FACILITATING WILDFLOWER-BASED FLORICULTURE/HORTICULTURE

Victoria has an enormous floral resource with a large number of species suitable for development as cut flowers, nursery plants, `potted colour' and for dried arrangements. Natural variation within species also adds another dimension to the possibilities for ornamental use.

Overseas countries, for example Israel, recognised the potential of our flora earlier than many Australian producers, and now export greater quantities of Australian native flowers than Australia. However, the richness and uniqueness of our floral resources, and our ability to access and test new strains, puts Australia in a position to capitalise on the seemingly insatiable world market for new plants. Our seasonal differences from the main producer regions are a third advantage, and a fourth is the presence of a climate well suited to the production of Australian native plants.

In order to survive in the fiercely competitive floriculture world market, the Victorian industry will need to focus on capitalising on its inherent competitive advantages. The Committee has identified several key areas that industry and government should target

in order to achieve continued growth. These areas are:

a) research and development, and promotion;

b) access to biological resources and intellectual property rights;

c) quality;

d) continuity of supply; and

e) access to export markets.

Research and Development, and Promotion

The Committee considers that a commitment by both government and industry to research and development of new floral products underpins the future of the Victorian wildflower industry. The richness of Australia's floral resources, and our ability to access readily and test new plants, puts Victoria in a position to feed the huge world demand for new plants. This competitive advantage can, however, only be realised if adequate funding is directed towards the development and promotion of new, high-quality products. The importance of research and development to maintaining Australia's competitive advantage is demonstrated by the commitment of competitors such as Israel to the development of new technologies and plant products.

As the supply of Australian native `filler' flowers (such as wax flower) from other countries has increased, the price has fallen, and they have become commodities rather than niche products. Many believe that the industry should focus on producing a variety of high-quality `value-added' flower products. A regular supply of new varieties will meet the demand for unusual flowers and command high prices. Importantly, growth of the industry is dependent not only upon the technical aspects of research and development, such as improved production and post-harvest treatments, but on the identification and understanding of the markets for new products; the development of rigorous quality control systems; and strategic promotional activities.

The Committee, while recognising that successful research and development programs rely on a commitment by industry, nevertheless considers that adequate government support is crucial. The success of research and development, and product promotion, relies on the translation of research results into practical outcomes. The coordination between all industry participants, including government, is thus important.

Industry Fragmentation

The cut-flower industry in Victoria has historically been fragmented, with a large number of industry organisations operating parallel to each other, both within the wildflower industry, and between wildflower and traditional cut-flower growers.

The Flower Export Council of Australia (FECA) is a key industry body (whose recent move to Melbourne was supported by the State Government). It is active in marketing and promoting Australian flowers, in market-access negotiations and in the development and promotion of quality-assurance programs.

The Society for Growing Australian Plants and the Australian Flora and Protea Growers Association are two other national organisations which promote and foster the use of native plants within Australia. Another organisation, Flowers Victoria, represents both traditional and wildflower growers in Victoria.

A peak body, the Flower Industry Association of Australia was established recently to serve as an umbrella organisation for the whole industry. Organisations such as the Flower Export Council of Australia are members of this peak body.

The success of research and development programs and the effectiveness of promotional activities are heavily reliant upon achieving involvement and cooperation within the industry. The Committee considers it essential that the activities of the various national and State organisations are coordinated in order to provide strategic direction to the industry.

The Committee notes that the State Government has established the Garden State Advisory Council, which comprises representatives of industry, government and research organisations in Victoria. Its role is to advise government and industry on promoting and developing the ornamental and amenity horticultural industry in Victoria. The Committee considers that the group has a pivotal role to play in ensuring that research programs match the needs of industry.

Access to Biological Resources and Intellectual Property Rights

Historically the genetic resources of biota, and plants in particular, were considered as the `common heritage of mankind'. As noted in Chapter 9, the international Convention of Biological Diversity, however, provides an opportunity for countries to exercise control over their genetic resources. Within Australia, the national jurisdiction of indigenous biological resources is administered by both the State and the Commonwealth governments. There is, however, no national approach to policy and legislation in relation to this issue.

