#1GOVERNMENT OF WESTERN AUSTRALIA Department of Primary Industries and Regional Development We're working for Western Australia. Western Australian horticulture industry snapshot A summary of the Western Australian Horticulture Industry - Overview for potential investors and other stakeholders#22 There are different types of investors All are needed and welcome in the Western Australian horticulture industry Important notice: The recent COVID-19 pandemic has affected the community and aspects of the global economy. Disruptions to supply chains, air freight and other business activities are acknowledged. Collaborative efforts by governments, industries and communities will chart the way forward knowing global demand for food and the supply of the many products from Western Australia's primary industries will continue. The information presented in this Industry Snapshot as at February 2020 serves as a reference point for continued industry innovation and growth. $ स Farmers continuously invest in land, genetics and farm innovations to drive growth. Western Australian horticulture producers supply fresh and processed produce locally, across Australia and beyond. Integrated growers, packers and shippers are significant investors in the horticulture industry, driving innovation, new product development and expansions in Western Australia. Packers, marketers and wholesalers play a large role in wholesaling and marketing products across the world. Industry bodies and various produce research and science organisations all invest in the Western Australian sector, providing innovative solutions across the whole value chain, from farm to consumer. State and Federal Government - across multiple agencies and departments - invests heavily in the industry through research, grants, education and support.#3Twenty year growth rate of fruit and vegetable import volume CAGR; tonnes; import volume 6% 5% Growing demand from Asia and the Middle East $75 Total fruit and vegetable China Indonesia import value US dollars billion $28 23% 18% $15 $7 $1 $3 US $47 billion growth in demand over the last decade 1967 1977 1987 1997 2007 2017 Markets include: China, Indonesia, the Middle East, all other Asia and North Africa Vietnam UAE CAGR = Compound annual growth rate Source: UN FAO Stat system UAE = United Arab Emirates 3#44 Western Australia is well positioned to deliver Shipping times and time zones from Perth Western Australia is the closest, most accessible Western region to Asia; it is in the same, or adjacent, time zone as Beijing, Manila, Hong Kong, Tokyo, Singapore, Kuala Lumpur and other regional centres. 13 days 10 days 8 days 6 days 5 days 9 days 8 days FREMANTLE 10 days 11 days 5 days#5Flights from Perth Western Australia has regular flights out of Perth to Asia and the Middle East and global destinations. In addition, the Busselton Margaret River Airport (225 km south west of Perth) has completed a runway upgrade, providing an international alternative for the South West. QANTAS malaysia Jetstar airlines THAI CATHAY PACIFIC SINGAPORE AIRLINES Air Asia Malindo air scoot QATAR tigerair ANA القطرية AIRWAYS Garuda Indonesia Emirates 中國東方航空 中国南方航空 CHINA EASTERN CHINA SOUTHERN As at April 2020, the COVID-19 pandemic has reduced air freight carried on passenger aircraft due to fewer flights. Until resumption of regular flights, chartered air-freighters will serve export supply chains. "Western Australia is the perfect location to supply into Asia. We can fly perishable products directly into Asian markets faster than our eastern counterparts." Horticultural producer#66 CURRENT FTAS NZ (ANZCERTA) Singapore (SAFTA) US (AUSFTA) - Thailand (TAFTA) · Chile (ACIFTA) - ASEAN-NZ (AANZFTA) - Malaysia (MAFTA) Korea (KAFTA) - Japan (JAEPA) - China (ChAFTA) - Trans-Pacific Partnership (CPTPP) - Peru (PAFTA) - Hong Kong (AHKFTA) Indonesia (IACEPA) FTAS UNDER NEGOTIATION Gulf (AGCCFTA) India (AICECA) - EU (AEUFTA) - Pacific Alliance (PAFTA) - Regional (RCEP) Excellent trade access PERTH FTAS CONCLUDED NOT YET IN FORCE - Pacific Islands (PACER Plus) FTAS = Free trade agreements As at 21 February 2020 Source: Department of Foreign Affairs and Trade "Australia has excellent trade access with low to no tariffs with many regional partners." CEO, Diversified Agrifood Company#7Western Australia is well positioned to supply South East and East Asia with fresh, high quality products consistently " Fresh "The advantage of Western Australia is the close proximity to South East Asia. The geographic location is a windfall. We get a good logistics advantage." Regional Director, Multinational Consistent quality "Western Australia has a good reputation as a reliable supplier, with good product performance and a stable supply." General Manager, Exporter Reliable "Western Australia is a very attractive place to invest; stable Government, trusted systems, and it's easy to do business." CEO, Horticultural Company, Grower, Packer, Shipper#800 8 Western Australia can produce more P O O Resources • Large land area for farming Opportunities for productivity increases • Small local population to feed (2.6 million people) • Readily available inputs Significant, reliable, inexpensive and good quality water resources in production areas • Well managed water and environmental regulation Skills and systems • Educated population • Modern farming systems • High productivity Pool of service providers • Well organised industry High food safety, and advanced traceability systems Reputation • Brand Western Australia • Clean and green • Strict biosecurity standards High levels of food safety Modern handling and processing facilities Comparative advantages Close to key markets Capable producers with a history of production for export to Asia and beyond • Western Australia is well positioned to supply fresh, chilled and frozen products into Asia You can harvest in the morning and have your product in Singapore, Hong Kong, Vietnam and other Asian markets by the end of the day • More competitive cost to Asia considering Australian east coast Environment conducive to horticultural production • Range of temperature and climatic zones Potential for year round production • Range of soil types Large range of unique bushfoods to use as products and flavourings Respected and effective water and environmental licencing systems Biosecure auditable environment • Free from numerous pests and disease due to isolation Use for production of seeds for international markets • Well resourced regulation Meet environmental and food safety global standards (e.g. BRCGS Global Standard for Food Safety, GlobalG.A.P.) • Traceable production through supply chain Supportive Government commitment to industry • Industry benefits from effective biosecurity management Experienced industry Sophisticated and experienced industry Modern farming systems Ongoing research and development and investment in genetics and productivity increases • Strong, organised inclusive community • Large farms at scale#9What do we have? Western Australian has a broad range of key products Carrots Potatoes Tomatoes Greens Beans Onions Broccolli Corn Truffles Avocados Apples Citrus "Products have a great reputation in international markets and with diversity in growing locations, quality crops are produced in Strawberries Table grapes Mangoes/melons different seasons." Research Director Stone Fruit Nuts Many others 9#1010 Western Australia's horticulture industry is concentrated in the south, but with counter-seasonal north and mid-state supply Kununurra Broome North Sweetcorn Vegetables Cucurbits Mid Mangos Vegetables Bananas Mangos Bananas Grapes Carnarvon "Our benchmarking initiative has gone very well. Companies really appreciate being able to compare their finances and make improvements. There is an ongoing motivation to improve. This is very good for the industry overall." CEO, Industry Association Perth and Surrounds Vegetables Geraldton Fruit Nuts Grapes Perth South Fruit Vegetables Truffles Manjimup Horticulture areas Albany#11The efficiency of Western Australian horticulture is increasing 10 year growth in tonnes or trees per grower 12.6% 9.3% 9.2% 6.7% 2.9% "As our trees grow and mature our yields will continue to increase." CEO, Diversified Agrifoods Company Avocados Strawberries Mandarins Melons Carrots 11#1212 Export focused horticulture Root crops • Long historical export success into growth markets • Strong in Asia and Middle East • Achieves premium in-market • Carrots are WA's largest horticultural export in value and volume • Seed and ware potatoes and onions achieve export success Berry fruit Attracting significant investment Growing local and export demand New varieties and genetics • Export success in strawberries • Pollinating research advancing blue berry production Tree fruit and vines • Strong track record of breeding, production and development (e.g. BravoⓇ branded apples) • Long history • of supplying export markets High level of vertical and horizontal integration • Proven entrepreneurs in table grapes, avocados and citrus who have improved quality and production for export Leafy vegetables Established domestic market • Select airfreight markets Can reach Asian destinations on day of harvest • Excellent food safety standards Specialty other opportunities • Leading global truffle suppliers - Manjimup is an ideal production area • Differentiated range of or native crops and bush foods (e.g. finger limes) • Wide range of other products (e.g. nuts, bush foods) Access to land and water • Large amounts of available land and abundant water can support industry growth Regions including the Ord River Irrigation Area, the La Grange groundwater south of Broome, Carnarvon, the Swan Coastal Plain, Collie, Manjimup and other areas have reliable good quality water for irrigation#13Western Australian horticulture exports are growing Total Western Australia Horticulture Exports AU$ million, 2008 to 2018 8.