Australian Vegetable Protected Cropping Industry Strategic Plan 2006-2011

1. Australian Vegetable Protected Cropping Industry Strategic Plan 2006-2011 Draft 1 - September 2006 Prepared on behalf of: Horticulture Australia Limited

2. Table of Contents • Introduction • Vegetable Protective Cropping Strategic Plan in Context • The Current Reality • The Vegetable Protected Cropping Industry Future • Vision, Mission & Objectives • The Way Forward • Industry Strategic Imperatives

3. Overview Introduction The Plan has been developed by industry with consultation and discussion across all sectors. • The development of an industry strategic plan is essential for the vegetable protected cropping industry as it prepares to go through a significant growth phase in a challenging business environment. • The industry strategic plan will be used to guide the investment of industry levy funds and to focus theAHGA on the critical needs of industry in the future. • The final plan will be developed utilising the following 4 step process: • Analysis: situation and environmental analysis • Synthesis: a workshop to develop a shared industry view and a draft Industry Plan • Consultation: discussions and feedback from industry on the draft Industry Plan • Review: regional workshops to review the draft plan, establish key action plans for inclusion in the Final Industry Plan • The Final Industry Strategic Plan is due for completion in late November 2006. The Plan was developed in 4 Phases to ensure it meets the needs of Industry. This draft Plan is due for finalisation in November 2006 following consultation and review by Industry

4. Vegetable Protective Cropping Strategic Plan In Context There is no specific protected cropping statutory levy. “Vegetable Levies” are paid on many of the crops grown using protected cropping production systems. No statutory levies are paid on fresh tomatoes, whether they are field or greenhouse grown. Funding research and development in the vegetable protected cropping market segment using levy funds is therefore dependant on “Vegetable Levy” support. The mainstream vegetable industry (vegetable levy) have aligned their research and development priorities to VegVision 2020, the industry wide strategic plan produced as a result of the Industry Partnerships Program (IPP) partnership between the Department of Agriculture Fisheries and Forestry (DAFF), Horticulture Australia and AUSVEG Ltd. The vegetable industry have, over the past two years, developed a clear direction for their investment in Integrated Pest Management and Minor Use Chemicals, two areas of investment highly relevant to the vegetable protected cropping market segment. In order to ensure the research and development priorities of the vegetable protected cropping industry are addressed the segment needs to align itself closely with: The 7 Foundation Projects identified in “Taking Stock & Setting Directions”; The 5 Strategic Imperatives identified in VegVision 2020; and The Plant Health/Plant Protection strategies developed by the vegetable industry.

5. The Current Reality Protected Cropping Facts • Protected cropping is the fastest growing food producing sector in Australia - AHGA reports industry growth, nationally, to be up to 6% per annum. • Over 1600 hectares of vegetables, herbs and floriculture under protected cropping in Australia. • Farm-gate value of $600 million per annum - Equivalent to 20% of total value of vegetable and flower production (Biggs, 2004). • Gross annual revenue, combining all sectors (retail, service providers, research, etc), is in the order of $1 billion (Biggs, 2004). • Protected cropping directly employs 7 – 8 people per hectare - over 10,000 people nationally. The indirect employment multiplier for fresh produce is estimated to be 2, suggesting that the industry creates over 20,000 jobs. • The current investment in greenhouse infrastructure is valued at $640 million • Annual investment in new infrastructure is estimated to be up to $10 million. • The average annual return on investment is between 5 and 10%. • The potential return on investment for high technology greenhouse and hydroponic vegetable enterprises is around 20 – 25% per annum - much higher than for other annual vegetable crops. Still Need • Quantification of industry expansion trends to manage and support

6. Levy payers • Lower costs, access to markets, access to timely and commercially valuable information, higher prices, less complexity and risk • AUSVEG • Increasing public profile, status and visibility with growers, less bureaucracy, increased industry representation, increased income, lower costs • HAL • Measurable returns from investments, operational efficiency in service delivery, company reputation, growing revenue base • Vegetable IAC • Industry ownership of strategic plans, quality planning processes, appropriate expertise in planned development, strategic project investment • Research Providers • Security of funds for research projects, peer recognition, consistent direction for strategic research, opportunities to publish • Packers • Quality product, low reject %, competitive prices, spread of production, stable relationships, low labour costs, efficient processes, good margins • Exporters • High-quality product, competitive prices, counter seasonal or niche, consistent supply, good margins • Wholesale & Agents • High volumes, stable relationships, quality product, consistent supply, good margins • Input suppliers • Stable or growing industry?, high productivity, constant change, rapid adoption of new technology, good margins • Retailers • Products that meet consumer demands, high stock turns, low waste, minimal cost, good margins, consistent availability, stable relationships, guaranteed supply • Consumers • Confidence in safe, quality food, convenience, taste, variety, low prices, consistent supply Stakeholders - strategic priorities & values The Current Reality

