australian mango industry strategic investment plan 2014/15

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Australian Mango Industry Strategic Investment Plan 2014/15 2018/19 May 2014

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Australian Mango Industry

Strategic Investment Plan

2014/15 – 2018/19

May 2014

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HAL Project Number: MG12011

Project Leader: Jenny Margetts

Plant & Food Research Australia Pty Ltd

Level 14, 97 Creek St

Brisbane CBD QLD 4000

jenny.margetts@ plantandfood.com.au

Date of the report: 30th May 2014

Version: Final draft 30 May 2014 version 1

Disclaimer: Any recommendations contained in this publication do not necessarily represent current HAL policy. No person should act on the basis of the contents of this publication, whether as to matters of fact or opinion or other content, without first obtaining specific, independent professional advice in respect of the matters set out in this publication.

Unless agreed otherwise, Plant & Food Research Australia Pty Ltd does not give any prediction, warranty or assurance in relation to the accuracy of or fitness for any particular use or application of, any information or scientific or other result contained in this report. Neither Plant & Food Research nor any of its employees shall be liable for any cost (including legal costs), claim, liability, loss, damage, injury or the like, which may be suffered or incurred as a direct or indirect result of the reliance by any person on any information contained in this report.

Key abbreviations used in this document

ABC: Analytical business case

AMIA: Australian Mango Industry Association Limited

EPPR Levy: Emergency plant pest response levy

HAL: Horticulture Australia Limited

IAC: Industry Advisory Committee

PHA: Plant Health Australia

R&D: Research and development

RD&E: Research, development and extension

ROI: Return on investment

SIP: Strategic Investment Plan

VC: Voluntary contribution (a funding mechanism available through HAL)

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An Overview of the Strategic Investment Plan

Strategic Intent: To capitalise on the unique character of Australian mangoes in order to maximise market opportunities and profitability for Australian mango growers

Key Aspirations

The Australian mango industry aspires to be a sustainable, profitable and growing sector by producing and marketing a product range that meets consumers’ expectations in terms of quality; flavour; value; convenience; health and nutrition; food safety; and environmental credentials.

It aims to achieve this through continued investment in research & development, managing biosecurity, developing efficient and effective production systems and supply chains, and identifying and capturing new market opportunities.

Objective 1 Increase average profit per tonne of fruit sold by 20% by 2018/191 by ensuring a consistent and sustainably grown supply of quality Australian mangoes that meets customer and consumer needs and expectations

Strategies 1.1 Continuously improve the effectiveness and efficiency of mango production systems

1.2 Improve packhouse and supply chain practices

1.3 Implement appropriate information systems and risk management strategies to underpin supply

Objective 2 Increase average profit per tonne of fruit sold by 20% by 2018/191 by increasing demand for Australian mangoes

Strategies 2.1 Investigate market development and product improvement opportunities

2.2 Drive growth in targeted domestic and export market segments through product improvement and effective market development

2.3 Increase consumer confidence in Australian mangoes by managing product issues effectively

Objective 3 Increase average profit per tonne of fruit sold by 20% by 2018/191 by ensuring the Australian mango industry has appropriate relationships and resources to manage industry development and build industry capacity effectively

Strategies 3.1 Facilitate industry development activities to deliver improved outcomes for industry and industry investors

3.2 Develop appropriate leadership, structures and resources to provide sound industry stewardship

3.3 Ensure the industry has appropriate resources/risk management strategies to function effectively

Details of the Mango Industry Strategic Investment Plan objectives and strategies are provided in the following pages.

1 Based on reported Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) per tonne of market fruit sold in the Enterprise Assessment program data 2010/11.

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Scope of the Industry Strategic Investment Plan

The Australian Mango Industry Strategic Investment Plan for 2014/15 – 2018/19 has been developed to provide a clear direction for the advancement of the Australian mango industry and to define the key outcomes required from the investment of industry and government monies over the next five years.

At current levy rates, it is expected that approximately A$5.5 million2 will be invested by HAL into industry research and development (R&D) and marketing & promotion over the next five years. One of the key roles of this document is to demonstrate to levy payers that their money is being and will be invested in the most effective way to achieve the stated aims of the Plan - sustainability, profitability and growth for the sector. Likewise the Australian Government can be assured that the public monies of industry levies and Commonwealth matching funds are being allocated appropriately and are addressing Government research and development priorities. Importantly this document can also assist in guiding investment from other stakeholders and also provides a context for research, development & extension (RD&E) that might be funded outside the industry levy/HAL process.

The Australian mango industry is fortunate that it receives significant R&D support beyond that provided through its industry levy and matched Australian Government R&D funding under arrangements with Horticulture Australia Limited (HAL). In regard to RD&E, there is also significant support received through:

Voluntary contributions from industry stakeholders3

State and Territory agencies, in particular the Northern Territory Department of Primary Industry & Fisheries4 and the Queensland Department of Agriculture, Fisheries and Forestry. Department of Agriculture and Food, Western Australia (DAFWA) and the NSW Department of Primary Industries also provide support services to the industry in their respective states

The Australian Centre for International Agricultural Research (ACIAR) and other Australian Government agencies.

For this reason, not only are components of the SIP that will be funded through the HAL/industry levy mechanism considered, but also the additional RD&E requirements of the industry that may be satisfied by other mechanisms.

Where investment in an R&D sub-strategy is important to the industry, but the current industry levy income and matching Australian Government funding does not allow for investment in the area, these sub-strategies have been highlighted in grey.

The plan focuses on the industry’s position and strategic needs within three key priority areas:

1. Supply – production and productivity

2. Demand – market development and promotion

3. Industry capacity development – industry organisation, resourcing and management.

2 Based on an average crop of 7.5 million trays, which equates to $3.3 million matched R&D funding and $2.2 million marketing &

promotions funding over 5 years. 3 Through the HAL funding arrangements, the voluntary contribution mechanism allows industry stakeholders to contribute monies

to projects that align to the Industry Strategic Investment Plan. The voluntary contribution monies within these HAL projects are then matched by the Australian Government. 4 Under the Australian Government Primary Industry Standing Committee National Horticulture Research Framework, the NT DPIF is

the ‘major priority’ or lead agency for the Australian mango industry.

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The success of strategies employed in these areas will be measured by their impact on industry profitability as well as a range of other indicators outlined in the SIP.

The SIP also addresses the Australian Government’s Rural Research and Development priorities of:

• Boosting productivity and adding value to rural production

• Effective operation of supply chains and markets for existing and new products

• Supporting effective natural resource management

• Building resilience to climate variability and climate change

• Protecting Australia from biosecurity threats;

and includes

Investment in skills to undertake research and apply its findings; and

Promotion of new and existing technologies to address the Government’s R&D priorities.

Additionally, the SIP will provide a management framework for the Australian Mango Industry Association, and will guide industry leadership and decision making. It will be reviewed annually by Horticulture Australia Limited (HAL), the Mango Industry Advisory Committee (IAC) and the Australian Mango Industry Association to ensure that investment continues to remain targeted and delivers priority outcomes for the industry.