% 10yr CAGR CAGR Compound annual growth rate 200 150 100 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: ABS, Project analysis 50 50 0 હેર કેર છે કે 13#1414 3 different production systems Mechanised field agriculture • Regional clusters around packhouses in each production area • Efficient irrigation systems • Large at scale modern farming operations • High technology systems • Latest genetics well adapted • Year round production across climatic regions • Strong reputation in export markets High productivity orchards and vines • Modern packhouses service surrounding growers • Accessing proven genetics • Track record of innovation • Highly skilled workforce • Strong reputation in export markets • Temperate through tropical production areas Greenhouses and other protected cropping • Focused on high value crops • Modern high output production systems • Leveraging global proven technology • World class capabilities and systems . Untapped potential for growth where markets identified#15Western Australia has growth upside in farm sizes relative to competitors Western Australia can grow average farm size significantly and achieve more efficiency to match key competitor states' Average Fruit Farm Size Hectares, 2018 Average Vegetable Farm Size Hectares, 2018 Tasmania 17 Western Australia South Australia 20 20 28 28 New South Wales 30 Queensland Victoria 35 55 1. Subject to regional water availability. Source: ABS, Project analysis 57 New South Wales 18 Western Australia Tasmania South Australia Queensland Victoria 22 22 32 32 35 35 38 88 47 15#1616 There will be solid demand for fruit and vegetables in the future "Australian fruit exports to China have grown fivefold in just four years, and there is ample opportunity to ramp up exports of vegetables into Asia... Asia has fuelled significant growth in Australian fresh fruit and vegetable exports, with China, Hong Kong, Japan and India leading the way." ANZ InFocus Future of Fresh, March 2018#17High level macro drivers support solid export demand for horticultural products Aggregate Global Fruit and Vegetable Production Growth 40yr CAGR Total Global Fruit and Nut Trade 10yr CAGR 2.3 %PA Fruit and Vegetable Consumption Growth per Person 40yr CAGR 0.9 %PA 3.5 %PA 3.1 %PA 6.7 %PA Volume Growth Price Growth Value Growth 3.6 %PA Global Vegetable Trade 10yr CAGR 0.8 %PA 4.5 %PA Volume Growth Price Growth Value Growth CAGR = Compound annual growth rate. Source: United Nations FAO; Project analysis 17#1818 Attracting global investment Driscoll's Only the Finest Berries™ Global berry company ONTARIO TEACHERS' PENSION PLAN 上海中房置业股份有限公司 SHANCHA CRES REAL ESTATE STOCK CO. LT SHANGHAI ZHONGFU Chinese private real estate company mg marketing Major NZ based produce Co-operative Canadian based Pension Fund Chinese investment company#19Investment is occurring fruit west 2019 Co-operative Ltd HARVEST 2019 ROAD- Memorandum of Understanding (MOU) signed with Australian licensee for BravoⓇ branded apples owner Fruit West Cooperative and Star Fruits Diffusion and Top Fruits (South Africa). Harvest Road plans to develop 100 hectares of land in the Pilbara and Gasgoyne - potential for $100 million worth of produce annually. MULTIPLE FIRMS 2015 onward Substantial investment in developing avocado industry in the South. roors 2016 onwards Significant investment in growing citrus. Cotton, horticulture, field crops and cattle. 2019 KAI MANDOS ARME 2018 $1 million on packing technology (to reduce packaging and plastic). SUMICH 2019 $10 million investment in infrastructure for growth (e.g. irrigation). 