7. Organisational structure, direction and performance The Current Reality Organisational structures at state and national level are not well developed for representing and managing industry issues • There is no national body to represent the protected cropping industry. • There is no current strategy for any such body to operate or implement. • Resources are fragmented and inadequate e.g. No tomato levy Need a strategic national approach to industry security linked to the wider vegetable industry The levy framework is fragmented and inconsistent with major gaps, especially tomatoes

8. Industry communication and collaboration are poor The Current Reality The protected cropping industry does not stand in isolation from the rest of horticulture and has many common issues. • There is a need to ensure that industry organisations have the right mix of skills, expertise and experience to provide appropriate governance and decision-making for industry. • Many of the issues impacting on the protected cropping industry are also relevant to many other horticultural industries, and in many cases, relevant to the rest of agriculture. • The industry currently has few mechanisms in place to leverage advocacy on shared issues • Industry leadership and succession are critical issues. The industry needs to develop and encourage young industry participants to assume leadership roles. • Improved communication across the value chain is essential to lift productivity, reduce costs and optimise returns. Adversarial positions are reducing trust and increasing costs. • As with other horticultural industries, business skills across the industry are generally poor. New technologies can expand the reach of education & training programs. Industry leadership and succession are important issues for the future. Improved communication across the value chain is essential to lift productivity, reduce costs and optimise returns.

9. Costs are too high to be profitable and innovative - needs review to fit The Current Reality Rising cost pressures provide a major challenge for the industry to remain viable. • Internal cost structures tend to be poorly defined and managed, especially amongst the majority of small farms. As a result clear price signals for change cannot be developed or addressed without a gross margin benchmark • As new costs emerge they are generally passively absorbed until the business is unsustainable. • The supply chain takes advantage of these labour intensive ‘price taker’ producers who are limited in their ability to define or negotiate on their real costs of production or relate these costs to any differential in the value of a product. • Typically, there are adversarial relationships between growers, processors, exporters and retailers causing: lack of trust, poor communication and higher costs. Internal business costs and unrealistic supply chain profit sharing undermine producer viability? Adversarial relationships, fuelled by a lack of trust and poor communications, exist at all levels of the supply chain - increasing our costs.

10. Industry marketing is non-existent The Current Reality We need to know more about fresh vegetable consumers than our competitors. • Vegetables seem to meet most of the criteria of consumer value but are generally seen as a commodity product – undifferentiated and staple. • Generally, there is a poor understanding of consumer needs and how we can meet them in domestic markets. There is inadequate, insufficient and outdated information on consumer perceptions, preferences and behaviour. • A failure to understand consumer needs has meant that there has been limited industry investment in product innovation to value add to vegetable products. Unlike apples, potatoes and mushrooms, the protected cropping industry has not attempted to differentiate or promote its product. There are opportunities to introduce differentiated products such as premium varieties, gourmet selections and semi-processed products. • We have limited marketing and promotion programs to raise awareness of protected cropping veg in the eyes of consumers and as a result consumers have poor knowledge of product varieties, uses, health benefits, etc. • We have poor market information for quality decision-making and what we do have is poorly disseminated and not available to all sectors. • Supermarkets are driving supply chains in both export and domestic markets. They are often responsible for setting “de facto” industry quality standards and have a major impact on market pricing. Good relationships are essential. Fresh vegetables are regarded as a commodity by consumers and growers, alike. We have poor marketing and promotion programs to promote and educate consumers on the benefits of fresh veg products. Some established practices of the big retailers are seen as unhelpful for industry viability.

11. The Current Reality Consumers & Marketing • Consumer attitudes, lifestyles and buying behaviours need to be understood • Consumer awareness, knowledge & familiarity of onions need to be developed • Industry requires access to quality information on markets and competitors • Marketing activities have been fragmented and uncoordinated • Retailers believe that promotion will lift sales • We must build relationships with supermarkets & value chains – global and domestic There is no current means for producers to access timely market information There is no discernment regarding the true value of fresh vegetable products Consumer education is required to establish a price reward for a high value product

12. Business management strategies are not well developed The Current Reality Investment planning tends to be weak and generally lacks a market driven business case. A few businesses are leading the way with their market based strategy for major new investment in production technology, value adding and marketing. The majority however face the following barriers: • Businesses generally lack the market intelligence and critical information on production technology options and costs to base investment decisions on. • As a result financial institutions tend not to perceive a business case for replacing old glass/polyhouses with new structures and systems (poly/shadehouses are not regarded as tangible/transferrable assets by many institutions). • The unskilled, casual labouring history of the industry has not motivated skill development/ retention of skilled workers. Financial institutions tend not to be supportive of new investment in greenhouse infrastructure. There is a shortage of reliable skilled labour, especially for modern hydro systems.

