In the dairy industry’s case, the relationship provides for enormous and mutually beneficial trade opportunities. The Chinese increasingly desire our safe and healthy dairy products, and we seek increased access to their growing domestic market.
By virtue of its enormous population and rapidly growing middle class with a taste for all things dairy, China is Australian dairy’s No 1 trade policy goal.
In 2012, China imported 1.375 million tonnes of dairy products. By 2013 that had grown to more than 1.9 million tonnes, a staggering increase of 40 per cent over the previous year. This level of demand is likely to continue; with more than 16 million babies born in China last year and the relaxation of the one-child policy, that figure is projected to increase beyond 20 million annually.
The Australian dairy industry is well positioned to help meet this demand; however, to realise this potential fully, it needs a free trade agreement with China, like our trade rival New Zealand.
After achieving an FTA with China in 2008, NZ has seen an eightfold increase in the total volume (tonnes) of dairy exports to that country, while Australia has experienced only modest export growth in the same period.
What the Australian dairy industry seeks is a “New Zealand plus” deal that, on implementation, would see tariffs on dairy exports fall immediately to the same level as NZ. Such an agreement would provide unprecedented new opportunities for Australian dairy and save the industry at least $31.5 million, based on current China exports, as well as removing our competitive disadvantage with NZ.
The application of NZ-equivalent duty terms, across the period 2016-25, could deliver the Australian dairy industry cumulative savings of more than $630m.
Importantly, while the Australian dairy industry would be keen to leverage growth opportunities from a China FTA, it is not our intention to do so at the expense of Chinese domestic dairy production. Australian dairy instead seeks to meet a growing demand and a need for diversity of supply through value-added products such as infant formula.
Our industry seeks to continue and build on a positive spirit of co-operation with China in the context of exploring new and mutually beneficial market opportunities.
Any free trade negotiation involves trade-offs and in the case of an Australia-China FTA this will invariably involve discussions on foreign investment.
Australian Dairy Farmers does not oppose foreign investment in the dairy industry.
A close examination of the facts on foreign investment show that foreign ownership of farmland and/or key agricultural assets is, in reality, quite low. Recent data from the Australian Bureau of Statistics shows that more than 99 per cent of Australian dairy farm businesses are fully Australian-owned and just under 98 per cent of dairy farmland is fully Australian-owned. This is not to suggest that foreign investment in Australian agriculture should be provided a blank cheque, but this is an argument in favour of a reasoned and thoughtful public discussion based on the facts.
As free trade negotiations progress, we have the opportunity to secure a more competitive and prosperous future for Australian dairy that will also benefit China and Chinese consumers.
We acknowledge that reaching a comprehensive deal with China that delivers significant new commercial opportunities will not be easy; it never has been.
However, the dairy industry recognises and supports the Australian government’s efforts to secure the best possible outcome on its behalf.
The stakes involved are high. However, if our industry is to grow and prosper in future, then the Australia-China FTA must include a dairy deal.
Source: The Australian