Anger swells as US follows EU lead with dairy subsidies

Posted by Isobel Drake on 25th May 2009

The re-introduction of dairy subsidies in the US has been met with disappointment in Australia, as concerns grow that protectionism could have a negative impact on food security.

“The US announcement at the weekend that it will follow the European Union’s (EU’s) misguided re-introduction of subsidies for dairy producers only compounds the garbled signals affecting world markets and derails legitimate attempts to correct the global economic recession,” National Farmers’ Federation (NFF) President, David Crombie, said.

“With world economies in freefall and the international food crisis ever-present, leading the charge on trade reform to open up markets should be political leaders’ focus. The Doha Round of trade reform has repeatedly broken down due to a lack of political courage on the part of key players.”

The NFF suggest that a jump-start for the global economy could be seen with a breaking down of artificial trade barriers and believe the US is instead “regressing into imaginary harbours that give it no protection at all”.

“The problem with so-called ‘protectionism’ is while it may shore-up domestic jobs in the short-term, it only reinforces the inherent distortions that plague international trade,” Mr Crombie said. “Rather than help the US economy to rebound, it entrenches the inefficient allocation of resources that economies can ill-afford – now or for a longer-term recovery.”

“Here at home, in light of the worldwide economic downturn and the ongoing debate surrounding food security, it is vital that the next generation of farm leaders have a solid understanding of how global trade assists Australian agriculture.

“Exporting some 65% of everything we produce on Australian farms, breaking down barriers and gaining greater access to world markets is essential. Without it, there is no opportunity for growth.”

Fonterra, the world’s largest dairy exporter echoed the sentiments of the NFF, contending that the US decision had the potential to damage a world dairy market which remained fragile.

Australia’s Agriculture Minister, Tony Burke, and Trade Minister, Simon Crean, have indicated they will try and pressure the US Government into reversing the decision with the help of other nations.

“This is another kick in the guts for our dairy farmers,” the ministers said. “The decision comes as dairy farmers around the world are struggling with the global recession and lower milk prices.”

“Both the EU and US are using export subsidies and setting a poor example for the rest of the world. We strongly reaffirm the need for the US and the EU to show better leadership,” they concluded.