Transcript: A video case study on Fletcher International Exports

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>>Voiceover: Australian lamb and mutton can be found on the dinner tables of homes and restaurants worldwide.

Australia is the world’s largest exporter of mutton and the second largest exporter of lamb.

We also export sheepskins and by-products such as meat for pet foods.

North Asia is a major destination for these products and export opportunities are set to grow under the free trade agreements with China, Japan and Korea.

These agreements will progressively eliminate tariffs on lamb, sheepmeat and sheepskins, giving Australia a significant edge over our competitors worldwide.

Which is great news for Dubbo-based Fletcher International Exports, one of regional Australia’s biggest employers.

>>Bernard Gooch: My name is Bernard Gooch. I’m the Export Manager at Fletcher International Exports Dubbo.

Fletcher International Exports is a privately owned company operating two state-of-the-art meat processing plants, one near Albany in Western Australia and one in Dubbo, New South Wales. We have capacity to process 90,000 lambs and sheep per week and employ over 1,200 people.

Our philosophy is to process as much as the animal as possible to as many countries as possible so we have to have as many markets for the animal as we can, processing not only chilled lamb, frozen mutton to over 90 countries but also sheepskins, runners for sausage casings, tallow, bloodmeal, meat meal and MDM.

The signing of the FTAs with North Asia is an integral part of our business with these markets. We can’t compete with countries that have already signed FTAs in these markets and have the benefit of the reduced tariff, and we’re still paying the full tariff. Signing the FTAs is one step closer to increasing exports and building on the relationships with these markets.

>>Voiceover: China is Australia’s second most important sheepmeat export destination. The China Agreement positions Australian farmers to increase sales by phasing out tariffs on sheepmeat as well as sheepskins.

>>Bernard Gooch: Fletcher’s is one of the largest processors and exporters of sheepmeat and sheepskins to the China market, processing and exporting over 51,000 tonnes of sheepmeat to China in the last two years.

In China’s case, our import duties will start reducing by the end of this year or early next year. In seven or eight years we won’t have a duty for sheepmeat in China. That’s so important for our customers’ cash flow – they don’t have to pay the duty when they’re clearing the product from the wharf and that will help them buy more products and help increase the exports of Australian sheepmeat into China.

The trade agreement with China has other benefits as well, not just on the sheepmeat and lamb that I’ve spoken about, but also on the sheepskins. As we reduce that duty down to zero over time, that will give a lot more confidence in the business and help increase exports to China.

>>Voiceover: Under the Korea Agreement, the tariff on all sheepmeat will be progressively eliminated. Fletchers is already benefitting from the agreement.

>>Bernard Gooch: Since the FTA was signed and came into force with Korea in December 2014, our sheepmeat exports to this market has increased by 30 per cent.

The signing of the FTA with Korea was significant, in the fact that a lot of the products that are exported to Korea are higher value so as we reduce the percentage of the tariff, that’s a saving for the supply chain, whether it’s the Australian farmers, the processors, or the customers in Korea – gives them a lot more confidence and they’re getting a lot more bang for their buck out of the signing of the FTA.

The other thing we’re doing to make the most of the FTAs is as the duties come down, it gives us a chance to develop new items and value-added items. A 15 per cent duty on a lower value item we might be able to value add that product and double the value of that product but it’s really impossible when there’s such an impost on duties in some of these markets. As those duties come off, it gives us the best chance and confidence to go and develop value-added items.

The unique qualities I see in the Asian markets is that the Asian customers all love that long-term relationship. When we make decisions in our business about going forward and investment and developing new products, we don’t try to make a quick buck today. We will always look towards the long term and our customers appreciate that.

The FTAs with these three countries give us a lot of confidence to reinvest in the markets and gives our customers confidence as well.

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