Structure of the Mango Industry Strategic Investment Plan

The Mango Industry Strategic Investment Plan has been written as the overarching document to guide industry direction and investment. There are a number of complementary plans that are intended to sit below this document and support the implementation and evaluation process. These plans include:

Research & Development Operational Plan (working document for the IAC)

Strategic Marketing Plan/Investment Plan (Mango Industry Strategic Marketing Plan 2010 -2015)

Industry Communications Plan.

These subordinate plans will be managed by HAL with the support of the Mango IAC and/or the Australian Mango Industry Association. They will assist the industry in directing its efforts and achieving the overall outcomes of the Industry’s Strategic Investment Plan.

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Important comments on the Mango Industry Strategic Investment Plan

Focus of the Plan

It is recognised that the Australian mango industry has limited R&D investment funds through the industry levy and matching Australian Government funding provided through HAL and hence it is critical that any investment aims to achieve maximum impact and the Plan’s objectives. Over the last decade there has been a significant investment in research that is known to influence the performance of production businesses and other supply chain partners positively; however, there is considerable scope for improvement in the degree of uptake of this research.

Given these circumstances, the focus of this SIP is to maximise the adoption of existing research and to ensure that growers and supply chain businesses have access to research, existing knowledge and understanding through a range of media and forums; and to address high impact gaps in R&D to complete the suite of tools and information available to growers and the supply chain.

Future research

The lack of adoption of research that has been shown to provide positive outcomes for businesses is seen as a weakness in the industry. It is therefore considered essential that any future research is informed by the end-user of that research, i.e. growers or supply chain partners, to ensure that it is structured in such a way to achieve maximum adoption and impact. It is therefore required that any proposed industry research have a defined industry adoption pathway.

Inherent components of RD&E

The industry also recognises a number of overarching impacts that influence the way Australian mangoes are produced and marketed both now and into the future.

Climate Change: Climate change and increased climate variability will present a number of challenges for the mango industry in coming years, potentially affecting growing conditions in established production regions, which may lead to changes in productivity and business viability. Changes in available water, climate patterns, pest and disease pressures etc. have the potential to have a positive or negative impact on production. Adaption strategies and increased resilience are seen as critical for the advancement of the industry and are therefore inherent component in industry RD&E activities and best practice production and handling guidelines developed for the industry.

Natural Resource Management: Responsible approaches to the use of natural resources, such as soil and water, are essential to the long-term sustainability of any production enterprise. Communities and governments are increasingly demanding that production does not affect the environment negatively. Customers and consumers want assurances that products are grown with a commitment to sound environmental principles. The industry recognises the ongoing need to address natural resource management as an inherent component of its RD&E activities and approach to best management practice.

Transformational Research: One of the challenges for the Australian mango industry is maintaining its global relevance in an increasingly competitive and open market. The industry recognises that to maintain this advantage there is a requirement for ongoing investment in R&D, in particular R&D which is transformational for the sector. Through collaboration with research agencies, other horticulture and agriculture industries, both domestically and internationally, the mango industry is seeking to identify and participate in such R&D and resultant technologies. The HAL Transformational Program, in which mango levies are invested, may provide opportunities for the industry to realise the outcomes it is seeking.

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Developing the Australian Mango Industry Strategic Investment Plan

The following process has been adopted to develop the 2014/15 – 2018/19 Mango Industry Strategic Investment Plan (SIP):

Step 1 – Approach and Planning

The Mango Industry Advisory Committee (IAC) and key stakeholders met in February 2013 to:

- Discuss the SIP planning process

- Review the industry performance and conditions and discuss changes and issues affecting the industry.

Step 2 – Industry Consultation

As part of the consultation with industry, a number of activities were undertaken:

- Consultation meetings with levy payers in Darwin, Dimbulah, Mareeba and Ayr

- Consultation meetings with researchers in Darwin, Mareeba and Brisbane

- Interviews with wholesalers, retailers and a number of levy payers who were unable to make consultation meetings

- Dissemination of a survey, via Mango Matters, to all industry stakeholders, providing an opportunity for feedback on issues affecting business and the industry and possible solutions – so that responses could be considered as part of the SIP development

- Update on findings from consultation meetings at the AMIA Mango Conference 2013.

Step 3 – Develop the draft Plan and industry review

Following the consultation process, a draft SIP outlining key objectives, strategies and required outcomes was developed.

The IAC reviewed the draft SIP.

A summary version was presented in Mango Matters (June 2013) and a full version of the draft SIP was made available online. Industry stakeholders were asked to provide feedback on the strategic intent and proposed strategies.

Step 4 – Development investment priorities and the draft R&D Action Plan Review

The IAC met in August 2013 to discuss amendments to the draft SIP (based on feedback from the consultation), implementation of the SIP (draft R&D Operational Plan), priority investment areas for the industry, and the likely benefits from RD&E investment.

Step 5 – Industry feedback meetings

A second series of meeting were held in key production areas (Darwin/Katherine, Mareeba and Ayr) to update and receive feedback from levy payers on the final SIP and proposed R&D activities.

Step 6 – Final endorsement of Plan

Following these meetings, a final SIP and an updated R&D Operational Plan were developed for consideration by the IAC and AMIA.

The final Industry Strategic Investment Plan was endorsed by the Mango IAC in May 2014.

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Profile of the Australian Mango Industry – 2013

About production

Mangoes (Mangifera indica) are grown in the Northern Territory, Queensland, Western Australia and New South Wales. There are also some smaller trial plantings in Victoria and South Australia.

Total volume of fruit marketed fluctuates from year to year, because of seasonal conditions and the irregular bearing nature of the crop. Average production marketed over the last five years has been approximately 53,500 tonnes. It is estimated that Australian production is increasing at 4% per annum over the longer term.

The Northern Territory and Queensland contribute approximately 95% of the total national crop. In recent years production volumes from the Northern Territory have grown to the point that they now equal production from Queensland.

AUSTRALIAN MANGO PRODUCTION 2005/06 – 2012/13

source: AMIA, June 2013

The seasonal harvest starts in the Northern Territory and Western Australia in September, followed by Queensland's dry tropical regions (Townsville /Burdekin/Bowen) in mid November, Mareeba /Dimbulah in early December, Central Queensland in late December, and South East Queensland and Northern New South Wales in January.

AUSTRALIAN MANGO PRODUCTION AREAS AND HARVEST WINDOWS

Location Harvest Window

Darwin September ‐ November

Kununurra Late September ‐ November

Katherine October - November

Burdekin/Bowen November ‐ December

Mareeba/Dimbulah November - February

Carnarvon December - February

Bundaberg January ‐ March

Northern NSW Late January ‐ March

Gingin (WA) Late January ‐ March

Source: Williams, R. et al.2012. Industry Situation Statement - Mango. http://www.hin.com.au/resources/industry-situation-statement-mango

There are a range of commercial mango varieties grown in Australia for the domestic and export markets. The main varieties and their respective approximate market share are: ‘Kensington Pride’ (65%), Calypso™ (20%), ‘R2E2’ (6%) and Honey Gold™ (4%) and ‘Keitt’ (3%). Other late season varieties include: ‘Palmer’, ‘Kent’, ‘Pearl’ and ‘Brooks’.

