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THE COMPETITION IN 1997
U.S. and
Competitor Expenditures on Export Promotion and
Export Subsidies for Agricultural, Forestry and Fishery Products
Australia
Market development support for Australian exports is widespread. Most agricultural export promotion is conducted by producer organizations funded by mandatory assessments collected under statutory authority. The funding for these producer organizations is estimated at $129.5 million in 1995/96. In recent years, the Australian government increased its support for export market promotion, particularly for high-value agricultural products, although government funding will be reduced in future years. Australian government grants for agricultural export market promotion are estimated at $56.8 million.
Major Australian producer promotion boards include the Australian Wheat Board, the Australian Dairy Corporation, the Australian Meat and Livestock Corporation, the Australian Dried Fruit Board, the Australian Horticultural Corporation, the Australian Wine and Brandy Corporation, and the Australian Wool Research and Promotion Organization.
Australian government support: The Australian government supports export promotion directly for all industries through the Australian Trade Commission (AUSTRADE) which has domestic offices and offices in 67 foreign countries. (Funding for AUSTRADE offices is not included in Table 1).
Key Australian government export promotion programs include the Export Market Development Grants Scheme (EMDG) and the Innovative Agricultural Marketing Program (IAMP). The EMDG allows companies to obtain a grant of up to A$250,000 ($195,000) a year to offset marketing costs incurred when entering or developing export markets. This maximum grant level was reduced to A$200,00 ($156,000) as of July 1, 1996. To be eligible, companies must be generating less than A$25 million (US$19.5 million) in exports and have incurred at least A$30,000 (US$23,400) in costs. The EMDG paid A$219.5 million in such grants in 1995/96, of which an estimated 20 percent (about $34.2 million) went to agricultural firms. This is slightly more than EMDG grants in 1994/95.
The IAMP provides financial assistance to producers, processors, manufacturers and marketers in the agricultural forestry and fishing industries who have innovative projects with sound potential. Much of the funding goes to market research and business-oriented activities. During 1995/96, 13 projects were supported with committed funding of A$4.14 million ($3.13 million). Funding for this program was terminated as of July 1, 1996.
In September 1996 a new program, called "Supermarket to Asia" was launched. It will be implemented by the Supermarket to Asia Council which will work across all major food sectors, focusing on production, transportation, distribution, packaging, marketing and trade to make Australian food products more competitive in Asian markets. For the three years from 1996/97 the Council will receive government funding of $8.9 million. The group’s mandate is "to develop a globally-competitive Australian agri-food industry with an aggressive export culture, resulting in significant and ongoing growth in exports to the Asian region over the next decade." The Council will help identify markets and production, packaging, distribution and marketing strategies to help Australian exporters attain this goal. On the marketing side, the Council will develop and promote a "Quality Food Australia log and certification program and will encourage coordinated promotions at both the retail and food service levels throughout Asia.
The Australian Wheat Board (AWB): The AWB is a statutory marketing board with authority through 1999 to sell all wheat for export. The AWB handles 60-80 percent of Australian domestic wheat production. Funding for the Board, comes primarily from domestic and export sales, although the AWB's investment fund, the Wheat Industry Fund, is financed by a levy on producers of 2 percent of the farm gate value of sales. The Australian government contributes funding of up to 0.5 percent of the gross value of wheat production for research. (This government expenditure is not included in Table 1 because it assists commodity research rather than promotion.)
The AWB's major product development objective throughout 1995/96 was to continue to develop an implement the strategy of tailoring the Australian wheat crop to meet the precise needs of customers. Product teams covering soft wheat, noodle wheat and feed grains were established during the year, with the aim of interpreting consumption trends, converting them into wheat quality needs and devising varietal development and segregation strategies to deliver them. The AWB encourages production of wheat specifically for Asian markets through special producer pools and premia. The AWB is committed to the task of increasing support for the purchase and use of AWB products and services amongst customers and those who influence the buying decisions of customers. They believe that by building the understanding of the AWB as a reliable supplier of 'Quality grain made to order!' the AWB's competitive positioning and business relationships with key customers will be strengthened.
The AWB actively promotes its wheat through technical training, orientation visits, off-shore consumer servicing and other promotional activities. This program is centered around the Asian Food Research Center at the Academy of Grain Technology in Melbourne, which uses the unique facilities of the AWB's noodle pilot plant and the Bread Research Institute to screen wheat varieties and to refine processing techniques. It also has external links to other research facilities, such as the Bakery Industry Training Center in Singapore.
