Major farmer organisation opposes ‘protectionist’ manufacturing support suggestion

Posted by AFN Staff Writers on 31st August 2011

Australia’s national farming industry association, the National Farmers’ Federation (NFF) is calling on the Federal Government to ensure the future viability of Australia’s food manufacturing sector, without resorting to protectionist measures.

NFF President Jock Laurie said in a statement today that it is in the interests of farmers to see a strong and vibrant manufacturing industry in Australia, particularly food manufacturing, but without compromising Australia’s long running trading position against protectionism.

“Agriculture is one industry that has learnt how to become globally competitive through policies that focus on productivity, rather than jeopardising our position in the international trading community through trade-distorting subsidies,” Mr Laurie said.

“Our farmers export around two-thirds of our domestic produce, and we do so competitively in the most distorted area of international goods trade.
“Achieving this was a long and difficult process for Australian farmers, but ultimately shows that it can be achieved in other trade exposed sectors, like food manufacturing, as well as agriculture,” Mr Laurie said.

“Of course, the high Australian dollar and the multi-speed economy are placing considerable pressures on our local food manufacturing sector, just as they are for farmers.

“The NFF supports a floating dollar and recognises that monetary policy can be an effective means of keeping inflation stable and low, ensuring that the Australian economy grows sustainably, without eroding our living standards.”

The NFF argues that now is the time for the Reserve Bank of Australia to broaden its mandate in setting interest rates to take into account the impact of its decisions on the Australian dollar.

Mr Laurie said, “We are concerned that the Reserve Bank of Australia pays little regard to the impact of monetary policy on the Australian dollar in setting interest rates, and, as a result, little regard to the fortunes of Australia’s trade exposed industries like agriculture and food manufacturing.”

Editorial opinion

Australian Food News notes that Australia’s main food exports are agriculturally sourced commodities such as bulk meat and cereals. National farming groups in the commodities sector have traditionally supported greater free-trade policies as the means of gaining greater access to international commodity markets.

Up until now, Australian farmers have not been supportive of Australian-based manufacturing. However, the strong Australian dollar may have had an effect in changing the thinking of some farmers, especially in the dairy sector. However, the major dairy processors in Australia remain international players in dairy commodity markets and are able to operate profitably irrespective of (or arguably because of) the weak commercial position of many of their farmer suppliers.