Faced with increased competition from foreign imports, Australian fruit and vegetable producers are calling for new country-of-origin labelling laws. Campaigners say the next generation of Australians will never taste an Australian-grown vegetable unless something is done to halt the flow of cheap imported produce. And the Fair Dinkum Food campaign is gathering support and momentum, as David Robertson reports.
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Australia’s farmers are some of the least subsidised in the world but as supermarkets and restaurants seek to cut costs, domestic growers have come under increasing pressure from foreign suppliers. This has prompted significant debate in Australia in recent months and politicians, celebrities and businessmen have backed the “Fair Dinkum Food Campaign”, which seeks to level the playing field.
The debate was sparked by McDonald’s Australia, which decided to halve the number of potatoes it buys from Tasmanian farmers and start sourcing potatoes from New Zealand instead. This decision unleashed a torrent of anger and 40 Tasmanian farmers in eight, ten-tonne tractors drove from Tasmania on a 2,100km protest. The convoy ended its journey in the national capital, Canberra, two weeks ago.
But it isn’t just Tasmanian potato farmers that are complaining about foreign imports. Vegetable growers across the country have warned that they are within five years of being wiped out by cheap imports and there has been plenty of rhetoric about how the next generation of Australians will never taste an Australian-grown vegetable.
Of course, complaints by farmers about foreign imports are nothing new. The farming lobbies in Europe and the US have been particularly successful at creating images of a nation totally reliant on foreigners to provide their food. But in Australia the farmers are considerably more exposed to imports than elsewhere because the country has very limited tariff and subsidy arrangements.
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By GlobalDataAccording to one estimate, Australian farmers receive only 4% of their income from the government while EU farmers get as much as 32% and American farmers get 21%. Australian farmers also say that weaker environmental and social laws in some countries gives imported product an unfair price advantage.
Michael Babcock, a Tasmanian farmer and chairman of Ausveg, a lobby group, said: “We’ve become a dumping ground because we don’t have tariffs to stop imports and we don’t get financial support to keep our own prices low. Then we have compliance costs of about 20% because of strict laws that don’t exist in some other places and what we find is we cannot compete.”
Weak labelling laws
The growers aren’t helped by a retail market in Australia that is dominated by just two supermarkets: Coles and Woolworths. Between them, these two companies control more than three-quarters of all food retailing in Australia and in recent years they have been squeezing farmers very hard on costs.
Some farmers have called on the Australian Competition and Consumer Commission to investigate the pressure put on local producers to cut costs, with some growers complaining that they are forced to accept unfair prices because of the supermarkets’ dominance.
Despite these problems, the Fair Dinkum Food Campaign isn’t about protecting or subsidising Australian farmers. Perhaps because the Aussies are used to receiving so little state aid, they aren’t even bothering to ask for it. What they do want, however, are changes made to weak food labelling laws. The farmers want produce identified as Australian because they believe consumers will vote with their wallets if they are able to make an informed choice.
Given Australia’s relative distance from overseas markets this applies more to frozen and canned foods than fresh produce, which is nearly all grown locally. Also, home or own-branded products sold by the supermarket chains are increasingly being sourced from foreign suppliers.
Food Standards Australia New Zealand, which regulates the Australasian food industry, has fast-tracked new labelling rules because of this controversy and last week announced that packaged products would have to clearly identify the country of origin. However, packaged foods containing more than one ingredient will not be covered and Ausveg wants more done.
Made in China?
The lobby group also wants the numerous food-labelling loopholes closed. For example, Tasmania’s leader of the opposition, Rene Hidding, produced a bottle of Aqua 1 water at a recent Fair Dinkum protest. The bottle’s label had a map of Australia on it with the phrase “proudly owned”. And while the company is Australian owned, the water is sourced and bottled in China.
Jam is another contentious product. Most jam in Australia is imported and then put into jars. Because the glass jar represents more than 50% of the value of the product, producers can put a “Made in Australia” label on it.
The Fair Dinkum campaign has touched a nerve with many consumers in Australia and politicians and companies are beginning to pay attention to the farmers’ complaints.
McDonald’s, which unsuspectingly sparked the whole protest, has set up a A$250,000 development fund for Tasmanian vegetable growers. The company has also been at pains to point out that it sources only 7% of its ingredients from overseas while McDonald’s globally buys A$300m worth of exported Australian beef.
Other companies have recognised that this backlash against foreign foods could be an excellent marketing opportunity. SPC Ardoma, which makes fruit juices for Coca-Cola Amatil, announced at one of the Fair Dinkum rallies that it was planning to replace 10,000 tonnes of imported Chinese apple juice with local product.
Inefficiency or unfair competition?
But while the Australian vegetable farmers do have reasonable grounds for complaining about the intense protectionism of the EU and US, they may not be entirely blameless for the situation they find themselves in.
Free-market commentators have pointed to the success of other Australian agricultural sectors, particularly beef, grains and wheat, as evidence that Aussie growers can compete internationally even in the face of trade barriers and other problems. Some have highlighted the potato-growing situation in Tasmania, where 450 farmers will produce the 80,000 tons McDonald’s needs while just 13 farmers will be used in New Zealand. This, they suggest, is a case of inefficiency and not unfair competition.
Babcock insists that is not true: “That’s playing with figures. All those growers aren’t just producing for McDonald’s, they have multiple contracts. Also, the farming environment in Tasmania is different to New Zealand.”
Whatever the free-market arguments, if the cost of maintaining Australia’s vegetable industry is merely changing a few labelling laws, the government would do well to pay attention as that seems a very cheap option compared with how the problem would be tackled in the US or EU.
