Agri-exporters receive $110m air freight boost
1 April 2020, Written by Matt Ogg
An explosion of freight costs for agricultural goods and limited capacity have prompted the Federal Government to put forward $110 million to help agricultural and fishing exporters reach export markets.
Deputy Prime Minister Michael McCormack says the International Freight Assistance Mechanism will help secure freight flights into Australia's key export markets, with an initial focus on China, Japan, Hong Kong, Singapore and the UAE.
The package will apply to freight leaving Melbourne, Sydney, Brisbane and Perth, with flights to return loaded with vital medical supplies, medicines and equipment.
In parallel, the government will inject an extra $49.8 million into the Export Market Development Grants (EMDG) program for the remainder of this financial year - a scheme that applies to exporters generally as well as the tourism sector.
Meanwhile, fisheries will have around $10 million in levies waived for the remainder of 2020.
"We are doing everything possible to help our high-value agricultural and fisheries exporters get their produce on airplanes and into overseas markets," says McCormack.
"This will help restore key freight routes for our farmers until commercial capacity can be restored again.
"Everything we are doing as a Government in response to this pandemic is focused on saving lives and saving livelihoods and we know our agriculture industry is key to this."
Federal Trade Minister Simon Birmingham says the Covid-19 pandemic has led to major air freight shortages and had disrupted supply chains around the world.
"This temporary action will help Australian producers to protect the jobs of those who rely upon Australia's export of safe, quality food into the world," says Birmingham.
"Getting our export sector back on its feet is crucial to reduce job losses through the crisis and a critical part of the ultimate economic recovery.
"By getting flights off the ground, full of Australian produce, we're supporting our farmers and fishers who have been hit hard by this crisis."
Federal Agriculture Minister David Littleproud says this initiative will focus on high-demand agricultural and fisheries exports that have been hit hard by the Covid-19 crisis.
"We're backing our farmers by making sure they can get more of their high-quality product into overseas markets," says Littleproud.
"The more agricultural exports we can secure, the more regional jobs we can protect.
"We've seen an explosion in costs of exporting agricultural goods under the belly of planes because of the sheer lack of numbers. The reality is this is a subsidisation; it will not pay for all of it."
He adds Australians should take comfort in knowing the country can not only produce enough food for ourselves here through this crisis, but we can continue to supply the rest of the world.
"This is about showcasing Australian agriculture as not just having the best produce in the world, but also being one of the most reliable suppliers in the world," he says.
"There's a calm confidence out there. The Australian agriculture sector is just getting on the job calmly and methodically producing the best food and fibre in the world - we've got to continue to make sure that supply chains are kept open.
"Farmers still need to make a living. We're a nation of 25 million people who produce enough food for 75 million, so our farmers can't stop exporting. People shouldn't panic about the fact that Australian produce is going around the world - it's a good thing."
Assistant Minister for Forestry and Fisheries Jonno Duniam explains the fishing industry was one of the first hit when access to China was cut off in January, bringing many in the industry to their knees.
"Unlocking key international markets will get thousands of fishers, divers, deckhands and processors back on the job, and the levy relief will help to keep fishers financially afloat," says Duniam.
"Our seafood industry has been built on the back of some of the toughest and most resilient Australians, and this assistance will ensure that the sector can build a bridge to recovery."
The $110 million package will come from the Federal Government's $1 billion Relief and Recovery Fund.
It is one thing to get agricultural products to market, but cultural differences and supply chain structures mean Australian produce won't necessarily be top of mind for foreign nations grappling with their own health crises due to the pandemic.
This means marketing will be essential.
The additional $49.8 million for the market development program will allow exporters and tourism businesses to get additional reimbursements for costs incurred in marketing their products and services around the world.
"We recognise the current COVID-19 crisis is placing immense pressure on Australian exporters and tourism businesses, many of whom felt the earliest and deepest aspects of the economic downturn," says Trade and Tourism Minister Simon Birmingham.
"This funding injection will put more cash in the pockets of thousands of Australian businesses when they need it most.
"The EMDG scheme has been a popular vehicle to support the costs associated in reaching new markets, and this additional funding will give Australian exporters and tourism businesses extra help in these tough times."
The minister explains businesses who have spent their own money to market and grow Australian exports get back up to 50 per cent of their total eligible marketing expenses.
"This investment addresses the reality that businesses invested in good faith to lift Australia's exports, but are unlikely to see immediate return on those investments. These entrepreneurial and outward looking businesses will be crucial to our future economic recovery," he says.
"This extra $49.8 million to supplement the additional $60 million already committed by the Morrison Government will bring EMDG funding to its highest level in more than 20 years at $207.7 million for the 2019-20 financial year.
"This support is in addition to other measures our Government has announced to help small and medium businesses manage cash flow challenges and retain employees such as increasing the instant asset write-off, cash payments of up to $100 000 and supporting apprentices."
Any business which has incurred eligible EMDG expenses for promotional activities in 2019-20 financial year will be able to seek reimbursement for 50 per cent of these expenses without the Export Performance Test applying, when they apply from July 1.
This is in recognition that many exporters would have spent more on marketing expenses with the expectation they would see export income high enough to meet the export performance test.
More than 200 businesses that will benefit from this change are in the tourism sector, one of the hardest hit sectors of the economy.
Additionally, applications lodged in the 2020-21 financial year can claim expenses even if events have been cancelled due to circumstances beyond a company's control.
Photo: Australian Table Grape Association
Updated at 12:00pm AEDT on 1 April 2020.
Author: Matt Ogg