Australian farmers say an international agreement to scrap agricultural export subsidies will put them on a level playing field with their competitors from overseas.
More than 160 member countries of the World Trade Organisation have agreed to remove the subsidies, which include direct payments, loans, tax breaks and other financial arrangements used by countries to support their exporters.
Dairy Australia’s trade manager Charlie McElhone said those measures have distorted the global milk market.
“So where the price for whole milk powder might be worth $3,000 a tonne today, if the export subsidy comes on and it’s worth $1,000 a tonne, overnight the export price will be $2,000 a tonne,” he said.
“Those are mechanisms by which they undercut the world price for dairy products, and which have been used quite widely within the dairy industry over many years.
“To see that we can no longer return to those bad old days is a real confidence boost for Australian dairy exporters.”
Australia welcomes successful end to long campaign against export subsidies
The Australian Trade Minister Andrew Robb said the agreement will scrap $15 billion worth of subsidies, with the United States and European Union responsible for $11 billion of those.
Australia has not subsidised its agricultural exports for decades.
“We’ll have a level playing field, Australian farmers will be far more competitive, we’ll keep markets that we otherwise would have lost, and it just generally puts us in a much, much stronger position than we’ve been in decades,” Minister Robb said.
“[Export subsidies] started really in a big way with the Europeans and the Americans back in the 1970s and ’80s; Australian governments and industry have been fighting this issue for decades now.
“Many would recall the big stockpiles of dairy products and meat and grain that built up in Europe at different times off the back of these major subsidies.
“They’ve caused enormous loss of markets and loss of income over decades, and it is critical that this decision was taken.”
Australian sugar producers, still smarting from a disappointing conclusion to the Trans-Pacific Partnership negotiations, will also benefit from this agreement, according to the National Farmers’ Federation trade manager Tony Mahar.
Countries such as India, which offers a subsidy to help sugar producers get their product to port, will have to phase that out over eight years under the agreement.
“What that effectively means is that they’re getting their products onto the market in a cheaper way than Australian cane farmers here are, and that means that the global price is affected by that subsidy,” Mr Mahar said.
“It really does depend on which product we’re talking about and into which market, so it will vary from product to product, but the endgame here is that the countries have agreed to eliminate those subsidies, and that means that Australian farmers will be much better off.”
WTO system needs a post-Doha overhaul
While it will banish export subsidies, the agreement does nothing to address domestic agricultural subsidies used by the US and EU, among others, to reduce production costs and risks for their own producers.
It also does not address market access, or lift restrictions placed on imported agricultural goods.
Trade Minister Robb acknowledged there’s “no realistic prospect” that the WTO’s Doha round of trade talks can resolve those issues, despite originally conceived as the framework to do just that.
He said the WTO system need an overhauled.
“There are still major issues that we’re nowhere near [resolving],” Mr Robb said.
“I think there’s a general acceptance from many, many countries that have been at these negotiations, that the process is deeply flawed.
“Yes we got an outcome this time, but it’s one of many, many issues that should and could have been resolved years and years ago.”