International and Australian farm policy news

Common Agricultural Policy for 2014–20

Approximately €100 billion out of a global CAP budget of €336 billion for 2014–20 will be for funding the protection of natural resources after an agreement was reached by European Union (EU) leaders on the EU’s long-term budget.

EU leaders have now agreed that 30% of payments, which will be approximately €80 billion, will go directly to EU farmers and will be linked to environmentally-friendly farming and agronomy. €20 billion will also be given to rural development funds and will be invested in schemes which benefit the environment and are orientated towards climate change.

One of the challenges that now lay ahead for the European Parliament is to agree on this and to define concrete ‘greening’ measures. This budget shows the importance placed by the EU on preserving biodiversity, natural resources and fighting climate change.

New trade agreement with China

A three-year ban on canola imports from Australia has been lifted by China after concerns subsided over the root-borne disease, blackleg. It is estimated that this new trade agreement could be worth up to $825 million dollars to farmers, with canola currently $550 per tonne.

This ban was abolished as a result of two key figures in the negotiations process; Australian Oilseeds Federation (AOF) and the Grains Industry Market Access Forum (GIMAF). These negotiations also resulted in an agreement established between China and Australia which included knowledge and information sharing relating to the different ways in which blackleg can be managed on-farm.

In the past three years, the Australian Canola industry has depended on its trade agreement with the EU and subcontinent as major trading partners. This new agreement could assist in further developing Australia’s canola industry.

Dairy campaign

In late March at the Sydney Royal Easter Show, Woolworths launched plans to buy milk directly from dairy farmers. This has come about as a result of the price war that existed between Coles and Woolworths in 2012 which saw milk prices slashed to $1 a litre.

Woolworths will now be trialling a scheme in the Manning Valley of direct pricing, with seven dairy farmers selling milk directly to Woolworths. This plan first needs to be approved by the Australian Competition and Consumer Commission who have already shown some support for the project. The Dairy Farmers Association however have expressed hesitation about this scheme.

If approved, the label Farmers’ Own milk will be available on Woolworth's shelves in NSW from the middle of 2013.

Indian rice

Global rice production is expected to soar to about 472 million tonnes next year according to International Grains Council data, obtained by Bloomberg. The UN’s Food and Agriculture Organization has also estimated that world inventories are forecast to reach a record high over 2012–13.

India in particular is currently one of the world’s largest rice exporters, and with forecast favourable weather conditions, rice plantings are expected to escalate within this region. Rice stockpiles in Thailand have also soared after Thailand’s government intervened and started buying rice off farmers in 2011.

India mainly exports rice to Africa and Bangladesh for about US$395 a tonne, with its premium basmati rice being exported to the Middle East, Iran and Europe at about US$990 a tonne.

US drought

In March, heavy rains broke a three-year pattern of drought in much of the south eastern United States (US). However, according to the US drought monitor, drought still affects much of the US northern grain belt as well as other parts of the US.

Currently, the entire state of Colorado remains in drought and California is considered to be abnormally dry as well as Texas, which is now either 99% dry or in drought.

This observation corresponds with the annual spring outlook from National Oceanic and Atmospheric Administration (NOAA) which has estimated that hotter and drier conditions will be felt across most of the US, in particular Texas, Oklahoma and Kansas in 2013. All three states, as well as Nebraska, have been battling to produce winter wheat crops with a survey in March showing that 61% of wheat production was rated as being poor or very poor.

Keep up-to-date with discussion on current issues in Australian and international agriculture policy via the Ag Forum on the Institute website.

Images:  Gaétane Potard, James Trosh, USDA

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