Dairy industry dudded by free trade deal

THE Australian dairy industry has been hung out to dry by the free trade agreement (FTA) with Japan, industry lobbyists say.

As final details of the FTA emerged late on Monday, delivering good outcomes for many industries as well as Australian consumers, the dairy industry emerged with almost nothing.

The Australian Dairy Industry Council (ADIC) said it was “extremely disappointed” with the agreement, estimating that it will deliver a benefit of just 0.1 of a cent per litre for Australian farmers in 20 years’ time.

ADIC deputy chairman Robert Poole said the agreement fell well short of the industry’s expectations, with minimal progress having been achieved in reducing a range of trade barriers. 

“We were hopeful government had heeded the industry’s message in regards to freeing up market access in Japan. However, it now appears our words fell upon deaf ears,” Mr Poole said. 

The number one objective for the dairy industry was a reduction in the tariff on cheese, but this remains unchanged at 29.8 per cent. The only concession achieved was a 20,000-tonne increase in the tariff-free threshold from the present 27,000 tonnes, to come into full effect by 2031. 

Australia exports 90,000 tonnes of cheese annually to Japan.

“This has been an agreement over six years in the making and sadly from the dairy industry’s perspective, will end up providing no meaningful benefit,” Mr Poole said.

Under the terms of the agreement, the Australian dairy industry will save just $4.7 million in the first year, rising to an estimated $11.6 million by 2031, out of a total export market of $511 million.

Japan is Australia’s largest dairy market, representing 19 per cent of exports by value.

Successful negotiation of the tariff cut would have saved the dairy industry $60 million a year, Mr Poole said.

“Instead we have received nothing and the tariff stays in place,” he said.

United Dairyfarmers of Victoria president Tyran Jones said 130,000 tonnes of Australian dairy produce goes to Japan each year. 

“We deserve a better deal,” Mr Jones said.

“The US and European Union are set to swamp the global marketplace with subsidised dairy products, making it even harder for Australia to compete on a level playing field,” he said of the agreement.

Beef producers have come out of the deal far better than the dairy industry, with the agreement expected to boost the annual gross value of Australian beef production by up to 7 per cent.

The tariff on Australian frozen beef will drop from 38.5 to 19.5 per cent, while the chilled beef tariff will fall from 38.5 to 23.5 per cent over 15 years.

The first year of the agreement will deliver an 8 per cent tariff cut for frozen product and 6 per cent for chilled beef.

Member for Wannon Dan Tehan said the outcome for the region’s beef producers was very good, giving them a competitive edge against key competitors.

“Unfortunately we were not able to achieve the result for dairy that we would have liked and the industry have expressed their disappointment,” Mr Tehan said.

He said the government felt it necessary to proceed with the free trade agreement in its present form or risk having it swamped by the ongoing negotiations under the Trans Pacific Partnership agreement, of which Australia is a part.

“The key thing for me now is that we see dairy benefit from a free trade agreement with China,” he said.

“We’ve got to see a result for dairy from those negotiations.”

Dairy Australia declined to comment on the agreement.

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