With Prime Minister Tony Abbott in Japan talking free trade, Australian farmers are sweating on whether he’ll be able to secure reduced tariffs on their beef and dairy products.
Mr Abbott has said he’s hopeful of being able to sign off on an historic free trade agreement agreement (FTA) while he’s in Japan, and Japanese media are reporting a deal is close.
Beef and dairy tariffs are two of the major sticking points, with Japan extremely reluctant to reduce tariffs of up to 38 per cent on those Australian products.
While Japan is concerned with protecting its local producers, tariff cuts are a big deal for Australia too; Japan is the country’s biggest beef and dairy export market.
From producers to processors, Australia’s beef industry is determined that any deal must include significant tariffs reductions on their products.
For Mike Norton, a former head of the West Australian Farmers Federation, who farms beef and dairy cattle with his family in south-west WA, it’s imperative that Australia brings a tough negotiating stance to the table.
«We have some very good negotiators, but agriculture is the poor relation in a lot of these FTA agreements,» he said.
«But on this occasion, food security is huge, all around the world in the major populated countries. And our negotiators need to be aware of that, that we’re in an extremely good position under those circumstances, and for God’s sake don’t trade off agriculture this time.»
Further down the supply chain, even the more domestic market-focused processors are keeping a close eye on the negotiations.
Paul Crane is the export manager for V&V Walsh, an abattoir and meat processing facility at Bunbury on WA’s south-west coast.
He says the worth of any Japanese FTA won’t be clear until the details are revealed, but anything that helps move more Australian produce into export markets is a good thing.
«Our plant certainly is focused a lot more on the domestic side, but there are straight export plants where free trade agreements will give them the opportunity to pay more for stock and keep bigger market shares in some of these countries,» he said.
«Obviously if you’ve got a free trade agreement like New Zealand has with Korea where the tariff is very low, versus Australia [with a beef tariff] at 40 per cent, the price disadvantage does lock you out of markets because you just can’t compete.»
The Abbott Government came to power in September promising to lock in free trade deals with Japan, Korea and China within 12 months.
Currently, the Korea deal is done but not yet ratified, a Japan announcement could come soon, while an agreement with China seems further off.
Lake Preston feedlot owner and manager, Geoff Pearson, from Myalup in south-west WA, exports Wagyu beef all over the world, particularly into China, Japan and Korea.
He says FTAs are essential if businesses like his are going to continue to grow and remain profitable, because current tariffs into countries like Japan are constraining his export potential.
But he acknowledges it’s a tricky political balance to strike.
«Japan need product, but they’ve also got to be mindful of looking after their farmers,» he said.
«I think their biggest concern is that if they lower their tariff, it would pretty much put most of Japan’s farmers out of business. There has to be a balance there.
«We know that Japan needs supply and it’s how their government and our government come to policies of opening that up and making sure everyone’s sustainable.
«There’s no two ways about it, we’re in an expansion stage. We have got the product and we have got the capacity to grow, but the markets have got to grow with us and we have to be mindful of that.»
Source: ABC