Farmers fear cost hikes

WA Business News recently held a forum on the effects of the US Free Trade Agreement. Mark Beyer and Jim Hawtin report.

WESTERN Australian farmers could face substantially higher costs on farm inputs as a result of a little known aspect of Australia’s trade deal with the US.

WAFarmers’ newly installed president Trevor de Landgrafft told a WA Business News forum on the Australia US Free Trade Agreement this week that some farm chemicals prices could rise three fold.

He said the proposed deal could also wipe out Australian manufacturers of generic chemicals in just a few years.

Mr de Landgrafft’s comments added to concerns that the FTA had little to offer Australian farmers.

Australia’s chief trade negotiator, Stephen Deady, acknowledged that Australia failed to achieve its goals in the beef, dairy and sugar markets.

“In agriculture, access to the US is still a major problem,” Mr Deady said.

“It was disappointing there wasn’t complete free trade.”

Nevertheless, Mr Deady is a strong supporter of the FTA.

“The biggest achievement is that we have a truly comprehensive trade agreement with the biggest economy in the world,” he said.

Mr Deady emphasised that the FTA was the US’ biggest trade deal since the North American Free Trade Agreement.

It was also only the second free trade deal the US had negotiated with a developed country.

Despite the progress on many fronts, WAFarmers is continuing to battle against new intellectual property rules that affect generic chemical manufacturers.

“The devil is in the detail for agriculture,” Mr de Landgrafft said.

He likened his concern over farm chemicals to the debate over generic pharmaceutical products.

The Australian Government acted to protect cheap pharmaceuticals but has not done the same for farm chemicals.

“WA has significant generic chemical manufacturing facilities here,” Mr de Landgrafft said.

“We also know that one of our chief chemicals which is glyphosate is only a third of the price as in the US.

“We also know that there is a dominator in the market called Monsanto.

“We are quite concerned in respects to how our boys are going to have to line up against them?”

Mr de Landgrafft said new rules governing “data protection” would enable US manufacturers to effectively extend their patent protection.

The protection afforded under the FTA was easier to obtain, and applied for a longer period, than applied under draft legislation for the domestic market, which requires a novel innovation.

WAFarmers accepted the concept of data protection but wanted the extension period limited to four years.

“Agriculture was actually trying to pull it back to four.

“And that was the time that FTA came on board and we found it whipped away from us and drawn back out to 10 [years].”

Mr de Landgrafft said this change would block out generic products, which are typically manufactured offshore and formulated into a final product locally.

“This will be a significant increase to agriculture’s cost,” he said.

“It’s one of the reasons it keeps an unsubsidised industry like ours in business.”

Mr de Landgrafft said generic manufacturers had been burgeoning over recent years.

“They have really come to the fore in the past five years.

“There is a whole host of chemicals off patent.”

Mr Deady said he understood the new rules were agreed independently of the US FTA.

“The FTA did not drive that decision, that was a decision of Governments including State and Territory and Federal governments,” he said.

Meanwhile, the latest Rabobank rural confidence survey has found that farmers in WA are relatively pessimistic about the benefits of the FTA.

Overall, 24 per cent of WA farmers say the FTA will have a positive effect on the agriculture sector compared with the national average of 34 per cent.

Mr Deady said despite the disappointment in agriculture, nothing was lost and there were some slight gains in beef and dairy exports to the US.

With dairy exports, Mr Deady said although US access was very low, there was more than a doubling of access, which grows by 5 per cent to 6 per cent per year over a wider range of products than the current access.

“And the industry . . . certainly see that as a big plus,’ Mr Deady said.

With beef, Mr Deady said while it was disappointing it took 18 years to get to free trade, the industry did not have long to wait before it starts seeing the benefits. 

Currently there is a 4.4 cent per kilogram tariff on Australia’s 378,000 tonnes of beef access to the US that will be eliminated when the agreement comes into force.

“That is about $17 million to $20 million tariff revenue . . . that will flow to the Australian beef industry [rather] than to the US treasury,” Mr Deady said.

“After year three an additional 20,000 tonnes of beef access to US will be granted and that continues to grow over 18 years up to 70,000 tonnes by year 18.”

Mr Deady said through working very closely with the agricultural sector on the FTA an understanding was developed that could lead to more gains for the sector.

“We worked very closely with Australian industry, particularly the agricultural sector were there in numbers,” he said

“Importantly they lobbied strongly as we negotiated strongly on their behalf.

“Even more importantly we were able to talk to the industry and get some very important intelligence and feedback as we went through the process.

“So there are some things in the agreement that did emerge from those discussions – with industry very much on the ground in Washington – which do deliver some important gains to us as we look at the detail of the agreement and it is very much up to the agricultural sector now to do that.”