October 14th 2006


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Articles from this issue:

COVER STORY: COMMONWEALTH-STATE RELATIONS: Will Howard override WA on natural gas?

EDITORIAL: Bushfires: an ounce of prevention

CANBERRA OBSERVED: Behind the move to lift cloning ban

INTERNATIONAL TRADE: Farmers protests over free trade in Cairns

TRADE POLICY: Why WTO trade talks failed

STRAWS IN THE WIND: The decline of Labor, the fate of Smith Street, Blair's departure and the Regensburg Address

NATIONAL AFFAIRS: T3 sell-off will not end Telstra's woes

HOUSING: Urban planning is destroying the great Australian dream

FOREIGN AFFAIRS: North Korea's nuclear ambitions: is China really powerless?

ANTI-LIFE CAMPAIGN: The selective indignation of Senator Stott Despoja

OPINION: The case for optional preferential voting

BIOTECHNOLOGY: The ascent of Mount Improbable

The debt trap (letter)

The Pope and Islam (letter)

The Ice epidemic (letter)

BOOKS: LONDONISTAN: How Britain is Creating a Terror State Within, by Melanie Phillips

BOOKS: SCOURGE AND FIRE: Savonarola and Renaissance Italy, by Lauro Martines

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INTERNATIONAL TRADE:
Farmers protests over free trade in Cairns




News Weekly, October 14, 2006
Farmers and business people protested recently in Cairns against Australia's lead in the World Trade Organization (WTO) talks on free trade in agriculture products.

The "Cairns Group" of nations, led by Australia, was meeting in north Queensland to try and revive the stalled Doha round of trade talks on liberalizing trade in agricultural goods.

The Prism group protest called on the WTO to back "Mutual fair trade", meaning that trade concessions should be reciprocal, rather than open free trade. The Prism group issued the following statement to the Cairns Group delegates.

Australia should only be granting other nations access to its agricultural market if our trading partners reciprocate and grant Australia access to their markets.

1. Won't free trade open up $300bn in world trade and greatly benefit Australian farmers?

It is time for Australia to face reality. After 20 years of pushing for free trade in agriculture, it is not going to happen. Wake up Australia!

If it did happen, it is impossible to predict what could happen on world markets. Australia could not supply the world market for temperate climate agricultural goods. It is possible that EU farmers, no longer being paid to not produce, would actually become highly efficient and put Australian farmers out of business.

2. Isn't free trade in agriculture necessary to help the developing nations?

It will not. Most developing countries export tropical products which have relatively free access to developed world markets. The push for trade liberalisation is for temperate-zone products: beef, wheat, dairy and other products that are not produced by tropical nations. In so far as developing nations produce some temperate climate goods, free trade in agriculture is likely to see subsidised developed world product flood their markets and put developing nation farmers out of business. This happened when Mexico joined the North America Free Trade Agreement (NAFTA). Subsidised US corn put thousands of Mexican farmers out of business.

3. What agricultural policies do Australian farmers want?

We want:
  • Preferential access to the domestic market for Australian farmers, like every other country affords its farmers;
  • Serious application of the anti-dumping rules to stop heavily subsidised, dumped products undermining Australian farmers' domestic market;
  • All Australians to share the cost of environmental stewardship; and
  • Reform of Australia's creaking quarantine authorities so that Australian farmers receive the appropriate high level of quarantine border protection to which they are entitled.


4. Don't you want subsidies? Why should taxpayers subsidise farmers?

It is the other way around. Why should farmers be subsidising Australian consumers?

The average farmer in the developed world received 31% of their gross farm income from various producers' supports (with about 70% of this coming from subsidies), but for Australian farmers it is just 4%. This means Australia's competitors have a 27% head start (31 – 4 = 27) when selling onto world markets, or when these subsidised products are imported into Australia.

The OECD also compares the prices farmers in different countries receive for their products and the price consumers pay for of food in different countries. It shows that among developed nations:

  • Australian farmers receive the lowest farm-gate price in the developed world, and that price is on average equal to the corrupt world price. On average, farmers in OECD countries receive a price 32% higher than the price Australian farmers receive; and
  • Consequently, Australian consumers benefit from having the lowest-priced food in the developed world. On average, consumers in other OECD nations pay 37% more for their food than Australians.


Because of free trade and competition policies, Australian farmers are being forced to work a second job, to send their wives to work, to use their children as unpaid laborers in order to subsidise putting the cleanest, cheapest food in the OECD on the plates of Australian consumers. Hence, the question should be reversed. Why should farmers be subsidising consumers?

5. Won't free trade make farmers more competitive?

As the previous question shows, OECD figures reveal that on average Australian farmers receive the lowest farm gate price in the developed world, equal to the corrupt world price. This indicates they are already highly competitive. Further, the Productivity Commission has shown that agriculture is the third highest productivity sector in Australia, after the communications and wholesale sectors.

6. Aren't EU and US consumers getting tired of agricultural subsidies?

OECD countries spent US$318 billion on agricultural subsidies in the year 2000. While this appears enormous to farmers living in Australia, this figure is just 1.2% of the Gross Domestic Product (GDP) of the OECD nations, down from 2.3% GDP fifteen years earlier. Agricultural subsidies cost just: 0.9% of the US economy; 1.3% of the EU economy; 1.5% of the Japanese economy. The cost of domestic food self-sufficiency is hardly a burden on their economies.




























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