13. Current technology is not well matched to production or markets requirements The Current Reality Modern greenhouse systems are uniquely capable of consistently producing the high quality and volume of produce required by supermarkets. • Overseas producers in Holland, the UK, New Zealand and the US, have established best practice technologies and management systems for their greenhouse systems. • Australia is lagging behind in the modernisation and efficiency game at the expense of business viability. • There also appear to be frequent poor decisions about the type of technology that significant money is being spent on. Need to maximise advantages of natural environment with best fit to technology. e.g. benchmark water use efficiency and promote best management practice. • This gap needs to be addressed by building the base of expert support and facilitating industry recognition and uptake of the commercial advantages available through effective modern systems. • Manage introduction of Bumblebees Many of the systems being constructed are not well suited to their climatic location. There is a lack of Australian based expertise to meet the planning and operational needs of modern hydroponic farms.

14. Protected Cropping Technology- definitions 1. Conventional greenhouses – Low tech: Characteristics: Low structures (glass, poly, mesh), soil cropping, no climate control. PEST MANAGEMENT OPTIONS: Improved spray program only. Generally not capable of supporting biological control in any reliable way. Seriously threatened by neighbouring pest pressure. 2. Improved greenhouses – Med tech: Characteristics: Improved height and pest exclusion, possibly hydro/heat/some automation. PEST MANAGEMENT OPTIONS: Improved spray program, pest exclusion and possibly biological control if have good pest exclusion, a thorough insect crop scouting program, and careful use of ‘soft’ chemicals. Mild to moderate threat from neighbouring pest pressure. 3. Fully modernised greenhouses – High Tech: Characteristics: Greatly increased height, pest exclusion, hydro, climate system, integrated automated systems. PEST MANAGEMENT OPTIONS: Improved spray program, pest exclusion and good chance of implementing biological control if have good pest exclusion, a thorough insect crop scouting program, careful use of ‘soft’ chemicals and automated year round climate control. Mild to moderate threat from neighbouring pest pressure.

15. Information and training resources and delivery are poor The Current Reality Development of a national training framework has commenced. EXISTING ASSETS AHGA • ‘Pathways to production’, a skilling initiative of the Australian protected cropping industry (VG0509) • International study tours • AHGA conferencing program IDO Network • Identifies issues and needs for action via state or national funding bodies • Assists in organising meetings, workshops, field days etc. • Provides targeted information output on research outcomes • Organises periodic overseas investigative tours • Networks growers, researchers and industry ROOM FOR IMPROVEMENT Much of the standards, resources and learning pathways are yet to be developed that can underpin a national training program and build the industry’s required skills base. This will need to include incentives and career pathways to make it an industry of choice. The IDO’s have established a national network of communication and strategic relationships. Not enough commercially independent experts to meet industry needs. There is no template for ‘best practice’ production linked to information and training. There is no central information bank to resource training.

16. Integrated Pest Management - National Strategy The Current Reality A recent national IPM Stocktake has kicked off a National IPM Strategic Plan for 10 minor crops. • A national IPM stocktake has identified critical gaps in 10 to 13 minor crops and and captured the transferable outcomes from over almost 40 veg R&D reports to date. • The stocktake also profiled the current state of play of IPM adoption, and adoption barriers and promoters in 15 vegetable crops and a range of non-veg commodities. • This information has been used to identify priorities resulting in support for 18 new and ongoing IPM projects. • Information from the stocktake has been collated for a national IPM information hub and future extension efforts. • Other concepts for promoting IPM adoption are being assessed for funding as scoping studies/pilot projects - e.g. the role of commercial consultants. A range of (18) projects have been newly funded/maintained to meet strategic priorities. Development of a national IPM information hub is due to be commissioned shortly.

17. The Current Reality Chemical Summary Minor use strategy: • Aims Improved relevance to identified needs ,efficiency (time and $$), with a focus on IPM) • Industry wide consultation • International input to fast track ‘best bets’ including overseas best practice data • Streamlined, simplified approval process • Ongoing review to keep gaps covered and progress toward new chemistries Systematic identification of minor use issues and gaps for control of pests and diseases Filling gaps with appropriate chemicals preferentially with an IPM fit.

