How Australia’s Free Trade Agreement with the United Kingdom will affect farmers

Anthony Wingard takes a look at the hotly anticipated Free Trade Agreement struck last month between Australia and the UK – and what it might mean for farmers.

Last month, Australian Prime Minister Scott Morrison struck an agreement in principle on a Free Trade Agreement (FTA) with the United Kingdom, after four rounds of negotiations stemming back to mid-2020.

The agreement, in principle, means the terms of the FTA have been negotiated and agreed, although are yet to be made official.

Still, the FTA with the UK – Australia’s largest trade agreement with any country outside of New Zealand – represents a significant point in time for our country’s agricultural sector.

At the announcement of the FTA, UK prime minister Boris Johnson said the deal “will be good news for the agricultural sector on both sides”.

Among the many intricacies of the FTA, the deal will improve the market access for Australian agricultural and industrial products as well as reducing costs and barriers to trade, with the removal of longstanding tariffs on many of Australia’s primary industries.

Many of the changes will be implemented over the forthcoming 15 years.

MEAT ON THE BONES

Cattle growers will be big winners under the new deal, with increases in tariff-rate quota (TRQ) volumes over the next 10 years – meaning more beef can be exported without attracting additional costs.

Under the current system, the UK only imported 1,567 tonnes of beef from Australia, which, according to the National Farmers Federation of Australia (NFF), is just 0.15 per cent of Australia’s overall beef exports.

Under the new FTA, Australian beef growers will have access to a duty-free transitional quota of 35,000 tonnes into the UK each year. The TRQ will rise in equal instalments to 110,000 tonnes in the tenth year.

“In the subsequent five years [years 11–15] a safeguard will apply on beef imports exceeding a further volume threshold rising in equal instalments to 170,000 tonnes, levying a tariff safeguard duty of 20 per cent for the rest of the calendar year,” says federal minister for trade, Dan Tehan.

“Beef tariffs will be eliminated after 10 years.”

It’s a similar story for lamb. After 10 years, tariffs on lamb will also be eliminated and, in the initial decade, a duty-free quota of 25,000 tonnes of sheep meat will be available, rising in equal instalments to 75,000 in the tenth year.

Again, a safeguard will apply on sheep meat imports that exceed a volume threshold rising to 125,000 tonnes from years 11 to 15.

“The volume of Australian red meat to the UK in the context of the UK’s total red meat imports and Australia’s total exports, is very, very small,” says NFF president, Fiona Simson.

“The aim of any free trade agreement is to provide both parties’ options. Australian red meat producers would like to have the option to export to the UK if, and when, the UK needs it.”

Until now, the UK market for Australian sugar – our second largest producing field crop behind wheat – has been virtually non-existent, however, under the FTA, sugar will be exported to the UK for the first time.

Tariffs on sugar will be eliminated over eight years and the quota will be immediately lifted to 80,000 tonnes per year, rising by 20,000 tonnes yearly.

Similarly, other crops and produce from Australia, including cheese, other dairy products and milled rice, will also see their tariffs phased out over the initial 15 years of the deal.

OFF TO WORK

The FTA will also see changes in the ag-labour space, with a new ‘agriculture visa’ introduced, allowing citizens from both countries to work freely in the other.

The agricultural visa also means UK backpackers will no longer be required to fulfill a certain number of hours in agricultural work to have their visa extended by another year.

“It will make it easier for British people, for young people, to go and work in Australia without the traditional compulsion of having to work on a farm for 80 days, which used to be the law,” said prime minister Johnson.

However, federal minister for agriculture, David Littleproud, says the UK FTA will account for 10,000 lost season workers each year.

The removal of this requirement for UK backpackers will create a sizeable void in an already bleeding workforce, something Morrison alluded to when he called the agriculture workforce shortage “one of our biggest challenges we have”.

To counter this, the Australian government has unveiled a new visa scheme, which will target the 10 nations of Association of South-East Asian Nations (ASEAN). The details of the visa are expected to be confirmed before the end of the year and are yet to be negotiated with the ASEAN nations.

Littleproud says the new seasonal ag visa will likely mirror the existing Seasonal Worker Programme (SWP), including protections to ensure workers’ safety, health and financial pay,

“The new visa will also set up the industry for the future and will address a key brake for many agriculture industries – the availability of labour,” Littleproud says.

Should the ASEAN seasonal worker visa be agreed and implemented by the time of September’s harvest, the labour vacuum in the ag workforce will be somewhat resolved however, the safety and financial necessities of the workers will also need to be.