Farmers could access China markets
The Age, Melbourne
Farmers could access China markets
6 March 2006
Key rural commodities including wine, milk and wool will be in keen demand from China if a free trade agreement with Australia is struck, a new report has found.
The Australian Bureau of Agricultural and Resource Economics (ABARE) study of farming in China said urbanisation of the economic giant meant there were huge opportunities for Australian farmers, as long as trade barriers were brought down.
Australia and China were now in talks over a free trade deal, which would join similar agreements between Australia and the United States, Singapore, Thailand and New Zealand.
Early estimates suggested a trade deal with China would boost the Australian economy by between $17.5 billion and $23 billion over the next decade.
China would benefit by between $66.5 billion and $83.1 billion.
ABARE executive director Brian Fisher said the increasing urbanisation of China meant tastes and trends were changing rapidly.
Those changes could benefit Australia.
"The increasing affluence of China’s urban consumers has meant that they are moving away from starchy staples toward more varied diets, including increased quantities of meat, dairy and seafood products," he said.
Dr Fisher said water constraints and land degradation in key areas was putting pressure on Chinese agricultural production, and it was questionable whether China could meet its domestic food requirements on its own.
Among major Australian agricultural exports, ABARE found wine, fruit juice, sugar, cotton, milk, wool, feed grains and wheat were the most likely to benefit from a free trade deal.
In terms of wine, exporters to China faced barriers in terms of labelling, packaging and registration requirements.
ABARE believes addressing those issues, and cutting tariffs under a trade deal, would help Australian wine producers sharply increase sales to potentially the second biggest market in the world.
Australian sugar farmers may be big winners because of a looming shortage of suitable land in China.
While competition from other sweeteners, such as corn syrup, is an issue, Chinese demand is so strong that it must focus on sugar imports.
Dairy farmers are also likely to be winners as demand from China rises.
"China’s demand for dairy products and sugar is expected to increase more rapidly than production, and increased imports are likely, enhancing the prospects of increased Australian exports to China," ABARE found.
Australia is already the largest supplier of wool to China, but ABARE believes by cutting tariffs and lifting quotas there was scope for even greater sales.
"Whether that will be taken up will depend on demand in the face of ever increasing competition from synthetics," it cautioned.
But there could be increased competition, particularly in the area of horticulture where more land is being put into production throughout China.
Even in an area where Australia is a net importer - apple juice - ABARE believes there could be scope for increased sales to China.
It said China mixed sour apple juice with its own local juices. Lower tariffs on sour juice could help Australian producers sell this niche product to China.
ABARE found a free trade deal could help Australian farmers match competitors, particularly from Chile and New Zealand, which are also looking at trade deals.
Chile and New Zealand are major competitors in areas such as wine, grapes and dairy products.
