Export Know How I1

A Primary Industry Perspective

Mark H OSullivan Manager, Rural Development Unit Queensland Department of Primary Industries

This article develops a case for taking a broad perspective on the benefits generated from government involvement in international services. In particular it shows how government scientists and other officers, through involvement in exporting government services, can gain and maintain important scientific knowledge, and access genetic material from overseas. These activities may be vital for the establishment of new industries, as well as maintaining production efficiency in the private sector.

The article further illustrates, through a case study, the unique role for government in assisting the private sector open up trade opportunities. In the case study example this was facilitated through sourcing overseas technology to treat mangos for fruit fly, and then after extensive testing and scientific work negotiating the removal of quarantine barriers to gain access to the lucrative Japanese market.

Virtually all the plant and animal genetic material which forms the basis of Australia’s primary industries is imported, though a great deal of local adaptation has taken place. The present-day merino sheep, for example, bear little resemblance to the original Spanish sheep. Queensland’s sugar cane, mangos, grains, pigs, beef and dairy cattle industries are all derived from imported genetic material. Part of governments’ role is to assist industry to remain competitive through, among other measures, accessing overseas advances in technology while at the same time ensuring quarantine measures are in place to protect existing industries.

This involves ‘trade’ in technology, genetic material and know how. Most of this can be conducted by the private sector, but there arc roles unique to government without which the system could break down.

The process of adapting imported genetic material has fostered a research and development industry which has in many instances taken the original material into new areas through selection, cross-breeding, disease control and resistance and similar scientific work. The pressure of inter- national competition in the marketplace has also forced research into achieving higher productivity levels. As a result, calving percentages in the national sheep and beef herds are well above those in most other subtropical and tropical parts of the globe, and grain yields are similarly elevated.

At the same time our overseas neighbours have continued to make advances in other fields and with other crops, faced disease problems with which we are unfamiliar, and continued with their own development from often a more widely based local genetic pool. This sets the scene for mutually beneficial international collaboration.

International Collaboration International collaboration can take many forms. In Queensland, the Department of Primary Industries (DPI) has carried out international work on behalf of the state’s primary producers for many years.

In the last decade the DPI has undertaken: 200 projects and consultancies; 62 training courses with over 2000 trainees; 28 collaborative research projects; active trade development.

This brief summary is only part of the DPI’s

Auslraliark Jourrlol of Public Adatinislralion * 55(4): 77-81, December 1996

78 0 ‘Sullivan

activities and does not take into account overseas study and professional conference activities. It illustrates the extent of departmental activities coordinated through a unit that specialises in international scientific and training activities. Details of a small cross-section of this work are provided in Table 1.

Briefly it can be seen that under ‘training’, the DPI has provided a training program on fruit fly control in Malaysia. It is coincidental that the 1995 outbreak of the papaya fruit fly in North Queensland came at a time when the DPI already had in place a research program overseas to transfer our technical knowledge for fruit f ly control to Malaysian industry, and at the same time to learn about their papaya fruit fly experience. This scientific exchange benefits Queensland industry by reducing the time required to learn about the papaya fruit fly and instigate control measures.

Under ‘consultancy’ a project in Indonesia on foot and mouth disease in livestock has enabled our scientists to study, outside Australia, exotic

diseases on our northern doorstep. If there was an outbreak of this disease in Australia it would cost substantial amounts to control and prevent exports of meats to many high-value markets. This provided experience for our scientists, as well as up to date information to strengthen quarantine procedures.

It is safer for our scientist to study dangerous diseases and pests outside Australia. This can more readily be achieved in an atmosphere of cooperation and exchange of information than otherwise.

