Grain trade digesting ramifications of Trump election

Henry Wells, November 14, 2016

INDICATIONS the new US administration is likely to implement protectionist measures should be of concern to Australian farmers, according to National Farmers Federation president, Brent Finlay.

“Any move away from more open markets towards protectionism can only have a negative impact on Australian farmers,” Mr Finlay said.

“Australia exports over 70 per cent of what we produce, so any trade damaging measures such as increases in tariffs, reductions in import quotas or increases in US domestic subsidies will hurt Australian farmers and other exporting nations.

“Australia must not give up the substantial gains that come from trade and opening new markets. More trade liberalisation of markets means more growth, innovations and new investment and that I consistent with the future of agriculture.”

Graingrowers Ltd general manager policy and innovation, David McKeon said while the impact of a Trump-led US administration was not yet clear, Australia should be considering the possible scenarios that might emerge.

“Over 70pc of Australia’s grain production is exported, earning around $11.4 billion in export earnings annually, and accounting for more than a quarter of all agricultural export earnings,” Mr McKeon said.

“Given this level of trade exposure, changes in policies and approaches to trade by the US will without doubt have a level of impact on the Australian grains industry.”

Mr McKeon said the Trans Pacific Partnership (TPP) was one trade agreement that Australia needed to keep an eye on.

“The TPP group of nations includes two of Australia’s top five export grain markets, Japan and Vietnam, as well as New Zealand, Singapore and Malaysia, which in total account for almost 20pc of Australia’s grain exports,” he said.

“In 2014-15 the combined value of these markets for Australian grain was almost $2bn. Even more critically, the TPP also includes the United States and Canada – key competitors of Australia in our key Asian markets.

“Trump has made statements indicating a lack of support for the TPP – which if followed through would see the end of the TPP, as the US are the largest nation involved.

“There is the possibility of a lame duck session of the US Congress which could see the US support the TPP, which can sit until Trump takes office in January. While this is technically possible it is extremely unlikely.”

Mr McKeon said Australia must protect its trade relationships.

“Although the benefits for Australian grains through the TPP are more focussed on ensuring we don’t let key competitors US and Canada gain improved access to some of our key markets, it would be disappointing if a change in policy from a Trump-led Government in the US led to a retraction in preferential trade agreements,” he said.

“However, any potential change in trading conditions between the US and key Asian markets such as China could lead to an uncertain and bearish future for Australian grains in our key markets.”

Avant Agri pool manager, Malcom Bartholomaeus, said the TPP would likely not have been ratified under either presidential candidate.

In his view, the fallout for Australia is likely to be how America’s trade relationships would affect Australia’s trade with key Asian customers and in particular with Australia’s biggest trading partner, China.

“Australia is high up on the list of US allies, and given that China is our biggest trading partner, any major tension developing between the US and China is likely to have fallout for Australia. We need to consider where that would leave Australia’s trade relationships in Asia.”


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