Key premium seafood export markets of China and Hong Kong have begun placing orders again as they emerge from COVID-19 lockdowns but a huge reduction in the number of international flights has made securing freight space and tripled the price.
The assistance package, announced today, aims to secure more freight flights to help Australian producers export into key overseas markets with return flights bringing back medical supplies, medicines and equipment.
The government is also waiving about $10 million of Australian Fisheries Management Authority levies for the remainder of 2020.
South Australian company Ferguson Australia is a major player, processing and marketing about 450 tonnes of Southern Rock Lobster a year. More than 90 per cent of its catch is exported to China with smaller shipments also regularly sent to Malaysia, Singapore, Hong Kong and Taiwan.
Ferguson buys from fishers in the southern and northern zones and also operates some of its own boats, which have not fished since January 26.
General manager Kate Birch said orders from China had resumed in the past two weeks but were only at about 10-15 per cent of normal volumes.
However, although the orders were currently small, she said the lack of flights and increase in freight cost from $3 to $10 a kilo had made exporting the live lobsters difficult.
“Last night we drove a truck to Melbourne to catch one of the only flights this week going to Shanghai so we’ll be jumping on board any plane that’s leaving Australia,” Birch said.
“Our boats aren’t quite back to fishing but hopefully this news gives us a little bit more confidence that once the flight schedule is locked in we can send our boats back out.
“Two weeks ago we started exporting back to China and we’ve done about 10 shipments so far via air freight on the last flights by Chinese airlines trying to get their nationals back to China, and those flights will stop once they’ve got their people home so that’s why the government is going to do their own.
“We’re definitely prepared to pay for freight and that’s built into our price but hopefully it’s not $10 a kilo.”
Ferguson Australia has sites in Port Lincoln, Adelaide and Port Macdonnell.
Birch said the onset of prawn and tuna season in Port Lincoln meant staff had been retained there but numbers at Port Macdonnell – the heart of the lobster operation – had reduced from 30 to four.
“We’ve had to hunker down,” she said.
“We need to retain our good staff as the market starts opening. We’ve got plenty of quota to catch, which is income, so hopefully it all comes together for us and we can keep going.
“We’ve been speaking to our customers in China every day about the situation. They are still very conservative and they are basically buying a shipment after they’ve pre-sold it because they want to make sure they don’t get stuck with any lobsters in their tanks.”
South Australian green lip abalone is prized in Hong Kong and China with about 90 per cent of our annual production exported there.
But, like lobsters, exports dried up on January 24 with small orders just starting to return in the past fortnight.
Streaky Bay Marine Products director Dion Edmunds said his abalone business was down about 70 per cent this year and almost 100 per cent in the past two months.
He said things had started opening up again in Hong Kong in recent weeks with small orders but trying to get them on a flight had been a challenge.
“Cathay Pacific cancelled their flights out of Adelaide a while back and that was just as we started seeing some orders coming through,” Edmunds said.
“Melbourne went from several direct flights to Hong Kong a day to seven a week so every man and his dog that had produce for Hong Kong was trying to get the space so it was going to the highest bidder really. But we ended up getting a couple of air freight boxes out in the last 10 days.
“A lot of these flights they are talking about will probably go direct into China, which probably won’t be that practical for us but we still will benefit from it because it will take away that baseload of products headed to China away from using the remaining commercial Hong Kong flights so that should help us.”
SA’s abalone fishery is predominantly based on the state’s west coast, where fishing is continuing as most green lip is cleaned, frozen and can be stored for up to 18 months.
“The green lips are showing some good signs that there is some initial demand there but how long that demand lasts is unknown,” he said.
“Usually we do see good demand post Chinese New Year with people reordering and restocking and we’re seeing a little bit of that but not to the level we would normally see so it is still a bit of a concern.
“With the demand that we saw last year on green lip we feel fairly confident there will be good demand there again once things get back to normal.
“The main season for consuming green lip over there is from October through to now so we’ve got the time to catch the fish, get them processed and into storage and then work on marketing and selling it later in the year and you’d hope by then things are getting back to normal and there will be good demand.”
Seafood Industry Australia has welcomed the Federal Government’s $110 million package.
“We’d like to thank the Federal Government for helping to keep Aussie jobs and Aussie seafood on the table,” SIA CEO Jane Lovell said.
“The Australian seafood industry has been in turmoil since orders to China evaporated on January 24,” she said.
“The assistance pledged today will help the Australian seafood industry restart exports to global markets, including China. This means not only securing Australian businesses and jobs in the seafood industry, but further downstream in processing, freight and beyond.
“For the Aussie seafood businesses who have effectively been without an income for nine weeks, for their employees, and for their families this marks the beginning of a return to normal. There’s no better stimulus than getting back to work.”
Federal Trade Minister Simon Birmingham said the COVID-19 pandemic had led to major air freight shortages and had disrupted supply chains around the world.
“This temporary action will help Australian producers to protect the jobs of those who rely upon Australia’s export of safe, quality food into the world,” he said.
“Getting our export sector back on its feet is crucial to reduce job losses through the crisis and a critical part of the ultimate economic recovery.
“By getting flights off the ground, full of Australian produce, we’re supporting our farmers and fishers who have been hit hard by this crisis.”
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