19 September 2012
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Preventing transmission of fire blight
Trade since August 2011
Use of streptomycin in NZ orchards
State of the Australian apple industry
In March 2007, Australian quarantine authorities announced that apple imports from New Zealand (NZ) would be permissible. Imports from NZ had been banned by Australia since 1921 due to the plant disease fire blight becoming established there and concerns about its possible spread to Australia.
Local apple growers had lobbied for the ban to be maintained. Fire blight infection can affect blossoms, fruit, leaves, branches, trunks and root systems and devastate fruit production through the death of blossom, shoot, limb and fruit. Sometimes the entire tree can die. Fire blight is presently found in Europe, Asia, Egypt, Bermuda, Canada, Guatemala, Mexico, USA, and New Zealand. Fire blight entry potential, establishment potential and spread potential have been rated as high. Fire blight was previously detected in Australia in an area isolated from commercial orchards and was eradicated. If established, fire blight can be economically devastating to commercial growers.
The long running ban on apple imports from NZ had been a significant bilateral issue which culminated in a dispute in the World Trade Organization (WTO) won by NZ. Consequently the Australian Government was required to revise the biosecurity arrangements for the importation of NZ apples and since these were finalised in August 2011 16 tonnes of apples have been imported from NZ. While the quantity may seem paltry the development is highly significant.
However, NZ is not the only country from which apples can be imported. Imports from Japan have been permissible since 1998 and in June 2010 quarantine authorities announced apples from China could be imported subject to a strict regime of biosecurity measures. More recently, the prospect of imports from the United States (US) has emerged.
The biosecurity issues associated with possible apple imports from all sources, but especially those resulting from NZ’s market access request in 1999, have been the subject of ongoing parliamentary and public interest. There have been specific Senate inquiries as well as regular and extensive canvassing of the issue at Senate Estimates.
A further indication of the level of contention associated with this issue was the announcement on 6 July 2011 by the Shadow Minister for Agriculture and Food Security, John Cobb, that he had circulated the Quarantine Legislation Amendment (Apples) Bill 2011 as a Private Member’s Bill. The Bill sought to make permits issued by the Australian Quarantine and Inspection Service (AQIS) for the importation of apples disallowable by Parliament and represented an approach to biosecurity in Australia which was without precedent.
A 2010 report by the Centre for International Economics (CIE) prepared for the apple industry’s peak grower organisation Apple and Pear Australia Ltd (APAL) forecasts that, under a worst case scenario, imports would have a significant impact on the domestic apple and pear industry.Currently apple production averages about 274 000 tonnes annually compared with 316 000 tonnes 20 years ago.
This Background Note summarises the situation regarding apple imports from each of the above-mentioned countries. Primarily the paper outlines the significant stages and processes that have led to the present situation. However its scope does not include consideration of the technical issues covered by Biosecurity Australia (BA) in the respective import risk analyses; inspection and testing arrangements for imported foodstuffs; nor the management and administration of Australia’s biosecurity regime or associated WTO arrangements.
Imports of Fuji apples from Japan have been permissible since 1998 although as of August 2011 no trade had occurred.
On 30 June 2010, Australia’s Director of Plant and Animal Quarantine (the Director of Quarantine) announced that the importation of fresh apple fruit from China would be permitted subject to the Quarantine Act 1908 and the application of phytosanitary measures specified in the final import risk analysis (IRA) report for fresh apple fruit from the People’s Republic of China. 
The quarantine measures include:
- sourcing fruit from registered orchards within nominated export areas
- nominated areas to be free of certain pests
- orchard control and surveillance
- fruit bagging
- pressurised air blasting of fruit prior to packing and
- inspection and remedial action if quarantine pests are detected.
To support these measures an operational system that maintains and verifies the quarantine status of consignments to Australia, through inspection by AQIS, is required. An AQIS officer must be present in China under a pre-clearance arrangement to inspect and verify all consignments prior to export.
China’s agricultural quarantine agency submitted a market access request for fresh apples to BA in 2001. Initially only two provinces were covered by the request but in 2004 two more provinces were specified. In 2005 the request was extended to all commercial apple production areas of China.