Australian species, on a number of occasions, have been developed and commercially exploited by overseas countries, without any royalties being returned to Australia. For example, the macadamia nut is now extensively produced in the USA and Australia now imports and pays royalties on cultivated varieties developed in the USA. Australian native wildflower markets are now being swamped by overseas production of these flowers - Israel and other countries produce greater quantities of kangaroo paw and wax flower than does Australia. There are no federal controls limiting the export of such genetic material. Once exported, it is difficult to assert `ownership' rights of the genetic material.

One approach is to require a royalty payment on any material being taken from the wild. This is the approach now being taken by Western Australia and, it is understood, Queensland. Both of these States have a large number of endemic species and address the issue of controlling access to biological resources through legislation. This legislation provides for the payment to the State of royalties arising from commercial use of its native flora and fauna. South Australia is entering into contractual agreements with overseas growers to supply material for subsequent development. It may be that more than one State will provide `exclusive' access to the genetic material of a plant - where that plant is found in both States.

Some in the industry believe that the requirement for such royalty payments is a disincentive to the development of new cultivars and thus market opportunities for Australian business.

The Committee was informed by the Department of Natural Resources and Environment (DNRE) that currently Victoria provides fairly open access to biological resources and that the Western Australian approach is currently not the preferred option for Victoria.¹

The Committee believes that an ad hoc State-by-State approach will not adequately address national issues, including indigenous people's rights to genetic resources and the question of who controls access to native species that occur in more than one State.

The Committee supports the need for a national approach. Clear policy is required not only on how to provide appropriate access to Australian genetic material, but whether `ownership' rights on this genetic material should be asserted and, if so, a policy on royalty payments - and the collection and distribution of any revenue generated.

The Committee notes, however, that world agricultural systems, including Australia's, have historically been based on a free and open trade in germplasm. There must therefore be recognition of the benefits gained from the relatively cost-free introduction of exotic species into Australia, for example South African proteaceous species, which are a major component of the wildflower industry.

The Committee therefore believes that any policy on access to the State's biological resources must not create impediments to continued access to and use of those of other countries'. The Committee believes that the genetic resources of the nation should be shared, but in a manner that is controlled and provides appropriate opportunities for Australian businesses and communities to benefit.

Benefit from the nation's unique genetic resources could be obtained through:

a) plant breeders rights;

b) royalty payments; and

c) contractual arrangements.

The Committee considers that research and development of new plant varieties will be encouraged if those who invest time, money and effort can receive a commercial return on their investment. As outlined in Chapter 9, the patenting system and the Plant Breeders Rights (PBRs) system are two methods by which this can be achieved - by conferring legal titles in new plant varieties to their breeders or discoverers.² Both of these systems are subject to federal laws.

With respect to the latter system, the Committee noted that Australian breeders may license PBR varieties to overseas growers on condition that a royalty is paid on subsequent plant or seed sales and that the mature plants are sold under Australian trademark. Alternatively the Australian enterprise is only involved with the initial selection and breeding of material, which is developed and marketed by overseas companies under agreement. The Committee considers that while both of these methods return the commercial benefits of plant research and development to Australia, the ideal situation would see greater investment in product development within Australia.

The recently completed inquiry by the Cut Flower and Nursery Industries Task Force was informed that income from propagating material and royalties had the potential to be greater than the sale of plant products to overseas countries.

The Committee is also aware (as outlined in Chapter 9) that the initial intention of the original legislation was that PBRs would not apply to selections from a natural or wild environment; rather it was a scheme for new plant inventions.³ However, the 1994 legislation arguably allows wild varieties that are `discovered' and then `bred' to produce a stable line to qualify for a PBR.

The Committee considers that the granting of PBRs in varieties derived from wild selected species must be contingent on the ability of the developer to prove the effort and expertise required to identify, select and stabilise a wild species for cultivation. In keeping with this approach, the Committee notes that improved documentation relating to the selection and propagation process of wild varieties is now required by the Australian Plant Breeders Right Office to prove the intellectual effort required to bring new plants into cultivation.⁴

It has been suggested that a sharing of royalties could be possible, where States assign limited exclusive rights to breeders to use wild material in return for a royalty payment.⁵ Breeders could then still use PBR to protect their selections or cultivars. Some argue that such an approach is unfair, as the commercial value of a plant in its wild state is small compared to the amount of intellectual effort, time and money invested in its development. In addition, the Nursery Industry of New South Wales has pointed to the public benefits derived from the propagation and commercialisation of rare and endangered species by the nursery trade.⁶ The Committee notes that the requirement to pay a royalty to the Government could unfairly penalise growers, and could be counter-productive to efforts to bring wild-harvested species into cultivation.