AUSTRALIAN MANGO VARIETIES AND HARVEST WINDOWS

The gross value of production (GVP) at farm gate is approximately A$140 million per annum.

There is no validated or reliable cost of production figures available to the industry. The industry has recently undertaken a benchmarking project which assessed enterprise performance over the years 2010/11 – 2012/13. These data will assist businesses in improving productivity and provide a mechanism for assessing industry performance over the life of this Plan. The industry also collects regional production data to assist growers with planning and marketing decisions.

0

20,000

40,000

60,000

80,000

Production Export

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About the product

Product overview

In Australia, mangoes are seen as the quintessential summer fruit. One of the strengths of the product is its seasonality; however, they are also highly perishable, and wastage at all points in the supply chain can be a significant issue.

Mangoes are predominantly eaten fresh; however, the current industry marketing campaign ‘Go an Aussie Mango’ is aiming to increase usage occasions by showing the versatility of mangoes - as an ingredient in savoury dishes, salads and drinks.

Based on 2012/13 volumes, average consumption of Australian-grown fresh mangoes in Australia is approximately 2.2 kg /person/annum.

Nutritional and health attributes

Mangoes are high in energy, low in fat, have a low Glycemic Index rating and are good sources of calcium and vitamins essential for good health.

A 200-g serve of ripe mango provides up to three times the recommended daily intakes of Vitamin A and Vitamin C. Vitamin C, an antioxidant important in protecting the body from infection, is required in the formation of collagen, a protein that gives structure to bones, cartilage, muscle and blood vessels. Vitamin C also aids the absorption of iron, necessary for transporting oxygen from the lungs to cells all around the body.

Australian mangoes also provide more beta-carotene than any other fruit and are a rich source of fibre and potassium. Beta-carotene is a powerful antioxidant that can help to protect the body against disease and also fight the signs of ageing by assisting with the growth and repair of cells, tissues and skin. The health benefits of mangoes are not thought to be widely known amongst consumers and there are strict standards that must be met when making such claims. Food Standards Australia New Zealand (FSANZ), the Australian food regulatory authority, regulates nutrition content claims, health claims, endorsements, cause-related marketing and dietary information that appear either on food labels or in advertising of food for retail sale. The industry needs to determine if and to what extent it should invest in research to substantiate any such claims.

Consumers and consumer research

The mango industry has made significant investment in market and consumer research to gain greater insight into market performance and to assist in developing market development and promotion campaigns.

Tracking studies to understand consumer purchasing habits and drivers have been in place since 2009. Research undertaken in 2013/14

5 shows that:

66% of Australian adults purchased mangoes over the 2013/14 summer

56% of Australian adults purchased mangoes on a monthly basis or more regularly

The decision to purchase is made largely at the point of purchase (67%)

Key drivers for purchase are quality and price

Displays are important

Colour, aroma and firm texture are considered the most important elements of high quality mangoes

87% of purchasers say they last purchased mangoes to eat fresh on their own

Adult females are the most likely people in the household to consume mangoes (84%), followed by adult males (74%).

About the market and its structures

Total global production of mangoes in 2009 was 35 million metric tonnes. Behind bananas, mangoes are the second most consumed tropical fruit in the world. Mangoes are grown by at least 90 countries. In global terms Australia is a very small player in the world mango market, with less than 0.2% of world production, and negligible exports.

Markets – Domestic

Approximately 92–95% of the Australia crop is consumed domestically. Of this, 95% is sold through ‘fresh’ supply chain and the remainder is used by the processing sector.

The traditional supply chains have relied on fresh fruit being shipped through the central wholesale markets systems to independent retailers and supermarkets; increasingly however, supplies to supermarkets are being directly shipped from grower/packer to supermarket distribution centres.

5 ‘Tracking Studies 2014’ - Sprout Research.

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Growers often view the increasing market power of the retail sector negatively. However, the Australian mango industry has developed advantageous relationships with key retailers and is driving domestic demand for mangoes through effective promotion.

Currently approximately 60% of domestic volume is sold through supermarkets and the remainder through greengrocers.

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Although there are a number of varieties, category differentiation at the retail level remains a challenge. The introduction of Calypso™ and Honey Gold™ over recent years is providing consumers with increased choice; however, there is still considerable confusion amongst consumers as to the different varieties and their attributes.

In regard to imports, there are currently market access arrangements in place for Mexico, India, Pakistan, Taiwan and the Philippines to provide fruit to the Australian market. Supply from these countries is counter-seasonal to Australian production; however, as the Australian production season extends it is likely that there will be an increasing overlap in supply to the market. There are also applications from Indonesia, Vietnam, Thailand and Brazil to import mangoes into Australia. Supply from several of these countries would fall within the same window as local supply and could facilitate a more competitive market environment during this time. Typically production in these countries is based on varieties that are not as familiar to the Australian consumer and this is likely to provide a point of resistance.

Processed mango products can be imported into Australia without restriction. Imported processed products usually take the form of juices, purees and canned products. The future impact of processing products on demand for fresh products is unknown but is something the industry should investigate further.

Markets – International

Approximately 8% (4,500–5,000 tonnes) of the Australian crop is exported on an annual basis. A strong Australian dollar, issues around market access, export logistics (access to direct freight routes) and costs, place significant pressures on export market performance.

Australia’s key export markets are Hong Kong (2012/13: 1932 MT), New Zealand (2012/13: 595 MT),

6 Nielsen HomeScan data from 2013/14 HAL Marketing Interim Report, IAC meeting, 25

th February 2014.

Singapore (2012/13: 570 MT) and the United Arab Emirates (2012/13: 483 MT). Direct access to the Chinese mainland market was achieved in 2011; however, volumes entering the market directly are only small.

AUSTRALIAN EXPORT VOLUMES 2005/06 – 2012/13

(source: AMIA, 2013).

The average value of exports over the 2011/12 and 2012/13 was approximately A$16 million.

There is potential to develop markets in other countries such as the USA, Taiwan and India. Australian mangoes have access to the USA (work plan for imports currently being developed – April 2014). There are applications pending to allow imports of Australian mangoes into Taiwan and India.

It is critical for the industry to maintain and secure improved access to current and new export markets with workable protocols. The industry continues to work with all the key organisations to achieve market access improvements.

Promotions and market development

The industry currently invests between $400,000 and $500,000 (2013/14: $458,836) of industry levies annually in marketing and promotional activities. HAL provides support to industries with marketing levies. As part of this support they work with industry to coordinate market and consumer research, and to develop and execute an appropriate marketing and promotions plan.

7

7 Mango Industry Strategic Marketing Plan 2010 -2015. 2012. Horticulture Australia.

0

2,000

4,000

6,000

Export volumes (tonnes)

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In addition to industry investment, there is also significant investment made by mango marketers and retailers in market and consumer research, market development and promotion.

Exporters of Australian product are also proactive in marketing their product to customers (importers and wholesalers) in export markets to grow demand for Australian products.

