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Australia To EU: More Farm Changes Needed

  • July 12th, 2007
  • Posted by EUEditor

aus-flag-site.gifMost Australian views on changes to European farm support say these are incomplete and should give way to more liberalisation.

The argument was made to an industry gathering, the General Assembly of the European Young Farmers Association (CEJA) (18.4.07), by a senior trade representative, Greg Williamson, the Australian Minister-Counsellor for Agriculture at Brussels.
ALWAYS ROOM FOR MORE

He said reforms in the Common Agricultural Policy (CAP) were welcome, while there was “always room for more”:

“True reform cannot be undertaken with continuing high tariffs and interventionist policy.

“In effect, farmers should not be shielded from competition and consequently be left at a disadvantage.

“In order to be globally competitive, the regulatory burden must be reduced, and policies must encourage greater competition, self-reliance and self-determination.

“The success of Australian agriculture, through self-reliance, self-determination, capacity building, greater competition, and adjustment assistance is equally applicable to the European situation.”

AUSTRALIA’S RECORD AND COMMON GROUND

He said changes in Australia over 25 years, in general economic management and in agriculture, had moved away from industry regulation, market management and protection, with positive outcomes in strong competitiveness, trade expansion and growth.

A comparison of the Australian and European farming sectors demonstrated they had common ground and common problems; mostly as family farming enterprises, faced with lower food prices, aging populations and budget constraints – and demands on them to be sustainable and utilise resources efficiently.

Where Australian policy settings were characterised by low levels of support; business adjustment, capacity building, and innovation were backed by national programs, e.g. encouraging industry investment, research and development, and environmental care.

EU AND US POLICIES CRITICISED

However Australian farmers enjoyed relatively low levels of support – as compared to the European Union and United States which had kept comparatively high levels of producer support.

“We see that the US still has major commodity programs that are trade distorting and damaging,” Mr Williamson said.

On agricultural support policies of the EU:

“Significant positive changes have been made to these policies in recent times, (but) it is also the case that the CAP continues to insulate European farmers from world market supply and price variations.

“DECOUPLING?”

“In addition, payments that are considered to be decoupled are being provided along with other, clearly market distorting support measures including tariffs, tariff quotas and export subsidies.

“These are not decoupled which leaves producers and consumers responding to prices that are distorted by the overall impact of all measures taken together.

“In effect, despite decoupling of farm payments, and the move toward reducing price support, the CAP in its current form will continue to have a significant negative impact on the EU community and global economic welfare.

“These effects can be explained in part by the impact of high CAP payments and other market distortions on farmer behaviour.

“In this regard, we believe there is a discernable impact on the way farmers manage risk, which in turn influences farmers towards being less inclined to alter production patterns or adopt new innovations when they have a guaranteed level of income.

REMOVED FROM MARKET REALITIES

“While this may appeal in the short run, it poses substantial longer run problems as farms become further removed from market realities.

“The capitalisation of large farm payments into land values also provides a further brake on innovation and smooth adjustment to changing markets – not to mention the inequities facing young farmers seeking to enter agriculture at a reasonable (and sustainable) cost.

“The Australian experience is particularly important here because not only have we avoided large farm payments, for reasons already outlined, but where payments have been made for adjustment purposes, like in the dairy example, it was decoupled from the farm – leaving complete flexibility for the individual to adjust to the new market conditions.

“There also remains an issue as to who receives farm payments under the CAP and who will benefit from the current system continuing, as compared to a more targeted, less distorting set of policy measures.

“Current public estimates have some 18% of farms receiving 85% of payments in the EU – something which should be of concern to the majority of farmers seeking to compete against this high level of support.”

Reference, full text: “The Australian Model of Agriculture: What relevance to the EU?”, http://www.eu.mission.gov.au (12.7.07)

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