DAN TEHAN | Australian Financial Review | July 7, 2015
The $4 billion package announced on Saturday will ensure Australian farms become smarter, stronger and more competitive to exploit Australia’s agricultural comparative advantage.
In the late 19th and early 20th centuries, Australia rode on the sheep’s back by using its ability to trade with the United Kingdom and other Commonwealth countries on special terms.
But the post-war period forced Australian agriculture to rethink and reform how it trades in a globalised economy. Liberalising our domestic economy through the reforms of Hawke, Keating and Howard, allowed our domestic production to increase without a cost to competition or quality.
This century’s challenge is to ensure our farmers have the best market access for their produce and the right domestic settings. As the newly signed free trade agreements show, farmers have not suffered from the end of protectionism but they want to be able to capitalise on it.
Australian farmers have a new-found confidence in their ability to compete with countries that have advantages in cheaper labour or less regulated standards, by producing fresh, safe products in abundance. Australia exports 65 per cent of all agricultural produce and it is worth $41.2 billion a year to our nation. Of this, $12.5 billion alone goes to China and Japan.
These figures don’t show what impact the newly signed free trade agreements will have.
Australia’s strong performance is being backed by positive forecasts for the global market In a joint report by the Rural Industries Research and Development Corporation and the CSIRO, key findings show the global demand for food is set to grow 77 per cent by 2050. More than this, consumers across the world will become increasingly selective about their food.
There could be no better news for Australian agriculture, which specialises in large quantities of premium produce. China is a key example, where consumers will pay up to $12 a litre for Australian milk.
But the Australian brand only delivers dividends to farmers when governments make an effort to tackle trade barriers of all forms.
While the free trade agreements signed with markets such as China moves mountains in terms of tariffs, the important work in lowering technical trade barriers must continue. In the last financial year Australia cherry exports increased 23 per cent, a direct result of the free trade deals with Japan and South Korea.
In real terms, cherry exports to South Korea rose from 5 tonnes to 250 tonnes in a year. Australian cherry exports to Japan increased in value by 35 per cent.
But the most astonishing fact about these figures is that they are still restricted by technical trade barriers. Only Tasmanian cherries can be exported to Japan and Korea, with the rest of Australia facing restrictions at the border. Similar stories abound for other horticultural products.
While the landmark trade deals create break-through, immediate growth, the technical roadblocks require urgent attention to further exploit our advantage.
In-country regulation or registry approval, for example, affects many Australian abattoirs’ ability to export, or agricultural service providers’ capacity to operate overseas.
This is why the white paper announces the government is investing $30.8 million to break down technical trade barriers. It delivers a commitment to put boots on the ground to tackle these barriers by creating five new agriculture counsellor positions to be based in major markets, which will assist industry to maintain and broaden access.
For the 128,900 businesses involved in agriculture, the government’s white paper provides a clear strategy that will position the sector for the next decade. That strategy is aimed at achieving better access for premium produce in both new and old markets at and beyond the border.
For both a trading nation and a country of world-class fanners, the Agriculture Competitiveness white paper sets out the plan for Australian agriculture to flourish in a globalised world.