Trends impacting marketing systems

There are a number of influences that are driving how markets work:

Increasingly food manufacturing, distribution and retailing are becoming dominated by a relatively small number of firms, globally and locally. As a consequence, marketing channel options for mangoes are declining, particularly for small to medium-sized growers who lack the scale to interest larger buyers.

Increasingly innovation and productivity improvements are being driven by commercial value chains as they seek to develop improved products that are better meeting consumer needs. This includes innovatively packaged and processed products. As a result there is a need for growers to develop relationships with and participate in these supply chains, to gain access to markets and technology.

Governments are becoming less involved in industry development and more involved in issues relating to consumer protection.

At the same time there are a number of macro-trends influencing consumer behaviour. These include: population growth; a focus on convenience; changes in family structure; an emphasis on health properties of food driven by an ageing population and increasing obesity levels; and more discerning consumers who are showing interest in emotional, ethical, aesthetic or environmental factors when purchasing food.

About industry structure, support and funding

The Australian Mango Industry Association (AMIA) was established in 2000 after mango growers and allied businesses identified the need for a strong and united industry. It is a national not-for-profit organisation that acts as the peak industry body for the Australian mango industry. Its aim is to represent the interests of

its members, promote the growth and development of the industry, provide leadership and services for members and the industry, and serve as an umbrella organisation covering all those engaged in the mango industry from growers through to consumers.

AMIA employs a part-time CEO, an Industry Development Manager and a Communications Officer.

Alliances

The industry, through AMIA, retains alliances and linkages with numerous organisations with the aim of encouraging the long-term sustainable growth of the industry. AMIA works closely with HAL to manage the industry’s RD&E and marketing & promotions programs. In addition it also works with Plant Health Australia (PHA), Freshcare, the Australian Government, State and Territory Governments, universities, other horticultural industry organisations, and a number of industry service providers including research delivery organisations.

Industry funding and support

Industry activities are funded through a range of mechanisms. The activities of AMIA are predominantly funded through membership fees and provision of services to industry. Industry RD&E and marketing & promotion activities are funded through:

The industry levy

Voluntary contributions (VCs) from industry stakeholders

For R&D activities, the industry levy and VCs are able, under certain conditions, to be matched with Australian Government funds

Other sources.

Industry levy: Industry levies are imposed, collected and dispersed through Commonwealth legislation. They are collected by the Australian Government on behalf of all levy-paying horticultural industries, including the Australian mango industry. Through accompanying regulation, HAL, which is a not-for-profit industry-owned company, is charged with managing the expenditure of levy funds. It is responsible for all decisions relating to their expenditure and has obligatory reporting arrangements and accountability to the Department of Agriculture, Fisheries and Forestry (DAFF) with respect to its investment decisions. HAL takes advice on how to spend these funds from the Mango IAC. As such, the IAC is an advisory committee to the HAL Board. Recommendations on appointments to the IAC are made by AMIA.

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When expended on R&D that aligns with the Industry Strategic Investment Plan, levy funds can be matched dollar for dollar, up to a total of 0.5% of annual gross value of production for horticulture, by the Australian Government. When funds are expended on marketing/promotional activities, they are not eligible for matched funding. The Australian Government requires outcomes from its co-investment that demonstrably meet its National Research Priorities and Rural Research & Development Priorities.

Since 2003 growers have paid a levy of 1.75 cents/kilogram (or 12.25 cents per 7 kilogram tray) on the sale of mangoes that are sold on the domestic market or exported. The levy is collected by the Levies Revenue Service (LRS), an agency of DAFF. From this levy, 1 cent/kilogram is spent on marketing & promotions and 0.75 cents/kilogram is spent on RD&E.

In late 2011, after completing consultation with levy payers about mango levy rates, AMIA conducted a ballot to ascertain support for an increase in the mango levy to 4.286 cents/kilogram (or 30 cents per 7 kilogram tray) and the introduction of a Plant Health Australia (PHA) levy and an Emergency Plant Pest Response (EPPR) levy. AMIA argued that this increase was necessary to meet the growing demand for industry development support and the increasing costs of RD&E and marketing services. Although the ballot found the majority of mango growers (by number and production volume) were in favour of the levy increase, a number of growers raised concerns over the increase in the rate. As a result the Australian Government requested that AMIA undertake further consultation with the industry to find common ground.

In May 2014, the Australian Government accepted the PHA levy (1 cent per tray) and EPPR levy. As a result it is expected these levies will come into effect on 1 July 2014.

Voluntary Contributions: The voluntary contribution mechanism allows HAL to support R&D activities funded by money other than statutory levies. When expended on R&D that aligns with the Industry Strategic Investment Plan, voluntary contributions can be matched by the Australian Government.

In the Mango Annual Industry Report 2013/14, the total levy investment of funds administered by HAL for the mango industry R&D projects (17 projects) is expected to be A$659,127 and A$458,836 for marketing projects. In addition to levy funds, A$2,924,622 of matched voluntary contributions to

R&D projects are expected to be funded by industry stakeholders.

Other Sources: There is also significant R&D investment in the industry from other sources, such as:

State and Territory Departments of Primary Industries, in particular Queensland Department of Agriculture, Fisheries and Forestry and the Northern Territory Department of Primary Industries and Fisheries

Australian Centre for International Agricultural Research (ACIAR) and other Australian Government agencies

Commercial businesses that participate in the supply chain, such as plant protection, fertiliser and packaging companies; growers, wholesalers, marketers and retailers.

Research support

The industry is supported by a range of R&D service providers, including State and Territory Governments (Queensland, New South Wales, Western Australia and the Northern Territory) and private sector businesses.

In September 2010, the Australian Government through the Primary Industries Ministerial Council and its Primary Industries Standing Committee (PISC) ratified the National Horticulture Research Framework. The Framework sets out future RD&E commitment and investment, by Australia’s State and Commonwealth agricultural agencies (largely the State primary industries agencies and CSIRO) to the Australian horticultural industries. Its aim is to facilitate greater co-ordination and capability amongst agencies and industry; to better harmonise RD&E and ensure effective collaboration without duplication; and to maximise the net benefit to Australia. Agencies nominate to fill national “Major Priority”, “Support” or “Link” roles, for RD&E, for the main horticultural crops.

For the mango industry, the “Major Priority” agency is Northern Territory Department of Primary Industry and Fisheries. Their role is to assume a national leadership position and to give a high priority to funding research, infrastructure and national coordination for the Australian mango industry.

The “Support” agencies include Queensland and Western Australian Government agencies. These organisations have agreed to support the industry by undertaking crop research. The New South Wales Government is a “Link” agency and therefore undertakes little or no research but accesses

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information and resources from other governments or parties to meet industry needs through development and extension.

Private sector research providers also play an important role in the delivery of industry RD&E. Larger growers and packers/marketers often employ specialist research companies and agronomists to assist with crop management and supply chain development.

