A New Free Trade Deal Provides Australian Exporters A Peek At The Peruvian Market

Australian exporters now have access to Peruvian market, one of the fastest growing economies in Latin America thanks to a new free trade deal, however some export products will have tight quotas. By The Peru-Australia Free Trade Agreement will eliminate more than 99 per cent of tariffs on products within five years. For sugar, in the first year of the deal, duty-free access will be given to only 30,000 tonnes about one shipload, which will double to 60,000 after five years.

The Australian Federal Trade Minister Simon Birmingham said some products will have quotas. “In some cases tariffs are eliminated completely such as for sheep meat, wheat and over time for beef and for seafood. In other areas it operates as a tariff-free quota. Sugar is one such example, in the first year under the deal, duty-free access will only be given to 30,000 tonnes of sugar, after five years that will double to 60,000. “It’s the best access that Peru’s provided to anybody in the last 20 years,” he said.

Queensland Sugar Limited (QSL) is a major bulk sugar terminal operator and CEO, Greg Beashel is confident the industry will jump on this opportunity for a new market. “I expect we will send the full amount that the quota allows for. So, 30,000 tonnes, which will be one shipload of sugar in the first year, and then in five-years time 60,000 tonnes, which will be two shiploads of sugar.” he said.

But this will only make up a very small amount of Australia’s total exports according to Rabobank Commodities Analyst Charlie Clack. “Australian exports of sugar, on an annual basis we’re looking generally from 3.5 million tonnes. These volumes to Peru would be less than one per cent of Australian sugar exports. Every tonne helps, and for Australian growers having 30,000 tonnes of access without a tariff being applied is better than not having 30,000 tonnes without a tariff being applied,” he said.

Sugar being sprayed into vessel. Sourced: ABC Rural

Australia will struggle to offer competitive prices even without tariffs in a market that has major sugar producers like Brazil and Columbia as its nearest neighbours. “It’s not just competitive at face value — the price at which it’s exported, the freight is also going to need to be included, despite this difficulty there are opportunities with South American sugar producers operating in a different season.” he said.

These types of trade deals are very important because Australia is a very low cost producer of sugar but access to markets is a problem and subsidised production around the world is a problem. There needs to be trade reform in sugar so that we can get a benefit from our competitive advantage in producing sugar. the Federal Government will continue work to diversify the Australian economy. A priority for the Government is to create as many choices, as many opportunities for farmers and businesses as can do.

While these deals are beneficial to Australian growers, it does not protect them from the volatility of global prices. So that need to diversify remains and to move into other avenues, biofuels is the obvious one, but there are other ones that exist as well.

It is important Australia diversifies its trade markets. “Australian farmers export 75 per cent of producing, so carving out new export opportunities and building on existing ones is absolutely crucial to the future. Australia has got lots of good trade markets in Asia, in particular with China, we’re working with the EU in negotiations for an FTA now and also starting up with the UK.” said National Farmers Federation Spokeswoman, Laureta Wallace.

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