Predicted economic impact of black Sigatoka on the Australian banana industry

• Australia's appropriate level of protection with respect to bananas is evaluated.
• The corresponding annual expected damage cost of black Sigatoka is Aus$60 million.
• Current quarantine arrangements are shown to be relatively permissive.
• The damage estimate varies with the probabilities disease arrival and detection.

While Australia has lifted its outright ban on banana imports, very strict pre-entry requirements remain in place making it prohibitively expensive for foreign suppliers to land product in Australia. These include the establishment and maintenance of areas of low pest prevalence (following guidelines described in FAO, 2005; FAO, 2007, respectively), trash minimization procedures and post-harvest fungicide treatments (Biosecurity Australia, 2008). Strict though these import requirements are and small the risk of exotic disease transference may be, the potential consequences of some disease outbreaks to the Australian banana industry is potentially huge. In this paper we provide quantitative estimates of these potential damages (in Australian dollars, A$) and discuss the implications for Australia's import risk assessment process using the example of black Sigatoka. In 2001 this disease was detected in the Tully region of Queensland, a major banana production region. The cause of the outbreak remains unknown (Molina et al., 2005), but it was detected early enough to be eradicated at a cost A$17 million (Sosnowski et al., 2009). This outbreak has failed to quell calls to relax banana import requirements further, and criticism continues to be directed at Australia's import risk assessment process and its associated appropriate level of protection ( Javelosa and Schmitz, 2006; Leroux and Maclaren, 2011). This is a locus of disease arrival probabilities and outbreak consequences with a unique product which forms a maximum expected damage a product entering the country can pose before violating Australian quarantine regulations. However, in practice the appropriate level of protection is not stated in quantitative terms, but is instead defined in rather ambiguous qualitative terms as very low. Our analysis provides quantitative evidence suggesting that in the case of banana imports, the appropriate level of protection corresponds to an expected damage of A$60 million per annum. This suggests that although current quarantine regulations are trade-restrictive, the appropriate level of protection corresponds to a relatively severe level of damage.