Technical information and communication

AMIA has an industry communications plan and undertakes a broad range of communication activities to cater for the range of stakeholders and communication channels in the industry. These activities include:

Publishing a quarterly magazine, Mango Matters, for all mango growers

Publishing a regular e-newsletter, AMIA Activities

Maintaining an industry website

Regular emails and correspondence

Hosting a biennial industry conference

Conducting/supporting grower and stakeholder meetings when necessary to ensure the industry is informed on key issues.

AMIA sources and distributes information related to RD&E, marketing, industry trends, government policy, international competitor activity and general industry development information.

Biosecurity

Ensuring the Australian mango industry has the capacity to minimise the risk of pests, and to respond effectively to any pest threats, is critical for the future sustainability and viability of the industry.

Biosecurity planning provides a mechanism for the industry, Government and other relevant stakeholders to determine pests actively, to analyse the risks, and to put in place procedures to reduce the chance of pests reaching our borders, and procedures to minimise the threat if a pest incursion occurs. Through this approach, the industry is better placed to maintain domestic and international trade, to negotiate access to new overseas markets, and to reduce the social and economic costs of pest incursions to both growers and the wider community.

The Mango Industry Biosecurity Plan and Orchard Biosecurity Manual were developed with Plant Health Australia (PHA) in 2011. The Industry Biosecurity Plan outlines key threats to the industry, risk mitigation

plans, identification and categorisation of exotic pests, and contingency plans.

PHA is a public company, with members including the Australian Government, all State and Territory Governments, and a range of plant industry organisations, including AMIA. The company was formed to address high priority plant health issues, and to work with all its members to develop a plant health management system that enhances Australia’s plant health status and the sustainability and profitability of plant industries.

PHA, the Australian Government, all state and territory governments and national plant industry bodies, including AMIA, are all signatories to the Emergency Plant Pest Response (EPPR) Deed, which is a formal, legally binding agreement that covers the management and funding of responses to Emergency Plant Pest incidents (including the potential for owner reimbursement costs for growers) and the role of plant industries' participation in decision making.

Community

Overall the industry has a favourable community image and is a major contributor to the regional economy.

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Major impacts on industry growth

Stre

ngt

hs

The appeal of mangoes to consumers

Seasonality of fruit provides marketing

opportunities for the product

Extended season and new varieties providing

increased offering to consumers

Access to new compounds to control disease

(strobilurins for anthracnose control) and to

improve quality

Continued investment by some businesses in

new technologies to achieve productivity gains

i.e. packhouse technology

Wide geographic spread of producers – assists

with more consistent supply of fruit into the

market

Developing better insights into consumer

requirements and the triggers for increased

consumption

Strong marketing campaign to drive demand and

support from supply chain and mitigate

oversupply situations

Recognition by retailers of the importance of the

mango category in driving overall store sales

Stable industry organisation with refocused

energy to address industry issues

Strong industry development and

communications program (in relation to

resources available through industry levies)

Several main stream varieties have limited productive capacity that are affecting grower profitability

Ability to produce a consistent high quality product profitably (first grade pack-out rate for ‘Kensington Pride’ averages 60%)

Limited/patchy uptake of research across the industry affecting performance of production businesses and supply chain partners – and overall industry reputation

Lack of industry discipline/skills to ensure that only mature fruit reach consumers – increasing impact of poor quality fruit on the overall market

Lack of management of shrinkage along the supply chain - increased pressure on retail margins attributed to shrinkage

Lack of or poor development of technologies and alternate value chains to absorb second grade fruit e.g. minimal processing, packaging, food service. Lack of demand is affecting overall profitability of production businesses

Limited financial resources available through industry levies for both R&D and marketing & promotions

Lack of robust industry data (production/marketing) on which to make informed investment decisions

Confusion at consumer level about different varieties and their attributes

Export volumes are not increasing at a rate commensurate with expectation and the profile of country markets is changing

Export currently has a strong reliance on grey trade through Hong Kong and therefore vulnerable

Market access investment is limited – reducing opportunities to build export markets

Reduction in research resources (people) – limited next generation of researchers through traditional R&D channels

We

akne

sses

- 14 -

Major impacts on industry growth (continued)

Op

po

rtu

nit

ies

Domestic market opportunities: o Educating consumers in relation to varieties

and their attributes o Growing demand for healthy fresh foods o Demand for good value, high quality

product (colour, ripeness, flavour) that consistently meet consumers’ expectations

o New packaging and products that address wastage and convenience

o Other value chains e.g. food service

Export market opportunities - growing demand for food globally; growing economies particularly in Asia – suited to development of a premium Australian brand/offering

Access to new technologies to increase business productivity e.g. mechanisation/robotics at field and packhouse levels

Access to new varieties and orchard systems to address need for increased productivity and consumer requirements

Export market logistics – access to direct freight routes via Darwin

Opportunities to increase demand through continued effective marketing and promotion

Potential changing supply arrangements leading to more sustainable business models

Leverage international research to support the Australian industry

Biosecurity risks

Access to appropriate pest and disease management technology (withdrawal of existing compounds used for pest & disease control)

Access to and cost of resources, in particular labour, water

Increasing cost structures within industry/impacts of carbon tax

Impact of climate change and variability/weather events on supply

Increased competition from other fruit commodities in the summer season (stonefruit, cherries, grapes)

High (and fluctuating) Australian dollar affecting export opportunities

Potentially increased competition from fresh imports and further erosion of seasonality

Increased competition from imported processed product significantly reducing demand for Australian processing fruit

Food safety issues/increased need for traceability

Increasing pressure and potentially unexpected demand from the supply chain to meet ‘environmental/ethical/social’ standards

Social media threat in relation to poor industry performance (real or perceived)

Government policy/regulatory environment particularly in relation to R&D funding, biosecurity, water, labour, chemical regulation, land usage etc.

Increased competition in retail and amongst retailers

Thre

ats

.

- 15 -

Objective 1: Increase average profit per tonne of fruit sold by 20% by 2018/198 by ensuring a

consistent and sustainably grown supply of quality Australian mangoes that meets customer and consumer needs and expectations

Investment Rationale

There is a need to focus on ‘quality’ to ensure that consumers have a positive eating experience every time they buy a mango!

The industry needs to build a culture of ‘quality’ to ensure that there is strong loyalty and repeat purchase throughout the season. Immature fruit providing an inferior eating experience will negatively affect repeat purchase and can have significant impact on product flow through the market and subsequent returns to growers. Quantifying what ‘quality and a positive eating experience’ means to the consumer is essential and from this information the industry can then develop and adopt appropriate minimum standards to build demand for the product.

Need for ongoing productivity gains at production level to drive business profitability

It is essential that Australian mango growers continuously seek to improve production and marketing systems to improve business performance, to meet market demand and to maintain a competitive position for Australian mangoes. Optimal production capacity, improved quality and related productivity gains can be achieved through a range of measures such as adoption of best management practice, better pest and disease management, improved varieties and rootstocks, advanced orchard management systems rootstocks, and robotics and sensing technologies.

