ANIC is the federation of the Australian nut producing industries
Capital and expertise have combined to expand the areas under nut cultivation in Australia. The industry is a mixture of large ‘corporate’ farms and medium- and smallsized family farms.
Nut growing converts land from broadacre crops with low returns per hectare to intensive crops with high returns per hectare and per megalitre of water applied.
Current Australian nut production has a commercial value of about $350 million.
Orchards already planted and/or planned for planting within the next three years will produce crops worth more than $1 billion within eight years. Despite an expanding domestic market, most of that new production will be exported. Exports are projected to be about $1 billion a year in about a decade. Capital for expansion of nut orchards has been committed in the belief that the industry can expand on the existing markets of Japan, Europe and the United States. However, the industry needs to make the most of export market development opportunities. These opportunities will be greater if import tariffs are lowered and unrealistic sanitary and phyto-sanitary protocols can be avoided in the course of market expansion. Many of the countries with whom Australia is negotiating free trade agreements (FTAs) – including Singapore, China and the United Arab Emirates (UAE) – are nut importers with significant potential for growth. Such markets have little or no domestic production to protect, but frequently have high revenue tariffs that restrict nut consumption. The Australian tree nut industries show a comparative advantage over competitors in a number of areas. Depending on the industry, advantages may take the form of lower per unit production costs, higher yields and a ‘country of origin’ gene pool. This allows Australia to compete (produce and process) with countries that have lower labour costs. In addition, Australian tree nut production generally reflects a high level of supply complementarity into key importing markets – by way of supply windows and enhanced quality.
Tree nut industries require long-term development capital, technological skills and research to build on advantages. With the support of R&D funding, Australia is producing some of the highest kernel yields per hectare in the world for almonds, pecans and macadamias. Long-term breeding programs aimed at improved varieties are also in progress.
In relation to the world tree nut trade, there is minimal market distortion and government interference – allowing supply and demand signals to be interpreted relatively transparently. Tree nut prices and production are not plagued by export subsidies or other incentives that many other commodities face due to the agricultural support programs of the USA and Europe. The recent failure of the Doha Round suggests the competitive position of affected commodities is unlikely to change in the foreseeable future.
Tree nuts also provide alternative production options to the older Australian agricultural industries currently under pressure from low labour costs and heavily subsidised overseas competitors.
Australia’s tree nut orchards use few, if any, pesticides, promoting the image of Australia as a clean and safe producer of foods. In addition, nut industries can generally afford an enlightened sense of environmental awareness and act on it in such areas as vegetation management and the application of more pest specific chemicals as part of integrated pest management.
The Australian nut industry receives no significant tariff or quarantine protection. It is an industry that has grown largely on its own efforts due to international competitiveness. The government assistance required is to ensure that there are the maximum international market opportunities available. The international trade and bilateral agreements that Australia is currently negotiating with other countries are unlikely to be renegotiated for 5-10 years. Australian nut production will need those markets within that time span.
Now is the time to identify the potential of Australian tree nuts as a serious contributor to Australian agricultural income in the years ahead and ensure that the nut industries achieve appropriate recognition in Australian government negotiations to reduce tariff and maintain biosecurity access.
The industry’s development – now and into the future
Most of the Australian nut industries commenced with a small band of devoted, innovative pioneers. In need of new technology to harvest and process nuts, the early years were difficult and slow. Translating overseas experience to Australian soils and conditions has taken time, patience and sometimes significant stubbornness to persevere with nut production. While the nut industry has in most cases been building the knowledge pool for more than 20 years, it has been the past decade in which pioneering effort has paved the way for significant and rapid industry expansion. It is now profitable to expand into large scale commercial production from essentially ‘cottage’ origins.
There have been very few government subsidies or assistance for nut farming. In fact, few in government circles have been aware of nut industry development progress and those that have occasionally seen it as linked to tax minimisation.
Given a production lead time of some five years from planting and some 10 years till breakeven for most nut trees, there is no doubt that the income gap is long and the requirement for external capital is large.
There is good reason to believe that the Australian nut industry can continue to prosper with minimal government financial assistance. However, governments need to be aware of the opportunities for the expected growth in tree nut production and export availability and give these industries priority in agriculture trade development.
Nut growing has the real prospect of providing alternative and profitable avenues for growers of traditional broad-acre crops that are increasingly confronted by subsidised competition into mature markets.
Nuts also provide an alternative for growers of other horticultural crops currently facing international trade pressure from low wage countries.
The attraction may be further enhanced by the inability of the lower labour cost countries (that are seeking to use their comparative advantage in traditional crops) to withstand the income and cash flow gap inherent in tree nut production. Low labour cost countries are not automatically seeking or achieving a share of the world tree nut trade.
Australia – the competitive advantages
Australia has an excellent combination of the necessary factors to be a successful grower of nuts:
· Access to horticultural skills and R&D
· Relatively low cost land
· Ability to pay market value for water
· Increasing focus on clean and green (and organic)
· Access to capital
· Development of labour-saving technology
· Organised industries structure
· Home grown gene pool
Horticultural Skills
Growing nuts on some of the world’s poorest soils and generally in a hot, dry climate is a challenge. Australian nut farmers have become good at it. In the process of overcoming the challenging conditions, Australian nut farmers have developed horticultural skills that have put them in the forefront of the world for nut yields per hectare and quality.
Australian almond growers, for example, have become especially proficient at managing the interaction between water and nutrient on Sunraysia soils to consistently achieve higher yields and lower per unit production costs than competitors. The use of continuous soil moisture monitors, an Australian development in its own right, has been a critical element in this success.
Australian pecan growers have demonstrated that they are leaders in product quality, attracting a price premium against USA suppliers in the traditional markets.
Australian macadamia growers, who have the advantage of working with the native gene pool, are the leaders in farm-based research and have placed heavy emphasis on integrated pest management to maximise recovery of sound kernel.
The ability to plant and manage large areas quickly in difficult terrain has been a feature of the recent expansion of Australian nut farming. These are skills not generally apparent in other nut growing regions of the world. Almond and pecan growers from traditional growing countries such as the USA regularly visit Australia to learn Australian techniques. The Australian macadamia industry is the key provider of research and development information to the rest of the world.
A dogged focus on climate coupled with disease freedom gives the Australian nut industry advantage.
The vision shown by the Australian nut industry is similar to the innovation Australia has shown in viticulture.
Biosecurity Plan
