Trade deals could foil pork import tariff bid

By Philippa Stevenson
Agricultural editor

Pig farmers stand to lose up to $18.5 million a year as their returns tumble under the weight of Canadian and Australian pork imports.

But their efforts to get relief by seeking trade restrictions may founder on the Closer Economic Agreement with Australia and a separate deal with Canada.

The pig farmers' claim for tariff protection came, embarrassingly, just as the New Zealand meat industry attempted to stop a similar action being taken against this country's lamb exports by sheep farmers in the United States.

The expected impact of the pork imports on the 500 or so producers represented by the Pork Industry Board was revealed yesterday in a document released to the Business Herald under the Official Information Act by the Ministry of Commerce.

The paper is a censored version of the board's application for temporary safeguard action against Canada and Australia. It alleges that a rising tide of cheap imports produced by subsidised overseas farmers is causing serious harm to local pig farmers, driving some out of the industry and halving the incomes of most others.

The board says imports increased 64 per cent last year and significant price undercutting had driven down prices by 16 per cent. That had caused a drop in gross revenue to the industry of at least $16 million and possibly as much as $18.5 million. If imports continued "the serious harm being suffered by the New Zealand pig farmer will continue to increase," it said.

But Government officials, including representatives of the ministries of Commerce, and Foreign Affairs and Trade, met yesterday to consider issues raised by the application, key among them, the bilateral trade agreements.

A legal opinion has been sought on the impact of the deals on the board's application, especially the CER agreement, which may contain provisions that override the World Trade Organisation Safeguards on which the New Zealand Temporary Safeguard Authorities Act is based.

A decision is expected within days and is likely to be discussed with the board before being made public. In its application, the board says local pig farmers have been becoming more efficient by reducing feed costs and increasing production, from which they could have expected at least a 5 per cent increase in returns. But a study had shown that depressed prices had cost 520 registered pig producers $12.2 million, or a 51 per cent profit loss, in the year to March.

When it lodged the application, board chairman Neil Managh said while local producers were recognised as being among the most efficient in the world "they do not have the benefit of subsidies and industry assistance available to their overseas counterparts and are unable to compete with the large volumes of low-priced imported product."

But in the application the board admits it has not been able to determine if any subsidies to Australian and Canadian farmers are "green", or sanctioned by the WTO Agreement on Agriculture. It mainly pins its case for proving serious injury to the economic viability of the industry on showing that imported products are "directly competitive" with its own.