""

Required Report - public distribution

**Date:** 9/16/2003

**GAIN Report Number:** AS3032

AS0000

**Australia**

**Fresh Deciduous Fruit**

**Semi-Annual**

**2003**

**Approved by:**

![](media/image1.wmf)Andrew C. Burst, Agricultural Counselor

U.S. Embassy

**Prepared by:**

Mike Darby, Agricultural Specialist

**Report Highlights:**

Australia's 2003 apple production fell five percent due to a prolonged
drought that led to tight irrigation water supplies. Pear production in
2003 was up about 17 percent from the weather-reduced 2002 crop. The
2004 apple crop is expected to be slightly below average, while the pear
crop should be about average. Apple exports in 2003 are projected to be
down marginally from 2002, while pear exports are expected to rise about
14 percent. Most of Australia's apple and pear exports are destined for
South and Southeast Asia.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Semi-Annual Report

Canberra \[AS1\]

\[AS\]

Table of Contents

[**SECTION ONE: SITUATION AND OUTLOOK
3**](#section-one-situation-and-outlook)

[SECTION TWO: STATISTICAL TABLES 4](#section-two-statistical-tables)

[SECTION THREE: NARRATIVE ON SUPPLY AND DEMAND, POLICY AND MARKETING
6](#section-three-narrative-on-supply-and-demand-policy-and-marketing)

[Apples 6](#apples)

[Production 6](#production)

[Trade 6](#trade)

[Consumption 8](#consumption)

[Marketing 8](#marketing)

[Pears 9](#pears)

[Production 9](#production-1)

[Trade 9](#trade-1)

[Marketing 9](#marketing-1)

# 

# SECTION ONE: SITUATION AND OUTLOOK

Australian agriculture was severely impacted by an extended drought that
began in late 2001 and lasted through to the first part of 2003. The
drought is now subsiding, and although the dry weather trimmed deciduous
fruit output in 2003, the outlook for the 2004 crop is fairly upbeat.
Besides some isolated incidents, there have been no other major weather
events negatively impacting the crop. In some respects, particularly
related to the prevalence of pests and diseases, the crops have
benefited from the earlier drier than normal conditions.

Industry sources report that moisture budgeting and tree management were
crucial to crop performance during the drought. Additionally, some of
the key pear growing areas did not suffer the very tight water
restrictions that were experienced by some other major horticultural
regions.

Irrigation water availability, however, remains low and is expected to
constrain apple and pear production somewhat in 2004. Despite the low
irrigation water supplies, soil moisture levels in major production
regions are now reported to be excellent. As a result, growers are
delaying irrigation programs in order to conserve available water
supplies.

Australia exports apples and pears, but imports are banned because of
diseases and insect pests of quarantine concern. Fresh apple imports in
2003 are forecast at 25,000 MT, slightly below exports in 2002. Fresh
pear exports in 2003 are forecast at 21,000 MT, about 14 percent higher
than in 2002.

