Food imports

A key driver of the National Food Industry Strategy is the view that globalisation will impact on Australian companies, whether or not they are exporters. Accordingly, one of the goals of the Strategy is to improve the international competitiveness of the Australian processed food and beverage industry - this is as relevant to imports as it is to exports. This look at what we're importing and from where is by James Kilmartin with Chris Ambler.

Food imports have increased by 66% from $3.6 billion in 1996-97 to $6.1 billion in 2002-03, as shown in Figure 1. Over the same period food exports have increased by only 29% from $17.2 billion to $22.3 billion. Exports declined markedly in 2002-03, mainly because of the drought. While overall the trade balance is satisfactory, food imports are currently increasing at a rate faster than exports.

Figure 2 shows the import value of food as a percentage of export value in 1996-97 and 2002-03 for the nine major categories. Over the period total food imports have grown by 6.2% to represent 27% of total food export value in 2002-03.

Categories that have experienced significant import growth in relation to export value are:

• Other food (+35%);
• Horticulture (+22%);
• Seafood (+10%);
• Other grains (+2.8%); and
• Dairy (+2.4%).

The most significant growth in imports has been the in Other Foods category, which has increased by $702 million over the period. Within this category, imports of food preparations of flour and meal (highly specialised ingredients including ice-cream mix, vegetable extracts and alcoholic compounds for drinks manufacture) have increased by $233 million to $594 million in 2002-03. This sector covers a range of highly processed ingredients not produced in any significant volumes in Australia.

In the Horticulture category, Australia's imports of horticultural products were greater than exports by $24 million in 2002-03. Apart from juice and juice concentrate imports, horticultural products largely comprise 'exotic/non-traditional' and increasingly seasonal fruit and vegetables from the northern hemisphere and therefore imports could be expected to be higher than for other sectors.

Seafood imports have grown by $359 million over the period, or 10% a year on average, to a value of $971 million in 2002-03. The major growth areas in this category have been fish fillets (+$83 million), prawns (+$64 million), tuna products (+$54 million) and manufacturing fish meat (+$24 million).

In the Confectionery category, the fastest growing import has been in cocoa-based ingredients, averaging 18% a year and increasing by $57 million in value over the period to 2002-03. Imports of finished chocolate product have increased by $27 million over the period, an increase of 43% per year since 1996-97. Sugar confectionery is another area where imports are strong, showing 8% annual average growth and increasing by $30 million over the period.

Where are the imports coming from?

New Zealand accounted for 17.2% of all food imports in 2002-03, up from a level of 13.9% in 1996-67 (see Figure 3). As shown in Table 1, it was also the country with the highest rate of growth in exports to Australia over the period.

Where to from here?

Four industry sectors - Other Grains; Confectionery; Other Food; and Beverages - have been identified as areas where there are likely to be opportunities for import replacement. In the remaining sectors - Meat; Dairy, Grains; Horticulture; and Seafood - there are activities under way which are addressing the issues or there is a view that there are limited opportunities for import substitution.

The findings point to some key areas on which to focus future strategic development efforts to improve the import competitiveness of the Australian food industry. These areas include:

• policy, legislation and regulation;
• innovation and new product development support;
• development of highly specialised ingredients;
• start-up primary production of non-traditional crops;
• industry consolidation and its constraints on market dynamics; and
• sustainability of natural resources.

NFIS would welcome the views or comments of food businesses on these issues, as input to further consideration with industry associations and the National Food Industry Council.

Reprinted with permission, from foodbiz.net.au Volume 2, Issue 1.