If you are feeling somewhat giddy from the hype of the last week, join the club. We’ve had the Chinese presidential visit, major investment seminars, multiple memoranda of understanding, smorgasbords for the world’s leading foodies and column inch after column inch in national press predicting that we are on the dawn of a new age of prosperity.
Perhaps it is time for some sober reflection.
There is no doubt that our world is going to change – but it will not happen overnight. There is no silver bullet. There is no magic panacea for its economic woes. There is no great benefactor. We have to make our own way in the world.
Undoubtedly, Tasmanian agriculture has been given a boost – but it will not mean dollars raining down on us tomorrow.
The China-Australia Free Trade Agreement (ChAFTA) has been ten long years in the making; and it has delivered more than we might have hoped for. This agreement will open bilateral investment opportunities in agriculture that have eluded us for far too long.
Under the agreement, Chinese tariffs on dairy products will continue for the next four to nine years. Similarly, we have to wait nine years for the tariff on beef to be eliminated and eight years for sheepmeat. For vegetables, it’s four years before we have a level playing field.
Therefore, free trade it is not. We are still behind the eight-ball. There is seldom a true level playing field in free trade agreements. We usually come off second best because our farmers operate without tariff protection, without government subsidy and are innocent bystanders as far as the Australian dollar is concerned.
But, as TFGA Dairy Council chair Andrew Lester noted: “… anything that gives us improved access to the Chinese market has got to be a good thing.” And this FTA does at least place us on an equal footing with New Zealand.
Meat Council chair Brian Stewart said: “The gradual removal of the tariff burden will have an immense impact of the profitability of Tasmanian sheep and cattle producers.”
Wool Council chair Michael Parsons also welcomed the FTA, saying it would provide a vital boost in an already established market.
“China already accounts for 75 per cent of Australia’s raw wool exports and our quota of 287,000 tonnes is only taxed at one per cent. The country-specific quota is recognition of our current place in the market and the quality product that we have continued to provide and the positive relationship that has been fostered with our Chinese customers,” he said.
China is Australia’s largest agriculture and fisheries market, worth around $9 billion in 2013. China’s demand for high-quality agriculture and food products is growing rapidly. The Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) predicts that China will account for 43 per cent of global growth in agricultural demand by 2050.
Tasmanian farmers, too, have a long history of trade with Asian nations, including China. In 2011/2012, they exported product worth more than $120 million to ASEAN countries. Major products exported to ASEAN countries included dairy ($42 million); seafood ($32 million) and wood products ($20 million estimated from private forestry sector). More than 20% of those exports were headed to China.
Until now, the absence of a bilateral FTA with China has meant Australian producers and exporters have faced significant tariffs on agricultural products and have been at a competitive disadvantage with respect to countries that already have an FTA with China – including New Zealand, Chile and the ASEAN nations. The Agreement will give Australia a significant advantage over larger players in the Chinese agriculture market – the US, EU and Canada. It will also provide a base for further liberalisation through a review of market access outcomes three years after entry into force.
Having said that, it is important to understand that Free Trade Agreements must deliver benefits to both parties. Tasmania is well placed to benefit from the expansion – through increased production, increased Chinese financial investment here, and our input to Chinese domestic production techniques.
In return, we will be able to provide knowledge and technology to assist Chinese farmers in improving their own productivity. The fact that we are in the southern hemisphere means that our main production season is mainly counter-seasonal with that in the northern hemisphere and therefore adds scope for us expand product availability in the Chinese markets.
This FTA clearly opens many doors for Tasmanian producers. It underscores the fact that agriculture will continue to be a stabilising influence on our economy.
I’ll leave the last word to our Chairman, Wayne Johnston, who said that “The events of the past week have certainly put us on the map for those who were unaware of our potential. Tasmania – and Tasmanian farmers – are in a prime spot to benefit.”
TFGA Chief Executive Jan Davis
