PRIMARY INDUSTRY: by Patrick J. ByrneNews Weekly
Fruit-canning industry laid waste by cheap imports
, May 11, 2013
The famed SPC Ardmona cannery has slashed its fruit intake, cancelled contracts with farmers and called for an emergency tax on imported canned fruit to save the industry.
In the Goulburn Valley around Shepparton in north-east Victoria, 114 farmers have either had their quotas for next season cancelled or slashed.
The cannery has announced that it will halve the pear and peach intake for the 2013-14 processing season and reduce processing at its Shepparton cannery to one day a week.
Victorian Peach and Apricot Growers Association president, Tony Latina, said that of the 68 suppliers in the Invergordon and Cobram districts four years ago, only 11 remain.
Growers are now ripping out fruit trees at a cost of about $30,000 per farm and are at a loss to know what to produce on their properties in the future.
An orchard is removed.
Matthew Lenne told The Australian (April 30, 3013), “We’ve always been canning-focused growers, so I’ve got no other option but to take the trees out.
“We can’t sell the peaches on the fresh fruit market because it would just start a price crash there.
“It’s sad for me, but worse for the district, the workers around here, and all the jobs, businesses and the towns that rely on the fruit industry and the cannery.”
Also, SPC is now the only tinned-tomato processor in Australia following the closure of the Heinz tomato-canning factory near Echuca last year.
Shepparton is the centre for SPC’s operations in the Goulburn Valley. The valley has been famously known as a major Australian food bowl, home to major dairy, livestock and cropping industries, and producing stone fruits and vegetables.
The devastation to the dairy industry caused by dairy deregulation, the long drought and disruption to irrigation by the misguided Murray Darling Basin Plan has already hit Shepparton hard.
In this town of around 30,000, over 160 shops have closed recently.
Like many other agricultural and manufacturing industries, the Goulburn Valley fruit industry is being hammered by cheap imports (due to the high exchange-rate of the Australian dollar) and rising production costs.
The global market has also been flooded with canned fruit products due to overproduction and the collapse of markets in North America and Europe.
Imported fruit is coming from Argentina, South Africa and China.
A major factor making imports cheaper than SPC products is the abnormally high value of the Australian dollar. A former deputy secretary of the Department of Trade, Colin Teese, has written in this issue of News Weekly (see next article) on the need for Australia to manage down the exchange-value of the Australian dollar, and explained how other countries are forcing down the value of their currencies.
According to SPC, over the past five years the share of imported private-labelled canned fruit has grown 58 per cent, while SPC Ardmona’s fruit share had declined 33 per cent. The company’s volume of exports has declined 90 per cent.
SPC has written to the federal Agriculture Minister, Joe Ludwig, and Trade Minister, Craig Emerson, asking for them to impose a tax on imported canned fruit, which is allowed under the Safeguards Agreement of the World Trade Organisation (WTO).
Two earlier requests by the pork industry for these safeguard measures to be invoked were rejected. The pork industry asked for temporary trade restrictions in 1998 and 2007 because of cheap bacon and pork imports.
The WTO Agreement on Safeguards took effect in 1995. Its purpose is to give WTO member countries the right to impose temporary import restrictions when imports pose a serious threat to domestic industries.
In part it says that members of the WTO “may apply a safeguard measure to a product” when a member country has determined “that such product is being imported into its territory in such increased quantities, absolute or relative to domestic production, and under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive products (Article 2)”.
The WTO rules define “serious injury” to mean “a significant overall impairment in the position of a domestic industry (Article 4.1.a)”.
In fact, the WTO rules allow for provisional safeguard measures to be applied before a full investigation into damaging imports has even been undertaken.
The rules say that “in critical circumstances where delay would cause damage which it would be difficult to repair, a member may take a provisional safeguard measure pursuant to a preliminary determination that there is clear evidence that increased imports have caused or are threatening to cause serious injury (Article 6)”.
It remains to be seen if the Government will invoke these WTO provisions to prevent the collapse of this industry.
It also remains to be seen if the Government will follow the example of many of our competitor nations by managing down the exchange-value of the Australian dollar.
Patrick J. Byrne is national vice-president of the National Civic Council.