FINAL REPORT (PROJECT BA 11013) Value of the Australian Banana Industry. to Local and National Economies

Transcription

1 1 (PROJECT BA 11013) Value of the Australian Banana Industry to Local and National Economies FINAL REPORT Prepared by Howard Hall and Joan Gleeson CDI PINNACLE MANAGEMENT Pty Ltd 11 April 2013

2 2 Project No. BA11013 (November, 2012) Prepared By: Howard Hall Managing Director CDI Pinnacle Management Pty Ltd P O Box 1800 Milton QLD 4064 hhall@pinnaclemanagement.com.au Joan Gleeson Executive Director Street Ryan and Associates Pty Ltd PO Box 513 Toowong, QLD 4066 joan.gleeson@streetryan.com.au Acknowledgement of Funding Sources This project has been funded by HAL using the Banana R&D levy and matched funds from the Australian Government. Purpose of Report: The purpose of this project report is to provide Horticulture Australia Limited and the Australian Banana Growers Council with an independent, soundly researched and comprehensive economic analysis of the contribution the Australian banana industry makes to regional, state and national economies. The project has stated key objectives of: To calculate the contribution that the Australian banana industry makes to the regional economies in which they are located and the national economy, To calculate the flow on or multiplier impacts that the Australian banana industry makes to regional economies and further along the supply chain in terms of additional economic activity, employment, spending and value added product, Identify the potential impact that any loss of banana production will have on both upstream and downstream companies which are directly or indirectly reliant upon the banana industry, Make local, state and national legislators and governments aware of the true 'worth' or contribution that the banana industry makes to regional economies and the Australian economy.

3 3 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. This report has been prepared for Horticulture Australia Ltd, pursuant to a Consultancy Agreement between CDI Pinnacle Management and the Horticulture Australia Ltd. This report has been prepared from data and information gathered from various sources and from primary research carried out by CDI Pinnacle Management. CDI Pinnacle Management has used its best endeavours and exercised the best of its skill and ability to ensure accuracy of the data, information and research materials. CDI Pinnacle Management believes the various sources to be reliable. However, CDI Pinnacle Management does not warrant the accuracy of any of the data or information provided by third parties or of research materials not created by CDI Pinnacle Management. CDI Pinnacle Management accepts no responsibility for any error contained in or any omission from the report arising from the data or information provided by third parties or from the research materials not created by CDI Pinnacle Management This report is for the use only of Horticulture Australia Ltd. CDI Pinnacle Management accepts no responsibility whatsoever to any third party in respect of the whole or part of this report (including all appendices) or its use. All rights reserved.

4 4 CDI PINNACLE MANAGEMENT CDI Pinnacle Management ( is an international consultancy specialising in the food and agribusiness sectors. We have been advising and assisting firms in food and agribusiness since Our core capabilities are in chain management, innovation, the development of new business opportunities and the application of new technologies, and assisting the re-engineering of industries and regions, across food and agriculture sectors. Our clients are innovators, early adopters and industry leaders and agencies. They are corporations in the food and agribusiness industry, small to medium enterprises (SMEs), individual producer/marketers (and Grower-Packer-Marketers), producer groups, industry, development and Government agencies, and marketers and processors. CDI Pinnacle Management takes a non-traditional, interactive approach to consultancy. Using a step-bystep process, we assist businesses and agencies in developing and implementing progressive and tailormade solutions. We assist firms, industries and regions to develop and implement a global vision and provide the tools and assistance to achieve success in domestic and international arenas. Contact: Howard Hall P O Box 1800 Milton QLD 4064 Australia Tel: hhall@pinnaclemanagement.com.au

5 5 TABLE OF CONTENTS TABLE OF TABLES... 7 TABLE OF FIGURES MEDIA SUMMARY TECHNICAL SUMMARY The Australian Banana Industry Data Used for Economic Analysis ( ) Banana Production Regions Far North Queensland Northern NSW Carnarvon Western Australia Economic Contribution Direct Contribution Economic Contribution INTRODUCTION MATERIALS AND METHODS RESULTS Banana Production Sector Overview Scale and Location of Production Queensland Banana Transport Data Significance of Banana Production in Regions Banana Production Sector Expenditure in Regions Banana Production Sector Direct Employment Banana Supply Chain... 34

6 6 5.2 Banana Production Regions Far North Queensland Northern New South Wales Carnarvon Western Australia Banana Region Economic Profiles Far North Queensland Overview Northern New South Wales Carnarvon Western Australia Economic Contribution of the Banana Industry Direct Contribution Regional Economic Impact of the Banana Production Industry DISCUSSION TECHNOLOGY TRANSFER RECOMMENDATIONS ACKNOWLEDGEMENTS BIBLIOGRAPHY APPENDICES Employment Multipliers for Banana Production Regions Aggregate Data Extract from Banana Enterprise Comparison Project107