The Committee believes that, in the event that a State government demands a royalty for the use of native flora within Australia, it should be minimal, to ensure that exploration and development of the native flora are not discouraged. The Committee suggests that an appropriate use of royalties imposed by governments on the commercial use of native flora would be the funding of in situ conservation programs.

The Committee did not receive any evidence that there is a demand for breeders' rights to be available to breeders of native fauna. It is also aware of a view that places more importance on the encouragement of new plant development - to ensure a continual supply of new products into the market place is more important than pursuing plant breeders' rights.⁷

Quality

`Quality' is difficult to define, yet success in the world market, particularly in Japan, is heavily dependent upon the provision of `quality' product. For export markets to flourish, the produce must achieve the standards expected by overseas customers. The perception by customers of quality involves not only the aesthetic quality and vase life of the flowers themselves (which will depend on cultivation, harvest, post-harvest and transport practices), but administrative and service aspects as well.⁸ Service aspects include supplying product on time and to specification, and providing accurate and complete documentation. Exporters are in a good position to define `quality' to the growers on the basis of the needs and expectations of overseas customers. Once the flowers reach the exporter, the exporter must have his or her own systems in place to ensure that standards achieved by the growers are not compromised.

The Committee notes that there are a number of quality-assurance schemes available to the industry, including international schemes such as ISO9002, that provide principles and systems for assessing and implementing quality standards. Participants achieving quality-assurance accreditation are audited at intervals to ensure that standards continue to be met.

The `Australian Quality Assured Flowers' program is a system designed specifically for all participants in the Australian flower industry, including growers, exporters, wholesalers and retailers. This program aims to improve the consistency of cut-flower quality, using minimum quality standards based on accepted international flower grades, and incorporating a quality system so that the treatment flowers receive from planting to post-harvest to sale can be controlled and tracked.⁹

The Committee spoke to the quality manager for the Melbourne National Flower Centre¹⁰ and learnt that more than 30 Victorian flower growers are now part of the scheme, which has now been extended to include flower wholesalers and florists. The national scheme was created from a Victorian-initiated program.

The industry is divided as to the benefits of such schemes. They are criticised by some as being too administratively cumbersome, particularly by successful growers who generally have their own systems in place to ensure a quality product, and who believe that price mechanisms serve as the best indicators of quality. Others have found that a quality-assurance system has benefited their business performance greatly, giving them an advantage over competitors who do not have quality-assurance accreditation. A marketing strategy for the Australian industry has been suggested that would see all growers and exporters who attain accreditation - from any of the wide range of recognised quality-assurance systems - united under a national umbrella body and logo to reinforce and enhance Australia's quality image to overseas customers.

The importance of the quality of product was impressed upon the Committee by all those organisations and businesses contacted during its study tour to Amsterdam, and it strongly advocates the application and development of the `Australian Quality Assured Flowers' program.

Continuity of Supply

The Committee was advised that a major barrier to establishing and maintaining overseas markets was the inability of the industry to supply adequate quantities to overseas customers - that is, demand for the products exists, but Victorian growers are often unable to supply the quantities required.¹¹ Exporters who need to obtain material from a number of growers may then be faced with inconsistencies in the product supplied - different growers may have different interpretations of, and approaches to, quality standards.

As noted above, wildflower growing represents a business `sideline' for many producers, and the majority of plantations are less than five hectares. Notwithstanding the many successes and rapid growth of the wildflower industry in Victoria, wildflowers can still be considered a developing industry. For such an industry there will be a transitional period where producers diversify and test the market, before dedicating production to new crops. A `Catch-22' situation may arise where the potential for market development exists but is hindered by the quantity and quality of product that is being offered. A major Victorian exporter who often has difficulty providing the quantities of material requested by overseas importers has suggested that more plantations of commercial dimensions (greater than 20 hectares) are needed.¹²

The Committee was informed that not only are larger holdings required, but more growers are needed to produce newly developed varieties to expand the range of flowers and foliage available to overseas customers.¹³ A greater number of growers producing wildflowers over a larger geographic range would also assist in improving continuity of supply by extending the period of flower availability. The Committee was informed that a major issue is getting growers to grow the new products developed by researchers. Growers are hesitant to move into new crops, as they are unsure of which plants to grow, how to grow them and the likely returns.