A number of market promotion activities were carried out during the year, including "Growing Together", a business forum for milling customers in Southeast Asia; "Prosperity through Quality", a series of seminars for millers in the Middle East; and "Golden Opportunities", a forum to promote AWB products and services in China. Expenditures for market promotion were nearly $1.7 million in 1996.
The Wheat Industry Fund (WIF), funded by a 2-percent levy on wheat sales to the AWB, provides a capital base which is used to diversify AWB business activities and could become the capital base to support AWB borrowing when the government borrowing guarantee expires in 1999. WIF investments include shares in flour mills in Egypt, Vietnam, and China. More than $5 million was invested in two Chinese mills during 1996. In addition, a consortium led by the AWB won a $7.6 million contract to build a grain terminal at Fang Cheng in China’s Guangzi region. This facility is an important part of China’s plan, financed by the World Bank, to modernize its grain handling system.
In addition to its marketing and market development activities, the AWB offers export credits guaranteed by government export credit insurance agency. During 1996 the Wheat Board paid $13 million in premiums for Export Credit insurance.
The Australian Dairy Corporation (ADC) is authorized to export dairy products and develop markets for dairy products at home and overseas. The ADC issues export licenses to private companies and dairy cooperatives, but sells cheese itself to Japan and the EU. The ADC’s market development activities are funded by assessments on dairy producers. ADC received some funding through the Australian government’s Export Market Development Grant scheme for coordinated advertising and promotion activities in the Asia/Pacific. The Australian government contributes funding of up to 0.5 percent of the gross value of dairy production for research. (This government expenditure is not included in Table 1 because it assists commodity research rather than promotion.)
ADC’s international promotions in 1995/96, estimated at a cost of $3.9 million, featured retail in-store tasting of dairy products, participation in trade shows, television advertising, educational videos and brochures promoting dairy consumption for nutrition, and most recently buyers guides and a magazine targeted at that food manufacturing industry. ADC is successfully using the "Australian Dairy Mark" as marketing tool. The majority of Australian dairy export sales are licensed to use the mark as are 27 foreign companies, mainly in Japan.
The Australian Meat and Livestock Corporation (AMLC) operates to maximize returns and profitability of the industry through domestic and international activities designed to secure and protect market access; to persuade customers of the desirable characteristics of Australian meat; to provide mechanisms to insure the best possible delivery of the product; and, finally, to provide market intelligence. AMLC is funded entirely by industry levies. The Australian government contributes funding of up to 0.5 percent of the gross value of cattle, pig and sheep production for research. (This government expenditure is not included in Table 1 because it assists commodity research rather than promotion.)
AMLC export market expenditures for 1996, estimated at $26.8 million, continued to focus on North Asia, which accounts for 62 percent of promotion expenditures, followed by the Americas (22 percent), Other Asia and Europe (12 percent) and the Middle East (5 percent). In Japan, AMLC advertising continued to concentrate on the "Aussie Beef" theme which it has directed primarily at consumers, including television advertisements reinforcing the Aussie Beef mark. Individual exporters have been able to operate under the Aussie Beef umbrella using its logo and its associated marketing benefits while promoting their own brands. To increase consumer acceptance of Australian beef, AMLC has developed a grading system known as the Voluntary Standards System or VSS. Research has shown that the VSS has the potential to positively influence trade attitudes, so participation is being expanded. Currently eight Australian companies, representing nearly half of Australian beef exports to Japan are using the system. In Korea AMLC has adapted its specifications for grassfed fullsets to better reflect the demand in the Korean market and has actively promoted its chilled beef.
The Australian Horticultural Corporation (AHC) oversees an industry goal of raising exports from A$700 million ($518 million) to A$2 billion ($1.48 billion) by the year 2000. AHC and individual commodity exporters covered by the umbrella organization undertake export promotion activities. AHC is funded by industry levies and government matching grants. In 1995/96 apples and pears received 55% of total AHC export promotion expenditures (both industry and government funds), a substantial increase over previous years. Dried fruits received 26% of AHC’s expenditures and citrus received 18%. Macadamias and Nashi pears received the remainder, while export promotion for honey and avocados was discontinued. Dried fruits and honey promotions are conducted by the Australian Dried Fruits Board and Australian Honey Bureau, which also have authority to issue export licenses for their respective products.
