Doubling US farm subsidies would have a devastating impact on world grain prices and the incomes of Australian growers, according to AWB Limited Chairman Trevor Flügge.
Mr Flügge was commenting on recent demands by the American Farm Bureau (AFB) to increase US farm subsides to $18 billion dollars annually.
He said these demands, from newly elected AFB Chairman Bob Stallman, flew in the face of international trade sentiments and highlighted a worrying shift towards greater protectionism in US agriculture.
He said subsidy levels in both the United States and the European Union are directly affecting world grain prices, and any decision to increase these subsidies would have a devastating impact on world grain supplies.
“Subsidies and support programs only serve to prop up industries that are not sustainable in the long term. This, in turn, creates severe market distortions.
“The current level of farm support in the US and EU distorts the market and insulates these growers from accurate market signals.
“This is a self fulfilling prophecy which increases production, decreases prices and creates pressure for further handouts. The way to rectify this situation is not to double the subsidies to growers, but, in fact, to remove these supports completely,” said Mr Flügge
“Australian farmers must compete in the international market with no subsidies, no handouts and no assistance from the Australian Government. Our focus is on producing quality grain for discerning markets, not on producing high quantities of low quality wheat simply to receive a Government hand out.
Mr Flügge called on the newly elected US Government not to cave in to this protectionist pressure and commit to immediate trade reform, through the reduction and eventual elimination of all support programs that distort US production decisions and isolate growers from true market signals.
“As Australia’s international wheat marketer, we will be sending clear signals to the US and the EU Governments that the way of the future is about free and fair trade for all participants in the world market,” said Mr Flügge.
For further information contact:
Jo O’Connell in AWB Limited Public Affairs on (03) 9209 2555 or 0407 310 250