# SECTION TWO: STATISTICAL TABLES

+----------------------+-----+------+-----+------+-----+------+-----+
| Australia            |     |      |     |      |     |      |     |
|                      |     |      |     |      |     |      |     |
| Fresh Apples         |     |      |     |      |     |      |     |
+----------------------+-----+------+-----+------+-----+------+-----+
|                      | **  | **R  | **  | **Es | **  | **Fo | *   |
|                      | 200 | evis | 200 | tima | 200 | reca | *UO |
|                      | 0** | ed** | 1** | te** | 2** | st** | M** |
+----------------------+-----+------+-----+------+-----+------+-----+
|                      | **U | **   | **U | **   | **U | **   |     |
|                      | SDA | Post | SDA | Post | SDA | Post |     |
|                      | Of  | Esti | Of  | Esti | Of  | Esti |     |
|                      | fic | mate | fic | mate | fic | mate |     |
|                      | ial | \    | ial | \    | ial | \    |     |
|                      | \[O | [New | \[O | [New | \[O | [New |     |
|                      | ld\ | \]** | ld\ | \]** | ld\ | \]** |     |
|                      | ]** |      | ]** |      | ]** |      |     |
+----------------------+-----+------+-----+------+-----+------+-----+
| ####                 |     | 01/  |     | 01/  |     | 01/  | M   |
| ## Market Year Begin |     | 2001 |     | 2002 |     | 2003 | M/Y |
|                      |     |      |     |      |     |      | YYY |
+----------------------+-----+------+-----+------+-----+------+-----+
| **Area Planted**     | 25  | 2    | 25  | 2    | 25  | 2    | (   |
|                      | 000 | 5000 | 000 | 5000 | 000 | 5000 | HA) |
+----------------------+-----+------+-----+------+-----+------+-----+
| **Area Harvested**   | 0   | 0    | 0   | 0    | 0   | 0    | (   |
|                      |     |      |     |      |     |      | HA) |
+----------------------+-----+------+-----+------+-----+------+-----+
| **Bearing Trees**    | 6   | 6300 | 6   | 6400 | 6   | 6500 | (1  |
|                      | 300 |      | 400 |      | 500 |      | 000 |
|                      |     |      |     |      |     |      | TRE |
|                      |     |      |     |      |     |      | ES) |
+----------------------+-----+------+-----+------+-----+------+-----+
| **Non-Bearing        | 3   | 3699 | 3   | 3752 | 3   | 3811 | (1  |
| Trees**              | 699 |      | 752 |      | 811 |      | 000 |
|                      |     |      |     |      |     |      | TRE |
|                      |     |      |     |      |     |      | ES) |
+----------------------+-----+------+-----+------+-----+------+-----+
| **Total Trees**      | 9   | 9999 | 10  | 1    | 10  | 1    | (1  |
|                      | 999 |      | 152 | 0152 | 311 | 0311 | 000 |
|                      |     |      |     |      |     |      | TRE |
|                      |     |      |     |      |     |      | ES) |
+----------------------+-----+------+-----+------+-----+------+-----+
| **Commercial         | 285 | 28   | 295 | 32   | 328 | 30   | (   |
| Production**         | 000 | 5000 | 000 | 0000 | 000 | 5000 | MT) |
+----------------------+-----+------+-----+------+-----+------+-----+
| **Non-Comm.          | 0   | 0    | 0   | 0    | 0   | 0    | (   |
| Production**         |     |      |     |      |     |      | MT) |
+----------------------+-----+------+-----+------+-----+------+-----+
| **TOTAL Production** | 285 | 28   | 295 | 32   | 328 | 30   | (   |
|                      | 000 | 5000 | 000 | 0000 | 000 | 5000 | MT) |
+----------------------+-----+------+-----+------+-----+------+-----+
| **TOTAL Imports**    | 0   | 0    | 0   | 0    | 0   | 0    | (   |
|                      |     |      |     |      |     |      | MT) |
+----------------------+-----+------+-----+------+-----+------+-----+
| **TOTAL SUPPLY**     | 285 | 28   | 295 | 32   | 328 | 30   | (   |
|                      | 000 | 5000 | 000 | 0000 | 000 | 5000 | MT) |
+----------------------+-----+------+-----+------+-----+------+-----+
| **Domestic Fresh     | 130 | 13   | 128 | 13   | 135 | 13   | (   |
| Consump**            | 000 | 0000 | 000 | 8000 | 000 | 5000 | MT) |
+----------------------+-----+------+-----+------+-----+------+-----+
| **Exports, Fresh     | 33  | 3    | 25  | 2    | 35  | 2    | (   |
| Only**               | 857 | 3857 | 393 | 5920 | 000 | 5000 | MT) |
+----------------------+-----+------+-----+------+-----+------+-----+
| **For Processing**   | 121 | 12   | 141 | 15   | 158 | 14   | (   |
|                      | 143 | 1143 | 607 | 6080 | 000 | 5000 | MT) |
+----------------------+-----+------+-----+------+-----+------+-----+
| **Withdrawal From    | 0   | 0    | 0   | 0    | 0   | 0    | (   |
| Market**             |     |      |     |      |     |      | MT) |
+----------------------+-----+------+-----+------+-----+------+-----+
| **TOTAL              | 285 | 28   | 295 | 32   | 328 | 30   | (   |
| UTILIZATION**        | 000 | 5000 | 000 | 0000 | 000 | 5000 | MT) |
+----------------------+-----+------+-----+------+-----+------+-----+

