Strawberries could be ploughed in with overseas markets unreachable due to COVID-19 flight reductions
/Strawberry farmers may be forced to plough their crops into the ground as sky-high freight rates could mean it's too expensive to export the fruit overseas.
Key points:
- A major WA strawberry producer is considering ploughing his produce into the ground because it is too expensive to export
- The WA Freight and Logistics Council says a Federal Government freight subsidy is not helping small exporters who must collaborate more closely
The number of passenger and cargo planes travelling to and from Perth has been slashed to just a handful of flights per week, which has driven up costs
Producers like Jamie Michael, based just north of Perth at Bullsbrook, exports about half the fruit he grows to international markets via air freight.
The produce is usually sent in cargo space on passenger planes but, with international borders closed and flights limited due to COVID-19, air freight capacity has been slashed to the bone.
Mr Michael fears it could make exporting the goods unviable, and picking them for the local market only could cause a supply glut domestically.
"We're going to have to sell a lot more fruit domestically and that's going to have a serious downward push on prices," he said.
"If the pricing ends up going below the cost of production then we'll end up with fruit that is unpicked — you have to slash back the crop and hoe it back into the ground."
Mr Michael has started picking his 2020 crop, with the peak of harvest expected in August and September.
He said he was already receiving inquiries from overseas customers for fruit, which he was unable to meet due to high freight charges or no aircraft availability.
"We've got customers in some of our Asian markets already calling for stock, they've been asking for fruit for a few weeks now and we just can't get space to get it up there," he said.
"If we're not able to service them they're either going to look elsewhere or WA is going to miss out on the opportunity."
From 23 hours to five days
The lack of regular flights is also putting pressure on low-volume, high-value producers such as truffle producers.
For Manjimup grower Al Blakers the lack of regular flights in and out of Perth is delaying his access to markets.
"This year shipping truffles has been a huge problem due to the lack of planes — every shipment has to be arranged well in advance," he said.
"What we've found is that what we used to be able to do in 23 hours in shipments last year can now take up to five days to get to the end user.
"It's changed the way we have to do things and it's made it a hell of a lot more difficult."
With exporters facing crippling freight charges, the Federal Government introduced the International Freight Assistance Mechanism (IFAM).
The $110 million scheme was announced in March as the pandemic started to take hold and is designed to restore supply chains by subsidising part of air freight costs.
Matthew Bronickis from the WA Freight and Logistics Council said the scheme, which requires a minimum 5 tonne consignment to qualify for assistance, had worked for high-volume exporters but its parameters did not work for low-volume producers.
"The larger exporters are finding it easy because they have sheer mass and economies of scale, they can charter a plane," he said.
"The smaller exporters are struggling because they simply cannot get the regularity of flights and cannot afford to use those flights."
Collaboration key
Mr Bronickis said smaller exporters must collaborate to build a sustainable supply chain beyond the crisis.
The council was working with major players, Tigers Freight and Air Menzies International, to bring together consignments from smaller players and form a critical mass to attract regular flights.
"The Government is looking to put up more IFAM funding, but if that stops exporters are in a predicament where even the bulk charters will not be able to do bulk export," he said.
"If we don't create a sustainable supply chain the airfreight will be in a worse position.
"We're trying to create a round trip … to be able to control the airline going out on export but also coming in. That way it starts to pay its own way and we can phase out our funding."
WA Agriculture Minister Alannah MacTiernan supported the premise of collaboration across commodities to create more stability in supply chains and market supply.
She said her department was working to find a solution for strawberry farmers and other small-volume exporters.
"We are very much working with the Federal Government to get IFAM investment into this state," she said.
"We have got meat going into the Middle East through IFAM-subsidised flights, and our people are working with the federal team to try and ensure that our other industries are also able to be supported.
"Seafood has had a reasonable amount of support, but we are hoping that those critical markets like strawberries up into Singapore can get that assistance and we are doing all that we can do to help those producers get that IFAM funding."
More than 25,000 tonnes of Australian produce, inlcuding 1,800 tonnes of strawberries, is understood to have been supported so far under the IFAM.
Trade Minister Simon Birmingham said agricultural and seafood producers continued to face major hurdles getting produce to export markets.
"These [IFAM] freight flights are critical to getting WA produce out the door during these tough times and helping to keep our farmers and fishers in business," he said.