‘Research’ includes work in Papua New Guinea on cocoa to improve the quality, particularly for small holders. Queensland may be able to benefit from establishing cocoa processing in this state to assist in the establishment of a chocolate industry. In the future growing and harvesting cocoa may be possible as an alternative to sugar cane in some wet tropical areas of North Queensland

The ‘trade development’ work of government is often less obvious. It can be argued the training

Table 1 Examples of DPI’s International Experience Training Consultancy Research Trade development Sri Lanka: Forestry and rain forest management

Kenya: Food security management

Parasitology , virology and specific disease diagnosis

Malaysia: Training in fruit fly control

Thailand: Post- harvest management

Seed testing certification

China: Study of citrus pests control, Dairy management

Indonesia: Poultry diseases project

Indonesia: Foot and mouth project

IndonesiaPhilippines: Soybean varietal mission

MalaysiaKhailand: Post-harvest disinfestation

Sri Lanka: Review of tick-borne diseases

Thailand: Economic analysis of foot and mouth control

South Pacific: Banana improvement

New Guinea: Cocoa Quality Improvement Project

Sri Lanka: Tick-borne disease in ruminants

India: Water efficiency in peanut, navy bean

Malaysia: Identification of fruit fly species, host plants and geographical distribution

Singapore: Export Tomato Project

Training in meat handling

Philippines: Integrated use of pesticides in grain stores in the tropics

Philippines slaughter house design

A Primary Industry Perspective 79

and other activities described above all result in trade. As trainees return home and further their careers, knowledge of Australian technology can result in sales of livestock, pasture seed, post- harvest handling equipment and much more. The Philippines example mentioned in Table 1 has assisted in the development of the very valuable live cattle trade out of North Queensland.

Benefits Summary The activities outlined above have the potential to generate goodwill towards Australia and provide other benefits; for example:

accelerated projects;

sharing advanced laboratories; study 0s a great array of problems, development of preventative measures or contingencies:

exchange of genetic material and observation of characteristics in different climates;

. facilitaiion of trade and earn revenue.

Accelerated Projects Research on some crops, for example, is limited to short periods. Flowering may only occur for one or two months each year. A ten year research program can be halved to five years by also carrying out research in both the northern and southern hemispheres on the crop during their respective flowering season.

Exchange of Genetic Material and Observation in DifSerent Climates Queensland industry may wish to source new varieties from overseas or learn about the growing and fruit setting characteristics of a plant in a climate different from its current Australian domain. Cooperation with scientists in other countries can establish relationships which enable activities of this nature to occur. This usually means exporting DPI services to foster relation- ships within which the exchange takes place.

Trade Facilitation There are ongoing sales by primary producers and the associated service industries of livestock, stud animals, cattle handling equipment, pasture seeds, portable sawmills, forestry technology, post- harvest equipment for fruit and vegetables, cane

harvesters and other items. There is also a well- established private sector international consultancy profession which undertakes overseas aid and development projects capitalising on the wealth of Australian industry, university and government funded research. Government export service activities complement these private sector firms.

The following case study illustrates the unique role the Queensland government played in enabling the development of a mango export industry for the Japanese market.

Case Study This case study illustrates the multifaceted nature of international collaboration. It shows how overseas technology was sourced by government to address a scientific issue which, after government to government liaison, led to the opening up for the private sector of a market in Japan for Queensland mangos.

Problem Plantings of mangos have expanded rapidly in Queensland as farmers sought alternatives to tobacco, rice and other crops as well as diversi- fication as a hedge against the cyclical problems that have occurred in sugar and beef. Forecasts are for over a tenfold increase in production in the decade to 1997-98.

This rapid increase has come from both larger tree numbers and increases in production in trees that can take up to 10 years to reach maturity. Increased production can be expected to depress prices on the domestic market so the industry has sought to develop export markets in Asia and the Middle East.

The Australian Kensington Pride or Bowen mango is mainly harvested between November and February. This occurs at a time when few ripe mangos are available in the northern hemisphcrc and presents a window of opportunity f o r Australian mangos between October and March. After March, Filipino, and later Mexican mangos, come into the Japanese market. Thai fruit is generally later in the calendar year.

Hypothesis A potentially large and high-price market for Australian mangos exists in Japan. Japan currently imports mangos from Asia and Mexico which pass

0 'Sullivan

through strict quarantine procedures before leaving the country of origin. No impor-tation protocols existed between Australia and Japan in the early 1980s when this work commenced.

The barrier to Japanese acceptance of Australian fruit is fruit fly. Two species then existed, one in Western Australia and the other in Queensland. The Japanese government required scientific evidence that Australian mangos could be treated in some way to prevent importation of fruit fly with mangos. Government to government negotiations are the only channels to address and resolve these issues. It is evident therefore that the Australian private sector could not open up this market without government playing a vital role.

