FTA a dairy game changer

17 Nov, 2014 04:00 PM
We’re moving to full trade and that’s an excellent outcome

THE China-Australia trade deal agreed today signals the start of a more even race for local dairy industry, competing against key export nations like New Zealand, Europe and the United States, says Murray Goulburn executive general manager shareholder relations Robert Poole.

But rather than comparing the race to a 100-metre sprint, where NZ had a 5-metre head-start that’s been pegged back, he preferred the analogy of a more enduring journey like a marathon, to describe the changed conditions of Australian dairy’s competitive outlook in China.

Mr Poole is also deputy chairman of the Australian Dairy Industry Council and gave the free trade agreement (FTA) a big tick on three key areas.

“Bilateral agreements are about catching up, getting ahead if you can and protecting your competitive position long-term, so I think it is an absolute tick on those three boxes,” he said.

Australia’s competitors may negotiate FTAs in future that allowed them to catch up to Australia but, “in theory they can’t go past us because we are moving to full trade - and that’s an excellent outcome,” Mr Poole said.

“Australia is a premium brand in China and the Chinese consumer is seeking Australian dairy.

“This deal will now allow trade to occur without a tariff involved and it’s really up to the commercial players now to maximise the benefits of that opportunity.

“China is a two million-tonne dairy import market - the biggest import market on the planet - and it’s growing rapidly.

“They will continue to seek imports and they will seek them from Australia so it’s a good outcome for the Chinese consumer as well.”

Mr Poole said the key question that now needed to be answered was how to take best advantage of the FTA.

“It’s really up to the commercial players now,” he said.

“The government has done the right thing by removing the handicaps but we’ve still got to run the race and capture the benefits.

“The commercial players will capture benefits through lower tariffs - and hopefully Murray Goulburn will be doing that and returning those benefits to farmers via its co-operative structure.”

'Good time to be in dairy': Fonterra

Fonterra Australia welcomed the China-Australia FTA and applauded the Australian and Chinese Governments and industry.

Managing director Judith Swales said expanding market access was critically important to the future profitability of the entire Australian dairy supply chain.

“This is a good time to be in dairy. The FTA will be a game changer for Australian dairy (and) presents all sorts of opportunities.

"For our Australian farmers, it will give them the confidence to invest in their businesses and confidence that the whole industry is supporting them in providing access to our biggest export market.

“It will bring our milk closer to the Chinese consumer - a market that represents 30 per cent of global dairy imports and is the world’s largest dairy importing country. We know that more milk is required to satisfy this demand and that all products in all forms are possible,” she said.

While Fonterra Australia has not yet been able to review the agreement in detail, Ms Swales commended the overall outcomes of the deal.

Colin Bettles

Colin Bettles

is the national political writer for Fairfax Agricultural Media
Date: Newest first | Oldest first


The Older I Get .....
17/11/2014 5:12:20 PM

I wonder if Fonterra New Zealand is as excited about the Aussie FTA as their Aussie based arm?
17/11/2014 9:35:45 PM

There is no mention here that China wants to buy the farms, not just invest in them, is this part of the trade agreement? There is a big difference. Have the other players in this game also bought the farms? If it is the case then Australia has a big problem.
Very WoollyThinking
17/11/2014 10:01:15 PM

Good to see this concluded but only when the full agreement is released will we know the truth. One thing that is a certainty is that Australia and NZ will soon be on a similar playing field with China and both will compete fiercely meaning - yep you guessed it - pressure to lower farm gate prices.
Bushie Bill
19/11/2014 7:58:35 AM

Aussie, this may come as a big surprise to you, but buying an asset IS investing in that asset.
19/11/2014 9:24:04 AM

The devil in the detail is that Chinese owned businesses in Australia will be given the advantage under the FTA of bypassing the Australian Industrial Awards system and using cheap Chinese labour alongside Aussies who will then be disadvantaged against the Chinese owned operators. How is that for fairness and equity? One thing it does do is prove beyond all doubt is that Australia has the highest and most unproductive regulated system of inflated input and supply chain costs.


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