19#20The Western Australian horticulture sector has a strong group of companies 20 20 Vegetables GALATI SUMICH GROUP IVANKOVICH FARMS Vegetable Crowers- MYALOP CENTER WWEET EXPORTS T&C Do & Son ANDO ARME Fruit AGRIFresh MARVEY RAEBURN ORCHARDS Other omega W.A.Pistachios MANJIMUP one harvest Odour Farms FRUITICO AVOWEST A & S Canzirri & Sons JASPER FARMS gingin citrus -growing toget Sweeberry Lakes LJM Produce Weet 'n Freeh Fresh Produce Group Bogdanich Farms costa well grown WEST PEMBERTON AVOCADOS JOE BENDOTTI & CO. Berry Sweet Strawberry Farm LAMANNA CROUP Bumbak & Sons DEIENT SWEET BANANAS OAK VALLEY TRUFFLES AUSTRALIAN TRUFFLE TRADERS THE TRUFFLE & WINE CO costa well A SOUTHERN TRUFFLES Five Acre Nursery one harvest#21Returns across the supply chain Australia's high performing sectors are showing strong returns across the supply chain Growing Fruit and Vegetable Wholesaling 4.4% Vegetable 8.3% Citrus, Nut, Other Grape Growing 16.6% Apple, Pear, Stone 11.4% 6.8% Fruit and Vegetable Processing 4.7% Note: Australia-wide statistics. 1. Australian industry average profit margins (EBIT/Revenue), 2018 EBIT = Earrings before interest and tax. Source: IBISWorld, Project analysis 21#22OUBLEG DOUBL ATOES TOMATOES OPEEN MED MEAN WOOLDU MILF MEENM COLOUR LARGE NET WEIGHT PHOT COYNE GOLD Four investment themes MAT Four investment themes exist to create growth in the Western Australian horticulture industry COLOUR MALL GREEN COLOUR SMUNED COLOUR MIAM COLOUR EDAM COLOUR RPC 1101 LARGE FAODIR AT NET WEIGHT 22 22 Investing in world-class systems Opportunities exist to continue to grow overall productivity through technologies, genetics and crop and farm management 1 Investing in ongoing post farm gate efficiences Opportunities exist to continue to drive industry consolidation and packhouse scale 2 COLOUR WORLD COLOUR Investing in value chain development Investing in growing production Opportunities exist to build more integrated value chain linkages into key high value markets 3 Opportunities exist to produce significantly more horticulture from 4 Western Australian resources#23Value propositions exist that promote opportunities for investment Expand BravoⓇ branded apples platform • Western Australia has developed several unique apple varieties marketed as Pink Lady®, Joya® and BravoⓇ Industry currently in scale up mode Opportunity to expand world wide with global export opportunities Develop mangoes targeting Asia • North Western Australia tropical counter seasonal conditions • Growing demand for premium mangoes in key markets Queensland experience indicates significant upside *CTF - Cosmetics, toiletries and fragrances Bush crops targeting global CTF* houses • Unique and diverse range of • • plants available Deep traditional knowledge base Positive consumer story and positioning Emerging scientific research 23#24The Department of Primary Industries and Regional Development is ready to assist you For further information please contact: e [email protected] p +61 (0)8 9368 3590 w agric.wa.gov.au/agribusiness-food-trade The Department of Primary Industries and Regional Development commissioned Coriolis Australia Pty Ltd to provide the information in this publication in consultation with selected industry stakeholders. Disclaimer This Snapshot publication provides indicative information on primary industries in WA. The Snapshot publication and any additional information or documents that the State of WA through the Department of Primary Industries and Regional Development (DPIRD) may supply, are to be used only as preliminary and indicative information, to be considered and used by prospective investors in the WA primary industries in conjunction with other information and appropriate financial, legal, industry and other expert advice tailored to their individual circumstances and intentions. Prospective investors should conduct (or engage appropriate professional advisers to conduct) their own analysis and due diligence on any proposed investments, including the process for obtaining approvals. No part of this Snapshot publication or any additional information or documents that DPIRD may supply constitutes or should be relied on as financial, investment, legal or other advice. The WA Government is committed to quality service to its customers and seeks to ensure accuracy, currency and reliability of information, but this cannot be guaranteed. Accordingly, to the fullest extent permitted by law, the State of WA and its officers and employees are released from liability (including in respect of negligence) for any loss, damage, cost and expense caused by use of or reliance on this Snapshot and the information in it. The State of WA and its officers and employees do not make any representations or warranties as to the accuracy, reliability, completeness or suitability for any purposes of this Snapshot and the information in it. Copyright State of Western Australia (Department of Primary Industries and Regional Development) 2020 401/20 40870e_KEY2_0520