Rotten Chinese apple myths

When I was a small boy, my parents would scold me for putting coins in my mouth, telling me, "They might have been in the pocket of a Chinaman.” I could never figure out what was different about Chinese pockets, but the implication was clear – they were to be avoided.

Unfortunately, attitudes about the importation of Chinese fruit and vegetables sometimes have a similar character – what is wrong with them is rarely stated, but there is a strong view that they should be avoided. The reality is that China represents a real opportunity for Australian consumers and producers alike.

This was lost in a recent fit of indignation over a shipment of Fuji apples from China, granted access to Australia following relaxation of our previously impossible import restrictions (The eve of free trade apples?, November 9). The only specific complaints were that they were either too cheap or not cheap enough, but there was also plenty of non-specific muttering.

Australia's food exports are worth about $30 billion per year, while imports total $10 billion, of which 94 per cent is processed. Overall we import more than twice as much fruit and vegetables as we export, due entirely to processed products. Trade in fresh (including chilled) fruit and vegetables strongly favours exports ($700 versus $250 million).

Fresh imports are growing at the same rate as exports and, as a percentage of total imports, both processed and fresh fruit and vegetables have declined since the 1990s. The big change has been processed fruit and vegetable imports, which are growing rapidly while exports are not growing at all. China is increasing in importance as a source and is currently our second largest supplier of imported vegetables, after New Zealand and ahead of Italy.

China has been a growing global exporter of fresh and processed fruit and vegetables since 2000, although it is a major importer as well. Annual growth in the value of the country's food imports was 17.7 per cent in the 10 years to 2009, compared with 9.5 per cent for its food exports. Its exports have created new competition for producers in several countries, the most rapid growth occurring in apples, apple juice and fresh vegetables. It is now the world's leading exporter of apple juice.

However, the country's export growth may not be long-term. Growing domestic demand for fruit and vegetables is likely to reduce the supply available for export and, as household incomes grow, consumption will rise along with the varieties demanded. Indeed, in 2008 China became a net importer of food for the first time. Australia currently sells about $100 million in fruit and vegetables to China, most of it fresh.

But much of our trade in fresh fruit and vegetables is counter-seasonal and does not involve China. That is, we import produce from other countries when it is out of season here, and export it when it is out of season there.

Trade in oranges between Australia and the United States is typical of this. Navel oranges are imported from the US during our warmer months while ours are harvested in May to October. A similar situation applies to table grapes and cherries, with imports and exports concentrated in the months outside local production seasons.

Australian growers of oranges, grapes and cherries tend to be supportive of counter-seasonal imports as they keep the fruit on the menu of consumers for a longer period. If they were only available while in season in Australia, total demand would fall because they were not a routine part of the diet.

Apple growers, on the other hand, would like us to eat locally-grown apples all year round, based on the fact that apples can be stored. Apple exports are also negligible. Indeed, the sectors in the fruit and vegetable industry that are most opposed to imports are typically the least competitive internationally.

China's reputation as a food supplier took a dive when it was discovered that melamine had been added to baby formula and pet food. Stories also circulate about Chinese farmers using crop chemicals in ways that would not occur here.

But China is a big, diverse country, with an enormously professional export sector. While it might have an image problem in comparison to New Zealand or the USA, there is zero evidence to support suggestions that its fruit and vegetables should be avoided.

In fact, the evidence is to the contrary. Imported fruit and vegetables are monitored closely by Australian Quarantine and Inspection Service (AQIS) under the Imported Food Inspection Scheme, with China subject to the most number of inspections. In the six months to the end of June 2010, its compliance was equivalent to that of the United States and no different to domestic producers monitored under the National Residue Survey.

Chinese fruit and vegetable imports will probably always have an image problem. Rightly or not, perceptions matter. But that becomes a question of price. While some lament the fact that we can no longer buy a toaster made in Australia, nobody objects that it only costs $20. Provided the Chinese products are priced at a level that matches consumer perceptions of quality, they will be bought.

Rather than complaining about Chinese imports, Australian growers of fruit and vegetables ought to be knocking on China's door, looking for opportunities to sell them their produce. And of course they should be sure to protect their image. We wouldn't want Chinese children being told to avoid coins that might have been in the pockets of Australians.

David Leyonhjelm works in the agribusiness and veterinary markets as principal of Baron Strategic Services and Baron Senior Placements.