7 7 Table of Tables Table 1 Summary Economic Contribution of Australian Banana Industry Table 2 Estimated Total Banana Farm Expenditure in Regions Table 3 Summary Direct Employment by Banana Producers Table 4 Summary of Regional Economic Contributions Made by the Banana Industry Table 5 Australian Banana Industry Statistics Table 6 Prominence of Far North Queensland in Banana Production Table 7 Australian Banana Industry Statistics by State Table 8 Australian Banana Industry Statistics by State, Adjusted for ABGC Transport Data Table 9 Banana Industry Outputs Compared to Total Fruit Production and Total Agricultural Production by State Table 10 Aggregate Banana Farm Expenditure in Table 11 Aggregate Banana Farm Direct Employment in Table 12 Aggregate Direct Banana Farm Expenditure by Cost Centre Table 13 Aggregate Direct Banana Farm Expenditure by Recipient Industry, Table 14 Key Characteristics of Far North Queensland Banana Production Region Table 15 Average Income Trends per Income Earner Cassowary Coast Table 16 No. of Businesses and Estimated Total Employment and Turnover Cassowary Coast Table 17 Average Income Trends per Income Earner Table 18 No. of Businesses and Estimated Total Employment and Turnover, Tablelands Table 19 Average Income Trends per Income Earner Table 20 No. of Businesses and Estimated Total Employment and Turnover, Cairns Sub-Region, Table 21 Average Income Trends per Income Earner

8 8 Table 22 No. of Businesses and Estimated Total Employment and Turnover, NSW Banana Production Region, Table 23 Average Income Trends - Carnarvon Western Australia Table 24 No. of Businesses and Estimated Total Employment and Turnover, Western Australia Banana Production region, Table 25 Australian Banana Production Statistics, and Table 26 Banana Farm Expenditure, Far North QLD, Northern NSW and Carnarvon WA Table 27 Direct and Total Impacts of the Banana Industry on Local Economies Table 28 Direct and Total Impacts of Banana Industry Expenditure on the far North Queensland Economy Table 29 Direct and Total Impacts of Banana Industry Expenditure on the Northern NSW Banana Production Region Economy Table 30 Direct and Total Impacts of Banana Industry Expenditure on the Western Australia Banana Production Region Economy Table 31 Selected Attributes of Upstream and Downstream Businesses Interviewed Table 32 Respondent Businesses and Entities Table 33 Aggregate Farm Income and Expenditure from Banana Enterprise Performance Project BA

9 9 Table of Figures Figure 1 Price and Volume for FNQ Bananas in and Figure 2 Major Expenditure Items for Banana Farms Figure 3 Research Framework for This Analysis Figure 4 Far North Queensland Banana Transport Volumes , & Figure 5 Impacts of Cyclones Larry and Yasi on FNQ Banana Production & Figure 6 Supply Chain Diagram for the Australian Banana Production Industry Figure 7 Supply Chain Diagram for the Australian Banana Production Industry Expenditure Allocated to Recipient Industry Sector Figure 8 The Queensland Banana Production Region and its Sub-Regions Figure 9 The Northern NSW Banana Production Region Figure 10 Western Australia Banana Production Region Figure 11 Population Distribution and Growth, Far North Queensland Banana Production Region Figure 12 Population Age Structure, Cassowary Coast and QLD, Figure 13 Distribution of Average Weekly Income, Cassowary Coast and Queensland, Figure 14 Rate of Unemployment, March 2011 and March Figure 15 Population Age Structure, Tablelands Far North Queensland and Queensland, Figure 16 Distribution of Average Weekly Household Income, Tablelands Far North Queensland and Queensland Figure 17 Rate of Unemployment, March 2011 and March Figure 18 Population Age Structure, Cairns Far North Queensland and Queensland, Figure 19 Distribution of Average Weekly Household Income, Cairns Far North Queensland and Queensland Figure 20 Rate of Unemployment, March 2011 and March Figure 21 Population Age Structure, NSW Banana Production Region and NSW,

10 10 Figure 22 Distribution of Average Weekly Household Income, NSW Banana Production Region and NSW, Figure 23 Rate of Unemployment, March 2011 and March Figure 24 Population Age Structure Western Australia Banana Production region, Figure 25 Distribution of Average Household Income, Figure 26 Rate of Unemployment, March 2011 and March

11 11 1. Media Summary This project BA is a comprehensive analysis of the value of the Australian banana industry to local and national economies. The purpose of the project is to deliver an independent, soundly researched and comprehensive economic analysis of the contribution that the industry makes to regional state and national economies This analysis concludes that the Australian banana industry produced 236,000 tonnes of bananas in with a gross farm value of $368m. Approximately 90% of this was produced in Far North Queensland by 51% of banana producers. Given was the year that Cyclone Yasi severely impacted production, review of data from other years suggests that the national industry can be expected to produce between 300,000 and 400,000 tonnes in a more normal production year. Data collected during the financial year is the basis for the economic analysis contained herein. This is the year prior to any impact from Cyclone Yasi. Data collected in the Banana Enterprise Comparison Project for the (HAL Project BA 10026) year is the primary source of information about on farm expenditures and employment. The total economic impact and contribution of the banana industry at regional and national levels includes the flow on effects of banana farm economic activity on demand up and down the supply chain. It also takes into account the induced impacts resulting from households reinvesting some of the income they earn from banana producers on local goods and services. In (the year prior to the impact of Cyclone Yasi) the banana industry contributed $1.1billion per annum to the three main banana growing regions of far North Queensland, Northern New South Wales and Carnarvon Western Australia (an output multiplier of 1.88), and 9,598 full time equivalent jobs (en employment multiplier of 2.52). It also represented 9.5% of total private business turnover across the three regions and 8.24% of full time equivalent jobs. This information at regional level is summarised in Table 1.

