Agricultural Trade Matters, July 2020
Agricultural trade matters provides an overview of what the Department of Agriculture, Water and the Environment and the Australian Government are doing to support international agricultural trade.
This is the current edition, published July 2020.
To receive an email notification when future editions are made available, subscribe to Agricultural Trade Matters.
Australia’s agricultural trade has held relatively steady during the COVID-19 pandemic, however the export of some commodities such as seafood, have seen a downturn.
In the early stages of COVID-19, there were significant concerns for Australian agricultural trade and the impacts we may see. Over the past few months however, agricultural trade has thankfully held relatively steady.
Head of Agricultural Forecasting and Trade for ABARES, Dr Jared Greenville, noted that official trade data shows that between January and March 2020, most agricultural exports continued to leave Australia and reach consumers in international markets.
‘Where exports are down on long-term average figures, this is mostly due to the effect of the recent drought on domestic production levels.
‘But there were exceptions, and significant disruptions did occur, particularly for sectors closely linked with food services, and those reliant on air freight to get their produce out of the country,’ said Dr Greenville.
Read more about insights into agricultural trade during COVID-19
‘Seafood is a key example of this, and we saw exports in this space fall sharply in February 2020. This was due to the timing of the spreading pandemic with peak seafood export periods, and a more significant reliance on air freight (approximately 76% of seafood export value).
‘While there was some recovery in March, our seafood exports remain well down on long term average results.’
Domestic production relies on continued access to imported goods like chemicals, fertilisers, agricultural machinery and veterinary medicines.
‘The trade data shows that these goods have continued to arrive, despite the pandemic. Most of these products arrive by sea, which has been much less impacted than transport by air,’ said Dr Greenville.
The global economic outlook is a significant concern going forward, and the International Monetary Fund (IMF) is forecasting a 3% contraction in global economic activity in 2020—an outcome that is worse than we experienced during the global financial crisis in 2007/08 (IMF, 2020).
‘Because agricultural exports mostly relate to food, the impact will most likely be felt through softer prices, rather than significantly reduced consumption. This is what we saw during the global financial crisis, when agricultural trade remained steady despite the economic turmoil that followed.
‘Not all products from the sector are essential though. As economic activity declines and global incomes are reduced, products consumed through more discretionary spending are likely to be affected, such as high quality food for cafés and restaurants.
‘For products which feed exclusively into manufacturing supply chains such as cotton, wool and wood products, demand may be affected by manufacturing closures, disruption to construction, and the effect of falling incomes on the purchase of new clothes and other durable goods.’
Depending on the course of the pandemic, economic activity is expected to begin normalising in 2021.
For agriculture, the pandemic has highlighted the risk of concentrated supply chains for certain goods and services. A diversified supply chain, which includes domestic and multiple international options for imported inputs and export markets, allows for risk mitigation and continuity of supply in almost all situations.
Visit the COVID-19 Hub on our website for more detailed insights into the impacts of the pandemic on our industry.
See our article on how the Australian Government’s International Freight Assistance Mechanism is helping to get Aussie exports off the ground during COVID-19.
A virtual meeting of the G20 Agriculture Ministers on 21 April agreed to continue their cooperation with major international organisations to ensure trade continues and information is available for all during the COVID-19 pandemic.
As the world faces truly unprecedented times in 2020 due to the COVID-19 pandemic, countries and international organisations have been discussing ways to keep international agriculture trade open in order to support global food security.
The G20 Agriculture Market Information System (AMIS) publishes monthly Market Monitor reports, and while they noted that the current global supply of food is adequate, they acknowledged that shocks created by COVID-19 were starting to take a toll on food markets.
Some countries are imposing restrictions of food exports to shore up domestic food supplies, which could risk market stability. Past analysis has shown that these restrictions come at the cost of food security in other countries, and harms domestic food producers through lower prices.
The G20 convened an Extraordinary Virtual Agriculture Ministers Meeting on 21 April 2020 which supported avoiding export bans and trade restrictions. Many members called for adhering to WTO rules, and that the WTO should be notified of any responses to COVID-19.
