Dairy Companies Association of New Zealand chairman Malcolm Bailey said they’ve been one of that industry’s most feared trade distortions, suppressing world market prices at significant harm to non-subsidised producers in this country. But now 2020 has been set as the end-date for export subsidy use by developed countries and 2022-23 as the final wind-up for key developing countries.
What he described as “a great step forward” needed to be matched in other areas such as domestic supports, to address other distortions, such as those having the negative effect of masking price signals for dairy producers in Europe.
There’s always more work to be done and dairy farmers looking at little chance of improved international dairy prices before the end of this season might query the agreement’s significance. What if it had been known just how long this particular battle would take when the first tentative steps were made back in 1984?
With 30 years of experience under their belts would NZ farmers have started out on this journey in the first place?
There was certainly plenty of disbelief from other farming nations when Federated Farmers said no to subsidies.
So it’s a tribute to them and their former presidents who took on roles as special agricultural trade envoys to press this policy’s case. Governments of the day soon realised one of the very best ways to make diplomatic headway in this particular instance was a quiet and reasoned farmer-to-farmer conversation. Brian Chamberlin, Bailey himself and the late Alistair Polson all very much played their part in many countries around the world, resolutely putting their sector’s point of view forward time and time again.
The going got tough when hammering out agreements went down to the wire as has so recently been seen with the contentious Trans-Pacific Partnership (TPP) deal. More of that later.
Chamberlin went one better than just advocacy, writing a book, Farming and Subsidies – Debunking the Myths, which was published in 1996. It still makes a great read for those who weren’t there at the time. Importantly, it was eagerly seized on by overseas farmers, politicians and media as the wheel slowly turned and they started to see the same arguments played out in their home countries at a much later stage.
Looking back over three decades, he says, yes, it was most definitely all worth it.
“We’ve got the soundest, most market-oriented agricultural industry in the world,” he said.
“But there was a period where we got overconfident.”
Chamberlin said even he didn’t realise European Union agricultural production restrictions would only last for 10 years, running out in April 2015, and causing a flood of milk on to international markets once they were removed.
“But they were a wonderful 10 years for NZ,” he said.
“There was a feeling that the good times would go on forever.”
Timing couldn’t have been better. This country, Australia and South America were virtually given the just-in-expansion-mode Chinese market on a plate.
“And people didn’t see that coming to an end. But we should have been listening to what was happening in Europe. There’s a fine line between shortage and surplus.”
In hindsight some dairy farmers paid too much for land and followed in their European counterparts’ footsteps, chasing production by buying feed from other countries and housing their cows.
While that was a move away from the local industry’s natural advantage, there are signs of a shift back. With falling international prices farmers have reacted quickly, selling stock and cutting back on imported feed.
Chamberlin now sees a more fundamental move back to what Kiwi dairy farmers are good at – producing grass. And that makes him a strong believer dairying can get through its current problems.
“The banks have got a mature attitude and the saving grace will be low interest rates,” he said.
Back to TPP and he believes there’s a slight advantage for NZ. One of his reservations is having Japan and Canada as signatories, given their agricultural protectionist history. The other is dairying’s initial lack of substantial gains.
But the story is much better for meat and horticultural products, giving those industries a better chance to take their place in the sun and the wider benefit of making NZ agriculture more flexible.
He reasons that the world’s population is still increasing and demand for food is only going to go up. While China’s growth might be slowing he uses the example of Vietnam, with a population of 90 million and the aim of growing its economy by 10% annually because of TPP.
“Trade negotiators aren’t fools,” he said.
Successive NZ governments haven’t been either when they’ve pressed on in the fight for a level agricultural trading environment despite what at the beginning seemed like totally insurmountable odds.
