurprisingly with the Australian industry which has horticulture production with a gross value of AUD$3.2 billion, with citrus production of $353 million and exports of $101 million in 1994/95.

In the year to March 1997, oranges represented approximately 9,000 tonnes of production, grapefruit 2,500 tonnes, lemons 2,500 tonnes, mandarins 3,500 tonnes and tangelos 5,000 tonnes. All these fruits excluding tangelos have dropped in production levels since the year ended March 1990. The reason for this is a sharp decline in the price for citrus fruit.

The price for New Zealand citrus fruit has shown a decline in recent years. For example farmgate prices for oranges were $0.80/kg in the year ended March 1990 but in the year ended March 1997 the price was just $0.30/kg. The price of grapefruit was $0.40/kg in the year ended March 1991 but in the year ended March 1997 the price was just $0.20/kg.

New Zealand is the coolest Southern Hemisphere location for citrus growing. A Horticultural Research Institute scientist has identified that this may provide an opportunity to develop varieties to fill the gap between the end of the southern season and the start of the northern season.

New Zealand oranges are not coolstored, they keep well, they are not chemically treated and they ripen naturally.

Total exports of citrus fruit have grown from $1.15 million FOB in the 1993 June year to $2.8 million FOB in the 1996 June year. The major export products are lemons and mandarins.

The proportion of the value of exports to total production in the June year 1996 was 23%. This indicates that the New Zealand citrus industry is oriented towards the domestic market.

The major export market for citrus fruit is now Japan which took 86% of New Zealand citrus fruit exports in the June 1996 year.

New Zealand Citrus Growers Incorporated
New Zealand Citrus Growers Incorporated (NZCGI) is the group that represents citrus growers, and other persons who have a demonstrable interest in the citrus industry, but are not growers of citrus.

Previously NZCGI received funding from the Fruitgrowers Federation under the Orchard Levy Act. This funding ceased when this act was repealed at the beginning of 1996.

Last year NZCGI attempted to implement a compulsory commodity levy. The ballot of potential levy payers was not successful, and NZCGI must therefore be funded on a voluntary basis.

Due to falling prices and production levels, the future of the New Zealand citrus industry is uncertain and it faces a stern test of its ability to revive itself. In order to place the future of the New Zealand citrus industry on a more solid foundation, members of the NZCGI put in place a working party in November 1996 to plan a new strategy for the industry. NZCGI considers that a major overhaul of the industry with a vision of the future is required in order for it to survive in the face of competition from Australia and the US.

For growers to be profitable, they must produce quality fruit to meet consumers' needs. Growers must also develop positive relationships with exporters to get their fruit offshore.

International competitors are becoming the preferred suppliers to large New Zealand retailers. Good relationships between growers, packers, wholesalers and retailers are required in order to compete against international competitors.

NZCGI Working Party Report
The plan has suggested the industry should divide into category groups for each fruit. These category groups would be run by elected people. The working party advocated a general manager to coordinate the groups.

Groups would monitor what went on in the industry and would ensure each group was not paying for the same things. For example, if one group paid for research on mites, other groups could put resources somewhere else.

The three product divisions that would be overseen by the New Zealand Citrus Growers Incorporated are:

oranges and tangelos
mandarins
limes, lemons and grapefruit.
It has been suggested that these three product divisions could allow more orderly marketing to large scale retailers such as supermarkets. Another suggestion of the working party included that specific crops should be grown in areas that suited them, preventing a clash with other crops.

Research and administration needed by the industry would be tendered for.

Producer and associate members would be charged a subscription which would be used for administration and the costs of meetings.

Working Party member John Graham says the proposals of the working party are to encourage growers to think about what they were doing, and how and why they were doing it, rather than just presuming marketing people had got it wrong when there was a huge glut of fruit.

Growers will have access to the industry strategic plan including information into future market opportunities and threats.

Relationship with Australia
There has been ready and free citrus imports from Australia as a result of the Closer Economic Relations (CER) agreement which removed import barriers between New Zealand and Australia.

The New Zealand citrus industry did not object to this when the CER agreement was first implemented.

Today Australia dominates the New Zealand market for navel oranges. The navel orange season in Australia coincides directly with the New Zealand season.

In order for the New Zealand citrus industry to survive in the face of increased imports, specialised niche export markets were found such as the market for easy peel mandarins in Asia. Reliance on the New Zealand market alone would not be sufficient for the New Zealand citrus industry to survive.

This conference is the first Australian conference to be held offshore. This is a healthy sign of the close relationship between New Zealand and Australia. The fact that New Zealand is invited to the Australian conference and vice versa is an indication of a willingness to learn from each other and the industry considers that there is a wealth of knowledge to be learnt from each other.

Due to the different climatic conditions prevailing in Australia and New Zealand, citrus crops that do well in one country may not do well in the other and vice versa. For this reason, shared research and development between New Zealand and Australia could help determine where the two countries fit in with one another in relation to market requirements.

Apple access
I would like to note in passing that negotiating access for exports of New Zealand apples to Australia has proceeded along a tortuous route. However, once again we understood a key event in the decision-making process was to occur with the release of a further technical analysis by the Australian Government earlier this week.

From New Zealand's point of view, I must say that Australia's draft assessment recommending a continuation of the ban on exports of New Zealand apples to Australia is very disappointing.

It is vital in our trade relationships that barriers to trade are based on sound science. It is because of this that Australia enjoys excellent access to New Zealand for your citrus crops.

My colleague, International Trade and Agricultural Minister Lockwood Smith raised the issue with his Australian counterpart Tim Fischer in Canberra yesterday.

Australia is a party to the international Agreement on Sanitary and Phytosanitary Measures which came into effect in 1994.

The agreement states that any bans must be on good scientific grounds.

We believe our case is a very strong one. We are confident that our position can withstand international scrutiny. We hope to persuade AQIS to reconsider its position.

As the New Zealand Minister directly responsible for the horticulture industry I personally hope that we can resolve this issue between our two countries.

Finally ladies and gentlemen, I would like to wish you well for a stimulating, productive and successful conference in our magnificent country. Thankyou