Coronavirus: Creeping state aid spooking farmers

Australian farmers face ‘creeping protectionism’ as countries use the coronavirus pandemic to impose agricultural trade barriers, new research says.

National Farmers Federation chief executive Tony Mahar: ‘There’s no doubt that the COVID-19 pandemic is a significant challenge for many countries, including Australia’. Picture: AAP

Australian farmers face “creeping protectionism” as countries use the coronavirus pandemic to impose agricultural trade barriers, new research conducted for the Department of Agriculture says.

The report, to be released on Friday, says global subsidies and protection for agriculture could already be costing $10bn in Australian agricultural exports, and world efforts to reduce trade barriers have stalled or reversed.

The Australian Bureau of Agricultural and Resource Economics and Sciences study says Australian farmers are some of the least subsidised in the world at only 2 per cent of their revenue, second only to New Zealand and compared with 50 per cent or more in some European and Asian countries.

It says with the pandemic, “there is a risk of creeping protectionism” in agricultural markets.

“Since late March, several countries have moved to impose export restrictions to shore up domestic food supplies,” the report says, noting that Vietnam imposed rice export restrictions.

“The focus of restrictions has been on staple commodities, like rice, wheat and some other grains.”

Some countries have moved to prop up agriculture through economic packages. While such moves are aimed at keeping businesses solvent, ABARES says they “could create further distortions in global agricultural markets”.

“The US Coronavirus Food Assistance Program, for example, includes an additional $US16bn ($24bn) in farm aid,” it notes.

These measures could result in up to 40 per cent of US farm incomes coming from government payments, up from 10 per cent before the US-China trade dispute.

“The use of export restrictions and increases in support during COVID, along with the initial signs of a trend to rising overall levels of support brings into focus the need for an effective inter­national system to ensure agricultural markets continue to address food security concerns and drive economic development,” it says.

“For Australia alone, estimates suggest that global subsidies and trade barriers could be costing Australian agriculture between $8bn and $10bn in exports ­annually.”

Out of the $62bn worth of food and fibre Australian farmers produced in 2018-19, nearly 80 per cent, or $49bn, was exported, according to the National Farmers Federation, which also sounded warnings about COVID acting as a Trojan horse against free trade.

“There’s no doubt that the COVID-19 pandemic is a significant challenge for many countries, including Australia,” NFF chief executive Tony Mahar said on Thursday.

“It’s during these challenging times that our unwavering commitment to free and liberalised trade will be tested.”

Agriculture Minister David Littleproud declined to comment.