18. Industry lacks a framework of national standards The Current Reality There is no mandatory whole of industry code of conduct or policing of standards to maintain product integrity, safety and trading fairness, including: • trading practices (code of practice) to ensure a fair return for investment, • standardised, nationally consistent Q.A. system, • chemical testing standards to ensure consumer safety, exclude poor practice and qualify for recognised niche or overseas markets (c.f. chemical free, organic, EUREPGAP) and • national control of use legislation to put growers on an even footing in all states There is no mandatory code of conduct and standards for the whole of the supply chain.

19. Biosecurity The Current Reality PHA are currently developing a Vegetable Industry Biosecurity Plan based on shortlisting known threats. • Consultations with researchers and industry have shortlisted the key pest and disease threats for a number of crops. • DAFF have developed a report and recommendations to assist communication with growers from a Language Other Than English background (title: ?) • These recommendations need to be worked into an implementation plan with resourcing of expert facilitators in major growing areas. • The strategy needs to produce effective consistency from offshore to the farm. DAFF have consulted with industry on communicating biosecurity understanding and vigilance to LOTE growers. Major planning and implementation issues still exist in terms of controlling off-shore pest threats, interstate trade and on-farm practices.

20. Vegetable industry relationship to natural resource and urban planning TheCurrent Reality • Vegetable growing regions are progressively forced to the margins of arable land, which is on the edge of resource infrastructure. • Price competition for land, and other land use conflicts, tend to occur frequently with urban dwellers (chemicals, odours, noise etc.). • Access to water, gas and electricity is often problematic and prohibitively expensive. • These issues add considerably to industry’s investment planning challenges. • Councils and state governments tend to not be pro-active in dealing with these planning issues. The vegetable industry is seen as an optional land use without adequate planning support. This gives rise to conflicts in land use (urban vs farming) and to poor access to critical resources - water, gas, power.

21. Synthesis of the Current Reality The Industry SWOT Analysis Based upon the preceding review of the Current Reality, industry stakeholders developed the following summary of the vegetable protected cropping industry - Strengths, Weaknesses, Opportunities and Threats.

22. The Structure of the Plan Linking the Vision to Outcomes The 2006-2011 Strategic Plan recognises the need to move from Vision to Action by utilising the following planning structure to highlight the linkages between elements of the Strategic Plan: Vision, Mission & Objectives The Industry’s primary focus Strategic Imperatives The key actions that industry must take to achieve the Vision Strategies Broad strategic directions for achieving the Imperatives Strategic Goals High level goals and actions for delivering the Strategies Project Action Plans The Project Plans required to deliver elements of the Strategic Plan – These Project Plans will be the specific responsibility of industry organisations and stakeholders – The protective cropping advisory group, Vegetable IAC, AHGA, AusVeg, HAL, etc. The details of these Project Plans will not form part of the Strategic Plan.

23. Our Mission “In 2015 the Australian Protected Cropping Industry will be organised and recognised for growing sustainably to world’s best practice. Product will be sought by educated, aware consumers through a supply chain of high integrity. Product is coordinated within a market strategy delivering consistent high returns to industry. The enabling strategies will be owned by and benefit our diverse industry”. Our Objectives The industry will achieve its mission by: Increasing consumption by developing informed, health-conscious, committed consumers; Enhancing the existing culture of industry wide participation through leadership with vision and enthusiasm; Developing effective, efficient production and processing value chains; and Generating targeted and reliable information to facilitate quality decision making. The Vegetable Protected Cropping Industry Future Our Vision for 2015 “By 2015, the Australian protected cropping industry is recognised as a supplier of premium quality vegetable products demanded by domestic and global consumers. In achieving this, our target is to increase the value of vegetable production grown in a protected growing environment to $1.8 billion annually while increasing consumption and industry profitability at all levels of the value chain. This will require a strong focus on consumer needs, value chain efficiency and collaboration at all levels.”

