Australian agriculture subsidies 2pc: report

A timely report showing Australia’s farmers are among the least subsidised in the world has blown holes in China’s decision to slap tariffs of up to 80 per cent on Australian barley imports. The Chinese Government confirmed rumours and ended an 18 month anti-dumping inquiry last month when it slugged the 73.6 per cent “dumping” tax and a 6.9 per cent tariff on supposed Australian Government subsidies. The Chinese Ministry of Commerce argued Australian subsidies and dumping had “substantially damaged the domestic industry” in China, saying the subsidies helped Australian exporters discount the sale price of barley in 2018. It also claimed the $10 billion rescue plan for the Murray-Darling river system, dating back to 2007, had provided irrigation subsidies to barley growers. A new report released by the Australian Government’s agriculture forecaster on Friday revealed government support for Australian farmers was just 2 per cent of revenue — down significantly on 9 per cent in 1988-89. The report showed the dollar value of the subsidy share of Australian farm revenues equalled about $11 million in 2018-19, down from about $48 million in 1988-89. It noted that most of Australia’s subsidies were in the form of input subsidies primarily related to drought measures and on-farm water infrastructure investment. Other subsidies related to climate risk management programs, primarily income tax smoothing and farm management deposits. It also showed Australia was particularly reliant on an open global trading environment, with more than 70 per cent of agricultural production exported and nearly 50 per cent of agricultural employment derived from trade. The report showed Australia had one of the lowest levels of agricultural support across the 37 Organisation for Economic Co-operation and Development member countries, and compared with major emerging economies. The Australian Bureau of Agricultural and Resource Economics found Australia was above only New Zealand, and well below many European and Asian countries’ agriculture subsidies. The highest levels of support were in Norway (61 per cent of revenue), Iceland (59 per cent), Switzerland (55 per cent), Korea (52 per cent) and Japan (46 per cent). In terms of Australia’s major agricultural competitors, subsidies were higher in the US (10 per cent) and Canada (9 per cent), and Brazil (3 per cent) and Chile (2 per cent) had low levels of support. Report author Jared Greenville said there were no targeted subsidies provided to Australian grain producers, along with other top exports beef and veal. “In contrast, global levels of support for beef and veal were around 13 per cent of farm revenues, on average,” he said. “Grains markets other than rice are relatively free from market distortions — on average 3 per cent and 6 per cent for wheat and barley, respectively.” The report, titled Analysis of Government Support for Australian Agricultural Producers, said keeping subsidies low was “important for both Australian producers and international markets”. “For Australia alone, estimates suggest that global subsidies and trade barriers could be costing Australian agriculture between $8-10 billion annually,” the report said. It also warned of “creeping protectionism” in a post-coronavirus trading environment. “Since late March, several countries have moved to impose export restrictions to shore up domestic food supplies,” the report said. “The focus of restrictions has been on staple commodities, like rice, wheat and some other grains.” Dr Greenville said deregulating agriculture and removing distorting support had spurred the sector’s growth and boosted participation in global markets. “Australia’s reform experience shows that deregulating the agriculture sector and removing distorting forms of support spurs overall sector growth, increasing participation in global markets and the contribution that agriculture makes to the rural and national economy,” Dr Greenville said. Countries with lower subsidies had better performing agriculture industries, with faster growing incomes, Dr Greenville said. “The costs of increasing distortions to trade and subsidies are also felt more in countries that implement these policies than elsewhere.” Federal Agriculture Minister David Littleproud said the research showed Australian farmers did not need handouts to thrive. “They work mighty hard off their own bat to produce the safe and fresh food trusted by all Australians and sought after by the world,” he said. The report noted that country level measures of support could hide “areas of heavy intervention in agricultural markets”, for example in China and India, where, “despite relatively low levels of support”, “both provide considerable subsidies to producers”. “Access a number of commodities, the absolute value of China’s subsidies considerably exceed expenditures in other countries,” the report said. Australia’s approach to agricultural subsidies has changed significantly in the past 30 years, with heavy regulation and subsidies in the mid-1980s. In 1988-89, Australian agriculture subsidies accounted for about 9 per cent of total farm revenues — with dairy producers receiving the highest levels of support at about 69 per cent of farm revenues. Visit agriculture.gov.au/abares/research-topics/trade/analysis-of-government-support-agricultural- producers