12 12 Table 1 Summary Economic Contribution of Australian Banana Industry Far North Queensland Northern NSW Carnarvon Total Total Output ($m) ,077 Output Multiplier % of Total Business Turnover 13.60% 2.20% 11.70% 9.5% Total FTE Jobs 8, ,598 % of Total FTE Jobs 12.6% 1.92% 9.01% 8.24% Employment multiplier Sources: Banana Enterprise Comparison Project BA ( data collection round) CDI Pinnacle Interviews with 50 upstream and downstream businesses Street Ryan estimates of multipliers The total direct expenditure by banana farms during year (when production was estimated at 310,000 tonnes) is estimated at $573 million. Direct employment by banana farms totalled 3,826 full time employee equivalent units. The analysis also concluded that the industry contributes between 30% and 50% of the gross value of fruit production and 3% and 8% of total gross value of agricultural production in Queensland, pending major climatic events. This research relied upon multiple sources of information including; economic research (regional state and national levels), interviews with over fifty businesses that are dependent upon the banana producing industry, and aggregated data from the Banana Enterprise Comparison Project Rounds I and II (BA and BA 10026). It is recommended that the industry utilise the findings of this analysis to make local, state and national legislators and the wider business community aware of the true worth of the industry in regions, states and nationally.

13 13 2. Technical Summary 2.1 The Australian Banana Industry The Australian Banana Industry produced 203,000 tonnes of bananas in with a gross value of $316m, according to the Australian Bureau of Statistics (ABS). This is the year Yasi (February 2 nd 2011) had a major impact on the Banana industry in Far North Queensland. Shipments of bananas out of Far North Queensland were reduced to approximately 10% of volumes prior to February. Information provided by the Australian Banana Growers Council (ABGC) suggests that the industry in Far North Queensland was larger than defined by the official ABS profile in Weekly transport shipments of bananas out of Far North Queensland in totalled 216,400 tonnes (16.6m cartons, or an average 320,000 cartons per week), 18% higher than outlined in ABS data. Adopting the Queensland transport figures for Queensland, the industry in is estimated to have produced a total of 236,000 tonnes of bananas worth $368m. Far North Queensland has consistently produced approximately 90% of the national banana crop in recent years. There were a total of 584 banana growers across Australia in of which 51% were in Far North Queensland 1. The Far North Queensland region dominated production, producing 90% of national volume off an average farmed area per enterprise of 40 hectares, with an average 620 tonnes produced per enterprise. In New South Wales the average farm size and average production volume in was 5.4 hectares and 51 tonnes respectively. In Western Australia the average enterprise farmed 5.4 hectares, and produced 91 tonnes Other than due to major adverse weather events in Far North Queensland, the industry operates in an environment where supply and demand are closely balanced and returns achieved by growers can be significantly impacted by relatively moderate variations in volume supplied. The relationship between volume and price is well demonstrated in Figure 1, where the impacts of both Cyclone Larry (March 2006) and Cyclone Yasi (February 2011) accentuated or exaggerated the price/volume relationship. 1 ABS, Agricultural Commodities, Small Area Data (Additional Data cube)

14 14 Figure 1 Price and Volume for FNQ Bananas in and Source: Australian Banana Growers Council FNQ Transport Figures Market Information Services 2012 The banana industry in Far North Queensland produced 33% of the total fruit production in Queensland in , and 3% of the gross value of agricultural production. In these figures were 52% and 8% respectively and these may well be closer indicators of true contribution by the industry in Queensland. In New South Wales and Western Australia the banana industry is a much smaller contributor to the states economies. However the industry is highly valued for its contribution to employment and other industry sectors including the household sector and public administration in the regions where it operates. In (the year prior to Cyclone Yasi) the banana industry contributed $1.1billion per annum to the three main banana growing regions of far North Queensland, Northern New South Wales and Carnarvon Western Australia (an output multiplier of 1.88), and 9,598 full time equivalent jobs (en employment multiplier of 2.52). It also represented 9.5% of total private business turnover across the three regions and 8.24% of full time equivalent jobs. 2.2 Data Used for Economic Analysis ( ) In the year the banana industry produced 302,000 tonnes 2 according to the Australian Bureau of Resource Economics (ABARE). ABGC transport figures put the Far North Queensland production at 279,000 tonnes in (21.5m cartons or an average of 413,000 cartons per week), which further supports the national banana production being at least 302,000 tonnes in , perhaps closer to 310,000 tonnes, with a gross value approaching $450m. 2 Agricultural Commodities vol. 3 no.1, March quarter 2013

15 15 Due to the impact of Cyclone Yasi on the major banana production region in Australia, the data for this industry is not seen as a normal data set. For that reason the core economic analysis used in this report is based on data relevant to The core economic analysis has been developed using data for on farm expenditure, employment and economic activities that was collected in the Banana Enterprise Comparison Project (BA10026) for the year. This data for expenditures and on-farm economic activity has been used along with the most recent data available for the number of banana producers, and hectares of banana production in three main banana production regions, being Far North Queensland, Northern New South Wales and Western Australia. The data used for number of producers and production hectares has been sourced with reference to the ABS agricultural census and some information provided by the ABGC during Aggregated data generated from the Banana Enterprise Comparison Project (BA10026) has made it possible to estimate the total expenditure made by banana producers in the three regions Far North Queensland, Northern New South Wales and Carnarvon Western Australia in Total banana farm expenditure in the three regions in is estimated at $573.5m. The details on a region by region basis are provided in Table 2. Table 2 Estimated Total Banana Farm Expenditure in Regions FAR NORTH QLD NORTHERN NSW CARNARV ON WA TOTAL % Wages (employees) and contract labour services 154,405,280 6,579,797 4,428, ,413,859 29% Freight and storage 79,753,325 2,183,697 1,314,444 83,251,466 15% Fertiliser and chemicals 57,354,017 2,387,936 1,004,766 60,746,720 11% Packaging 49,510,958 3,959, ,036 54,197,314 9% Wages and on costs - owners 26,136,730 11,485,299 1,521,128 39,143,156 7% Rates 27,251,331 3,377, ,741 31,366,579 5% Contract packing fees 24,095, ,545,858 28,641,700 5% Marketing and promotion 20,033, ,033,461 3% Finance 7,023,429 7,038,030 1,161,938 15,223,397 3% Fuel and oil 8,104, , ,828 9,166,522 2% Field consumables 5,590,080 3,519,015 41,455 9,150,550 2% Other 50,519,571 2,918,217 3,712,307 57,150,095 10% Total 509,778,906 44,293,630 19,412, ,484,819 Source: Banana Enterprise Comparison Project BA Expenditure by banana farmers is heavily weighted towards the sourcing of labour and contractors which collectively represent 41% (inclusive of paid family labour) of total banana farm expenditure. Freight and

16 16 storage, fertilizers and chemicals and packaging collectively account for another 35% of total expenditure, as depicted in Figure 2. Figure 2 Major Expenditure Items for Banana Farms % 5% 3% 12% Labour and Contractors 41% Freight and storage 9% 11% 15% Fertiliser and chemicals Packaging Source: Banana Enterprise Comparison Project BA This aggregated data has also enabled an estimate of the total direct employment on banana farms in these three key banana production regions in Collectively the three regions are estimated to have employed 3,826 full time employee equivalents (FTEs) in , the details by region are outlined in Table 3 Table 3 Summary Direct Employment by Banana Producers Number of FTEs Employed on Banana Farms (Including Family) Source: Banana Enterprise Comparison Project BA Far North QLD Northern NSW Carnarvon WA 3, ,826 Total QLD, NSW and WA Of the FTE positions employed on banana farms: Non-family members accounted for 86% of the total, and 59% of the total FTE positions were filled by non-australians, predominantly back packers on working holidays in Australia.

17 Banana Production Regions FAR NORTH QUEENSLAND The Far North Queensland banana production region incorporates three sub-regions Cairns, covering parts of the outer suburban areas of the City as well as its rural hinterland and (the former) Douglas Shire Cassowary Coast to the south of Cairns Tablelands to the west of Cairns and Cassowary Coast. It is by far the dominant banana production region in Australia accounting for around 90% of national production in terms of both tonnage and gross value. Banana production within the region occurs primarily in Cassowary Coast and Tablelands. In both these sub-regions agriculture is the dominant industry, accounting for most businesses, most jobs and most business revenue, with bananas generating the greatest value of production of all agricultural commodities. The region has a population of 176,665, is characterised by rapid population growth in Cairns and stable or declining population elsewhere (although all sub regions are expected to grow over the next 20 years). By 2031, its population is expected to be 260,831. It has a total private sector business turnover of around $7 billion generated by 15,673 actively trading enterprises of which 20% (30% plus in Cassowary Coast and Tablelands) are in agriculture, an estimated 66,564 jobs of which 25% (over 40% in Cassowary Coast and Tablelands) are in agriculture, and 89,900 workers. It also has a slightly younger age structure than the State (but older in Cassowary Coast and Tablelands), a higher rate of unemployment and an average income (excluding Government pensions and allowances) less than 60% of the average for Queensland which, in turn, is less than 95% of the average for Australia. It is not surprising then that all parts of the region, with the exception of the more urban parts of the Cairns sub-region, are ranked within the top 50 in terms of relative socio economic disadvantage in the State. Herberton, within the Tablelands sub-region, is ranked within the top 11% NORTHERN NSW The Northern NSW banana production region is focussed in two pockets; one surrounding Coffs Harbour the other further north surrounding Lismore and Murwillumbah. It produces around 6% of national banana production in both tonnage and gross value, but the scale of the industry in the region has declined significantly over the last 4 years with the area under production dropping by 35%.

18 18 The Northern NSW region has a total population of 105,013 with around two third of this population being in Coffs Harbour. It has experienced modest population growth over the last 5 years and is expected to grow at an average of 1.3% pa over the next 20 years to 135,500 by It has relatively fewer people aged 45+ than NSW, but significantly more in the 15 to 44 age group. The Northern NSW banana production region has an estimated total private sector business turnover of around $4 billion, generated by 9,226 actively trading enterprises. Of these 20% are in agriculture, although agricultural business turnover only comprises 7.5% of the total suggesting much smaller enterprises in this industry sector. Total jobs are estimated at 46,246, of which 9% are in agriculture. Its rate of unemployment is slightly higher than the State average and its average income (excluding government pensions and allowances) per income earner is 71% of the average throughout NSW and 74% of the average throughout Australia. Agriculture is relatively insignificant to the Coffs Harbour economy in terms of its contribution to GRP, its level of value add and its contribution to employment. It is, however, a net exporting industry and is ranked 6 th (of 19) in terms of relative locational advantage. Agriculture is also a more significant contributor to the northern part of the region. Of all the industries in the region, agriculture, forestry and fishing is the only one that is classified as being in a transitioning phase due to lack of growth in employment. Nevertheless, horticultural industries are recognised as being reasonably specialised and important contributors to the economy. In Tweed Shire, for example, agriculture, forestry and fishing is one of only 3 industries that is estimated to have increased its share of employment in 2011 It also has had the most significant increase in value add of all industry sectors in the Shire CARNARVON WESTERN AUSTRALIA Banana production in Carnarvon occurs in a small part of the Shire close to the western seaboard and adjacent to the Gascoyne River. It is the smallest of Australia s banana production regions in terms of volume and value of production, but has increased its area under production over the last 4 years and its volume of production by 35%. Gross value of production, however, has dropped by 23% 3. Carnarvon has a population of 6,042 which has remained relatively stable over the last 5 years, but is expected to decline over the next 15 years. It has a younger age structure than WA but is expecting the proportion aged 65+ to increase from 4% to 9.4% over the next 15 years. It has the highest average total income (excluding government pensions and allowances) per income earner of all banana production regions, but only around 80% of the average across WA and 89% of the average throughout Australia. 3 ABS, Agricultural Commodities, Small Area Data (Additional Data cube)

19 19 Carnarvon has a rate of unemployment marginally higher than the State, but the rate has dropped markedly over the last year while the rate for WA has remained relatively static. It has a total of 585 actively trading private sector enterprises generating a total business turnover of around $329 million and supporting 3,620 jobs. Just less than half (46%) the businesses, 36% of business turnover and 52% of jobs are in agriculture. 2.4 Economic Contribution DIRECT CONTRIBUTION The direct contribution made by the banana industry is measured by gross value of production, expenditure made by growers and employment. The gross value of banana production in 2010/11 was $312 million, representing 6.7% of the gross value of fruit production in Australia, 32.9% of the gross value of fruit production in Queensland, 3% in NSW and 3.5% in WA 0.7% of the gross value of agricultural production in Australia, 3% of the gross value of agricultural production in Queensland, and 0.2% in both NSW and WA. However, results for 2010/11 are adversely affected by the impact of Cyclone Yasi in the Far North Queensland production region. In 2006/07, for example, the year of the previous Agricultural Census, the total value of banana production throughout Australia was $851 million, representing 17.3% of the gross value of fruit production and 2.4% of the gross value of agricultural production in Australia The gross value of banana production in Queensland was $761.9 million (compared with $283.1 million in 2010/11). This represented 52.2% of the gross value of fruit production in Queensland, 8% of the gross value of agricultural production, and 11% of the 2011 total business turnover in the region. It is suggested that these results are more representative of the contribution made by the banana industry in Queensland excluding the impact of extreme climatic events. Estimated total expenditure by banana growers in 2011 was $573.5 million ($510 million in Far North Queensland, $44 million in Northern NSW and $19 million in Carnarvon. Greatest expenditure is made on Wages and contract labour services (36%) Freight and storage (15%) Fertilizers and chemicals (11%) Packaging (9%) Contract packing fees (5%).

20 20 Of the total expenditure, 53% or $304 million is spent within the local regions. Excluding wages and payments to contract labour, the most significant local spend is associated with transport (around $42 million) rates ($31 million) contract packing fees ($17 million) packaging ($15 million) Fertilizers and chemicals ($9 million). Total employment amongst banana producers was 3,826 full time equivalents at an average wage of $53, ECONOMIC CONTRIBUTION The direct impact of an industry on a regional economy only tells part of the story of its economic impact. Economic impact also measures the extent of flow on effects that result from producers increasing their output resulting in increased demand up and down the supply chain, and induced impacts resulting from households reinvesting some of their increased income on local goods and services. The total economic contribution made by the industry to the three banana growing regions, including multiplier and flow on effects, is estimated at total output or sales in the three regions of $1.1 billion (an output multiplier of 1.88) total full time equivalent jobs of 9,643 (an employment multiplier of 2.51) This represents 9.6% of estimated total private sector business turnover 9.8% of estimated total full time equivalent jobs. Impacts (in terms of total $s) are most significant for the household sector the Transport, Postal & Warehousing industry. Strongest linkages (& highest output multipliers) are associated with the Professional, Scientific & Technical Services industry Agriculture, Forestry & Fishing.

21 21 Impacts are most significant in Far North Queensland and least in Northern NSW. In Far North Queensland, for example, the banana industry generates a total output (directly and indirectly) of $951 million representing approximately 13.6% of total business turnover, and supports 8,384 full time equivalent jobs, 14.6% of total full time equivalent jobs in the region. Impacts by region are summarised in Table 4. Table 4 Summary of Regional Economic Contributions Made by the Banana Industry DIRECT IMPACTS Far North Queensland Northern NSW Carnarvon Total Direct Expenditure ($m) $509.8 $44.3 $19.4 Direct FTE Jobs (No.) 3, Av Wage/FTE Employee $54,034 $50,484 $46,867 ECONOMIC CONTRIBUTION (DIRECT AND INDIRECT IMPACTS) Total Output ($m) $951.3 $86.9 $38.6 Output Multiplier % of Total Business Turnover 13.6% 2.2% 11.7% Most Significant Impact Household sector Household sector Administrative & Support Services 2 nd most significant impact Transport, Postal & Warehousing Highest output multiplier Professional, Scientific & Technical Services 2 nd highest output multiplier Agriculture, Forestry & Fishing Total FTE Jobs Supported by the Industry Public Administration & Safety Household sector Professional, Scientific & Technical Services 8, % of Total FTE Jobs 12.6% 1.92% 9% Employment multiplier Household Sector Professional, Scientific & Technical Services Electricity, Gas, Water & Waste Services

22 22 3. Introduction The banana industry is a significant employer in the regions where it operates. In tropical Far North Queensland the industry purchases significantly more transport packaging, labour and related service than the sugar industry, the next largest agricultural industry in the region. Both these industries eclipse the other tropical fruit and tree production industries in the region. Beyond this however there is little quantitative information available pertaining to the economic contribution the banana industry makes to its regions and the local, state and national economies. This lack of data places it at a disadvantage when negotiating support and cooperation from local, state and federal agencies and governments, other industry sectors, special interest groups and communities. Given the lack of current economic data and analysis of the banana industry and the need for the industry and its peak industry to be well informed and equipped in order to represent the industry, Horticulture Australia with input from the Australian Banana Growers Council commissioned this project. The need for this project was further demonstrated when the industry was hit by the second major cyclone since February 2006, being Cyclone Yasi on February 2 nd This analysis indicates that Cyclone Yasi reduced monthly shipments of bananas from Far North Queensland to 10% 4 of what they were in the preceding months. In 2006 Cyclone Larry had a similar major impact on the Far North Queensland industry, which produces 90% 5 of Australia s bananas. This project takes advantage of an opportunity to access data from several very pertinent sources of information to present a comprehensive analysis. Data from the Banana Enterprise Comparison Projects, information gathered from face to face interviews with 50 businesses that are reliant in one way or another on the banana production sector and thorough economic research and analysis of the entire economies of the regions, states and Australia have each been applied to produce this report. With the information provided in this report the industry and its representative bodies will have the tools and information needed to: present the case for increased support for the banana industry in policy development, and government assistance when and as needed, ensure that government bodies, regional and industry organizations, other sectors in the banana supply chain and the communities that co-exist with the banana industry are aware of the importance of this industry to the well-being of regions and the economy, 4 SOURCE: Australian Banana Growers Council 2012, FNQ Transport Figures, SOURCE: ABS, Agricultural Commodities, Small Area Data (Additional Data cube) ABS, Value of Agricultural Commodities Produced, Australia,

23 23 develop and use the information to support planning, industry development, research and development investment decision making and interaction with stakeholders and special interest groups

24 24 4. Materials and Methods This project utilised four avenues of information collection and then analysis. The unique access to aggregated data derived directly from the business operations of a representative sample of banana producers (Banana Enterprise Comparison Project) was supported by: Economic research and econometric modeling, Data collected by industry regarding product shipments from the dominant production region,& Interviews with 50 upstream and downstream businesses that are reliant in one way or another on the banana production sector for a significant part of their own businesses. This multi-faceted data sourcing is illustrated in Figure 3. Figure 3 Research Framework for This Analysis Banana Enterprise Comparison Projects BA and BA10026 Data aggregated from a sample of 60 banana growers that contributed 30% of the national crop in , employed 865 full time equivalent employee units and had a collective business turnover of $143m in Economic Research and Econometric Modelling Provided by Street Ryan and Associates Pty Ltd. Interviews with 50 Upstream and Downstream Businesses This respondent group collectively had business revenue of $583m, in , of which 38% was considered directly related to the banana industry, and employed 1,562 full time equivalent employee units of which 37% of the positions were directly related to servicing banana producers. Multi-source analysis of the value of the Australian Banana Industry to Local and National Economies Report Project BA Value of the Australian Banana Industry to Local and Regional Economies Other Key Data Sets Including ABGC banana transport figures for years including 2006/07, 2009/10 and 2010/11 and historical wholesale price information for banana sales through the Brisbane wholesale market.

25 25 Every attempt has been made to undertake validity and authenticity checking where ever possible. The methodology adopted is particularly strengthened by the degree to which the respondent samples are representative of the total populations in respect of: The sample of banana producers who have contributed to the aggregate data set from the banana enterprise comparison projects, and The sample of upstream and downstream businesses that have been engaged in one-on-one interviews across the supply chain. In the economic research and econometric modelling cross-checks have been carried out where available to test the findings against alternative methods and sources that are at times used by economists. The providers and Street Ryan and Associates, our contractors, are not aware of any prior work done in an agricultural production sector that has taken the opportunity to combine the sources of information that have been accessed in this analysis. Certainly discussions with the Australian Banana Growers Council prior to commencing this analysis confirmed that to their knowledge no similar analysis of the banana industry has been undertaken prior to this project.

26 26 5. Results 5.1 Banana Production Sector OVERVIEW In the Australian banana industry produced 202,750 tonnes of bananas with a gross value of $316 million, according to the Australian Bureau of Statistics 6 (ABS). This production was achieved from 13,296 hectares and by a total of 584 producing establishments, as outlined in Table 5. Table 5 Australian Banana Industry Statistics /11 Total Area (Ha) 13,296 Production (Tonnes) 202,740 No. of Establishments 584 Gross Value of Production ($m) 316 Local Value of Production ($m) 245 SOURCE: ABS, Agricultural Commodities, Small Area Data (Additional Data cube) ABS, Value of Agricultural Commodities Produced, Australia, Banana producing establishments in Far North Queensland account for 51% of total banana producers and consistently produce approximately 90% of the national banana crop, as in Table 6. Table 6 Prominence of Far North Queensland in Banana Production QLD as % of QLD, NSW &WA 2006/07 QLD as % of QLD, NSW & WA 2010/11 Total Area (Ha) 84.57% 88% Production (Tonnes) 89.20% 92% No. of Establishments n/a 51% Gross Value of Production ($m) 89.53% 91% SOURCE: ABS, Agricultural Commodities, Small Area Data (Additional Data cube) ABS, Value of Agricultural Commodities Produced, Australia, ABS, Value of Agricultural Commodities, Australia,

27 SCALE AND LOCATION OF PRODUCTION Whilst Queensland produced 90% of the Australian banana crop in as provided in Table 6, Queensland, New South Wales and Western Australia produced 98.5%, the only other state or territory recording banana production is the Northern Territory (1.5%), as provided in Table 7. Also, although Queensland and New South Wales collectively produce 96% of the crop, the industries in these two states are markedly different. For example in Far North Queensland during producers with an average farm size of 39 hectares produced 183,000 tonnes (average 622 tonnes per enterprise) 7. In comparison, in New South Wales 230 producers produced an average of 51 tonnes per enterprise and had an average farm size of 5.4 hectares. The Western Australian industry is also very different to the industry in the eastern states. Bananas are produced predominantly in a very small geographic area just outside Carnarvon in Western Australia. The average farm size in this production region is also approximately 5.4 hectares 8, with average production per enterprise of just under 100 tonnes per enterprise. The Western Australian market is focused on local (western seaboard) markets with significantly different variety mix and farm practices, with much of the production targeted and smaller fruit size for local markets. Table 7 Australian Banana Industry Statistics by State Queensland New South Wales Western Australia Total QLD, NSW & WA Northern Territory Total Total Area of Bananas (Ha) 11,480 1, , ,295 Production (Tonnes) 182,687 11,780 5, ,639 3, ,740 % of Production 90.1% 5.8% 2.6% 98.5% 1.5% 100.0% Number of Agricultural Businesses Value of Production ($m) Implied Average Price $/KG % of Value of Production 89.6% 5.9% 3.2% 98.7% 1.3% 100.0% Source: ABS, Agricultural Commodities, Small Area Data (Additional Data cube) ABS, Value of Agricultural Commodities Produced, Australia, According to the information sourced from the ABS 9 the Australian banana industry in had a gross value of production of $316m with an average farm gate price, as implied by the data, of $1.56 per kilogram, or $20.28 per 13KG carton equivalent. 7 ABS, Value of Agricultural Commodities Produced, Australia, ABS, Value of Agricultural Commodities Produced, Australia, ABS, Value of Agricultural Commodities Produced, Australia,

28 28 As discussed in the following section, additional data collected annually by the Australian Banana Growers Council (ABGC), of shipments of bananas out of the Far North Queensland region suggests that at last in the industry was larger than reflected in the ABS figures QUEENSLAND BANANA TRANSPORT DATA The Australian Banana Growers Council (ABGC) has for many years coordinated the collection and dissemination of data for the weekly shipments of bananas from Far North Queensland to the national domestic market. This data is collected and recorded as the number of cartons shipped per week by the major transport companies out of Far North Queensland. Analysis of the ABGC Transport Figures (as known within industry) for the years , and provides the information illustrated in Figure 4. ABGC Transport Figures indicate that in ,000 tonnes (16.6 million cartons) were shipped from Far North Queensland to the domestic market, compared to the ABS figure of 182,697 tonnes (14 million cartons). Given the source and nature of the ABGC Transport Figures it appears reasonable to adopt upgraded total volume of production figures for , being: The Far North Queensland Industry produced approximately 216,000 tonnes of bananas, and Total Australian banana production in of approximately 233,000 tonnes, if volumes from other regions are assumed to be as captured by the ABS. Figure 4 Far North Queensland Banana Transport Volumes , & / / /11 300,000, ,000, ,000, ,000, ,000,000 50,000, ,811, ,406, ,677,308 Source: Australian Banana Growers Council (FNQ Transport Figures) 10 Australian Banana Growers Council 2012, FNQ Transport Figures, , ,

29 29 By adopting the ABGC Transport Figures as the most accurate measure of production out of the largest producing region, and adopting data as provided by ABS for other parts of the Australian industry the total production in is upgraded to 236,000 tonnes with a gross value of $368m. Table 8 Australian Banana Industry Statistics by State, Adjusted for ABGC Transport Data Queensland New South Wales Western Australia Total QLD, NSW & WA Northern Territory Total Total Area of Bananas (Ha) 11,480 1, , ,295 Production (Tonnes) 216,406 11,780 5, ,358 3, ,459 % of Production 91.5% 5.0% 2.2% 98.7% 1.3% 100.0% Number of Agricultural Businesses Value of Production ($m) Implied Average Price $/KG % of Value of Production 91.1% 5.1% 2.7% 98.9% 1.1% 100.0% Source: ABS, Agricultural Commodities, Small Area Data (Additional Data cube) ABS, Value of Agricultural Commodities Produced, Australia, Australian Banana Growers Council 2012, FNQ Transport Figures, Source: Market Information Services, SIGNIFICANCE OF BANANA PRODUCTION IN REGIONS Far North Queensland In the Far North Queensland region banana production is a highly significant component of the region s economy as illustrated in Table 9. In , after the impact if Cyclone Larry in March 2006, banana production was responsible for 52.2% 11 of the total fruit production in Queensland from July 1 st 2006 to June 30 th 2007 and accounted for 8% of total gross value of agricultural production in Queensland in that year. 11 SOURCE: ABS, Agricultural Commodities, Small Area Data (Additional Data cube)

30 30 Table 9 Banana Industry Outputs Compared to Total Fruit Production and Total Agricultural Production by State QLD NSW WA QLD, NSW & WA Bananas as % of Total Australia Bananas 2006/ / / / / / / /11 Gross Value of Production ($m) Local Value of Production ($m) % of Gross Value of Fruit Production % of Local Value of Fruit Production % of Gross Value of Agricultural Production % 98.70% % 98.50% 52.20% 32.90% 9.20% 3.00% 4.70% 3.50% 18.40% 7.70% 52.70% 30.70% 9.60% 2.50% 5.00% 3.80% 17.30% 6.70% 8.00% 3.00% 1.00% 0.20% 0.30% 0.20% 2.40% 0.70% SOURCE: ABS, Agricultural Commodities, Small Area Data (Additional Data cube) ABS, Value of Agricultural Commodities Produced, Australia, In the recorded contribution of banana production to the gross value of fruit production and the gross value of agricultural production was lower, 32.9% and 3% 12 respectively. The reason for the significant reduction in banana production in is directly related to the timing of Cyclone Yasi, which hit the region and the industry on February 2 nd As clearly demonstrated in Figure 5, volumes produced and shipped to market out of far North Queensland following Cyclone Yasi, between March and June 2011, were reduced to approximately 10% of the monthly shipments in the seven months leading up to Cyclone Yasi. 12 SOURCE: ABS, Value of Agricultural Commodities Produced, Australia,

31 31 Figure 5 Impacts of Cyclones Larry and Yasi on FNQ Banana Production & / /11 Tonnes Shipped / Month 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 - Cyclone Yasi, February 2, 2011 Cyclone Larry Source: Australian Banana Growers Council 2012, FNQ Transport Figures Market Information Services 2012 New South Wales and Western Australia Banana production accounts for 9% of the gross value of fruit production in New South Wales and 1% 13 of the gross value of agricultural production. In Western Australia it accounts for 1% of the gross value of fruit production and 0.30 % of the gross value of agricultural production However, as is discussed in following sections, the value of this industry to the regions in which they are located are significant in terms of the proportion of regional employment it generates and its impact on other sectors or the regional economies such as the household sector and for its contribution to other sectors in these regions BANANA PRODUCTION SECTOR EXPENDITURE IN REGIONS This analysis if the economic value of the Australian banana industry to regional and national economies benefits from the ability to access information collected across the industry in the Banana Enterprise Comparison Project, Rounds I and II, (HAL Project BA 10026). This project collected data from 60 banana growers across the Australian industry that collectively account for more than 30% of the total volume produced in The Banana Enterprise Comparison Project delivers a unique insight into the costs, returns and practices of a highly representative group of banana growers from across all regions. The participant group collectively farmed over 3, hectares of bananas in and produced more than 82,000 tonnes of bananas worth $143.5 million. 13 SOURCE: ABS, Value of Agricultural Commodities Produced, Australia, SOURCE: 'Banana Enterprise Comparison Project Round II (HAL Project BA 10026)