Possible Solution The technology to treat fruit fly in mangos and produce a marketable fruit was unknown in Australia. The Japanese had, however, developed a technique to kill fruit fly by exposing the fruit to heated water vapour and holding i t for a predetermined time. This is known as the VHT method. DPI scientists imported an experimental rig from the Japanese manufacturer and embarked on an extensive testing program to establish the conditions under which the VHT method kills both the Queensland and Western Australian fly species. Being able to access proven overseas technology saved around five years in research time for Australian scientists.

Virtually all of the funds for this work, which ran up costs in the vicinity of $800 000, was met by government, mainly by DPI. Industry made a

small contribution only. Negotiating access to the Japanese market

required extensive liaison through diplomatic channels. A brief overview is illustrated in Figure 1, which illustrates the procedures required to negotiate protocols to permit entry into Japan of Australian fruit and vegetables likely to be hosts to fruit fly.

It demonstrates the unique role only government can play in negotiating with other governments to put in place protocols to enable private sector trade activities.

Outcome As a result of this government work, and prior to the papaya fruit f ly outbreak, the following outcomes had been achieved.

Protocols were put in place which permit the export of mangos from Australia to Japan. Trade has taken place after private firms built two commercial VHT plants. Knowledge gained can be applied to other fruit and vegetables. Therefore the mango work will shorten the time it is likely to take to open up the Japanese market for other produce. This is assisted by access to new commercial size VHT units in Australia. The retail price i n Japan for Australian mangos has been up to $12.50 each, higher than fruit from other countries and 3-4 times the retail price in Australia. If 5,000 tonnes are shipped in one season, the local domestic market value would be around $3.6 million, whereas the price at the VHT plant for export

Figure 1 Government to government phase

Diplomatic Channels for Australia-Japan Quarantine Protocol Negotiation

DPI & Other Researches

I Translation I

Australian Quarantine &Inspection

Service (AQIS)

Ministry Agriculutre Forests &

A Primary Industry Perspective 81

frui t is more likely to be around $12.5 million.

Distribution of Benefits The benefits of this research are widely distributed.

Mango growers benefit by development of a market prepared to pay a high price for very high quality fruit. Less fruit delivered to the Australian market reduces downward pressure on domestic prices. Growers of other fruit and vegetables now likely to be VHT treated for Japanese markets will benefit from the pioneering work as new markets will also open up for their produce. The private sector investors in the commercial VHT plants have a new business opportunity which stems from the mango work. They also have the potential to expand into the export to Japan of other fruit and vegetables. There are new direct employment oppor- tunities for the VHT plant, on the supplying farms as well as the supporting service industries. The increase in exports helps Australia’s balance of payments through the generation of export income.

The above comments are based on the assumption that the difficulties caused by the papaya fruit fly outbreak will be overcome.

Conclusion Benefits can be gained for the whole community from government involvement i n exporting services. There are situations in which the involvement of government is vital to enable trade to flow as demonstrated in the VHT mango example above. The private sector is not a recognised player in the negotiation of quarantine protocols between governments; this occurs on a

government to government basis. The private sector can assist behind the scenes and is obviously vital for the subsequent commercial uptake of the opportunities.

Government officers involved in aid and training projects can establish relationships with their counterparts overseas which can facilitate trade as well as provide channels for the intro- duction of new genetic material for Australian primary industries. The ‘trade’ of benefits from Australian research and development with both developing and developed countries is on balance vital to Australia because of the positive contributions it provides to the private sector.

Finally it needs to be recognised within the context of this article that government is not buildings and bureaucratic systems; people form relationships, generate new ideas, put in the extra effort to follow up on leads, and spend hours of trial and error to solve problems. The stock of human capital in a department such as the Queensland DPI, the corporate knowledge, skills and culture is our competitive edge, arising from the skills of thousands of public servants. This needs to be properly recognised by public administrators and nurtured if the ongoing flow of benefits to the state is to continue. It is not difficult to substantiate benefits to the whole economy, including employment creation, decentralisation of industry, diversification of the productive base of the economy, and generation of export revenues to address balance of payment imperatives.

Therefore government involvement in ex- porting services makes very positive contributions towards improving the quality of life and living standards for Australians. At the same time other countries, many of whom are trading partners, also benefit through shared information.