PRIMARY INDUSTRY: by Patrick J. ByrneNews Weekly
Pork farmers under attack on two fronts
, September 10, 2005
Australian pork producers are under attack from the risk of disease-carrying imports and from subsidised imports, writes Pat Byrne.Australian pork producers have challenged pork imports on both quarantine and probable dumping grounds. In both cases, government agencies have been accused of adopting import-risk methodologies that allow imports to continue.
A Federal Court judge recently described as "bizarre" the methodology used by Biosecurity Australia in recommending pork imports to continue from countries where Post-Weaning Multisystemic Wasting Syndrome has devastated young pig populations.
The judge's ruling, however, is being appealed against by the Federal Government before a full sitting of the Federal Court.Bizarre report
Now the Productivity Commission has issued an equally "bizarre" report, claiming that pig meat imports from Denmark are not dumped, as they "do not benefit significantly from subsidies".
The report has argued that the subsidies received by Danish farmers is "comparable" to the 3.95 per cent producer-support estimate (PSE) received by Australian farmers. The PSE is an internationally-recognised measure of the percentage of gross farm income that comes from government assistance.
Australian Pork Limited (APL) has accused the Productivity Commission (PC) of conducting what was, at best, "a desk top audit of Danish pork imports". It said the PC conducted no on-the-ground investigations in Denmark, "so it is difficult to see how the PC can arrive at any meaningful conclusions".
In a damning criticism, APL said that "the PC needs to explain why it decided to use a different methodology in analysing the issue of imports and subsidies than that used by the OECD in determining the PSE in Demark, which has resulted in the PC making basic and very serious errors in its analysis". The Organisation for Economic Co-operation and Development (OECD) is the recognised agency for tracking government assistance to agriculture around the world.
In fact, the PC didn't even offer a figure for what level of subsidies (PSE) the Danish and EU governments offered Danish farmers. The PC report just kept asserting that Danish farmers don't benefit from any significant government subsidies.
In contrast, APL commissioned ITS Global to undertake detailed on-the-ground investigations, which included discussions with Danish industry organisations, commercial parties, government agencies, the OECD and research institutes.
APL's on-the-ground consultancy study found that pork producers in Denmark received the same 23 per cent PSE level of government support as pork producers in other EU countries.
It said: "The PC fails to take into account the fact that EU tariff barriers (a market-support mechanism), ranging from between 21 and 37 per cent inside the quota, and the equivalent to between 64 to 106 per cent outside the quota, have the effect of pushing up pigmeat prices inside the EU.
"The PC also draws the erroneous conclusion that Denmark is a competitive exporter."
APL said that, in making this conclusion, the PC has failed to recognise that Denmark does not export 85 per cent of its production under world market price conditions.
While it exports 85 per cent of total production, in fact only around 18 per cent of those exports are sold under world market price conditions. Nearly 60 per cent of Denmark's "exports" actually go to EU countries (and as such are not truly exports for tariff purposes), where the prices are supported by tariffs of up to 106 per cent. Producers receive no less support in Denmark from the EU tariffs and quotas than any other EU country.
Further, around 23 per cent of Danish exports go to Japan, where the prices are inflated by specific duties which encourage exporters to artificially raise prices. The OECD deliberately excludes Japan's exports from its calculation of the PSE in the EU because of these distorted prices.
"Therefore, the PSE of 23 per cent is entirely consistent with Denmark exporting a marginal proportion of its production under world market conditions (estimated at 15 percent). The PC seems to have failed to recognise this," APL said.
Finally, apart from the benefit of higher prices inside the EU, the biggest Danish pig meat company, Danish Crown, received $30 million directly from the EU in export subsidy and other payments in 2003.Shifting the goal posts
Australian pork producers are under attack on two key fronts, from disease-carrying imports and from subsidised imports. They have fought back on both fronts, and in each case the relevant government agencies have simply "shifted the goal posts", in a way that favours imports. Bizarre!
The decision of the Federal Government to challenge the Federal Court ruling against disease-carrying imports, and now the appearance of the Productivity Commission's transparently flawed report, will only add fuel to the argument that the Federal Government is bending over backwards to allow pork imports, as an unwritten condition of the US to agreeing to sign the Australia-US Free Trade Agreement.