Read more about global effort to keep trade open during unprecedented times
At the meeting, Australia’s Minister for Agriculture, David Littleproud, highlighted some key measures Australia has put in place to respond to COVID−19, to ensure continuity of supply chains for domestic food security, and to give our trading partners confidence in our export capacity. He also called for international experts to work through the risks of wildlife wet markets.
Major international organisations are helping their member countries manage any changes to trade that are being put in place due to the pandemic, and to keep up to date with measures around the world.
The World Trade Organization (WTO) and International Food Policy Research Institute (IFPRI) are keeping registers of the trade-related measures countries are putting in place in response to COVID-19. Many of the policy responses to COVID-19 disruptions to global supply chains have been trade facilitating, and Australia is working with our trading partners to continue these trade facilitating measures post COVID-19.
The UN Food and Agriculture Organisation (FAO) is providing policy analysis and other tools for governments to assess COVID-19 impacts on food and agriculture, value chains and food security. The FAO has also published a dedicated COVID-19 platform which among other things, offers an overview of current policy decisions that Member Countries are adopting to mitigate the impacts of COVID-19 on food and agricultural systems.
The Organisation for Economic Co-operation and Development (OECD) hosted a special virtual session of its Committee for Agriculture, to discuss the impacts of COVID-19 on agriculture and food sectors. They have established a dedicated online platform to compile data, analysis and recommendations on the COVID-19 crisis, as well as to facilitate coordination, and contribute to necessary global action.
Head of bilateral trade in the Americas, Matt Worrell, said that Australia is advocating across these forums to maintain free trade and promote science-based standards to be used when trading in plant, animal and food products.
‘We will continue to support the WTO and key international organisations in analysing the impacts of COVID-19 on agricultural trade and production,’ Mr Worrell said.
‘I am encouraged by the work of these international organisations and countries around the world taking steps to ensure that supply chains remain open.
‘If this continues, international markets will function to support the movement of agricultural and agri-food products, and will play an instrumental role in avoiding food shortages and ensuring food security across the globe.’
Visit the department’s COVID-19 advice hub for more on Australia’s contribution to world efforts.
The Australian Government is supporting agricultural and fishery exports during the COVID-19 pandemic.
On 1 April 2020, the Australian Government announced the $110 million International Freight Assistance Mechanism (IFAM) as a temporary measure to help restore critical global supply chains which have been heavily impacted by COVID-19 containment measures.
IFAM has been set up to ensure essential airfreight trade continues, including imports of medicines and medical supplies to Australia. It also provides assistance to maintaining air freight supply chains that help producers of high-value, perishable agricultural and fisheries products supply their international customers on the outbound flights.
The funding comes as part of the $1 billion Relief and Recovery Fund, which supports regions, communities and industry sectors that have been disproportionately affected by the COVID-19 pandemic.
Read more about helping to restore global supply chains for Australian agricultural and fisheries exporters
Head of Strategic Trade Policy and North Asia, Amy Fox, encouraged exporters of traditionally airfreighted, high-value agriculture and fisheries products to complete an online form, expressing their interest in the mechanism.
‘Register your expression of interest and we will keep you up to date on how the mechanism is being developed, including opportunities to access flights supported by IFAM,’ Ms Fox said.
‘If you’re considered eligible, we will notify you of next steps so that you can get your products to your established international customers.
‘The details you provide will also help inform decisions for future flight routes and inform analysis of matching airfreight supply to future market need.’
IFAM is a temporary, emergency measure, and does not provide individual funding for exporters or importers, but will be applied across international freight pathways to help restore broken global supply chains.
‘While the mechanism won’t fully offset the increase in freight costs to pre-COVID-19 levels, it will help Australian businesses adapt quickly when the crisis begins to abate.’
Find out more about IFAM, including what products are eligible, and how to register your interest.
Visit our COVID-19 advice hub for more on measures and assistance for your industry.
The Indonesia-Australia Comprehensive Economic Partnership Agreement will come into force on 5 July 2020.
The date has been set on Australia’s new Free Trade Agreement (FTA) with Indonesia, thanks to news that Indonesia completed their domestic ratification process on 6 May 2020. From 5 July 2020, The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) will be in effect for Australian exporters to take advantage of.
