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Rural Industries Research & Development Corporation
February 2003
RIRDC Publication No 02/168 RIRDC Project No HAS-10A
The Australian Asian vegetable industry is a dynamic, growing horticultural sector whose products appeal to Australian consumers. The industry has more than doubled in production value and grower numbers since 1995. It has also doubled its share of total Australian horticultural production. Many of the industry’s products are on the verge of becoming mainstream staples and product is available through a wide variety of outlets.
In 1995 Rural Industries Research and Development Corporation published an Audit of the Australian Asian Vegetables Industry. This study, completed in October 2002, highlights changes in the Australian Asian vegetable industry since that original audit report. It provides an assessment of the current Australian Asian vegetable industry situation and assesses the industry’s future directions.
Industry Structure and Production
The domestic market accommodates more than 80 Asian vegetable types. However, most demand centres around a limited number of major lines. These include leafy vegetables such as bok choi (white cabbage), kai laan (Chinese broccoli), choy sum (Chinese flowering cabbage) and bor choi (Chinese spinach) as well as Chinese cabbage, spring onion/shallot, taro, daikon, kabocha and herbs such as coriander and Chinese chives.
Industry value is estimated at $135.8 million up from $50.4 million in 1993/94. Grower numbers total 1,675 up from 679 in 1993/94. One half the industry is located in NSW.
The industry has a presence in all Australian states and territories. As a general rule small-scale market gardens operate within the metropolitan area (group 1) while larger commercial holdings operate in the regions (group 2). Key features of both groups are summarised below in table 1.
Table 1: Industry Profile – An Industry with Two Types of Grower
| Group 1 – Market Gardeners | Group 2 - Scale Producers |
| Recent migrants. | Second generation Australians. |
| Small scale market gardens (¼ to 5 ha). | Large commercial operations (5 to 50 ha). |
| Small
volume production and a large number of different
vegetable types. |
Fewer high volume products such as Chinese cabbage. |
| Some seed saving for next year’s crop. | Commercial seed including hybrid seed. |
| Supply fresh produce, especially leafy bunch lines to the domestic market. | Producers
of boxed product that requires less labour.
More likely to be involved in exporting. |
| Traditional practice. | Best practice. |
| Members of ethnic based grower groups. | Members of broadly based grower groups. Grow Asian and conventional vegetables. |
| Difficulty with communication. | Actively seek information. |
| More
likely to experience cool chain breakdown.
Poor profitability hampers capacity to invest in refrigeration. |
Use
of specialised refrigerated storage and transport, new packing cases, adherence
to cool chain
management and QA. |
| Market to restaurants and smaller scale greengrocers. | Market to larger scale retail (Western and Asian) and exports. |
| More
likely to bypass the central market system.
Make use of aggregators. |
Market through central market system and some have sufficient volume to market direct to retailers. |
As noted in the Lee audit, the combination of short growing times, multiple harvests and intensive landuse, make Asian vegetables a high yielding horticultural activity. Harvests of 60 tonnes per ha for crops such as Chinese cabbage and daikon are not atypical.
Key Changes Since the Mid 1990s
Of note since the Lee audit is the superior organisation
of the industry and its increasing sophistication, especially amongst group
2 growers. Key trends and innovations include:
The industry has been assisted in making these changes
by researchers, extension and consumer interest channelled through the
major supermarkets.
Market Situation
Since 1995, the domestic consumption of Asian vegetables has increased and the product range, quality and availability has substantially improved.
By far and away the majority of Australian grown Asian vegetables are sold fresh in boxes and bunched form. Pre-packed retail ready salad mixes containing Asian vegetables continue to grow in popularity. Other forms of processing, such as pickling, have had limited success. Modified Atmosphere Packaging is expected to play a greater role in the industry in the future.
Most growers sell on spot markets and there is a low level of forward contracting. No vertical integration activities were observed during the study. Grower packing cooperatives are being explored in the NT. Cooperatives have met with little success in Victoria.
Since the Lee audit, a role has emerged for Asian vegetable aggregators who consolidate large and tightly specified orders for the supermarkets. Farmer markets have also emerged in NSW and Queensland. These markets serve as an important outlet for Asian vegetables that fail to meet supermarket specifications. The development of these markets in other states would have important benefits for producers.
Exporting of Australian Asian vegetables has stagnated since 1995. Export volume and value has been adversely impacted by competition from China. Future competition is anticipated from Vietnam. Australia currently exports around 16% of Asian vegetable production volume. Qld and WA dominate Australian export sales. It remains to be seen whether current interest from Japan and Singapore in guaranteed low chemical residue Australian vegetables translates into sales with acceptable margins. Market research is required to investigate this opportunity and grower visits to export markets are suggested. Export marketing plans need to be founded on the back of sound domestic marketing practice.
Importing of fresh Asian vegetables is insignificant. A small amount of taro is imported from the Pacific. Processed product is sourced from Asian countries that enjoy an advantage in labour costs and a large domestic market.
Market outlook was reviewed on a state-by-state basis. In states with small Asian populations the industry is stagnant (SA and Tas). WA will also stagnate unless new and profitable export markets are identified. Exports of Chinese cabbage from this state have faltered. Growth is forecast in Queensland and the NT and increasing sales through supermarkets is expected to drive demand in Victoria and NSW.
Supply Chain Issues
Much has been done to improve domestic supply chain management and establish and implement appropriate cool chain management protocols since the mid-1990s. Cool chain management is critically important to the delivery of product acceptable to consumers and remains an ongoing and potentially profitable area of research and extension for this industry.
The NT initiatives in relation to a Vietnamese-speaking liaison officer and group-based activities provide useful lessons for the uptake of R&D in this area. The importance of R&D message repetition is highlighted in this report and liaison officers are one way of achieving this.
A dichotomy exists between exporters of Asian origin and established mainstream horticultural exporters. Exporters of Asian origin tend to operate on spot markets and are penalised for an absence of a thorough chain approach. This finding may be important for directing future supply chain research effort.
Industry Future Directions
With consistent nomenclature, dietary and functional food quality research and product promotion, Asian vegetables have the capacity to be recognised by the Australian population as a major fresh produce retail category.
In particular, the future lies with group 2 commercial producers. The near mainstream lines they produce, will merge into the mainstream and loose their status as exotics. Group 2 growers will continue to adopt best practice production and supply chain delivery systems.
Group 1 producers will occupy relatively limited niches from which new mainstream products will sporadically emerge. Group 1 growers will face pressure to close their operations as their market gardens are affected by urban expansion. This will trigger investment in either group 2 style operations or fund entry into another sector.
Supermarkets will continue to set the domestic market agenda and their increasingly stringent requirements for cleanliness, packaging and shelf life will need to be met by growers. R&D will be required to contain these additional costs and deliver cost saving innovation. Grower markets, and potentially the food service sector, will provide alternative domestic outlets for group 1 growers.
Exporting of fresh Asian vegetables will continue to be very competitive and best returns will be achieved by a whole chain approach that bypasses agents and Asian central markets.
Recommendations
Study recommendations are made in relation to research. The most important of which relate to export market field studies for grower representatives, functional food quality investigation and consistent nomenclature for retail. The cost of establishing a system of consistent nomenclature might be part funded by supermarkets and wholesale market management. Industry development should focus on lifting group 1 growers into group 2 and advancing the capacity of group 2.
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