PoM rent increase will damage dairy's competitiveness

Jun 17, 2015

The Australian Dairy Industry Council (ADIC) is extremely concerned about the Victorian Government proposal to increase rent of stevedoring facilities at the Port of Melbourne (PoM). The size of the reported increase will have a large and disproportionate impact on the dairy industry, including both dairy farmers and companies that export product through the port.

With around 85% of total dairy exports channelled through the PoM, dairy is the 5th largest user of the port. According to ADIC Chair, Noel Campbell the move could cripple dairy’s future competitiveness.

“The Australian dairy industry operates in an open international market, competing directly with products from other dairy producing countries,” Mr Campbell explained.

“Dairy manufacturers operating out of the PoM will be unable to simply add on the cost of the rent increase to their exported products without incurring negative effects in the global market place. This means the rent hike will be charged back to dairy farmers.”

Basing their estimating on the fact that each Twenty-foot Equivalent Container (TEU) will be handed a $100 rent increase per container, the ADIC said the impact on individual dairy farmers could be in excess of $1,000 per farm.

“The export market provides substantial and important markets for our products, one where there is clearly great demand for our high quality, safe products,” Mr Campbell said. “Exporting to these regions ensures the industry’s ongoing viability and growth.”

The ADIC has also expressed concern that the funds raised by the Government through the increased rent are not committed to improving port facilities, but will instead be directed to the cost of removing railway crossings in suburban Melbourne.

This will have repercussions for port fees in the future and provide no direct benefit to the dairy and other manufacturers that use the port. The impact on dairy and other commodity exports is further exacerbated by the proposed 50-year non-compete clause that will effectively mean the abandonment of the development of Hastings as an alternative deep-water port.

For further information on the ADIC’s policy and advocacy work in the markets, trade and value chain area click here


Budget offers mixed bag for dairy

Jun 16, 2015

The 2015 Federal Budget announced on 12 May, delivered modest gains for agriculture. With initiatives aimed at supporting rural and small businesses such as tax breaks for those with annual turnover under $2 million, social and community support services for rural Australians, and drought relief assistance, dairy came out slightly better off than the year before.

On 27 May, ADF welcomed the announcement from Federal Government that it would bring forward the introduction of accelerated depreciation of fodder, fencing and water assets to the night of the Federal Budget, as opposed to 1 July 2016. This decision will greatly benefit farmers who have been recently impacted by severe floods and drought. ADF acknowledges the considerable effort of the Hon. Barnaby Joyce, Minister for Agriculture, in making this happen.

Key gains for dairy in the 2015 budget:

•Tax write-offs for fences and new water storage
•$25 million for assistance for drought affected areas to reduce the impact of pest animals
•$20 million towards social and community support services for emotional impacts on farmers. And an extra $1.8 million for more counsellors.
•Cattle Farmers in the north will see $101.3 million over the next four years for improved road infrastructure
•$25 million to towards assisting Australian producers access the benefits of free trade agreements
•Tax burden for small business will be reduced to 1.5 per cent for businesses with annual turnover under $2 million
•A 5 per cent tax discount for smaller, unincorporated businesses
•An immediate tax deduction of all assets under $20,000 will allow small businesses to invest in new tools or machinery.
•$3.7 million allocated to implement recommendations from the review into the integrity of the 457 Visa Program.

The budget also included money for drought grants and loan schemes, however, this is the same money that was previously allocated but not spent.
ADF would have appreciated the budget also address the lack of Agricultural Counsellor postings to assist with reducing technical barriers to trade within key international dairy markets. We also would like to have seen further Investment in agriculture R, D&E, CRCs, infrastructure for rural regions and biosecurity.

There is still an opportunity to address these issues in the upcoming Agricultural Competitiveness White Paper. ADF will continue to advocate and work with government to help ensure the budget allocations are used to maximise its benefit for the dairy industry. 


TPP must be commercially meaningful for dairy

Jun 10, 2015

The Trans-Pacific Partnership (TPP) offers a historic opportunity to address a broad range of distortions affecting Australian dairy producers, and to ensure consumers throughout the region involved have access to safe, high quality Australian products.

