March 14, 2007

FTA seen to strengthen agricultural trade between Australia, Japan
 

 

Being the fourth largest supplier of agricultural products to Japan, the Australian farming community is hoping to get more positive results from the FTA talks, which is scheduled to commence on April 13.  

 

Australian producers realise Japanese farmers are sensitive about the removal of trade barriers and nervous about increased imports of agricultural products, said Ben Fargher, chief executive of the National Farmers' Federation.

 

Fargher noted the FTA would demonstrate Australia's reliability as a supplier of safe quality food and will not overstep bounds on Japanese farm products.

 

Australia mostly supplies Japan, its largest trading partner, with raw or semi-processed farm, mineral or energy products, such as beef, iron ore, coal and liquefied natural gas. Trade in 2005 totaled A$31.6 billion.

 

Even though there are no major technical barriers to the trade, an FTA could add "a new dimension to the political and strategic relationship," which would flow through to stronger economic ties, Fargher said.

Australia is Japan's fourth-largest agricultural products and food supplier after the US, EU-15 and China, accounting for about 10 percent of Japanese needs, the study found.

 

Japan relies on Australia for half of its beef needs in a trade valued at almost A$2.5 billion a year; one-third of its cheese; and one-fifth of wheat and sugar demand, while Japanese farmers purchase half their feed barley needs from Australia, the study found.

 

Fargher said Australian farmers will sit down with their Japanese counterparts and officials to explain production systems and how Australian capacity and constraints, such as occasional droughts, means it can't flood Japan with farm products.

 

Australian farmers want to work with Japan and build long-term relationships, he added.

 

That said, Japan has erected significant trade barriers and Australian farmers expect the government in FTA negotiations "to fight to have those barriers removed," he said.

 

Bill Bray, president of producer lobby Cattle Council of Australia, said reducing a 38 percent Japanese import tariff on beef is "the main game" for the Australian beef industry.

 

Cutting the Japanese tariff will boost consumption through access to lower priced beef, in turn benefiting Australian producers, who remain competitive now despite the high tariff, he said.

 

Japan turned to Australia to meet its beef needs after Japan banned US beef in 2003 following the discovery of a case of bovine spongiform encephalopathy, or mad cow disease.

 

Bray said Japanese beef consumption has since contracted 20 percent, underpinning his belief that the market can grow. However, the FTA would prove Australia's endeavour in ensuring quality beef on the Japanese market. 

 

Chris Phillips, general manager trade and strategy at marketing/services concern Dairy Australia Ltd, said Japan has long been a major dairy market for Australia, with export of products there accounting for about 10 percent of national milk production.

 

Most of Australia's dairy exports to Japan is cheese, which carries a tariff of almost 30 percent and mostly feeds a hunger for pizza, while tariffs of about 300 percent on butter, skimmed milk powder and milk "are basically prohibitive" for trade, Phillips said.

 

As a long-term partner with Japan, Philips concludes tariff reduction will strengthen "the ties between the two countries and build on going forward without affecting the Japanese domestic trade".