The Committee notes that the Institute for Horticultural Development and the Garden State Advisory Council are currently working on a `Best Bets' program, with the assistance of major exporters. This will identify species (native and exotic) considered to have the greatest commercial potential and provide growers with available information on cultivation requirements. The Committee considers that such extension activities are an essential component of the development of the industry and should be encouraged to ensure that research efforts are translated into practical outcomes.

Access to Export Markets

The Committee notes that the Cut Flower and Nursery Industries Regulatory Reform Task Force, through the State Government's Office of Regulation Reform, has recently completed a major review of regulatory arrangements in the Victorian cut-flower and nursery industries. The Committee commends the report of this review to readers and notes that many of the issues addressed by the Task Force are directly relevant to native-plant sectors of the industry. A number of export issues peculiar to, or of particular relevance to, native-plant industries are highlighted below.

Export Permits

As noted in Chapter 9, the federal agency Environment Australia manages Australia's CITES obligations under the Wildlife Protection (Regulation of Exports and Imports) Act 1982 and is responsible for the issuing of all permits for the import and export of native flora. Export permits may be obtained either by individuals on a case-by-case basis or, alternatively, Environment Australia can issue an authority for businesses in States that have in place a Management Plan for the artificial propagation and commercial wild-harvest of native flora.¹⁴ The Australian Customs Service is responsible for inspecting consignments to ensure that they match the permits.¹⁵

Victorian exporters of native flora raised concerns to the Cut Flower and Nursery Industry Regulatory Reform Task Force about the long time taken for the issuing of export permits by Environment Australia. The Task Force identified a number of impediments that need to be addressed in order to expedite the issuing of export permits.

First, unlike Western Australia and Queensland, Victoria does not have in place a State management plan for the artificial propagation and commercial wild-harvest of native plants. Victorian exporters of native flora therefore face a greater regulatory burden in obtaining export permits than their competitors in States that do have a plan in place. The Task Force recommended that the DNRE develop a State management plan as a matter of priority.

Second, in some cases the Australian Quarantine and Inspection Service (AQIS) requires the same information for phytosanitary certificates as that required by Environment Australia for the issuing of export/import permits. The Task Force recommended that Environment Australia accept copies of phytosanitary certificates, where appropriate, to satisfy export permit requirements. AQIS has indicated is support for such an approach.

The third issue is the efficacy of Customs inspections of export consignments. Environment Australia has acknowledged criticisms that Customs officers lack the technical skills to ensure that consignments match permits. The Task Force recommended that AQIS be responsible for inspecting native-plant exports, rather than Customs Officers.

The Committee endorses the Task Force recommendation that the DNRE, as a matter of priority, develops a State management plan for the artificial propagation of native plants and for commercial harvesting of a limited number of native plants from the wild.

The Committee notes that a management plan is currently being developed for the harvesting of tree ferns, and that one for flowers and foliage is intended. The Committee considers that the implementation of a formal management plan is essential, not only to assist the industry by expediting export permits but, importantly, to ensure that wild-harvesting and cultivation practices are sustainable.

The Committee, while recognising that quarantine and inspection services are within federal jurisdiction, supports the streamlining of these processes for native-plant exports. The Committee considers it appropriate that AQIS and Environment Australia review their quarantine and inspection procedures to avoid duplication. The Committee also considers that unless personnel with the appropriate expertise check consignments, the intent of export legislation to protect endangered species will be greatly undermined.

Air Freight Costs

The Cut Flower and Nursery Industries Task Force was informed that exporters are concerned about the lack of adequate coolroom facilities at Tullamarine, and the capacity, quality and cost of freight services offered. The Committee notes that the Victorian Airfreight Council has recently established a Perishables Industries Task Force to address issues raised by exporters of perishable goods. The Victorian Government has also recently appointed a Perishable Industries Manager to Business Victoria, who is currently negotiating for the expansion of coolroom facilities at Tullamarine airport. As noted above, the majority of floral exports from Victoria are native plants, therefore efficient, cost-effective transport is essential.

The Committee supports the above efforts to ensure that Victoria's competitiveness in overseas markets is not unduly reduced by deficiencies in freight services.