Australian dairy to enter Thailand tariff-free for first time

Australian dairy products like Allowrie butter have been sold in Thailand for decades. But now there’s a change in the trade game.

Australian dairy produce will finally sail into Thailand without tariffs, two decades after a free trade deal was inked between Canberra and Bangkok.

The Howard Government sealed the Thailand-Australia free trade agreement — known as TAFTA — back in July 2004, with whole milk, butter and cheese excluded from the deal due to Thailand’s small, trade-exposed dairy sector.

Dairy was a sticking point in negotiations between then Australian PM John Howard and his Thai counterpart Thaksin Shinawatra, with trade mediators finally agreeing on a protracted reduction of tariffs over a 20-year period.

A similar measure was also agreed upon for Australian potatoes, with the Thai government finally removing tariffs off the versatile vegetable in 2020.

Dairy Australia sustainability manager Charles McElhone said Australian butter and cheese had been popular with Thai consumers for decades and anticipated the trend to continue into the new year.

Allowrie butter was one of the first Australian dairy products sold in Bangkok in the mid-1970s, when it was produced by Victorian co-operative Bonlac. Allowrie is still one of the most popular international butter options today, now produced by Fonterra Australia.

“We’re seeing renewed demand from Thailand — it’s long been a good market for Australia but it keeps growing,” Mr McElhone said.

“It’s becoming more and more part of the local diet, but also as a popular tourist destination, visitors are big consumers of Australian dairy too.

“The same applies to other countries with strong tourist sectors, like Vietnam, Singapore, Indonesia. China has been the largest importer of dairy but there has been well-publicised softening of that demand.

“However, China remains the largest importer of Australian dairy by far.”

Allowrie butter is one of the most popular Australian dairy brands in Thailand.

New Zealand dairy farmers are also beneficiaries of the sunset clause on a similar free trade agreement, inked by NZ PM Helen Clark in 2005, with tariffs abolished on Kiwi dairy heading into Thailand from this month.

This week, Thailand’s Cooperative Promotion Department — part of the Bangkok administration — warned Thai dairy farmers and processors to prepare for the potential impact of zero tariff Australian and NZ dairy produce.

CPD director-general Visit Srisuwan this week urged Thai dairy farmers to focus on hay and corn stems over more expensive manufactured fodder in order to improve competitiveness against imported dairy.