Increasing exports of goods and services from Mansfield ... · 2 Mansfield Shire Economic Profile 2011 –Census Update Mansfield Shire Council’s submission to Inquiry into the

Increasing exports of goods and services from Mansfield-High Country Region Submission to Inquiry into the Opportunities for Increasing Exports of Goods and Services from Regional Victoria

Mansfield Shire Council

ABSTRACT

Mansfield Shire Council has developed this submission with input from the Mansfield Branch of the Victorian Farmer’s Federation (VFF) and key Mansfield Shire businesses involved in the export of local goods and services from Mansfield Shire.

Mansfield Shire Council’s submission to Inquiry into the Opportunities for Increasing Exports of Goods and Services from Regional Victoria, April 2014, [email protected]

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Table of Contents

Mansfield Shire Council .................................................................................................................. 1

Executive Summary ......................................................................................................................... 3

Introduction ....................................................................................................................................... 3 Mansfield Shire economy – a snapshot ................................................................................................ 4 Importance of export to the Mansfield region .................................................................................. 4

Factors affecting local export opportunity .............................................................................. 6 Case Studies ................................................................................................................................................... 7 ParkSeeds....................................................................................................................................................... 7 Davilak Pastoral Company ....................................................................................................................... 7 Stephen’s Fine Foods .................................................................................................................................. 8 Delatite Winery ............................................................................................................................................ 9 Adventure Victoria .................................................................................................................................. 10 Murphy Fresh Tomatoes ........................................................................................................................ 12 Grow, Breed, Make – small plots ......................................................................................................... 13


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Executive Summary

Export makes up a modest yet important component of Mansfield Shire’s $372m economic output.

Export dollars circulate their way into our local economy via tourism, agriculture, education, manufacture, event catering and professional services in a myriad of ways across a diversity of markets.

In tourism, export is identified as the growth area. In agriculture, we are typically commodity price takers and farmers focus on keeping their costs of production as low as possible.

Examples exist locally of how to export well – Adventure Victoria is a model showing success in the tourism space. Challenges also exist with our seed exporters identifying impediments to their export efforts.

There is potential for an increased level of export from the Mansfield High Country Region but there is a limited capacity for micro to small, family owned businesses to realise export opportunities without a level of support.

Introduction

Mansfield Shire Council acknowledges and supports the State Government’s interest in supporting the growth of exports of goods and services from regional Victoria.

Council would like to acknowledge the support of local business and stakeholders who responded with their input to the Inquiry’s Terms of Reference.

Our submission is provided within the context of the Hume Strategy for sustainable communities.


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Mansfield Shire economy – a snapshot Agriculture, tourism and construction are key industry sectors in Mansfield contributing to the Shire’s industry output of $372 million.1 Tourism is the key sector –with around 1.2 million visitor days per annum contributing 50% of our retail activity. 2 The sector is predominantly domestic, with Mt Buller’s snow season and select niche adventure tour activities leading the charge to gain export tourism market share in what is tipped to be the key area for future tourism growth. On the farm front, cattle, seed, horticulture and sheep predominate, with a healthy sprinkling of small lot niche food products. Mansfield Shire continues to buck the trend as a small rural shire in regional Victoria – growing faster than others (1.7%) and attracting families as well as older people. This is in large part due to our proximity to Melbourne and the considerable attraction of our natural and man made assets that offer a diversity of experiences to visitor and resident alike. The lifestyle property market remains strong – with some 50% of our ratepayers being non-resident. Of the 7000 rateable property assessments, almost 1900 are between 1 and 10 hectares.

Importance of export to the Mansfield region Exporting of goods and services is estimated to form only a modest component of Mansfield Shire’s economic output, but there is the potential for growth. Export is a small yet growing part of the tourism scene and represents a significant percent of business for some agricultural enterprises, particularly in the livestock meat and seed industries. The quantum of our export trade is difficult to gauge given the diversity of business endeavours involved that include agriculture, tourism, manufacture, education and professional services. Not all transactions are captured via shipping movements at air or sea ports and some businesses deal direct whereas others are first up on the supply chain and have no dealings with the end consumer. Exports from Mansfield High Country region include but are not limited to: Agriculture

o Rye grass seed for fodder and lawn o Meat – beef

sheep (mutton) o Wine

1 Mansfield Shire Economic Profile 2011 – Census Update 2 Mansfield Shire Economic Profile 2011 – Census Update


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Tourism Adventure, nature based & heritage – year round experience seeker &

glampacker. Includes horse riding. Adventure Victoria Snow sports and snow play at Mt Buller – June to October Mountain biking at Mt Buller – December to May

Education

Geelong Grammar’s Timbertop Campus attracts an intake of overseas students for what is a local yet world renowned high country Year 9 experience

International School Camps – Adventure Victoria

Manufacture Food - Plum puddings (trialled export then ceased)

Events

Catering & event project management - Crawfords Catering

Professional services Varied e-business and consultant residents work locally to provide services

across a range of industries to foreign countries A number of local case studies are included in this submission to provide insight into issues and opportunities facing local businesses in relation to exporting. 3

3 Mansfield Shire Rates Database April 2014


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Factors affecting local export opportunity The terms of trade, awareness of product or experience, maturity of relationships, supply chain complexities, business economy of scale and capacity to invest in identifyiong and developing markets are all factors that affect Mansfield Shire’s export opportunity. Our story is not unique. The work done by Federal and State Governments to establish free trade agreements, bring buyers to Australia and take suppliers to market is important. ‘Investment’ in regional businesses – that in our case, are typically micro or small to medium sized is imperative, if local exports are to grow. Investment can take the form of business support to be export ready, mentoring through the process of identifying key supply chain contacts or distributors, formation and support of product or experience strategic alliances that can offer a competitive advantage with critical mass and direct assistance for expenses for trade missions and expos or fairs. Agricultural competitiveness is key to increasing exports of goods from that sector. Council responded to the recent Issues Paper toward an Agricultural Competitiveness White Paper. The recommendations contained in our response4, although not specific to export, are relevant for the health of the sector and include: Right to Farm

Incorporation of a regional level of planning to support the regional strategies and to provide a much needed level between the metropolitan focused state planning policy framework and the local planning schemes.

Provide guidance and support for emerging small lot land holder agricultural enterprises that can fit comfortably in a rural or rural living context.

Profitability Federal, state and local government cooperate in a whole of government

review to find ways to reduce the cost burden and improve services to support the agricultural sector.

Conduct a study to determine the production value of farmland that excludes the lifestyle property and tourism influence.

Labour force Support for Business Case into short term rental accommodation for workers. Industry support program to assist farmers with recruitment and retention

strategies. Industry support program to assist farmers access the international worker

and ‘backpacker’ labour market. Grass Seed Export/Import

Review the classification of grass seed as a food product for the purposes of import/export.

Encourage DAFF Inspectors to travel to inspect in region in a decentralised strategy to reduce cost to farm business.

4 Mansfield Shire Council Response to Issues Paper toward an Agricultural Competitiveness White Paper


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Case Studies

ParkSeeds A number of our larger local farmers specialise in the production of rye grass seed, to produce vegetative fodder for animals and for lawn/turf related products, for the domestic and international market. While no farmer would argue about the importance of our border protection, local seed producer Brad Parks indicates a concern that exports are being hampered by what he feels is a reluctance by Department of Agriculture, Fisheries and Forestry (DAFF) to provide Inspectors out of the metropolitan or regional cities for dry container inspections and seed lot sampling prior to exporting seed. He cites booking times that have gone from 3 days to more than 2 weeks. A trend, toward centralisation for process stages like inspections, all adds to the on-farm production cost burden.

On the flip side, when seed is imported (for sow and grow purposes as opposed to eat) and the business opportunity existed locally to provide storage, inspection and despatch – the classification of temperate grass seed as a food product, in with grain and barley, meant conditions so stringent as to preclude the possibility.

Recommendations

Review the classification of grass seed as a food product for the purposes of import/export.

Encourage DAFF Inspectors to travel to inspect in region in a decentralised strategy to reduce cost to farm business.

Davilak Pastoral Company

Our local sheep and cattle farmers typically take the market price on offer and keep their focus on running a commercially viable business, by keeping costs of production down, getting the most out of their land and ensuring sufficient volume for an economy of scale.

Being commodity producers, most are price takers, with some notable exceptions working in the paddock to plate and biodynamic space who are able to command a premium, albeit with higher costs of production and typically lower volume.

Rod Manning of Davilak Pastoral Company acknowledges that being a single entity at the start of the supply chain, one cannot be a ‘price setter’ without a viable point of difference. It can be difficult and expensive to create a point of difference and in order for the difference to be a competitive advantage it needs to appeal to consumer sensitivities, taste or both. Facilitating alliances for volume, with branding to appeal to consumers based on strengths is one area Manning feels the public sector could explore to support expansion of regional livestock exports.


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At the national level, the work being done to secure free trade agreements will hopefully open up markets that will result in increased demand at the local level.

Davilak typically sells 70-80% of its cattle in a high grade, high marbelling product to the export markets in Japan and Korea. 1000 – 1300 angus yearlings are sold per year at around 350 – 400 kg live weight. They are then grown out, then finished off in a feed lot and then sold at around 700-800 kg live weight.

Around 20-30% of cattle are sold domestically; direct to a supermarket chain.

When asked why he wouldn’t ‘finish off’ the weaners locally and add the weight and value for a better price, Manning speaks of the higher risk. “It’s important to find the right balance between weight and age of the animal, variability of the seasons and growing the most grass to support the best return.”

He points to the United States where the majority of farm land is leased out in contrast to the picture in Australia and particularly in our region in north east Victoria where the land is predominantly privately owned. There is a disconnect between the market value of the land in our area – inflated by the considerable lifestyle property market and tourism values – and the production value of land. A huge number of blocks under produce in a farming and export potential scenario. A land bank exchange is one idea that could put under utilised land holdings into active production by local farmers who have the economy of scale, business systems, processes and experience in return for a return of some sort be it ‘grass control’, rent, paddock improvement or share of risk and return. While such a scheme may not suit all farm businesses or land owners – it may provide synergies and suit some. Mansfield Shire has 600 blocks between 10 and 40 hectares and more than 800 are above 40 hectares. How many of these are productive from a farm perspective and/or under utilised is not known.

Recommendations

Support to explore options to create a land bank exchange, with the aim to increase production values of under utilised farm land and assist farmers create additional economy of scale and reduce operating cost.

Support to explore options for strategic alliances to assist the regional farm sector increase the value proposition for their product and move from being price takers to price setters.

Stephen’s Fine Foods

Michelle Morrice of Stephen’s Fine Foods explains that they used to export about $5000pa wholesale value of quality plum puddings to Hong Kong. Although plum puddings are not


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high on the list for Chinese foodies – there was a significant market identified from expatriats and chefs of quality restaurants and hotel chains resulting from a government subsidised and shared trade stall presence at food fair Hofex.

Subsequent buyer interest was shown from a chain of supermarkets but opportunity went begging due to the absence of an experienced local food distributor. Morrice explains they had neither the contacts nor the funds to pursue this further themselves.

According to Morrice, of the 8 food wholesalers supported by Austrade to showcase their product in Hong Kong, only one – Stephen’s Fine Foods – received an order.

Difficulty in finding a distributor – and a distributor experienced in food – was the major hurdle. That, and the paperwork required on the receiving end in Hong Kong.

Morrice is still interested in the export market. “We certainly have the capacity now, after relocating and building a new factory in Mansfield. And we would welcome assistance again from Austrade,” she said. Morrice estimates the trade trip cost them around $8000 in travel, freight and accommodation and acknowledges the tremendous support of a government grant to produce a cooperative brochure and assistance with the trade stall.

Identification of and introductions to food distributors, Morrice feels, would have made a vast difference to their export venture. “And more thorough homework by Austrade prior to a trade trip coupled with follow up post trip, would help ensure opportunities for regional businesses to export are capitalised upon,” she said.

Recommendation

Continued support for businesses to break into export markets with particular attention paid to mentoring through critical supply chain steps including identification of on the ground distributors and networks.

Delatite Winery

David Ritchie only exports about 10% or around 1000 cases of his cool climate quality wine but he hopes to grow this to 25% of the business within 5 years (with the business growing by 75-100% in that time). He has been exporting since 1986, predominantly to England, Malaysia and Canada. The market then swung to Japan and Europe but his current main market is China. Guangzhou is the key destination and he deals with an importer who supplies restaurants and some discerning private clients.

Direct on line purchasing is not a focus for the export side of the business. Ritchie explains that it is too hard to pay the duty and he has more control when dealing with an importer.

About to embark on a sales trip to England, Ritchie will be meeting with wholesalers and other wine suppliers with whom he has built a relationship over many years and hopes to appoint a UK importer as a result


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Delatite Winery is set to launch a new brand of wine that will be more regional in its focus to take advantage of what he believes is a key competitive advantage – ‘ we are cooler, cleaner and more sustainable in our practices in the high country – and that’s appealing to our prospective buyers,” he said.

When speaking about barriers to export, predictably the Australian dollar exchange rate and low cost production of competitors is cited.

In terms of improving the prospects for export for local wineries, Ritchie feels that the state government programs such as the overseas super trade fairs that expose producers to wine buyers are terrific but that on the inbound side there could be more focus on wine buyers visiting destinations other than those in close proximity to Melbourne such as the Yarra Valley and Mornington Peninsula.

Recommendation

Actively encourage and facilitate in region winery visits by overseas wine buyers.

Adventure Victoria

Michael Watson is the spear head of Adventure Victoria – a cluster of micro businesses providing adventure and nature based experiences, targeting the international ‘experience seeker’.

His own business is Watson’s Trail Rides which operates year round, 7 days a week, keeping 60 horses in work, employing EFT 4 and catering for a variety of markets from budget to luxury with trips that are sold out months in advance.

Adventure Victoria was born of a desire to offer product in the international space but a realisation that a micro business would be hampered in its ability to compete in a complex and expensive space. But the international market is where the better yield is and that’s where the growth is identified for the sector.

Support from local, state and federal governments assisted Adventure Victoria become export ready and the years of relationship building and continuity of product necessary for success. Adventure Victoria continues to receive support from local government, regional tourism and is actively involved in a number of Tourism Vic and Tourism Australia programs aimed at growing the export tourism market.

Turnover from internationals has gone from 1% of Watson’s business to approximately 15% of turnover. It represents over $100,000.

Catering for internationals requires commitment. They are typically happy to pay more and expect more. Their lead in times are generally longer although Watson observes a trend to shorter lead in times and they want to create their own unique story to tell that has its roots in nature and local connections.


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International customers are predominantly from the western hemisphere as Watson explains they are more likely to invest in a longer stay. That said, visitors from the eastern hemisphere are showing an increased propensity to explore in region outside of the local ‘snow season’.

Growth in the international sector is limited by availability. There are only so many horses you can run, trip sizes are limited in accordance with permits on public land and to a large extent the trips are already full from domestic demand.

The spillover effect is incredibly beneficial for other operators. Watson outsources demand by sub contracting like and complementary businesses in a win win for all. When he receives a quote request for Adventure Victoria it invariably involves a number of businesses – both those already involved in Adventure Victoria who are ‘export ready’ and those that help supply to that market to create the seamless itinerary and trip.

But the challenges are many. Internationals expect a door to door service and transport to region is lacking. It is not unusual to see Watson with a group of Europeans or Americans enjoying a fine dining experience in Mansfield as their first port of call after Watson has gone down to the airport to pick them up. An adventure bus or ‘hop on, hop off’ transport solution to suit the international market would be a massive boost for the region to capitalise on its tourism export. An investment incentive may well be needed to kick start private enterprise solutions.

The international school camp market is another exciting area of opportunity for our region. A recent school camp from Hong Kong, coordinated by Watson under Adventure Victoria, featured local school visits and a range of nature based and adventure activities for the students. The camp represented 2.5 times the yield over a domestic school camp equivalent. Another 5 expressions of interest have been quoted from Hong Kong and Singapore.

In order for the local tourism export market to be realised, Watson believes that we need to be far more active in the product and industry development space. A critical mass of product is needed to ensure the depth of experience.

We have the amazing landscape but lack the infrastructure. Iconic experiences supported by in situ appropriate, high end, wilderness accommodation would enable multi day product that could rival the best in the world. Although the rules have changed to allow appropriate development in Victorian National Parks, the scale of the local micro tourism businesses precludes that level of investment.

“Public infrastructure and planning investment is required to deliver ‘game changing’ projects. While many tourism businesses are prepared to invest in their business future, the magnitude of significant start up development in park is beyond the capacity of small and owner operated businesses.”5

55 Mansfield Shire Council, Submission to Parliamentary Inquiry into Heritage Tourism and Ecotourism in Victoria. p.3


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Watson, as cited in the recent Eco Tourism and Heritage Tourism Inquiry, subscribes to the user pays principle and would hire in situ accommodation for his high end international trips, if available.

Barriers for regional businesses entering the export tourism world include cost of commission levels, the years it takes to establish and nurture the relationships that will result in bookings and the micro nature of the businesses – hence the Adventure Victoria collective model.

Recommendations

Establish a regional funding stream targeted toward public investment on public land to progress development of tourism investment opportunities of significance in Alpine National Park.

Provide an investment incentive to kick start private enterprise transport solutions to regional Victoria including Mansfield, to cater for the international market – The Adventure Bus.

Support for programs that assist regional tourism businesses to become export ready.

Murphy Fresh Tomatoes

Currently Murphy Fresh grow loose, truss and cherry hydroponic tomatoes, on a 5 ha footprint of land, for the domestic market. While they do not currently export, it is a space they would like to explore.

Jon Murphy explains that they supply direct to local retailers and the bulk goes to Melbourne to find its way almost anywhere across the country.

Being declared as a fruit fly zone, export options for tomatoes are limited. But Murphy believes there is potential for a market in Singapore. Eating habits are changing in Asia and tomatoes are finding their way onto the palate mix.

Further expansion of the business and diversification are being considered by Murphy Fresh but sourcing labour and accommodation to suit the workforce in Mansfield is a challenge, given the expense and short supply of furnished rental accommodation.

Murphy believes there is merit in working in collectives to tap into new markets including export and would welcome initiatives to assist them on that path.

Recommendations

Support for a Business Case into short term, rental accommodation for workers.

Support for regional hydroponic businesses to identify and tap into export markets that are not precluded by ‘fruit fly zone’ declaration.


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Grow, Breed, Make – small plots

The growth in food tourism, interest in paddock to plate and under utilisation of small blocks of land in Mansfield Shire has sparked local and non resident landowner interest.

There is identified growth in the food tourism market and Tourism Australia is set to invest in a new domestic and international campaign – Restaurant Australia. Organic trade is also growing - at the rate of 10%‐20% per year worldwide with over 100 countries exporting certified organic products. 6 To support the interest, Council recently ran a ‘Grow, Breed, Make – Small plot of land’ forum. The event was oversubscribed with 70 attendees who heard from local producers about what they are doing with capers, truffles, organic beef, garlic, olives, alpacas, free range pork etc.. We believe ‘farm enterprises’ on small lots is an area of significant interest and potential that given support and guidance will contribute to the diversity and health of our agriculture sector and may well support the export food market and complement the export tourism market.

No of Assessments Size Ha

3791 <1ha

507 1-U3ha

638 3-U5ha

727 5-U10ha

321 10-U20ha

144 20-U30Ha

135 30-U40Ha

814 40Ha +

7077

Recommendation

Provide guidance and support for emerging small lot land holder agricultural enterprises that can fit comfortably in a rural or rural living context.

6 Asia-Pacific Economic Cooperation Symposium 2009.

Documents

Increasing exports of goods and services from Mansfield ... · 2 Mansfield Shire Economic Profile 2011 –Census Update Mansfield Shire Council’s submission to Inquiry into the