An indication of the extensive and comprehensive nature of an IRA process, including the consultation elements, is reflected in the schedule of significant dates for this IRA which included:
- 17 March 2008: commencement of the IRA process
- 8 July 2008: issues paper released
- 21 January 2009: release of the draft IRA for stakeholder consultation
- 4 December 2009: conclusions of the revised draft IRA report released
- 30 March 2010: provisional final IRA report released for the 30 day appeal period
- 13 May 2010: stakeholders notified that an Import Risk Analysis Appeals Panel (IRAAP) would be convened to consider two of the five appeals submitted. The other appeals were considered to be out of scope of the criteria for appeal
- 9 June 2010: the IRAAP disallowed the two appeals against the IRA but recommended that BA include reference to the insect pest spotted wing drosophila (SWD) in the final IRA report. BA conducted a separate pest risk analysis for SWD and
- 30 June 2010: release of the final IRA report for fresh apple fruit from China and the associated policy determination.
The first commercial imports of apples from China arrived in early 2011. Information provided to Senate Estimates hearings in February 2011 by the Department of Agriculture Fisheries and Forestry (DAFF) was that 24 consignments of apples had arrived from China, as of 18 February 2011. With each consignment weighing around 22 tonnes, those imports totalled about 528 tonnes. According to a July 2011 media report, apple imports from China had reached 670 tonnes. For the 2011-12 season 13 shipments amounting to 225 tonnes of apples were imported from China. All lots were inspected in China by Australian authorities with none rejected.
In March 2007, Australia’s Director of Quarantine announcedthat imports of apples from NZ would be permitted subject to a regime of specific quarantine measures. This announcement concluded a formal process of consideration of a market access request for apples from NZ which was initiated in 1999. It also ended Australia’s ban on the importation of apples from NZ which had been in place since 1921.
In response to the announced policy, the NZ government initiated a WTO dispute which went before a disputes panel for a ruling. The WTO panel found that the quarantine measures by Australian authorities for apples being imported from NZ were not justified and hence ruled that Australia was in breach of its WTO obligations. A subsequent appeal by Australia to the WTO Appellate Body against the finding was unsuccessful. As there are no further avenues for appeal within the WTO system, Australia is required to implement the reports of the Disputes Panel and Appellate Body and adopt quarantine measures for apples from NZ which comply with its WTO obligations.
As part of the WTO compliance process, BA announced on 7 December 2010 that it had initiated a review of existing policy for apples from New Zealand. This review is also referred to as a non-regulated analysis as it does not meet the criteria for an IRA.Nevertheless it was conducted to the standard of an IRA and considered the pests which were the subject of the WTO dispute: fire blight, European canker and apple leaf curling midge (ALCM). Evidence not available at the time of the original risk analysis in 2006 as well as the WTO decision were taken into account.
The draft report of the NRA was released on 4 May 2011 for the requisite 60 day consultation period. BA received 65 submissions in response to the draft report.
Although completion of the final report for the NRA was not subject to a legislated timetable, Australia and NZ had previously agreed that the WTO recommendations and rulings would be implemented by 17 August 2011. This allowed Australia to be in a position to issue import permits for NZ apples from that date, based on any conditions that might arise out of the NRA.
On August 17 2011 BA released the final report of the NRA and the associated policy determination for the importation of apples from NZ. Australia’s import conditions for apples from NZ require:
- in-orchard controls for fire blight, European canker and ALCM
- only mature and symptomless apples, free of leaf material and other contaminants to be exported
- high pressure water washing and brushing of fruit in the packing house
- maintenance of wash water sanitation
- two 600 fruit inspections including one in NZ by Australian quarantine officers with detection of quarantine pests or trash resulting in the rejection of that lot or consignment
- a supporting operational system to maintain and verify the phytosanitary status of consignments and supply chain assurance and
- AQIS to audit and verify that the recommended phytosanitary measures have occurred.
As a result of the NRA BA has concluded that Australia can be adequately protected from fire blight. It notes that:
- fire blight bacteria can only survive, if at all, in very low numbers in a poor state of health on mature apple fruit.
- mature apple fruit is an adverse environment for fire blight and the bacteria die quickly.
- if fire blight bacteria survived long enough to enter Australia they would then need to survive on apple waste to be of concern and survival is most unlikely.
- even if fire blight survived in apple waste, it would then need to be moved to a new host as it cannot move independently.
- the integrated management approach Australia requires of NZ apple growers, including targeted measures to prevent blossom infection, effectively manages fire blight.
