Hopes of a boost for dairy industry

AS Prime Minister Tony Abbott attempts to push a free trade agreement with China by the year's end, the dairy industry hopes for a better deal than those recently secured with South Korea and Japan.

China is expected to become Australia's biggest export market in two years, with dairy companies in Tasmania such as Fonterra, Van Diemen's Company and Launceston's Bellamy Organic expanding milk production to cash in, particularly in the powdered milk trade.

But the deals with Korea and Japan secured minimal duty- free or tariff benefits on powdered milk and other dairy products, and insiders are concerned.

Tasmania Farmers and Graziers Association chief executive Jan Davis said New Zealand's trade agreement with China in 2008 set the bar for what Australia should aim for with regards to its dairy trade agreement.

That deal sees free trade on dairy between New Zealand and China by 2019, with New Zealand's industry growing $2.2 billion in those five years, compared to Australia's $70 million growth in the same time.

Ms Davis said the government was trying to sell dud deals to the Australian public, with agricultural industries gaining very little in the way of tariff reductions.

She said the best bargain would be for China to cut tariffs on Australian dairy exports.

"We have no tariffs on Chinese products coming here yet we are competing with tariffs of up to 360 per cent mark ups and we are basically priced out of the market," she said.

"That isn't what normal people would think of as a free trade agreement."

Dairy Tasmania executive officer Mark Smith said Japan was the biggest importer of Australian dairy product, yet the industry gained nothing from the Japan deal.

Cheese was seen as one area where benefits could be made, and the export quota was increased by 20,000 tonnes, but tariffs remain the same.

"It effectively makes competition difficult ... the status quo is prevailing," Mr Smith said.

"The predominant volume of dairy exports goes into Asia, so any liberalisation of trading agreements with China, Taiwan and South East Asia, would be a benefit for Tasmania's dairy industry."

Email: ibird@examiner.com.au

Twitter: @IsabelBird

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