AGRICULTURE: by News WeeklyNews Weekly
Queensland sugar deregulation stalls
, October 4, 2003
A prolonged campaign by cane farmers strongly opposing sugar deregulation has resulted in the Queensland government laying its sugar deregulation bill on the table, at least until some later time.
Farmer protests have seen both Federal and State governments back away from the Memorandum of Understanding they signed in September 2002. The MOU agreed to have the Queensland government deregulate the industry, and to provide an industry assistance package.
The political stalemate has both sides playing political brinkmanship on the issue.
According to Qld Development Minister, Tom Barton, "Recently, the Premier wrote to Canberra to advise that, due to the delay by the Federal Government in expressing a clear and final position on proposed regulatory reforms", it is now too late in the season to implement changes for 2003.
Federal Agriculture Minister, Warren Truss, replied to Mr Barton, saying , "All the legislation regulating the sugar industry is Queensland Government legislation and I have always stressed that any changes to the Queensland Act are ultimately a matter for the Queensland Government to determine ... The Federal Government recognises the need for industry reform but we have always had concerns about the radical deregulation plans proposed by the Beattie Government.
"While the State Government has subsequently been prepared to make some concessions, long delays have occurred because of the unwillingness of Queensland Government Ministers to engage the industry in order to achieve an agreed reform program.".
While the Federal and State governments accuse each other over stalled deregulation, Brazil is expanding production by 70 million tonnes of cane over two years, the equivalent of twice the Australian crop.
The world price for sugar has dropped to $195 per tonne, well below the $320 per tonne that Queensland Agriculture Minister, Henry Palaszczuk, regards as a minimum for the industry.
Meanwhile, the pro-deregulation sugar millers have indicated to the Federal government that they would like deregulation to proceed - which would include abolishing single desk selling of sugar onto international markets - if it gives Australian sugar access to US markets under an Australia-US Free Trade Agreement currently being negotiated.
It is hard to see how this exchange would benefit Australia. In 1994, the North America Free Trade Agreement (NAFTA) came into force. NAFTA Article 702 deals with the US-Mexican trade in sugar. It means that after 15 years (i.e. in 2009) all barriers to trade in sugar between Mexico and the US will be abolished.
Limited trade will be allowed between years one to eight (up to 25,000 tonnes pa), and from there after Mexico will be allowed to sell up to 250,000 tonnes of its net production surplus into the US. During years 7 to 15, remaining US tariff on Mexican sugar will be reduced on a straight line basis to zero.
While ever the above restrictions are in place against Mexican exports to the US, it is hard to see how any deal on sugar on sugar could be concluded with Australia without impinging on the NAFTA agreement with Mexico. Australia has preferred access for about 30,000 tonnes p.a. into the US.
This situation could only change if the US were to sacrifice a large number of its sugar producers. Moreover, the US heavily subsidises the industry and has a sugar mountain growing at one million tonnes p.a.