Improved harvest and postharvest management is essential to ensure quality product at retail level

Impacts on fruit quality through the supply chain continue to be significant costs to the industry. Better harvest management and postharvest management systems are required to reduce loss of value and waste. There is a need to educate the supply chain continuously in best practice handling to ensure that product reaches the retail shelf in the optimal condition.

Productivity gains need to be measured to inform stakeholders and to drive change in the industry

It is essential that the changes in practice, which underpin increases in productivity, and the resulting outcomes are measurable and comparable, so that individual business enterprises and the collective industry can determine where the most significant improvements and return on investment can be made.

Need for improved industry information systems

There are currently gaps in the industry data available to growers and other industry stakeholders. Lack of timely robust data limits the ability of managers to make informed decisions relating to management, supply chain and marketing activities at an enterprise level. It also affects decision making at an industry level and inhibits longer-term investment decisions, hence stifling industry advancement. It is important that the industry continues to develop or access industry information to support business development.

The data provided through the enterprise performance project (2010/11 – 2012/13) have provided valuable benchmarks that have allowed growers to identify opportunities to achieve productivity gains and increase business profitability. They will also assist the industry in measuring its planned development throughout the life of this Plan.

Robust biosecurity settings are required to underpin supply and confidence in the industry

The integrity of the production system which serves to provide the sustainable and competitive supply of mangoes needs to be underpinned by robust biosecurity mechanisms. The Australian mango industry has a biosecurity plan; however, an ongoing proactive approach to biosecurity and vigilant monitoring is essential. Any breach of biosecurity has the potential to affect not only the supply of Australian mangoes, but also the livelihoods of growers, their workers, supply chain partners, local communities and their economies.

8 Based on reported Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) per tonne of market fruit sold in the Enterprise Assessment Program data 2010/11.

- 16 -

Objective 1 Increase average profit per tonne of fruit sold by 20% by 2018/199 by ensuring a consistent and sustainably grown supply of quality Australian mangoes that meets customer and consumer needs and expectations

Strategies 1.1 Continuously improve the effectiveness and efficiency of mango production systems

1.2 Improve packhouse and supply chain practices

1.3 Implement appropriate information systems and risk management strategies to underpin supply

Sub- strategies

1.1.1 Undertake targeted research to support improved quality, productivity and the consistent supply of consumer-acceptable fruit at retail level.

1.1.2 Ensure plant health and market access is maintained through R&D; appropriate pest, weed and disease management protocols; access to current and new chemicals; and other technologies, systems and/or practices, particularly those that offer nil residue outcomes

1.2.1 Continue to improve pre-harvest, harvest and postharvest knowledge and systems to maximise product quality and productivity; and reduce shrinkage through the supply chain

1.3.1 Continue to build on industry production data initiatives ensuring that information provided to businesses (and industry) supports management and marketing decision-making processes.

1.3.2 Ensure an effective biosecurity plan is in place and a proactive approach to biosecurity issues is adopted, especially with regard to biosecurity awareness and required research of pests & diseases

1.1.3 Investigate the application of new orchard management systems and the development/ introduction of new varieties and rootstocks that will provide productivity gains, market advantage and meet consumer expectations

10

1.1.4 Invest in or encourage adoption of new technologies (such as mechanisation, robotics and sensing technologies) that have the ability to improve productivity, product quality and environmental outcomes

10

Outcomes A measured decrease in the incidence of resin canal in marketed fruit as a result of improved management practices

11

Market access to all existing markets is maintained

Appropriate management protocols and registrations in place to manage major pest, weed and disease threats cost-effectively

A measured decrease in the amount of shrinkage as a result of improved supply chain practices

11

At least 70% of production value available industry data (independent evaluation 2015/16 and 2017/18)

Updated enterprise benchmark data are completed for at least one year and communicated to industry (2016/17 to allow for contribution to next SIP)

Up-to-date biosecurity plan in place and an effective response to biosecurity issues, leading to improved security of the Australian mango industry (measure by incident and response)

9 Based on reported Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) per tonne of market fruit sold in the Enterprise Assessment Program data 2010/11. 10

There is no allocated levy budget for this sub-strategy. Work in this area is important to industry; however, current levy income does

not allow for investment through industry - HAL funding (see page 2 for explanation). 11

Evaluation metrics to be determined as part of project work.

- 17 -

Objective 2: Increase average profit per tonne of fruit sold by 20% by 2018/1912 by increasing

demand for Australian mangoes

Investment Rationale

With a focus on ‘quality’ there is a need to quantify ‘quality’.

Quantifying what ‘quality and a positive eating experience’ means to the consumer is essential - from this information the industry can then develop and adopt appropriate minimum standards to build demand for the product.

Need for ongoing market and consumer research to identify opportunities for Australian mangoes

The industry needs to monitor market conditions and trends continually and to undertake consumer research to ensure it has appropriate information to inform market development and promotion programs for the key mango market segments, including retail, food service and export.

It is also important that this information is easily accessible to levy payers, so that it might inform their own business development activities.

New product development can drive product demand

New trends and technologies may provide the opportunity for the Australian mango industry to develop new fresh or value-added products that better meet consumer needs, access new markets or extend existing markets, therefore driving demand. Conversely new trends or technologies may also provide opportunities for competitors to capture market share and erode existing market potential. It is therefore imperative to that these potential impacts are understood and responded to appropriately.

Effective promotion and strong product positioning will drive demand

By increasing product demand through execution of an effective mango promotion campaign, there is the opportunity to influence prices positively and therefore profitability of production enterprises.

It is essential to build a sustainable and profitable export sector

It is important that the Australian mango industry has a plan for the development of its export sector. Quality Australian mangoes have the ability to achieve significant premiums in select markets. To achieve the rates of return required, appropriate market and consumer research needs to be undertaken to identify new opportunities. Research to underpin appropriate market access protocols needs to also be undertaken so that Australia can provide product in premium condition that meets the requirements of the importing country. A well-considered approach to achieve these outcomes and industry support is required to advance this initiative.

The consumer needs to have confidence in the product they are purchasing

Increasingly consumers are concerned with the environmental, ethical and social aspects of the foods they eat. The industry needs to quantify, document and communicate its credentials.

The industry also needs to have appropriate protocols in place to address food safety incidents in the event of such an occurrence. Consumers need to have confidence that any food safety breaches are being handled professionally and with the well-being of the consumer as the paramount concern.

12

Based on reported Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) per tonne of market fruit sold in the

Enterprise Assessment Program data 2010/11.

