PRIMARY INDUSTRY: by Patrick J. ByrneNews Weekly
Subsidised imports threaten pork industry
, October 23, 2004
Australia's pork industry faces being reduced to the level of a cottage industry after three reports recommending action to save the industry have been ignored by the Federal Government.
The Australian pig industry has about 2,300 active producers, employing 6,000 full-time "on farm" workers, another 6,700 "off farm", and indirectly a further 16,800.
The industry has about 330,000 producing sows. Pig farm investment is worth about $1 billion, and annual farm-gate production is about $1 billion.
Farmers have been losing on average $30 per week per pig sold in recent times. The problem has been a flood of low-price imports.Three threats
The Australian pork industry has shown that it has been under threat from imports from three directions.
First, imported pig meat from countries that strongly support their farmers - Denmark and Canada - now accounts for 45 per cent of processed product. The US has recently gained unimpeded access to the Australian market through the recent Free Trade Agreement, and a further 10 countries are seeking to gain similar access.
This crisis has been recognised for some time:
- In 1998 a report by Purcell and Harrison, commissioned by the Queensland Department of Primary Industries, found that for every additional 1,000 tonnes of imports, returns to domestic producers fell substantially.
- The Productivity Commission's Pig and Pigmeat Industries Inquiry 1998 found that "increased imports were the dominant cause of low pig prices and reduced profitability".
- A recent Australian Bureau of Agricultural Resource Economics (ABARE) report stated that, if the present import trends continue, an Australian industry almost entirely focused on servicing domestic demand for fresh pig meat, with most raw materials for manufacturing processed meats being imported, was a possibility.
Given the threat imports pose to the industry, Australia has the clear right to take safeguard action under the World Trade Organization's Agreement on Safeguards
It states that when a domestic industry is facing imports "in such increased quantities ... as to cause or threaten to cause serious injury to the domestic industry", then a government has the right to invoke the WTO safeguard rules. These rules allow Australia the right to suspend any binding trade commitments it has made with the WTO, or with the exporting country, in order to stop pork imports damaging the Australian industry.
Second, there is a strong prima facie
case that Canadian and Danish pork is being "dumped" in Australia. Again, action can be taken under WTO rules.
WTO-GATT Article VI, Anti-dumping and Countervailing Duties
, says that dumping occurs when "products of one country are introduced into the commerce of another country at less than the normal value of the products" and "is to be condemned if it causes or threatens material injury to an established industry".
The WTO rules go on to say that if a product like pork is dumped into the Australian market, then Australia may "levy on any dumped product an anti-dumping duty".
Third, the industry has accused Biosecurity Australia of failing to provide adequate safeguards for the Australian industry under its new quarantine standards. The new standards would threaten "post-weaning multisystemic wasting syndrome" (PMWS) becoming established in the Australian pig herd.
Discovered less than 10 years ago, PMWS is devastating pig herds world wide. It has killed eight million pigs and cost an estimated $A1.5 billion in the European Union alone. It was discovered in New Zealand only last October.
MWS is not present in Australia. What causes it and how it is spread are not yet known.
A CSIRO study estimates the new Biosecurity Australia quarantine standards will expose the Australian pig herd to a 95 per cent chance of an exotic disease outbreak within 10 years.
When this was put to the Senate Rural and Regional Affairs Committee's public hearing on the issue in February, Biosecurity Australia did not dispute the claim.
The Australian pork industry has taken the issue to court to try and stop the new standards being implemented.Failed to act
Already there are three reports outlining the threats to the industry and some potential solutions. This means that that the Federal Government could act on any one of the three threats to solve the industry's problem, but has failed to take any action on any of the policy options.
Instead of acting, the Government now has another inquiry underway by the Productivity Commission.