Aussie Rock Lobsters Claw Their Way to Chinese Markets

August 2018

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Buoyant times lie ahead for the Geraldton Fishermen’s Co-operative thanks to growing demand in China for rock lobsters. The Co-operative is also seeking to diversify its rock lobster exports to a range of other countries.

Founded in the 1950s, the Co-operative is based in Western Australia, and has grown from a small handful of fishermen to the largest rock lobster exporter in the world. With sales of $450 million a year, 200 members and 350 employees, it still insists on remaining as it began; a co-operative owned by its members, who are all fishermen.

The Co-operative’s main export market is China, where rock lobster is a prized menu item.

‘We export about 63 per cent of the Western rock lobster industry and at any one point in time can export up to 20 to 40 per cent of the world trade in live rock lobster,’ says CEO Matthew Rutter.

FTAs opening up Chinese markets

Prior to the China-Australia Free Trade Agreement (ChAFTA), the tariff on Australian rock lobster exports was 15 per cent. Under ChAFTA, this tariff has been reduced to 3 per cent and it will be eliminated entirely on 1 January 2019.

The ChAFTA tariff reduction set up the Geraldton Fishermen’s Co-operative to reap even greater rewards in existing well-established markets across China.

‘Since the tariffs have dropped under ChAFTA, we’re now exporting to 12 different cities across the country, when we used to have just one entry point into China,’ says Rutter.

‘More and more buyers are willing to participate and we’re seeing continued growth, even before the tariffs have fully gone down to zero. So I would say ChAFTA is having a big impact on our business.’

ChAFTA has given the Co-operative the ability to better brand its product, enhance control of the supply chain, and develop a better understanding of the market.

‘Another thing the FTA has helped to do is to make it easier to clear product at Chinese ports, that in the past were harder to get through,’ says Rutter.

‘Now that everyone knows about the FTA and are all incentivised to facilitate trade between China and Australia, it opens up markets that were previously closed, if not from the tariffs then red tape and bureaucracy.’

Diversifying risk

While 97 per cent of its exports currently go to China, the Co-operative also sells to markets such as the US, Japan, Taiwan, and the Middle East. The Co-operative is keen to expand these markets in order to diversify risk.

The Co-operative is also looking for new export opportunities and is currently analysing markets in other countries.

‘We’ve got to make sure our product remains as competitive as possible. We can’t have tariff barriers and those sorts of things stopping us from going into other markets.’

‘That’s why all these agreements, not just ChAFTA, but also ones like the TPP-11 and PAFTA [Peru-Australia FTA], are also important,’ says Rutter.

Growth plus optimism equals investment

Thanks to a number of factors, including the FTA with China, sentiment within the Co-operative and Western Australia’s rock lobster industry is confident, as members have seen more certainty in the sustainability of export markets.

‘There’s a level of growth and investment which has been going on for a couple of years now. The fishing industry is healthy, it’s well run and the quotas are closely managed,’ says Rutter.

This confidence is demonstrated by recent investments, with the three largest boats the fleet has ever seen commissioned in the past 18 months.

‘You wouldn’t see that sort of investment unless there was an air of optimism, and the FTA is definitely a contributing factor to that,’ says Rutter.

While keeping an eye on new and emerging markets, the opportunities China presents, including its consistently high prices and size of market, provides a bright future for Western Australia’s rock lobster industry.

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