- there have been no outbreaks of fire blight in NZ since 1998 and
- there is no evidence that fire blight can be transferred from mature apples or from apple waste from mature fruit to a host in Australia.
In addition, NZ apple growers note that both NZ and the US, where fire blight is also present, have successfully exported large quantities of apples to Taiwan for over thirty years without transmitting fire blight.
In August/September 2011 BA undertook pre-shipment inspection in NZ of 13 lots of apples proposed for export to Australia. The lots totalled just 23 tonnes. No quarantine issues were detected with 10 lots – some 18 tonnes. The other 3 lots (5 tonnes) were rejected due to detection of:
1) a single live ALCM and leaf trash
2) a live ALCM and
3) a small piece of leaf trash.
Consequently these lots did not leave NZ and in total 16 tonnes of apples were shipped to Australia.
In addition to concerns about the risk of fire blight being present on apples imported from NZ, there has been the associated issue of possible human health and safety risks due to the use of the antimicrobial agent streptomycin on apple orchards in NZ to control fire blight. Food Standards Australia New Zealand (FSANZ) which administers the Food Standards Code undertook a risk assessment and concluded:
The consumption of apples imported from New Zealand poses a negligible increased risk to Australian consumers from potential exposure to antimicrobial resistant organisms. 
Key points noted in the FSANZ review included:
- streptomycin is only used on a small proportion of NZ apple orchards during each growing season and when used, it is applied to trees during blossom, or three to six months prior to harvesting, and
- there is only a minimal possibility of residues of streptomycin being present on apples due to the time period between application and harvesting of mature fruit, as well as practices undertaken by growers which limit the potential retention of residues on fruit.
On 17 March 2008, BA announced the commencement of an IRA for apple fruit from the US grown in the Pacific Northwest (PNW) states of Idaho, Oregon and Washington. This IRA is being undertaken as an expanded IRA, requiring completion within 30 months from announcement. This compares with the maximum time frame for a standard IRA of 24 months.
Key dates for this IRA thus far include:
- 7 July 2008: release of the issues paper for consultation
- 5 September 2008: closure of submissions on the consultation
- 22 October 2009: release of draft IRA report
- 4 March 2010: BA invokes ‘stop the clock’ provisions of the legislation to ascertain from the US Department of Agriculture information on the risk posed by some quarantinable pests present in the PNW states and proposed quarantine measures.
The draft report proposes that the importation of apple fruit be permitted, subject to quarantine measures for the pests of quarantine concern. The combination of risk management measures and operational systems proposed for the importation of fresh apple fruit from the PNW states includes:
- mandatory pre-clearance arrangements with AQIS officers involved in all risk management measures in the PNW and auditing of the systems and processes used by the US to certify exports
- orchard inspections and packing house disinfection treatment for fire blight (orchards with any visual symptoms of fire blight would be disqualified from export)
- orchard inspection for European canker (orchards with any symptoms of European canker would be disqualified from export)
- establishment of area freedom for ALCM and apple maggot. Alternatively, an effective treatment could be used for all export lots
- establishment of areas of low pest prevalence for codling moth, oriental fruit moth, cherry fruitworm and lesser appleworm. Alternatively, an effective treatment could be used for all export lots and
- inspection for all other quarantine pests with remedial action taken (treatment or withdrawal of the lot) if any are detected.
In May 2012 DAFF advised they were still waiting for the above mentioned additional information. Once the requisite information is received from US authorities the revised draft IRA report will be finalised and submitted to the Eminent Scientists Group (ESG) for review in accordance with the legislated requirements for expanded IRAs. BA will notify stakeholders when the clock is restarted.
The market environment for the Australian apple industry has changed considerably in a relatively short space of time with imports now possible from Japan, China and NZ. Also, should the final IRA report on apples from the US confirm the proposal to allow imports from that country, further competitive pressure is expected. Some major findings of a 2011 report on the economic situation of the apple industry in relation to imports include:
- NZ apples are expected to have the greatest impact as they are high quality apples likely to be well accepted by consumers and produced at a lower cost than in Australia
- NZ’s proximity to Australia compared to other apple-exporting countries places their apple growers in a highly competitive position
- China is a low-cost producer but apples from there are not expected to be a favourite with consumers compared to other imported and domestic product. Nevertheless Chinese apples will gain some market share in Australia.
