Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

The US FTA issue highlights policy failures in Australian agriculture

By Ben Rees - posted Wednesday, 7 July 2004


NAFTA appears to have prompted Mexico to provide support to its agricultural sector in line with the US. On the other hand, Canadian support to agriculture fell during the same time frame. Canadian farmers are clearly disadvantaged within NAFTA in terms of farm support levels.

Australian % PSE at 4% suggests that once the US Bilateral Agreement is signed, all three NAFTA members will provide support to their farm sectors well above that of Australia. The US FTA will offer indirect access to Australia for NAFTA member countries. Agricultural and environmental leaders in Australia would do well to ponder the implications of support differentials between Australia and NAFTA member countries

Industries of particular interest are compared below:

Advertisement

Source; Agricultural Policies in OECD Countries Monitoring and Evaluation 2003 Tables III.15 & III.45

The WTO AoA provides for a two-tiered system of domestic support. First, a bound Aggregate Measure of Support (AMS) defines a nation’s total level of support to agriculture under price and production distorting instruments. Second, a system of exempt payments allows support additional to the AMS under clearly defined policy instruments that are neither price nor production distorting. Exempt payments instruments offer a wide range of support including decoupled income; environment; conservation; structural adjustment and income insurance.

Decoupled income support is an important instrument and underwrites Covered Crops Programs to US grains industries. The EU announced a move to this type of support last year.  Payments are usually based upon a defined historic production base such as cropping areas or headage payments (number of animals). A target price is set independently of the industry and used as a basis to provide a deficiency or counter-cyclical payment to meet the difference between actual market price and the target price.

Rural policy is about income redistribution back to the farm sector to offset long-term erosion of real farm income. Income effects of sectoral realignment in mature growing economies cannot be reversed by confused economics pursuing increasing efficiency and rising productivity.  This policy direction simply compounds oversupply in international markets.

Advertisement

Lifestyle, environmental and conservation concerns in an increasingly urbanized society also lie beyond confused economics. These lifestyle issues are now in open conflict with rural policy.

Australia needs to consider the following questions
· How best to rebuild rural industries and the damaged social fabric of regional communities
· How to deliver a just price for rural output                         
· How the rural sector can deliver lifestyle, conservation and environmental services to urban Australia
· How to alleviate environmental degradation in overcrowded urban communities by rural reindustrialization

These questions are now being addressed in other mature economies with varying degrees of success. Australia needs to observe and learn form these experiences.

  1. Pages:
  2. 1
  3. 2
  4. 3
  5. Page 4
  6. All

Article edited by Betsy Fysh.
If you'd like to be a volunteer editor too, click here.



Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Ben Rees is both a farmer and a research economist. He has been a contributor to QUT research projects such as Rebuilding Rural Australia. Over the years he has been keynote and guest speaker at national and local rural meetings and conferences. Ben also participated in a 2004 Monash Farm Forum.

Other articles by this Author

All articles by Ben Rees
Related Links
Australian Cane Farmers' Association
Photo of Ben Rees
Article Tools
Comment Comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy