Thai fruit farmers have won a long battle to get their lychees and longans onto the Australian market place, breaking a long ban by Australian authorities which deemed the fruit as a potential pest-carrying hazard to agricultural crops.
Until last week, the fruit was on a black list of agricultural products which Thailand was banned from exporting into the country. However, in recent safety tests, Australian authorities declared the fruits pest free and gave the green light for imports to recommence.
Australia and Thailand have spent the last two years ironing out a free trade agreement between the two nations. At times the discussions have been heated and certain issues, such as quotas, have proved to be extremely tricky, but the two countries finally signed an official free trade agreement in October last year.
The agreement on lychee and longan is widely seen by industry observers as a softer stand on Thai food and beverage imports, which until recently have been hampered by a lack of development.
However, Australian authorities did stipulate that the import of the fruit would be closely monitored, with all Thai exporters having to follow closely regulations designed to minimize the risk of pest outbreaks.
Lychee and longan are among the main fruit crops in Thailand. Presently lychee production runs at around 40,000 tons a year, whereas the more important longan crops comes in at around 230,000 tons a year. The vast majority of these crops are consumed on a local basis, however the export market for longan fruit is significant, with the US market importing around 90,000 tons a year.
Australia has its own small lychee and longan fruit industry which, until now, has been protected by the ban on imports from Thailand. Currently Australia produces about 3000 tonnes of lychee annually, returning A$12 to 15 million. On a per hectare basis, this rate of return compares more than favourably compares with alternate crops such as macadamia, stonefruit and mango. About 50 per cent of production is in northern Queensland, 40 per cent in central and southern Queensland, and the rest balance in northern New South Wales. Longan production is much smaller, with a yearly market value of just $2 million for a crop that averages yields of around 1,000 tons.
Both the fruits were introduced to Australia about 60 years ago, but the widespread commercial farming only began back in the 1970s.
Although the move may prove a threat to this small sector in Australia, it will certainly prove advantageous to Thailand's burgeoning fruit and vegetables export market. On top of firming up the FTA with Australia, Thailand has also signed an agreement with China for free trade in fruits and vegetables, a move which is widely tipped to provide a major boost to the sector.
Since the agreement was signed in China, in October 2003, the Thai authorities have reported unparalleled requests from fruit and vegetable exporters wanting to find out more about special tax privileges to export their products to China. Trade for that market is currently estimated to be valued at baht 2.9 billion (€60m). Thai authorities estimates that in the three months since the agreement was introduced Thai fruit and vegetable exports to China have increased by 80 per cent.