What you need to know about exporting food to Australia

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  • Post last modified:October 6, 2020
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A couple of weeks ago, Australia and New Zealand are about the begin negotiations on a free trade agreement with the United Kingdom.

So, we addressed a step by step exporting food and drink products to Australia guide for food and producers who are planning to sell the Australia market in future.

Branded exports to Australia increased by 3.5% in Q1 2020

That is driven by increased sales of cakes and baked goods (including tarts, pastries, wafers, pizzas and quiches), which saw a 12% increase in 2019. Australia showed sustained demand for UK branded food and drinks in the first quarter of 2020.

FDF Export Snapshot 2020 Q1

In total UK exports of goods and services to Australia were worth £11.2B and it has great advantages, and it is pretty much easy to do. the UK exported £65.2B goods and services to all Commonwealth countries and that figure accounted for 9% of the UK’s total overseas trade.

Statistics on UK trade with the Commonwealth of House of Commons Library

Australia is the UK’s 14th largest export market, and trade between the UK and Australia would surge after the free trade agreement.

Some small business owners may not realise the complications they can face when exporting to Australia.

Some of the main challenges of doing business in Australia are logistical. The time difference is one, with the Australian east coast being nine hours ahead of the UK in summer and 11 hours in winter. Another is the travel time, around 24 hours by plane, and the very large size of Australia itself.

Dealing with Incoterms

After finding a prospect buyer, the negotiation starts. Most cases, your buyer would say “please arrange delivery to our depot at …” that means, you need to find a good transport company or forwarder. Or EXW sounds easy when you have hundreds of other problems to deal with.

Before doing so, we recommend you negotiate better incoterms whilst looking at the shipment cost of goods door to door. You can save money, gain leverage, or wave risks.

Check out our INCOTERMS Guide to learn more, before deciding shipment terms.

You will need to decide methods of payment as the negotiation goes on. read our methods of payment section in below before agreeing on any terms or sign the agreement.

Check the freight cost

So, if you decide to arrange international transport, ask the customer the port of delivery and the final delivery address of goods and start looking for the freight market with your third-party logistics partner.

Or you can work directly with shipping lines, it is easy for a small company to being a customer of shipping lines. Both ways, make sure you have at least five different offers at hand.

Prepare a spreadsheet and keep all the information in order to create freight market data. You will need it in future to check the cost data.

Secondly, check transit days, port charges, rent and demurrage charges. we recommend you ask your customer their ideal free demurrage days at the port of delivery. It would be particularly important if the customer or your forwarder would not be able to clear or arrange delivery to the destination in the meantime.

Routinely check freight costs from the logistics partners and ask for better options.

Check your shipment documents

On the first export shipment, make sure documents are prepared without any mistake.

Read and double-check every piece of document you produce to submit your export declaration.

Most declarations are submitted electronically using the National Export System. If you’re going to do this yourself, rather than appoint an agent, you’ll need to register for the National Export System.

From 1 January 2021, you will need to follow the export declaration rules of HMRC. For more information please visit gov.uk

4 export shipment documents you must submit

Commercial invoice: Clearance of goods requires a minimum of two copies invoice. It must be written in English.

The invoice must include:

  • Clear and precise descriptions of goods
  • Terms of sale and payments
  • All details necessary to establish full prices paid
  • Gross and net weights
  • The country of origin.

Packing lists: A packing list should provide an accurate overview of the individual packages, including brand, numbers, gross and net weight. Also, write the container number onto the packing list. Add commodity tariff code of goods onto the invoice or the packing list.

Transport documents: Original set of bills of lading, not draft copy or copy of the original bill of lading.

Health Certificate: you might not need to the producer that certificate. Please visit the related authorities’ website or talk to your customs agent.

Certificates of origin: Certificates of origin are not required unless specifically requested by the importer. A certificate of origin can be requested at the Chamber of Commerce.

For most food and drink products, in Commonwealth countries, certificate of origin is not needed essentially. Better to discuss with your custom agent.

Search Commodity Tariff Codes, HS Codes

Until the United Kingdom signs a trade agreement with Australia, the UK exports to Australia on Most Favoured Nation terms under the World Trade Organization (WTO) rules. Check Australia’s import tariffs and quotas under WTO rules on the Market Access MAP website.

If you didn’t check the commodity tariff code of your products, simply visit the gov.uk website first. before doing so, if you would like to read more on UKGT, the new UK Global Tariffs, here is the link.

visit, gov.uk/tariff

Then search for the product you would like to sell overseas. For instance,

Look below to find the right commodity code that fits the product description.

If the product is blended malt whisky in 70cl bottles, the commodity code is 2208.30.41

After that go to www.macmap.org/ and search for that commodity code from the United Kingdom to Australia.

You might need to delete the last two digits to find the right description.

5% import duty applies to blended whisky in 70cl when you import into Australia before free trade agreement as of today.

Food labelling requirements when exporting to Australia

Country of Origin labelling is required for most food products for retail sale in Australia. You need to comply with and label requirements.

https://www.business.gov.au/foodlabels

Country of Origin labelling can let Australian consumers know which country a product came from.

Please keep in mind, Certificate of Origin and Country of Origin labelling is different processes. Those labels are applied on the product.

https://www.abf.gov.au/importing-exporting-and-manufacturing/importing/how-to-import/requirements/labelling

You can note Australian Border Force website to check for further details or restrictions, similar to the UK Border Force website.

Custom Duty and custom clearance

Goods worth more than AUS$1,000 require a customs import declaration, which requires the importer to pay duty, tax – usually at 10% – and a customs import processing fee.

Goods must clear at port of delivery.

The goods may be held up at customs, for example;

  • If you do not have the right licences for the goods or business
  • They did not pass inspection
  • They’ve been combined with a shipment that has been held up

If this happens you will be told why by the Border Force

Before you export, it’s important to understand any extra costs that may apply at the port of delivery. Depending on the type and value of the goods, you may have to pay:

  • Clearance fees
  • Customs duty
  • Goods and services tax (GST)
  • Value-added Tax
  • Sugar Levy

These duties, taxes and charges are paid at the border. You must pay all duties before your goods can be released at the border.

The import duty, costs are covered by the final buyer, customer so you would not worry about them. However, for instance, in terms of DDP

The seller delivers when the goods are placed at the disposal of the buyer and cleared for import, before being unloaded at the destination. The seller must clear the goods not only for export but also for import, to pay any duties and to carry out all customs formalities. DDP is just opposite of EXW.

Photo by NeONBRAND on Unsplash

More importantly, when you would like to calculate the landing cost of your products, it is better to keep in my mind ports’ operation and import duty costs.

Methods of Payment in International Trade

When it comes to overseas payments, buyers tend to prioritize the cheapest and most straightforward payment method. In other words, anything that can help reduces cost. Another priority is ensuring they receive the goods specified.

While buyers prefer paying as late in the transaction process as possible, sellers will want to be paid in full, as quickly as possible, and via a secure option. Sellers who offer attractive payment terms and varying methods will have an advantage over those who limit themselves.

There are four main international payment methods, which are applied to overseas agreements and payments:

  • Cash in Advance
  • Letters of Credit, guarantees
  • Cash against Documents.
  • Open Account
  • Consignment

Important Notes

  • International trade presents a spectrum of risk, which causes uncertainty over the timing of payments between the exporter (seller) and importer (buyer).
  • For exporters, any sale is a gift until payment is received. Therefore, exporters want to receive payment as soon as possible, preferably as soon as an order is placed or before the goods are sent to the importer.
  • For importers, any payment is a donation until the goods are received.
  • Therefore, importers want to receive the goods as soon as possible but to delay payment as long as possible, preferably until after the goods are resold to generate enough income to pay the exporter.

Go to market strategy

Australia is a well-developed, business-friendly market, which offers great opportunities to British companies across a broad range of industry sectors. According to great.gov.uk/markets/australia/, almost any UK business that has a smart, knowledge-based product and a sound business plan have a good chance of being successful in Australia.

For most industries, the east coast cities are the main commercial centres, particularly Sydney and Melbourne. However, there are also export opportunities in Brisbane, Adelaide and Perth across a diverse range of sectors. Canberra has little manufacturing industry, but there is much activity centred on federal administration of government departments and service-based industries.

Know your buyer’s persona and the journey

It is hard to create a buyer’s persona for your products and it is harder to create the buyer’s persona who lives in Australia.

Buyer personas help you understand your customers better. This makes it easier for you to tailor your content, messaging, product development, and services to meet the specific needs, behaviours, and concerns of the members of your target audience.

Once you have an idea for your consumer in Australia, investigate the best routes on how to distribute goods to them. as you evaluate the distribution landscape, it could be eCommerce, distributors – wholesalers, ethnic market or retailers, identify the distribution channels and prioritize potential partners in order to serve your final consumer needs most.

As you can see a regular FMCG food and drink products have two customers on different levels. One is your B2B partner and the second one is the actual consumer, your buyer’s persona.

Working overseas, sellers should understand both to leverage their product on the ever-evolving marketplace.

Our customer care team is award-winning, and we pride ourselves on supporting customers. We are keeping you informed throughout all the shipping processes and stages.

Got any more questions? Contact our team today and see how we can help you!

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