Australians Upset Again By US Wheat Sales

AUSTRALIAN farmers are mad at President Bush. Again.

The United States Department of Agriculture Monday announced that it had offered Pakistan - a major Australian market - 550,000 tons of subsidized wheat. The offer undercut the commercial price by $34 a ton.

Australia does not subsidize farm products. And this is the second such sale the US has made. Back in October, Mr. Bush announced the sale of 800,000 tons of subsidized wheat to Pakistan.

Australians are also angry because it looks like Pakistan may not go through with its contract with Australia for 600,000 tons of wheat. That could mean a loss of $100 million (Australian; US$66.8 million).

"This is designed to knock Australia out of the market for the rest of this year," says John Lawrenson, managing director of the Australian Wheat Board.

The wheat sale is the latest blow to Australian farmers. At Christmas, winter rains turned to floods. While no wheat was lost, some 4 million out of 14.6 million tons will be downgraded to lower-quality milling wheat or feed wheat, says Alec Nicol of the Australian Wheat Board.

The Australia economy is heavily dependent on farm commodities. Wheat is one of the largest exports, bringing in an average of more than $2 billion a year.

But US officials say they need the Export Enhancement Program subsidies to compete with the heavily subsidized European Community (EC).

A US embassy official says Bush wrote former Prime Minister Bob Hawke last year saying "all possible care will be taken to avoid disruption of traditional markets where Australia as a nonsubsidizing exporter has significant interests."

"The US always said it's there to counter subsidies from the EC, but the EC doesn't have white wheat to sell into that market," Mr. Lawrenson says. The US claims the EC does sell wheat to Pakistan.

Some here say it is not only the sale that hurts, but also the market loss. Once a market gets "corrupted," it is hard to get back in.

The Australian government, which wants to maintain good relations with the US, is taking a somewhat softer approach than the farmers.

Analysts here say the US may have believed crop water damage would make Australia unable to meet its contract with Pakistan. But grain officials say the country would have fulfilled its promise.

Both sides see a positive resolution to the Uruguay Round of the General Agreement on Trade and Tariffs talks as the major way out of the dilemma.

"If the Uruguay Round would come to a satisfactory conclusion on subsidies, we would dismantle the program," the US embassy official says.

"We could pin our hopes on the Uruguay Round, but if we don't get some sense there, then individual growers will stop growing wheat," Acting Minister for Foreign Affairs and Trade John Kerin says.