Outside The Square: Australian Export Trends To Europe (2016-2020)
While Europe is not considered one of Australia’s biggest two-way trading partners, sub-regions within the British Isles (United Kingdom) and Western Europe have shown considerable demand for Australian exports from 2016 to 2020.
Derived from Australian total trade figures, the United Kingdom (31%), the Netherlands (15.5%), Belgium (7.8%), Germany (7.1%) and Italy (6%) showed the greatest demand with the top exports from 2016 to present being tobacco, vegetables, milled cereal as well as minerals, metals and oils.
In 2019 alone, global sales from tobacco cigarettes exports by country totaled US$20.2 billion (1). While Australia and New Zealand contributed a mere 0.4% (1) to this global figure, this amounted to US$36,692,000 for Australia and US$36,222,000 for New Zealand respectively (1).
From a more local perspective, the year-on-year increase of Australian tobacco exports between 2019 to 2020 was 375% bringing the 4 year average to nearly 120%. Australian exports of Tobacco and substitutes to Europe was specifically transported to Western Europe.
According to an article published in the Magazine of European Medical Oncology, the reason for high smoking prevalence in the region during this time is largely justified by both low prices of tobacco adjusted for purchasing power, as well as poor smoke-free legislation enforcement (4). The European Region also has the highest proportion of tobacco use in the world, with an estimated 209 million people (or 29%) smoking (2) as of 2019.
Exports of Australian vegetables to Europe continue to be on the rise despite difficult conditions in 2019, with onions showing significant growth (3).
Increasing 5.4% year-on-year, total vegetable export volumes reached 230,000 metric tons (MT) during the 2019 season alone while the value of these shipments rose by 6.6% from 2018, according to a report by Australian industry body, AUSVEG (3).
National Manager of Export Development at AUSVEG, Michael Coote says, “The Australian vegetable industry is continuing to see growth in its exports, particularly on the back of strong performing products such as onions to European markets,” (3).
While onions had a strong season in 2019, experiencing a rise of 67% in overall value, carrots remained Australia's main vegetable export making up 34% of total export volumes. Following, potatoes, onions, celery, broccoli and cauliflower were all identified as significant exports for the country and contributed to the overall rise in exports (3).
Export growth for onions in 2019 was led by Tasmanian producers in the country as the state saw a 91% increase, with many of its shipments being sent to European markets (3). Western Australian and South Australian growers also increased onion exports 67% and 47% respectively (3).
The extremely dry weather and severe spring frosts across central and southern parts of Europe has presented a great opportunity for the Australian wheat/grain market (5).
Rabobank's London-based Global Grains and Oilseeds Strategist Stefan Vogel said within the world grain trade, all eyes are now on Australia to see how much of their crop would counterbalance the result in Europe, which is likely to see its lowest canola production in nearly 15 years and well below average cereal tonnes (6). Mr. Vogel highlighted wheat and canola as the two main crops presenting opportunities (6).
However, after a good 2019/2020 harvest where the European market exported 38 million tonnes of wheat, Mr. Vogel is anticipating a drop of at least 10m tonnes this year, with major wheat growing nations such as France, Germany and Romania suffering from dry and hot conditions (6).
"Everyone is banking on Australia to make that happen on the world market because no one else has a whole lot of buffer to make that up," he said (6).
Minerals, Metals and Oils
Europe is not traditionally considered a ‘major’ market for Australian mining exports in comparison to the likes of North East Asia. Nonetheless coal, gold and lead are Australia’s largest goods exports to the European bloc (7).
Australia’s largest goods export to Europe across 2017-18 was coal which amounted to $4.2 billion, or 7% of Australia’s total global coal exports. This is a growth of 27% in 12 months (predominantly to the Netherlands, France, Belgium, Italy, Germany and the UK) (7).
Gold was Australia’s second largest goods export to Europe, valued at $3.96 billion (22.5%) (7). The main export markets for this commodity was the United Kingdom, Switzerland and Germany (7), followed by lead exports worth $590 million in 2017, predominantly to the UK and Belgium supplying 19% of Europe’s total lead requirements that year (7).
Managing Director of CMA CGM Group Agencies Australia & New Zealand, Shane Walden says “Despite the fact that Europe may not be Australia’s largest trading partner, changing demands over the last five years have provided key opportunities for Australia to capitalize on key commodities. Influenced by global events, extreme weather conditions, strong seasonality and changing consumer trends, the European market looks like it could provide increased opportunity for smaller players in the years to come.”