Although there has not been competition from other countries in the domestic fresh apple market for some 90 years this has not prevented significant structural change occurring in the industry. A good indicator of the extent of this change is the decline in the number of apple growers. In 1973–74 the Australian Bureau of Statistics recorded there were 4742 holdings with more than 0.4 ha of apples. By 1993–94 the number of apple and pear farms had fallen by around 70 per cent to 1378. The sharp contraction in farm numbers has continued in recent years with a further decline of 60 per cent to leave 545 apple and pear farms in 2010.
As concerning as the rapid reduction in grower numbers would be to the Australian apple industry it may well be that this is only the symptom of a greater problem—namely that the industry is uncompetitive by international standards as concluded by a recent report by the CIE, which observed:
- Australian growers lag behind international competitors on a number of indicators of orchard productivity
- product quality is inconsistent, which reduces demand in both domestic and export markets and lowers the price received by growers and
- the supply chain is highly fragmented preventing Australian producers from taking advantage of economies of scale in packing and marketing.
The apple industry had already taken steps to improve its competitive position prior to the CIE report through the adoption of the Future Orchards 2012 program. This APAL managed program ran from July 2006 to June 2011 and was designed to lift the productivity of Australian apple and pear orchards to world competitiveness. The CIE also prepared a transition plan for the apple industry ‘to support the industry in undertaking critical actions to deliver long term sustainable improvements to the productivity, perceived and actual product quality, and international competitiveness of the apple industry’.
APAL was unsuccessful in obtaining funding in the 2012 Federal Budget for an investment package of $21.9 million ‘to help growers become internationally competitive by transitioning them to best practice orchard management techniques’. APAL argues that ‘Without additional funding from the government the industry could face widespread job losses, which would have a devastating impact on many rural communities.’
The issue of apple imports from NZ has generated a degree of rancour on both sides of the Tasman. One of the Australian Senators who visited NZ in June 2011 claimed ‘…they would not talk to us about apple blight, they would not allow us to meet with apple producers and they would not allow us to go on to orchards. They were almost insulting.’ Another delegation of Federal Parliamentarians visited several orchards in the Hawke’s Bay area of NZ in November 2011. Their visit attracted rather unflattering comments from NZ’s peak industry body including a reference to the Australian MPs of ‘…not coming to New Zealand with an open mind…’
NZ apple growers have indicated that the very stringent quarantine conditions required by Australia have made exporting not commercially viable and hence they will be seeking changes to the current protocols. This is despite those conditions having being agreed to by NZ under the WTO settlement. They are looking at ‘another three to five years to create a commercial relationship and a commercial business with Australia.’
To date there has been no indication from Australian authorities that any changes are being considered or have even been requested by their NZ counterparts. Any such request would need to comply with internationally agreed procedures and be reviewed by BA in accordance with established science based risk assessments. Thus it remains to be seen whether or not the changes sought by NZ growers will eventuate.
A further tension has arisen between the Commonwealth and Tasmanian government with the latter reportedly imposing its own ban on apple imports. Under WTO arrangements sanctions can be applied to a member country like Australia if a sub-national jurisdiction such as a State Government is found to be in breach of WTO rulings. A similar situation arose in 2000 when Tasmania banned the importation of Canadian salmon. In this case the WTO ruled that Australia was in breach of its WTO obligations as the Tasmanian Government’s ban was not based on a risk assessment and not supported by scientific evidence. It is highly likely a similar conclusion would be reached regarding apples from New Zealand.
Australia’s apple industry is very familiar with change, the factors which drive it and the harsh realities which can result. However the advent of apple imports and the prospect of strong competition from other suppliers, especially NZ, herald an era of pressures and adjustment which may be unlike anything experienced previously. Although it appears there will be at least several years before the full competitive pressure of imports manifests itself, past experience suggests the industry faces a major challenge if it is to achieve its vision which is to ‘be world class in satisfying consumer demand for its products and be achieving sustained profitability’ by 2015.