Government grants to the AHC have been used since the AHC’s inception in 1988 to supplement the industry levies and to support "change" in the Australian horticultural sector. This grant is estimated to have been about $600,000 in 1996/97, the last year it was provided. These government grants have been terminated. Since this money is not specifically dedicated to export promotion, it is not included in Table 1. AHC and individual commodity boards also receive Export Market Development Grants. In 1995/96 the AHC received $29,260 from this source and the dried fruit board received a grant of $121,740.
Specific activities of AHC and its members in the export area include: market access and development and industry marketing. Market access activities are primarily technical assistance to the Quarantine Inspection Service to identify and seek the elimination of phytosanitary import barriers. Industry marketing activities have been undertaken in Singapore, Malaysia, Hong Kong, New Zealand, Indonesia, Taiwan, and the United States. The majority of export promotions have focused on demonstrations and publicity at the store level and general media activity. A major program for AHC is the Australian Fresh logo and banner which is used to build market presence for Australian fresh fruits and vegetables as safe, healthy, high-quality produce. Industry support for this program is strong with over 25 apple and pear exporters, growers and packers participating in the launching of the 1996 promotion season in Singapore, Malaysia and Indonesia. Thirty key exporters are licensees under this scheme bringing its financing up to about $2.3 million.
The Australian Wine and Brandy Corporation (AWBC) is chartered to promote and control the export of grape products from Australia through the promotion of products both in Australia and overseas. Specific missions of the AWBC include the achievement of an international reputation for Australian wines and the improvement of knowledge about Australian wines in selected export markets. The AWBC also issues licenses to exporters and compliance certificates for each wine shipment. The AWBC inspects wines intended for export to ensure that quality standards are met and that the wines meet importing country requirements. The AWBC also administers a Label Integrity Program. Under the AWBC is the Australian Wine Export Council which coordinates objectives and budgets of exporter committees that exist in the U.K., Mainland Europe, U.S., Sweden, Asia and Canada. The AWBC spent a total US$1.4 million on export promotion in the following countries: the United Kingdom (47 percent), the United States (18.5 percent), Europe (15.5 percent), Scandinavia (11 percent), Canada (5.5 percent), Japan (1 percent) and other countries (1 percent). An additional $580,000 was spent on overhead costs such as staffing and office maintenance. Most of these funds have come from either national or regional grants. However, the industry recently agreed to establish and ad valorem export tax to fund the Corporation’s activities.
The Australian Wool Research and Promotion Organization (AWRAP) was formed on December 1, 1993, from the merger of the Australian Wool Corporation and the Wool Research and Development Corporation. In June, 1994, the operations of AWRAP and the International Wool Secretariat were merged in order to form one customer-focused international marketing and research organization. The AWRAP Board is involved in operational issues, particularly technical and research and development matters and Australia-specific issues, while the IWS Boards addresses policy issues related to funding, the Woolmark brand and other branding strategies, and generic promotion. AWRAP/IWS conducts industry studies, consumer trade and retail promotion and provides technical service and expertise to the early and later stage processing industry around the world. Funding for AWRAP comes primarily from a 3.5-percent wool tax levied on the value of the wool shorn. More than 90 percent of the funding for the IWS comes from these levies on Australian wool. This is further supplemented by license fees for worldwide use of the Woolmark trademark which raised $4.5 in 1995/96. During this year the IWS spent $94 million on marketing activities.
The Woolmark is one of the world’s most recognized apparel labels. Research shows that consumers in major markets are prepared to pay more for clothing which carries the Woolmark label. In 1995/96 the global design of Woolmark tags, labels and merchandising was updated as part of the successful Woolmark commercialization launch. The concept was expanded to meet the needs of specific uses. For example, the Woolblendmark has been used for some blends of wool and other fibers. This year Woolplus branding was launched as part of the partnership between the IWS and Du Pont to promote Wool plus Lycra. The IWS conducts strict quality assurance and integrity control on use of these trademarks, including testing and inspection visits of licensees. The IWS also develops and promotes products on a global basis, working with key industrial partners at all stages of production, including spinners, weavers designers and manufacturers. Its regional branches carry out local industry interface activities including consumer and retail promotion, quality control and public relations.
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