FURTHER delaying a free trade agreement (FTA) with China will see Australian dairy exports lose more vital ground to key competitor New Zealand, says Trade and Investment Minister Andrew Robb.
Mr Robb delivered the opening speech at the Dairy Australia investment forum in Melbourne today, where he outlined critical elements of the government’s efforts to conclude an FTA with China by the year’s end.
After more than one year in office, the Coalition government has signed significant trade deals with Korea and Japan, which the Minister says have delivered strong gains across agriculture and horticulture.
In a speech at the forum, Mr Robb enforced his view that finalisation of the China FTA remains in prospect this year.
He says the Korea, Japan and China markets account for more than 50 per cent of Australian exports, with agriculture a key element of trade.
“After almost 10 years – and 21 formal rounds of negotiations – in my view it is now time to have the courage to make decisions and seek to complete an agreement that takes Australia’s relationship with China to another level,” he said.
“To further delay will only exacerbate the advantages our direct competitors have, including most relevant to you, New Zealand.”
Mr Robb said New Zealand – the most serious competitor for Australian dairy products – had gained a major advantage by concluding an FTA with China in 2008.
“The inability of our predecessors to conclude an agreement with China during six years undermined our competitive position against our friends across the Tasman,” he said.
“Since concluding their agreement New Zealand’s dairy trade revenue from China increased by $3.7 billion to the end of 2013, while over the same period our revenue from China has increased by $173 million.
“There have, however, been good gains for us of late for example our dairy exports to China in 2013-14 almost doubled to more than $440 million.
“And China has been our fastest growing dairy market in recent years.”
Mr Robb says China is also Australia’s largest dairy cattle export market taking about 79,000 head last year representing a 33 per cent increase from the previous year, striking $169 million in value.
But he said servicing the market was “not as simple as putting cows on ships”.
“It is about establishing strong integrated supply chains that work both here and in China,” he said.
According to Mr Robb, Australian food and agribusiness has strong future prospects across the Asia Pacific with the region’s middle class population set to grow from 600 million to more than 3 billion over the next 20 to 30 years.
He said Australia’s reputation for clean, green and safe produce will ensure we are an “increasingly formidable competitor at the quality end of these rapidly emerging markets”.
“Given their scale, in many cases what are effectively niche markets in Asia will to us resemble mass markets,” he said.
“Australian dairy will continue to feature prominently and each free trade agreement we can secure are like bricks in the wall, providing new levels of opportunity and market access.
“Demand from China in particular will continue to grow, especially for fresh milk.
“Infant milk powder can retail for almost four times as much in Shanghai as it does in Australia.
“Fresh Australian milk retails for more than $7 a litre on the shelves of Chinese supermarkets.
“We are capable of being the supplier of choice for innovative, high-quality products that meet demand.”
The forum examined industry investment opportunities and included a large delegation from China.
The Australian dairy industry is currently valued at $13 billion including farm gate value of $4 billion, and comprises about 1.65 million cows and 6700 dairy farmers producing around 9.5 billion litres of milk annually.
In 2013-14, Australia exported $3.21 billion of powders, proteins, cheeses, and other milk products.
While the Australian dairy has some catching up to do on NZ, Mr Robb says the overall gains from an FTA with China would be more “widespread” for the Australian economy, given the greater diversity of our export profile and economy.
He said Australia’s current two-way trade with China is worth $150 billion compared to New Zealand’s $19 billion.
In 2013, New Zealand sent $9 billion worth of goods to China in total, which included $3.6 billion of milk powder, a record level, he said.
Mr Robb said his starting position on trade negotiations was to seek full liberalisation across every sector “but these are negotiations”.
But he said there are “always sensitivities on both sides and you rarely get everything you want”.
“I’m well aware of the industry’s issues and expectations in regard to the China FTA, as well as Trans-Pacific Partnerships agreement negotiations,” he said.
“And the same applies to all the sectors that have a stake in these agreements, whether it’s dairy, beef, fruit, vegetables, nuts, wine or seafood, or services for that matter.
“In my role as in politics generally, the challenge is in reconciling many competing interests, but ultimately, on balance, you have to make decisions based on the national interest.
“The same applied in my former role as head of the National Farmers’ Federation where a broader outlook was needed.
“That doesn’t mean you don’t want the best for each commodity, but it means there is a wider
Source: Australian Dairy Farmer