. The Bill was not introduced into the Parliament and on 23 August 2011 Mr Cobb announced he would not proceed with his Bill ’at this time’ and he would consider information learned on his imminent visit to NZ before taking any further action. Source: J Cobb, Coalition to inspect New Zealand Apples, media release, 23 August 2011, viewed 27 June 2012, http://www.johncobb.com.au/news/default.asp?action=article&ID=646
. Centre for International Economics, ‘Part 2: economic impact statement’, Adjusting to apple imports, prepared for Apples and Pears Australia Limited, Canberra & Sydney, December 2010, viewed 27 June 2012, http://www.apal.org.au/assets/content/3917/Final%20CIE%20Economic%20Impact%20Statement%20%20-%2016%20December%202010.pdf; A Dick, ‘Imports to hit apple industry core’, The Land, 7 July 2011, viewed 27 June 2012, http://theland.farmonline.com.au/news/state/horticulture/fruit/imports-to-hit-apple-industry-core/2218317.aspx
. Australian Bureau of Statistics, Agricultural commodities Australia 2009-10 (and earlier issues), cat. no. 7121.0, ABS, Canberra, 11 April 2011, p. 12, viewed 26 June 2012 http://www.ausstats.abs.gov.au/Ausstats/subscriber.nsf/0/20042E8A21DCF545CA25786C0015898B/$File/71210_2009-10.pdf; and Australian Bureau of Agricultural and Resource Economics (ABARE), Commodity statistical bulletin 1991, ABARE, Canberra, 1991, p. 151.
. Even prior to China’s market access request for apples, Australia had an existing quarantine policy permitting the importation of fresh pears from China, the Republic of Korea and Japan. Pears have been imported from China since 1999.
. In accordance with international standards, IRAs conducted by BA use the international definition of pest being ‘Any species, strain or biotype of plant, animal, or pathogenic agent injurious to plants or plant products’ as set out in: Secretariat of the International Plant Protection Convention, Glossary of phytosanitary terms, ISPM no. 5, International standards for phytosanitary measures, Food and Agriculture Organization of the United Nations, 2010, p. 12, viewed 27 June 2012, https://www.ippc.int/file_uploaded/1273490046_ISPM_05_2010_E.pdf
. Biosecurity Australia, Policy determination 28 June 2012 (attached)
. Biosecurity Australia, Draft report for the non-regulated analysis of existing policy for apples from New Zealand, op. cit., p. 3.
. Biosecurity Australia Policy Memorandum 2007/07 27 March 2007 (attached)
. Biosecurity Australia Advice 2010/38 7 December 2010 (attached)
. Biosecurity Australia, Draft report for the non-regulated analysis of existing policy for apples from New Zealand, op. cit., pp. xv-xvi.
. Biosecurity Australia Final Report for the non-regulated analysis of existing policy for apples from New Zealand August 2011
. Biosecurity Australia Advice 2011-14 17 August 2011 (attached)
. The 600 unit inspection regime routinely adopted by Australia for quarantine purposes is based on standards set by the International Plant Protection Convention which is the international body responsible for plant health standards. For more information see International Standards for Phytosanitary Measures No. 31 Methodologies for sampling of consignments available at https://www.ippc.int/file_uploaded/1229532867492_ISPM31_2008_E.pdf viewed 25 June 2012. The issue of determining sample size is covered in Section 5.
. D Barbour, (Acting Assistant Secretary, Biosecurity (Horticulture) Branch, DAFF), ‘Estimates’, Hansard, evidence given to the Senate Rural Affairs and Transport Legislation Committee, Canberra, 21 May 2012, p. 93, viewed 20 June 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22committees%2Festimate%2Fed7222c7-70d3-4be9-8805-0fd5a65c360d%2F0001%22
. The Eminent Scientists Group (ESG) is a high level review group which provides external, independent, scientific and economic scrutiny of expanded IRAs. It reviews the draft IRA report, as revised by BA after consideration of stakeholder comments but prior to final publication. The ESG review takes account of any relevant new information brought to its attention and assesses conflicting scientific views. For more information about the ESG see: Biosecurity Australia, Import risk analysis handbook, op. cit., p. 36.
. Industries Assistance Commission (IAC), Fruitgrowing Part B: apples and pears, IAC report, IAC, Canberra, 16 January 1976, p.27.The report also notes that the methodology used by the then Bureau of Agricultural Economics (BAE) for its farm surveys classified apple growers as ‘specialist’—generally having more than 4 ha—‘or small’—having under 4 ha. BAE estimated that there were about 3000 growers in 1974: 800 small and 2200 specialist.
. ABS, Agricultural Commodities Australia 2009-10, op. cit.
. CIE, op. cit., p. 6.
. CIE, op. cit., p. 12.
. Pipfruit New Zealand, op. cit.
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