+--------------------+-----+------+-----+------+-----+------+------+
| Australia          |     |      |     |      |     |      |      |
|                    |     |      |     |      |     |      |      |
| Fresh Pears        |     |      |     |      |     |      |      |
+--------------------+-----+------+-----+------+-----+------+------+
|                    | **  | **R  | **  | **Es | **  | **Fo | **U  |
|                    | 200 | evis | 200 | tima | 200 | reca | OM** |
|                    | 0** | ed** | 1** | te** | 2** | st** |      |
+--------------------+-----+------+-----+------+-----+------+------+
|                    | **U | **   | **U | **   | **U | **   |      |
|                    | SDA | Post | SDA | Post | SDA | Post |      |
|                    | Of  | Esti | Of  | Esti | Of  | Esti |      |
|                    | fic | mate | fic | mate | fic | mate |      |
|                    | ial | \    | ial | \    | ial | \    |      |
|                    | \[O | [New | \[O | [New | \[O | [New |      |
|                    | ld\ | \]** | ld\ | \]** | ld\ | \]** |      |
|                    | ]** |      | ]** |      | ]** |      |      |
+--------------------+-----+------+-----+------+-----+------+------+
| ######             |     | 01/  |     | 01/  |     | 01/  | MM/  |
|  Market Year Begin |     | 2001 |     | 2002 |     | 2003 | YYYY |
+--------------------+-----+------+-----+------+-----+------+------+
| **Area Planted**   | 0   | 0    | 0   | 0    | 0   | 0    | (HA) |
+--------------------+-----+------+-----+------+-----+------+------+
| **Area Harvested** | 0   | 0    | 0   | 0    | 0   | 0    | (HA) |
+--------------------+-----+------+-----+------+-----+------+------+
| **Bearing Trees**  | 1   | 1950 | 1   | 1950 | 1   | 1950 | (    |
|                    | 950 |      | 950 |      | 950 |      | 1000 |
|                    |     |      |     |      |     |      | TR   |
|                    |     |      |     |      |     |      | EES) |
+--------------------+-----+------+-----+------+-----+------+------+
| **Non-Bearing      | 550 | 550  | 550 | 550  | 550 | 550  | (    |
| Trees**            |     |      |     |      |     |      | 1000 |
|                    |     |      |     |      |     |      | TR   |
|                    |     |      |     |      |     |      | EES) |
+--------------------+-----+------+-----+------+-----+------+------+
| **Total Trees**    | 2   | 2500 | 2   | 2500 | 2   | 2500 | (    |
|                    | 500 |      | 500 |      | 500 |      | 1000 |
|                    |     |      |     |      |     |      | TR   |
|                    |     |      |     |      |     |      | EES) |
+--------------------+-----+------+-----+------+-----+------+------+
| **Commercial       | 168 | 16   | 165 | 14   | 175 | 17   | (MT) |
| Production**       | 896 | 8896 | 000 | 5000 | 000 | 0000 |      |
+--------------------+-----+------+-----+------+-----+------+------+
| **Non-Comm.        | 0   | 0    | 0   | 0    | 0   | 0    | (MT) |
| Production**       |     |      |     |      |     |      |      |
+--------------------+-----+------+-----+------+-----+------+------+
| **TOTAL            | 168 | 16   | 165 | 14   | 175 | 17   | (MT) |
| Production**       | 896 | 8896 | 000 | 5000 | 000 | 0000 |      |
+--------------------+-----+------+-----+------+-----+------+------+
| **TOTAL Imports**  | 1   | 1027 | 1   | 1467 | 1   | 1000 | (MT) |
|                    | 027 |      | 000 |      | 000 |      |      |
+--------------------+-----+------+-----+------+-----+------+------+
| **TOTAL SUPPLY**   | 169 | 16   | 166 | 14   | 176 | 17   | (MT) |
|                    | 923 | 9923 | 000 | 6467 | 000 | 1000 |      |
+--------------------+-----+------+-----+------+-----+------+------+
| **Domestic Fresh   | 80  | 8    | 84  | 7    | 85  | 8    | (MT) |
| Consump**          | 000 | 0000 | 000 | 0000 | 000 | 5000 |      |
+--------------------+-----+------+-----+------+-----+------+------+
| **Exports, Fresh   | 16  | 1    | 18  | 1    | 21  | 2    | (MT) |
| Only**             | 877 | 6877 | 030 | 8472 | 000 | 1000 |      |
+--------------------+-----+------+-----+------+-----+------+------+
| **For Processing** | 73  | 7    | 63  | 5    | 70  | 6    | (MT) |
|                    | 046 | 3046 | 970 | 7995 | 000 | 5000 |      |
+--------------------+-----+------+-----+------+-----+------+------+
| **Withdrawal From  | 0   | 0    | 0   | 0    | 0   | 0    | (MT) |
| Market**           |     |      |     |      |     |      |      |
+--------------------+-----+------+-----+------+-----+------+------+
| **TOTAL            | 169 | 16   | 166 | 14   | 176 | 17   | (MT) |
| UTILIZATION**      | 923 | 9923 | 000 | 6467 | 000 | 1000 |      |
+--------------------+-----+------+-----+------+-----+------+------+