A free trade negotiation that commenced in March 2010, the TPP involves 12 Pacific Rim countries including Australia, who account for approximately 40% of the world’s GDP*. Included in this round up are key Australian dairy export markets such as Japan, Singapore and Malaysia, as well as competitor countries such as New Zealand and the USA.

Australia exports dairy products to all eleven TPP countries – between 250,000 and 300,000 tonnes valued at around $US1 billion per year. Around 50% of these exports (worth $425 million in 2013/14) go to Japan.

Throughout the negotiations, the Australian Dairy Industry Council (ADIC) has continuously lobbied for the TPP to address traditional tariff barriers for dairy products and more subtle trade distorting non-tariff measures such as the European Union’s aggressive stance on Geographical Indications, as demonstrated in their trade agreement with Canada.

The ADIC expects that the TPP will address these non-tariff barriers, especially in the Japanese and Canadian markets where these restrictions are most pervasive. For the TPP to be commercially meaningful, markets like Canada and Japan must demonstrate that they are prepared to significantly increase their existing dairy market access positions.

Sustained economic and population growth is driving an increase in dairy demand for the Asia-Pacific, but to take full advantage of this unprecedented opportunity, the TPP must be ambitious, comprehensive and commercially meaningful.

The latest round of TPP negotiations took place in Guam at chief negotiator level on 26 May 2015. There are many issues yet to be addressed and the ministerial meeting planned to follow the negotiators talks did not take place with the US Congress yet to pass the crucial Trade Promotion Authority (TPA) Bill.

The ADIC will continue to advocate strongly for dairy’s interests in the TPP.

*Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. 


China FTA: How does it weigh up?

Dec 03, 2014

As New Zealand (NZ) Prime Minister, John Key has reportedly been working to ensure NZ’s dairy industry receives equal benefits to our industry, it’s clear that Australia’s free trade agreement (FTA) with China has weighed up very well.


With negotiations concluded and a Declaration of Intent signed on 17 November, the China-Australia FTA has delivered a significant confidence boost to the whole dairy value chain, with the outcomes presenting real opportunities for dairy to grow and prosper.


So what does the deal promise and how does it compare to NZ’s existing FTA with China?


While the FTA is currently in its legal review phase, it has secured the following tariff outcomes:
  • Elimination of the 15% tariff on infant formula over 4 years;
  •  Elimination of the 10 ‐ 19% tariff on ice cream, lactose, casein and milk albumins over 4 years;
  • Elimination of the 15% tariff on liquid milk over 9 years;
  • Elimination of the 10 ‐ 15% tariff on cheese, butter and yogurt over 9 years; and
  • Elimination of the 10% tariff on milk powders over 11 years.

In comparison to our trade deal, the China-NZ FTA contains restrictive safeguard measures on a wide range of dairy products, including liquid milk, cheese, butter and all milk powders. These safeguards or quotas mean that China raises the tariff back to the normal rate when NZ’s exports exceed a certain volume of product.

Under our FTA, Australian dairy will only face a discretionary safeguard on whole milk powders, with the safeguard trigger volume set well above current trade levels and indexed to grow annually. For all other dairy products there will be no safeguards and Australia will receive unlimited preferential access.

Australian Dairy Farmers (ADF) President, Noel Campbell said now that the deal has been done, the hard work begins – seizing the opportunities the agreement offers and making them work for our industry.

“The effects of the deal won’t be immediate, and to effectively capitalise on the improved market conditions, on-farm investment and upgrades to the industry’s infrastructure are necessary,” Mr Campbell said.

“The FTA with China opens the gate to the Chinese market, now it’s up to industry to work together to leverage the benefits.”

Mr Campbell thanked Minister for Trade and Investment, Andrew Robb, the Australian government, industry and the broader dairy community for its ongoing support throughout the negotiations.

Click here to download your copy of the Department of Foreign Affairs and Trade’s Implementation Timeline or see www.fta4dairy.com.au for more information.


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