Australia's Productive Farmers Face Trade Barriers
INTERNATIONAL TRADE TALKS IN BRUSSELS
MURRAY WISE, and his two brothers, are among the most productive wheat farmers in the world. Mr. Wise's 7,000 acre farm is blessed with rich soil and a climate so ideal that he harvests two crops every 18 months, compared to every 24 months for farmers in other parts of the world. However, because of the subsidy wars between farmers in the European Community and the United States, his income will be cut in half from 1989 on this year's harvest.
``We're just the meat in the sandwich,'' he complains.
Australia counts on farmers like Wise. With huge areas under cultivation and a population of only 17 million, Australia must export its surpluses. The country estimates that US and European farm subsidies cost it $1.6 billion (US) in annual farm exports. Thus, Australia has joined with 13 other agricultural exporting nations, called the Cairns Group, to press for a 75 percent cutback in farm subsidies. Australia's support for its farmers ranks far below those of the European Community and the US.
The Cairns Group has rejected the first European offer of a 30 percent cut in subsidies. Neal Blewett, Australia's minister for trade negotiations, notes that the European offer sets 1986 as its base. That was the high point for European subsidies, which have been cut 15 percent since then. In addition, the Europeans have made no commitment on quotas or export subsidies.
If the GATT talks fail, Mr. Blewett suggests an option for Australia is to join a Pacific trading bloc made up of Japan, the US, Canada, South Korea, Thailand, and Singapore. Such a bloc could hoist its own protectionist net.
In the meantime, the Europeans are making life very difficult for the Australian farmers. The EC recently sold - on credit - wheat to the Soviet Union with a flat subsidy of $150 per ton.
This subsidy is far more than the average Australian farmer will receive. The Australian Wheat Board is estimating wheat growers will be paid $108 (US) per ton for their crop this year. For the average farmer, the cost of growing and harvesting the wheat amounts to $64 (US) per ton, not counting interest and his time. He then must pay $26 per ton for storage, handling, and transportation. This leaves the farmer with a margin of $18 per ton which can easily be eaten up by interest expenses.
``We are estimating that the best will break even and the majority will lose money,'' says Alec Nicol, a spokesman for the Wheat Board.
The Wise brothers happen to be among the best farmers. Their costs are lower and they have planted birdseed, barley, sorghum, and sunflowers to diversify their crops.
Even so, it is likely their income will be cut in half this year. If the GATT negotiations fail, says Wise, ``We'll just tighten our belts and tough it out.''