- 18 -

Objective 2 Increase average profit per tonne of fruit sold by 20% by 2018/1913 by increasing demand for Australian mangoes

Strategies 2.1 Investigate market development and product improvement opportunities

2.2 Drive growth in targeted domestic and export market segments through product improvement and effective market development

2.3 Increase consumer confidence in Australian mangoes by managing product issues effectively

Sub- strategies

2.1.1 Undertake market and consumer research to underpin investment in industry market development & promotions activities and product development

Provide regular information on market conditions/trends (domestically and internationally) and consumer research to levy payers

2.1.2 Track research and new technologies to support the development of new products that meet market/consumer needs

2.2.1 Develop and execute an effective promotion campaign, driven by consumer/market research, which optimises the positioning of Australian mangoes in existing & emerging domestic market channels

2.3.1 Quantify and communicate the industry’s environmental, ethical and social credentials to enhance its reputation 14

2.2.2 Develop and implement an Export Development Roadmap, incorporating detailed market access and market development requirements, to maximise export market opportunities and returns to growers

14

2.3.2 Ensure the industry has appropriate protocols in place to address food safety incidents (see Strategy 3.3.3)

Outcomes Market and consumer research is undertaken and findings reported to the industry on a regular basis (annually through industry events and publications)

Increased demand for Australian mangoes in line with KPIs outlined in the Industry Marketing Plan 2010 – 2015 (and subsequent Industry Marketing Plans)

Effective approach/response to market access issues, leading to opportunity for and security of the Australian mango industry

Export market volumes increased to no less than 10% of total production by 2018/19

The industry has an appropriate risk plan, incorporating food safety incident protocols, in place by 2014 (see Strategy 3.3.3).

13

Based on reported Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) per tonne of market fruit sold in the

Enterprise Assessment program data 2010/11. 14

There is no allocated levy budget for this sub-strategy. Work in this area is important to industry; however, current levy income does

not allow for investment in this area industry - HAL funding (see page 2 for explanation). The industry will seek other funding mechanisms to fund this activity.

- 19 -

Objective 3: Increase average profit per tonne of fruit sold by 20% by 2018/1915 by ensuring the

Australian mango industry has appropriate relationships and resources to manage industry development and build industry capacity effectively

Investment Rationale

It is necessary to build industry capacity and resilience to underpin industry development

To provide the necessary industry stewardship and achieve optimal outcomes for levy payers and other stakeholders, the industry needs to continue to build the capacity and resilience of the industry and its members.

Communication regarding industry issues, extension of R&D, access to industry data, and training are critical tools in building knowledge, understanding and the necessary skills to manage production, supply chain and market development; and to build more productive, profitable and resilient businesses.

AMIA, through its industry capacity building program has a key role to play in facilitating change and developing a more informed, skilled and resilient industry.

It is essential that the industry has access to appropriate resources to achieve the outcomes that stakeholders reasonably require

AMIA, with the support of HAL, need to monitor the future needs of industry and ensure levy structures are appropriate and levy rates are adequate to support necessary levels of investment in RD&E and marketing & promotion to meet the expectations of levy payers.

To achieve its objectives, the industry must also build effective relationships and alliances with strategic partners

It is essential for the industry to build relationships and alliances with strategic partners to meet industry objectives and in particular to find solutions to the diminishing financial and R&D resources available to industry.

One of the greatest challenges for industry over the next five years will be accessing suitable RD&E resources. The ongoing withdrawal of government services in this area is placing significant pressure on remaining services and staff. This is beginning to result in a paradigm shift in how RD&E will be accessed by the horticulture industries. The mango industry needs to find new models to support (and build) existing capability to achieve future RD&E outcomes.

There is a need to ensure industry stakeholders realise and value benefits from investment of the industry levy

There is a requirement for industry and HAL to demonstrate a strong return on investment of levy funds through appropriate governance, program/project structures and outcomes for levy payers, the community and the Australian Government. It must be demonstrated that the public monies of industry levies and Commonwealth matching funds are being allocated appropriately and are addressing Government research and development priorities.

There is a need for effective risk management strategies to mitigate adverse industry events and/or market conditions

The industry potentially faces a number of challenges in the years ahead which have the potential to affect the viability of the industry and for which appropriate risk management strategies should be developed. Of concern are access to key markets, biosecurity threats, government policy settings, food safety issues (see Section 2.3.2), among others.

15

Based on reported Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) per tonne of market fruit sold in the

Enterprise Assessment Program data 2010/11.

- 20 -

Objective 3 Increase average profit per tonne of fruit sold by 20% by 2018/1916 by ensuring the Australian mango industry has the appropriate relationships and resources to manage industry development and build industry capacity effectively

Strategies 3.1 Facilitate industry development activities to deliver improved outcomes for industry and industry investors

3.2 Develop appropriate leadership, structures and resources to provide sound industry stewardship

3.3 Ensure the industry has appropriate resources/risk management strategies to function effectively

Sub- strategies

3.1.1 Facilitate the adoption of best management practice to assist growers in improving FRUIT QUALITY, productivity and environmental outcomes at production level (Aligned to Strategy 1.1.1)

3.1.2 Promote the adoption of best practice handling to improve handling practices through the supply chain to maximise product quality at retail level, minimise shrinkage, and optimise returns to growers (Aligned to Strategy 1.2.1)

3.1.3 Undertake other industry development activities to support functioning of industry (Industry Capacity Building Program)

3.1.4 Ensure and demonstrate strong return on investment of HAL administered funds through appropriate governance, program/project structures and outcomes

3.2.1 Assess and build the capacity and resilience of industry and its management, through appropriate training activities

3.2.2 Collaborate across the horticulture/agriculture sector and with key stakeholders/ international partners to ensure the mechanisms for delivery of R&D are appropriate and there are sufficient resources and skills available to meet the current/ future R&D and biosecurity needs of industry

3.2.3 Continue to develop international networks proactively, and foster co-operation and partnerships to improve global market intelligence and opportunities for the industry

3.3.1 Review current levy arrangements, and where necessary/feasible, seek implementation of adjusted levy structures and rates to ensure obligations of industry and levy payer’s expectations are being met

17

3.3.2 Investigate and seek additional income/funding/ support to facilitate industry development, R&D and marketing activities (aligned with this Plan) that fall outside industry levy funding

3.3.3 Develop a comprehensive risk management strategy for industry which considers key issues that may affect the viability of the Australian mango industry

Outcomes At least 70% of production recognise value in services provided through the industry adoption and development activities ( assessed 2015/16 and 2017/18)

Industry demonstrates strong ROI of levy funds (assessment of investments – 2017/18)

The industry has a succession plan in place and ensures those taking leadership roles have appropriate support/training

Review of current levy structures undertaken (to be determined by AMIA)

Additional industry development, R&D and/or marketing activities achieved by accessing additional funding/support outside industry levy mechanism

The industry has an appropriate risk plan in place by 2014/15.

16 Based on reported Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) per tonne of market fruit sold in the Enterprise Assessment Program data 2010/11. 17

There is no allocated levy budget for this sub-strategy. The review of levy rates is the responsibility of the prescribed industry body

for the Australian mango industry, the Australian Mango Industry Association.

- 21 -

Assessment and allocation of proposed investment

Investment Priorities

The Analytical Business Case (ABC) is a formal assessment process that draws from a range of tools to provide rigour and comparison between competing research investment areas and thus enhance the overall strategic investment plan (HAL Strategic Planning Guidelines November 2009).

The ABC for the Mango Industry Strategic Investment Plan 2014/15 - 2018/19 uses benefit:cost analysis techniques as described by Council for Rural Research and Development Corporation Guidelines (CRRDC updated 2012). Analysis was completed at the strategy level.

Analytical Business Case Approach

Benefit:cost analysis is reliant on data and assumptions and this information was assembled from the ‘Mango Industry Strategic Investment Plan 2013/14 – 2018/19 (draft September 2013)’ and expanded in an Industry Advisory Committee (IAC) SIP review meeting in August 2013. Given the current situation and performance of the Australian mango industry, the analytical business case (benefit:cost ratio) identifies the high priority investment strategies for industry as:

Objective 1: Increase average profit per tonne of fruit sold by 20% by 2018/1918 by ensuring a consistent and sustainably grown supply of quality Australian mangoes that meets customer and consumer needs and expectations

Strategy:

1.1 Continuously improve the effectiveness and efficiency of mango production systems

(indicative benefit:cost ratio → 15.7:1)

1.2 Improve packhouse and supply chain practices

(indicative benefit:cost ratio → 13.8:1)

1.3 Implement appropriate information systems and risk management strategies to underpin supply

(indicative benefit:cost ratio → 10.0:1)

Objective 3: Increase average profit per tonne of fruit sold by 20% by 2018/19 18 by ensuring the Australian mango industry has the appropriate relationships and resources to manage industry development and build industry capacity effectively

Strategy:

3.1 Facilitate industry development activities to deliver improved outcomes for industry and industry investors

(indicative benefit:cost ratio → 7.3:1)

The Mango Industry Advisory Committee and Australian Mango Industry Association will need to monitor investment priorities continually to ensure strong return on investment. Over time, investment priorities may change as the situation of the industry changes.

18 Based on reported Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) per tonne of market fruit sold in the Enterprise Assessment Program data 2010/11.

Page 2

Page 2

- 22 -

Proposed indicative funding allocation across strategies

Below is an indicative allocation of funds over the five-year life of the SIP (2014/15 – 2018/19). This is informed by the investment priorities outlined in the table above.

Approximate Available Funds

Estimated investment funds $

Available R&D Levy a Matched $3,300,000

Available Marketing Levy b $2,200,000

Estimated project costs c

Approximate Investment

c

Objective $

Objective 1 – Increase average profit per tonne of fruit sold by 20% by 2018/1919

by ensuring a consistent and sustainably grown supply of quality Australian mangoes that meets customer and consumer needs and expectations

$1,100,000

Objective 2: Increase average profit per tonne of fruit sold by 20% by 2018/19 by increasing demand for Australian mangoes

$500,000 $1,900,000

b

Increase average profit per tonne of fruit sold by 20% by 2018/19 by ensuring the Australian mango industry has the appropriate relationships and resources to manage industry development and build industry capacity effectively

$1,700,000 $300,000

b

Total - all R&D $3,300,000

Total - all Marketing $2,200,000

TOTAL INVESTMENT $5,500,000 a Indicative investment funds available for R&D, industry consultation agreement funding and generation of Annual Industry Report after estimated deduction for LRS and HAL Corporate Recovery Costs and Across Industry contributions b Indicative investment to be made from marketing levy c Indicative investment from R&D matched levy, unless otherwise stated

Proposed indicative investment by objective

(including R&D and marketing levy investment) (2014/15 – 2018/19)

19 Based on reported Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) per tonne of market fruit sold in the Enterprise Assessment Program data 2010/11.

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

OBJECTIVE 1 OBJECTIVE 2 OBJECTIVE 3

Marketing Levy

R&D levy

- 23 -

Proposed indicative investment by objective (R&D levy investment only)

(2014/15 – 2018/19)

Proposed R&D investment by Australian Government Rural R&D priorities

Below is the proposed allocation of R&D investment against Australian Government Rural R&D priorities over the life of the SIP.

Proposed R&D investment by Australian Government Rural R&D priorities* (2014/15 – 2018/19)

* Total R&D investment is $3.3 million over the life of the Plan. This includes consultation agreement funding. It does not include marketing levy investment.

$1,100,000 33%

$500,000 15%

$1,700,000 52%

OBJECTIVE 1

OBJECTIVE 2

OBJECTIVE 3

25%

33% 5%

4%

5%

23%

5%

Productivity & adding value (25%)

Supply chains & markets (33%)

Natural resources management (5%)

Climate change & variability (4%)

Biosecurity (5%)

Innovation skills (23%)

Technology (5%)

Increase average profit per tonne of fruit sold by 20% by 2018/19

- 24 -

References

The following documents inform this Plan:

Australian Mango Industry Strategic Plan 2010 - 2014 (updated 2012). 2012. Horticulture Australia, www.horticulture.com.au (February 2013).

Australian Mango Industry Strategic Plan 2010 - 2015. 2009. Horticulture Australia.

Australian Mango Industry Development Needs Assessment and Plan. 2010. Horticulture Australia.

Mango Annual Investment Plan July 2012 – June 2013. Horticulture Australia.

Mango 2012/13 Annual Marketing Plan. June 2012. Horticulture Australia.

HAL Strategic Investment Planning Guidelines (draft) Version 2, updated 12 September 2011, Horticulture Australia Limited.

Mango Industry Annual Report, eds. 2007/08; 2008/09; 2009/10; 2010/11; 2011/12; 2012/13; 2013/14. Horticulture Australia, Sydney. www.horticulture.com.au.

Mango Industry Biosecurity Plan (Draft) 2011, Plant Health Australia, Canberra.

Mango Industry Strategic Marketing Plan 2010 - 2015. 2012. Horticulture Australia.

Orchard Biosecurity Manual for the Mango Industry, Version 1. 2011. Plant Health Australia, Canberra.

Appendix 1: Contributors

The growers, wholesalers, retailers, researchers and other service providers that participated in the consultation process are acknowledged and thanked for their contribution to the Australian Mango Industry Strategic Investment Plan. In addition the following people are acknowledged for their further consideration of the plan:

Mr Rod Dalton, IAC Chairperson

Mr Gavin Scurr, AMIA Chairperson, IAC member and grower/marketer – Northern Territory

Ms Marie Piccone, AMIA Board member, IAC member* and grower/marketer – North Queensland

Mr Robert Gray, AMIA Board member, IAC member and grower/marketer – Northern Territory

Mr John Nucifora, AMIA Board member, IAC member* and grower – North Queensland

Mr Geoff Warnock, AMIA Board member, IAC member* and grower – Western Australia

Mr Ian Persehouse, IAC member and grower – Central Queensland

Mr Brett Jackson, IAC member and grower, Southern Australia

Mr Ben Martin, IAC member and grower, North Queensland

Mr Ross Maxwell, Chair NT Mango Industry Association, IAC member** and grower – Northern Territory

Mr Joe Moro, IAC member** and grower – North Queensland

Mr Tim Elliot, IAC member** and packer- Northern Territory

Mr Trevor Dunmall, Industry Development Manager, AMIA

Ms Elisa Tseng, Horticulture Australia Marketing Services Manager

Ms Jane Wightman, Horticulture Australia Industry Services Manager

Mr Michael Clarke, AgEconPlus (Analytical Business Case)

Ms Jenny Margetts, Plant & Food Research Australia (Plan facilitator).

* IAC member until December 2013 ** IAC member from December 2013