The potential reduction of regulatory thresholds for marine biotoxins in the EU will have significant negative economic consequences for the Australian oyster, mussel, scallop and abalone industries (and pipi’s if domestic regulatory thresholds also changed).

The scallop, oyster and mussel industry currently export product to the EU. Total scallop exports to the EU in 2006/2007 were valued at around $4,551,000 AUD (187 t). Other mollusc (including oysters and mussels) exports to the EU in 2006/2007 were around $1,084,000 AUD (255 t). Due to the periodic occurrence of okadaic acid toxins and saxitoxins in Australian shellfish the implementation of reduced regulatory levels would reduce the amount of product eligible for export to the EU.

Exports of Australian abalone to the EU ceased in 2007, this was in part due to the enforcement of marine biotoxin regulatory limits by the EC. The wild caught abalone industry is attempting to regain market access to the EU through determining alternate risk management procedures for marine biotoxins in abalone. The reduction of regulatory levels for marine biotoxins may impinge on future EU access arrangements for Australian abalone.

Experience has repeatedly demonstrated that European decisions can impact on other more commercially significant markets, including Asia and the domestic market. Codex may also be prompted to change marine biotoxin guidance levels in response to EU changes. Wide spread adoption of reduced regulatory levels for marine biotoxins would result in increased growing area closures in Australia and less product eligible for sale. This proposal aims to assist in maintaining the current EU regulatory limits for marine biotoxins which will allow the current amount of shellfish to be exported to the EU and avoid other markets being influenced.

Over the last decade, the capital value of the abalone quota units and the beach price per kilo for wild-caught Abalone
has dropped by about 50% (after allowing for inflation). The main reason for this decline in industry value is more competition - particularly from farmed abalone, although currency fluctuations have also played a role.

The most important market for Australian abalone products in terms of both volume and value is currently mainland China. Demand is subject to normal economic forces, but appears to be fairly constant. However, in a market that is growing in line with the Chinese economy, Australian abalone returns and capital growth have been steadily declining since 2000.

No specific activities aimed at positioning Australian Wild Caught Abalone have been undertaken with customer (restaurant) or consumers. The industry has principally operated as an export sales function, building strong relationships with Chinese importers, but further down the supply chain, there has been no involvement by Australian stakeholders.

It is the view of the Abalone Council of Australia that a serious commitment to trialing a product differentiation strategy and an associated marketing effort in China is required to ascertain whether it is possible to prevent further economic damage and start improving the value of unit holders’ investments.

Research to date suggests that the best opportunity is to establish a program that increases demand for Australian Wild Caught abalone in Chinese restaurants specifically targeting the emerging mass affluent consumers.

Over the last decade, the capital value of the abalone quota units and the beach price per kilo for wild-caught Abalone has dropped by about 50% (after allowing for inflation). Historically Abalone consumption in China is strongly associated with status and prestige. While the overall volume of consumption is substantial Abalone consumption is very seasonal and there is a regular disconnect between supply and demand. This disconnect creates price elasticity and pushes importers and distributors to commit malpractices to improve their margins in turn compromising the product integrity.

Key market dynamics include:
1.Chinese consumers do not have any knowledge and awareness of the place of origin and depend on the restaurant recommendation;
2. Dishes cooked with Abalone are very traditional and the domain of highly experienced and skilled chefs.
3.The wholesalers and restaurants express common concerns regarding unstable supply, quality and product integrity and price fluctuations as a proportionate response to upstream volatility.
4. Hong Kong and Shenzhen importer practices exist due to high entry barriers and the invisibility of the supply chain.
5.Australian processors suffer from loss of control beyond Hong Kong and hence cannot track the actual consumption due to the invisibility of demand.

This project will test the following:

1. Whether a value proposition exists for Australian Wild Caught Abalone amoung the emerging affluent Chinese consumers particularly focusing on the fusion cuisine trend
2. That it is possible to differentiate Australian Wild Caught Abalone from competitor product by developing integrated B2B and B2C activation strategies
3. That it is possible for Australian Abalone producers and processors to collaborate to establish a profitable “white channel” for Australian Wild Caught Abalone