Head of Bilateral Engagement, Jodie McAlister, said that this new agreement opens the door for both Australian and Indonesian businesses, service providers and investors to develop closer commercial relationships.
‘We have longstanding and mutually beneficial trade with Indonesia. With a growing middle class and sustained economic growth, there is tremendous scope for further growth, not only for Australian and Indonesian agricultural trade, but also for general trade, investment and services in both directions.
Read more about new FTA brings new opportunities for Aussie exporters to Indonesia
‘Under IA-CEPA, over 99% of our exported goods will enter Indonesia either duty free or under significantly improved arrangements, supporting businesses to take advantage of new opportunities to drive growth and jobs. This very welcome news comes at a time when our country needs a strong trade footprint to help our economic recovery following COVID-19,’ said Ms McAlister.
‘IA-CEPA will also mean that we’re able to support one of our closest trading partners during COVID-19, as they prioritise access to affordable, fresh food for their people. Australia is seen as a trusted, and reliable supplier to Indonesia so it’s a positive outcome for both countries.
‘Entry into force of IA-CEPA also signals to the region and the world that, even in these challenging times, both Australia and Indonesia are committed to free and open trade.
‘For Australian suppliers, there’s good news across a variety of commodities. Live cattle exporters will have greater certainty, including through a tariff rate quota of 575,000 live male cattle, which increases over time to 700,000 per year. Tariffs on our frozen beef and sheep meet will be halved to 2.5%, and our grain producers will have duty free access for 500,000 tonnes of feed grain per year, which increases by 5% each year.
‘The 5% tariffs on milk and cream, and grated and powdered cheese have been eliminated, and access has been improved for Aussie citrus fruits such as mandarins, oranges, lemons and limes.
‘As our 6th largest export market, Indonesia is already a country of opportunity for our exporters so we look forward to seeing this grow over the next few years,’ said Ms McAlister.
For more information on the IA-CEPA visit the Export Quotas page on our website.
Lima, Peru’s capital. Peru is one of Latin America’s fastest growing economies, and an opportunity for Australia’s agriculture thanks to the Free Trade Agreement between the 2 countries.
In February 2020, the Peru-Australia Free Trade Agreement (PAFTA) entered into force, beginning the process of phasing out tariffs and boosting Australia’s agricultural competitiveness in the South American nation.
The nation of over 32 million people is the 4th most populous in South America, and a promising market for Australia’s agriculture. The trade of agricultural products between Peru and Australia was valued at $108 million in 2018-19.
Head of bilateral trade in the Americas, Matt Worrell, said that the agreement will slash tariffs across a wide range of Australia’s goods, allowing Australian farmers and exporters to enter a level playing field against competitors in the market.
‘The US, Europe and Canada all have deals with Peru, and now we’ll be able to compete at the same level. This will give our world-class food products the best chance to get on Peruvian supermarket shelves and dinner tables,’ Mr Worrell said.
Read more about tariffs slashed leading to exciting market opportunities in Peru
Tariffs on seafood, sheep meat, kangaroo, most horticulture products and wheat were immediately lifted at the commencement of the FTA, as were some tariffs on wine and pork. Tariffs on beef and many more on wine will be phased out over the next 5 years.
‘Overall, 99.4% of tariffs on Australian goods exported to Peru will be abolished by 2025,’ Mr Worrell said.
‘We’ve also negotiated for preferential quotas on sugar, dairy, rice and sorghum. These quotas will increase over time, which is a win for those industries.
‘Peru has been one of the fastest growing economies in Latin America, and at times the world, over the last decade. The agreement heralds a great opportunity for Australia’s agriculture to stake a claim of that strengthening market.’
For more information about PAFTA, including details on the outcomes of the agreement, visit the Department of Foreign Affairs and Trade’s PAFTA webpage and read about the outcomes for goods market access.
Provide your feedback to DFAT on the first 5 years of trading under the China-Australia Free Trade Agreement by 31 July 2020.
The Department of Foreign Affairs and Trade (DFAT) is now seeking feedback on the China-Australia Free Trade Agreement (ChAFTA), as we mark its 5th year of being in force.