# SECTION THREE: NARRATIVE ON SUPPLY AND DEMAND, POLICY AND MARKETING

## Apples

### Production

Apple production in 2004 is forecast at an average to slightly below
average level. Depleted irrigation water supplies due to the drought
appear to be the main constraint to a larger crop. Rainfall, on the
other hand, has now returned to a much more normal pattern. Significant
precipitation, of late, in many fruit growing areas has helped to fill
soil moisture profiles. Irrigation water supplies remain well below
normal, but recent rainfall has begun to boost supplies and has lessened
demands for irrigators.

Apple production in calendar year 2003 is estimated at 305,000 metric
tons (MT), down from Post's previous forecast of 328,000 MT, but
slightly above the five-year average production of 300,000 MT.
Widespread drought conditions across most of the Australian continent
combined with dwindling irrigation water supplies trimmed output of the
2003 crop.

Although production in 2003 was lower than previously anticipated, it is
surprising that the crop did not deteriorate to a greater extent given
the extremely dry conditions that characterized much of the season.
Industry sources suggest that improved management practices including
moisture budgeting and orchard management avoided a general crop
failure.

The 2003 apple harvest was made up of a far higher proportion of smaller
sized fruit, according to industry sources. The small size of the crop
is largely attributed to the dry conditions that characterized the
season. The crop season was relatively free of any other forms of
extreme weather which otherwise could have affected crop quality.

Apples are grown commercially in all of Australia's states and
territories, except the Northern Territories. According to a recent
agricultural survey, the Australian Bureau of Statistics (ABS) reports
that Victoria is the largest producing state, with about 30 percent of
national production, followed by New South Wales (22%), Tasmania (16%),
Western Australia (15%), Queensland (9%), and South Australia (7%).
Australia's major apple varieties have traditionally been Granny Smith
and Red Delicious, which still constitute over 50 percent of national
apple production. Gala, Fuji, Cripps Pink (Pink Lady) and Cripps Red
(Sundowner) account for about one-third of production, and are growing
in importance. Apples grown in temperate regions of Australia are
irrigated.

### Trade

**Exports:** Australia's apple exports in calendar year (CY) 2003 are
forecast at 25,000 MT, down slightly from the 26,000 MT exported the
previous year. Australian Bureau of Statistics (ABS) export figures for
January to June 2003 show a significant increase in exports over the
year-earlier period. However, the smaller size of the 2003 crop, small
fruit sizes, and a much stronger Australian currency are expected to
trim prospects for the remainder of 2003. Apple exports in 2002 were
valued at A\$35.5 million.

Australia was a major exporter of apples to the United Kingdom in the
1970's. However, with the entry of the UK into the European Union, this
export market has declined significantly. Australia has now focused most
export market promotion efforts at markets in Japan and South and
Southeast Asia. India is now Australia's largest export market and
shipments to India have been the bright spot in export performance.
Shipments to India are dominated by Red Delicious out of Tasmania.