24. The Way Forward The Industry Strategic Imperatives The Vision, Mission & Objectives of the 2015 vegetable protected cropping industry future will be achieved by industry delivering on the following four Strategic Imperatives: The Vision 2015- Increase consumption - $1.8b value of production- Increase scale - Improve productivity 1. Grow the market for vegetable products grown using protected cropping systems 2. Increase Industry Productivity 3. Strengthen Industry Information & Communication Networks 4. Identify & build industry leadership & capacity

25. Industry Strategic Imperatives This Draft Plan is not complete • As illustrated on the previous page, industry stakeholders have developed 5 Strategic Imperatives essential to achieving the Vision 2015. • At this stage of the Planning Process, the detailed Strategies that underpin each Strategic Imperative have not been explored in a structured manner and the strategies supplied are indicative of the required elements for success. • Regional workshops will be conducted in South Australia and NSW in October 2006 in which detailed strategies and action plans will be developed. Other industry participants will have the opportunity to provide input via email or speaking directly with Simon Drum or Tony Burfield. This DRAFT Plan is a “work in progress”. Detailed Action Plans have not been developed at this stage. Regional workshops will be conducted in South Australia and NSW in October 2006 in which detailed strategies and action plans will be developed.

26. Industry Strategic Imperatives #1: Grow the market for vegetable products grown using protected cropping systems • Outcome: To expand domestic markets for vegetable products grown using protected cropping systems • Strategies/Goals: • Communicate the beneficial attributes of vegetables to consumers • Understand consumer perceptions of vegetables grown in a protected cropping environment • Identify the health and nutritional benefits of vegetable consumption • Develop and enhance vegetable products to meet consumer needs • Continue to introduce new products aimed at exceeding consumer expectations • Implement uniform Quality Standards (Australia Gap) • Establish agreed common systems and specifications for food service, retail and central markets • Develop a promotional program for vegetable crops grown in a protected cropping environment • Promote our environmental credentials to government, community, consumers and industry • Promote Australian Grown • Promote unique taste and quality attributes • Minimise the impact of regulation on Industry Growth • Maintain and expand Market Access for key export markets • Develop Strategic Policy to minimise the impact of regulation on industry • Develop industry wide systems and strategies to match supply and demand

27. Industry Strategic Imperatives #2: Increase Industry Productivity • Outcome: To build industry competitiveness throughout the supply chain • Strategies/Goals: • Research, develop and encourage investment in technology accelerators to improve industry productivity at all levels • Continue to invest in the chemical minor use program • Continue to invest in the development and enhancement of IPM tools and strategies on a regional and national basis • Encourage investment in new technologies to reduce cost and improve efficiency throughout the supply chain • Complete an Industry Benchmarking Study • Enhance environmental sustainability • Improve water use efficiency, recycling, treatment and disposal systems • Increase input efficiency • Modify production systems to account for climate change • Move toward fully enclosed production systems • Enhance relationships and engagement with domestic and international supply chain partners

28. Industry Strategic Imperatives #3: Strengthen Industry Information & Communication Networks • Outcomes: To disseminate reliable and targeted information to industry through appropriate mechanisms, networks and forums. • Strategies/Goals: • Generate and communicate reliable and targeted information for members • Develop an Industry Website with a “Members Only” Area • Regularly survey industry to determine information needs • Utilise improved Communications Technology to expand the range of interaction with members • Encourage through-chain collaboration and communication • Establish regular Forums for discussion of industry issues • Involve all stakeholders in industry issues • Continue to conduct an annual Industry Conference • Co-host industry events with appropriate partners eg. AUSVEG • Enhance international alliances to ensure the Australian industry is aware of and participants in global industry development

29. Industry Strategic Imperatives #4: Identify and build industry leadership and capacity • Outcome: To enhance the human capital of the vegetable protected cropping industry • Strategies/Goals: • Enhance industry’s agripolitical lobbying capacity • Encourage participation and leadership • Establish a Young Leaders Program • Fund participation in Leadership Development programs eg. Nuffield, ARLF • Organise industry study tours to other regions & countries • Develop mentoring programs to improve skills transfer • Enhance industry participants technical and business skills • Determine Industry Training and Education needs • Develop and/or source recognised training programs • Commission industry skills training in conjunction with other Industries to reduce costs and improve access • Use technology accelerators to increase the reach of training programs • Investigate the potential for a protected cropping training institute • Investigate labour sourcing opportunities • Importing seasonal contract labour • Investigate the potential for a statutory levy on tomatoes

30. We need your feedback on the Draft Plan Feedback • The Draft Plan will be revised based on your comments and the input from participants at the regional planning workshops to be held in October 2006. • How can I give you my comments? You can email your comments to burfield.tony@saugov.sa.gov.au or fax them to 08 8303 9542 IMPORTANT • WE NEED YOUR FEEDBACK BY 14 OCTOBER, 2006 This is an industry plan and we need your feedback on its relevance to you and your business. The Draft Plan will be revised based on industry comments and feedback.