Businesses and any other interested stakeholder can provide their written submission, which will help inform DFAT’s 5 year Post-Implementation Review (PIR) of the ChAFTA.
The Assistant Secretary of the Department of Agriculture, Water and the Environment Strategic Trade Policy and North Asia Branch, Amy Fox, said that Australia’s agriculture, food, fisheries and forestry sectors are important players in our trading relationship with China, and that their feedback is vital to the ongoing shaping of the agreement.
‘Primary producers and exporters in this sector benefited to the tune of $15.9 billion in 2018-19 thanks to the trade relationship with China,’ Ms Fox said.
Read more about have your say on the China-Australia Free Trade Agreement
‘It’s important that we continue to review and seek industry feedback on our existing FTA with China, despite any current trade issues in this space. This agreement shapes how industry does business, and so their input is invaluable, and we strongly encourage submissions to this review, particularly from the agriculture sector.’
Interested stakeholders have until 31 July 2020 to make their submissions.
The Post-Implementation Review marks the first 5 year review of ChAFTA since the agreement came into force on 20 December 2015. Since the agreement’s implementation, the export of Australia’s agricultural products to China has increased by 60%.
Tariff cuts under the agreement to products like beef, veal, dairy, citrus and table grapes has led to growth in exports for each of those products.
‘Your feedback to the Post-Implementation Review panel will inform the Australian Government on the impact ChAFTA has on your business. We want to know how it has affected your competitiveness in the market, and your ease and cost of doing business,’ Ms Fox said.
‘The Post-Implementation Review seeks to uncover any unintended impacts of the agreement, whether beneficial or not. Your opinion on whether ChAFTA has delivered a net benefit to the Australian community is also valuable.’
To find out more about the review, and learn how to make a valuable submission, visit DFAT.
Aussie malting barley and a range of fruits are on an even fresher path to India, thanks to new biosecurity arrangements.
Australia’s trade with India has had a boost with new biosecurity arrangements in place that open the door to more export opportunities for Aussie barley and fruit growers.
Agriculture Counsellor based in New Delhi, Nora Galway, said that India has approved changes to Australia’s use of phosphine fumigation, a step closer to exporting malting barley. They’ve also approved our use of in-transit cold treatment of a variety of fruits, which is a major breakthrough for our farmers.
‘This outcome is very positive for Australia’s role in global malt production, and it means that our fresh produce, such as table grapes, apples, pears and summer fruit, arrive in an even higher quality state in the destination country’, said Dr Galway.
‘Being able to treat our produce in-transit, we get it to market quicker and our exporters can charge a premium based on the increased freshness.
Read more about fresh new benefits for Aussie exporters to India
‘The use of phosphine as a quarantine treatment for malting barley will save our industry up to $10 per tonne exported, and will also help to establish its broader acceptance as a treatment for other grains, pulses and nuts. It’s a positive step in improving conditions for our exports.
‘In 2018, Australia’s two-way trade with India was valued at over $1 billion, and we export $664 million worth of agriculture, fisheries and forestry products. These outcomes show the interest and maturity of our agricultural relationship with India. They also come as a result of the great teamwork from across the department in Canberra, and in India, as well as with Austrade, the Department of Foreign Affairs and Trade (DFAT) and industry,’ said Dr Galway.
For further information on Australia’s trading relationship with India visit the DFAT website.
For coming trade and exhibition events, please go to the Austrade's event search.
MICoR – Manual of Importing Country Requirements
MICoR allows you to find out about, and keep up to date on, the importing requirement of your key export markets.
The Australian Government FTA Portal provides a comprehensive tariff finder, with information on rules of origin and market snapshots for your searched products.
ePing – Electronic Export Alert
ePing provides notifications on changes of your export markets' sanitary and phytosanity (e.g. biosecurity and food safety) or technical barriers to trade (e.g. labelling) measures. Let Australia's contact point know if you have concerns on another country's measure.
BICON – Australian Biosecurity Import Conditions database
BICON helps to determine if conditions exist for your imports and if a permit is required. The database houses information for more than 20,000 plants, animals, minerals and biological products.