**Australia: Fresh Apple Exports, Calendar Years 2000-2002**

(metric tons)

  ------------------------ --------------- --------------- ---------------
  **Country**              **2000**        **2001**        **2002**

  India                    3,578           5,495           5,244

  Malaysia                 10,070          7,749           5,224

  Sri Lanka                4,211           2,975           3,639

  Singapore                5,109           3,920           2,848

  United Kingdom           3,188           3,369           2,234

  Bangladesh               2,079           2,355           1,381

  Taiwan                   1,921           1,382           1,327

  Indonesia                1,414           968             739

  Hong Kong                1,428           1,510           577

  Papua New Guinea         598             492             459

  Others                   2,782           3,642           2,248

  Total                    36,378          33,857          25,920
  ------------------------ --------------- --------------- ---------------

Source: Australian Bureau of Statistics.

**Imports:** Australia bans apple imports because of diseases and insect
pests that are of quarantine concern. Of principal concern for Australia
is fire blight, a plant pathogen that is present in many apple producing
countries (including the United States), but not in Australia. Australia
has banned apple imports from New Zealand since 1921, largely due to
concerns associated with the potential entry of fire blight into
Australia. In recent years, New Zealand made formal applications to
Australia to allow apple imports, first in 1989 and again in 1995. Both
applications were rejected by Australia largely over concerns with the
introduction of fire blight.

In January 1999, New Zealand again made a formal application to
Australia to consider the importation of apples. In October 2000,
Australia (Biosecurity Australia) released a draft Import Risk Analysis
(IRA) for New Zealand apples, which again highlighted Australia's
concern with fire blight, but did outline a proposed series of
conditions under which access could be granted. New Zealand viewed these
conditions as unnecessarily onerous and scientifically unjustifiable,
specifically arguing that based on available scientific evidence, fire
blight cannot be transmitted via trade in mature, commercially produced
apples free from trash, i.e., leaves and branches. New Zealand has
stated that they may seek a formal WTO dispute settlement case against
Australia.

Meanwhile, the United States was pursuing a WTO dispute settlement case
regarding Japanese import restrictions on apples because of fire blight.
In July 2003, the panel in this case concluded that Japan's quarantine
measures for fire blight disease were inconsistent with the WTO
Agreement on Sanitary and Phytosanitary Measures. The panel found, among
other things, that on the information presented, there is not sufficient
scientific evidence that apple fruit are likely to serve as a pathway
for the entry, establishment or spread of fire blight within Japan.
Japan has appealed this decision.

The release of a final IRA for Australia's apple imports from New
Zealand is still pending. According to Australia's Agriculture Minister,
the WTO panel's findings in the Japanese case, including the scientific
conclusions relating to fire blight, will be considered as part of the
IRA Australia is conducting for New Zealand apples. The Minister is also
quoted as saying that Australia's import prohibition on New Zealand
apples will remain in place, at least until the IRA is finalized.
Australia's risk analysis panel (RAP) for the New Zealand apple import
IRA continues to meet on this topic. The 15^th^ meeting of the RAP is
scheduled for September 16-17, 2003.

The United States is also very interested in gaining access to
Australia's apple market. Like New Zealand, U.S. access into the
Australian market is now denied largely because of the presence of fire
blight in the United States. A final IRA permitting New Zealand apples
access to Australia would be favorable for future U.S. access.

### Consumption

The bulk of Australia's apple crop is consumed domestically. Australia's
apple consumption in CY 2003 is forecast at 135,000 MT, down slightly
from the 138,000 MT consumed in the previous year. The actual export
level will impact on the final consumption level.

### Marketing

Apple and Pear Australia Limited (APAL), a non-profit pubic company, is
the peak industry body representing the interests of Australia's 2,000
commercial apple and pear growers. APAL's major concerns are legislation
and regulations affecting the industries, marketing, and research and
development. APAL replaced the previous Australian Apple and Pear
Growers Association Inc. (AAPGA).

Horticulture Australia Limited, which was formed by the merger of the
Australian Horticultural Corporation and the Horticultural Research and
Development Corporation, is owned by its members, which comprise 28
horticultural industries (including apples and pears). Horticulture
Australia operates through a statutory levy system. Apple and pear
growers pay statutory levies of A1.53 cents per kilogram and A1.64 cents
per kilogram, respectively. For levies used for research and
development, the Commonwealth government matches on a one-to-one basis.
The levy funds are then managed by Horticulture Australia through the
apple and pear Industry Advisory Committee (IAC). About A\$4 million is
collected through the apple and pear levies.

Most apple producers pack and market their own fruit, either directly to
retail chains, or through the domestic wholesale marketing system. An
increasing amount fresh fruit, including apples, is marketed through the
retail food chains.

The majority of Australia's apple and pear exports are marketed under
the "AUSTRALIAfresh" brand. The AUSTRALIAfresh promotional campaign for
the 2003 season is funded with A\$565,000 in industry funds and about
A\$150,000 in contributions from exporters. This brand is also used for
Australia's other horticultural exports.

## Pears

### Production

Post expects pear production in calendar year (CY) 2004 will be around
average levels. A return to more normal rainfall conditions and
improving soil moisture levels should result in an average-sized crop,
despite below average irrigation water availability. Of note, the bulk
of the major pear producing areas in the Murray and Goulburn valleys in
northern Victoria have a more secure water supply than many other
irrigation areas in Australia.

Post estimates pear production in CY 2003 at 170,000 MT, well above the
five-year average of about 155,000 MT. The higher than average
production level occurred because the major pear growing areas retained
better access to irrigation water supplies due to its geographic
location. In addition, the drier than normal conditions reduced the
usual pressure from pests and diseases. Industry sources report higher
than normal fruits per tree, which is also believed to be the result of
the dry conditions.

Industry sources report that pear quality in 2003 suffered considerably
from a low prevalence of "russet" on the Bosc variety. Russet provides
the Bosc pear with its unique appearance. Industry funded promotional
campaigns advised consumers this did not pose a problem to eating
quality, but merely impacted the appearance of the fruit.

Pear production in CY 2002 is estimated at 145,000 MT, which is in line
with official ABS statistics. Mixed weather conditions, such as heavy
rainfall in the blossoming phase followed by a hot and dry finish, did
much to trim output of the crop. The 145,000 MT crop is the lowest
production level since 1998, when only 130,000 MT was harvested.

Most of Australia's commercial pear production is in the Goulburn Valley
in the state of Victoria, which accounts for about 87 percent of
national production. Western Australia and South Australia account for
about seven percent and six percent of national production,
respectively. Australia's pear production is dominated by varieties
Packham, Williams and Beurre Bosc, which account for over 90 percent of
national production. There is considerable interest in new pear
cultivars, particularly for export.

### Trade

**Exports:** Pear exports for CY 2003 are forecast at 21,000 MT, up from
the 18,472 MT estimated for the previous year. The above average 2003
harvest increased the availability of fruit for export. In 2002,
Australia's pear exports were valued at A\$23.6 million.

**Imports:** Australia bans the importation of pears because of concerns
on diseases and insect pests of quarantine concern. A primary concern
for pear imports is fire blight (see the discussion on this topic in the
Apple Trade section.)

### Marketing

(See the Apple Marketing section.)

**Australia: Fresh Pear Exports, Calendar Years 2000-2002**

(metric tons)

  ------------------------ --------------- --------------- ---------------
  **Country**              **2000**        **2001**        **2002**

  Singapore                6,750           4,524           4,631

  Malaysia                 4,955           4,872           4,018

  Indonesia                2,543           2,140           3,016

  Canada                   751             646             1,811

  New Zealand              1,336           1,202           1,647

  Hong Kong                2,535           1,576           851

  Belgium-Lux.             24              76              422

  India                    174             250             322

  Italy                    0               64              232

  Taiwan                   37              17              142

  Others                   1,473           1,510           1,380

  Total                    20,578          16,877          18,472
  ------------------------ --------------- --------------- ---------------

Source: Australian Bureau of Statistics.