In a changing international trade climate, Grains Australia’s Dr John Ackerman says the Australian grains industry needs to act strategically and remember the sector’s importance to ‘human survival’

A rise in ‘non-tariff measures’ despite free trade agreements signals a challenging shift in international markets, according to one expert.

At the GRDC Grains Research Update – Perth, Grains Australia trade and market access general manager Dr John Ackerman reflected on a relatively stable half-century that had led to improved health care and longer life expectancies. In the past 20 years, this had seen extreme poverty reduced and food security improved.

Free trade agreements (FTAs) had increased trade, diversified markets and become a major contributor to jobs and growth, he said. However, “the good news was extremely short”.

In a changing international climate, Dr Ackerman suggested the Australian grains industry needed to act strategically, not reactively.

Non-tariff measures

Dr Ackerman said non-tariff measures included quotas, licensing, product standards, certification requirements, subsidies, use of state-owned enterprises as importers, customs procedures, and sanitary and phytosanitary measures.

While some have been necessary and beneficial, some have negatively affected agricultural trade by creating alternative barriers, he said.

“They increase production costs, and therefore they reduce grain volumes. They affect quantity, price and the type of goods traded.”

With the rise in these measures, Grains Australia – a GRDC initiative – has started a project to analyse impacts and address trade barriers.

Already, that work has shown that more than 800,000 non-tariff measures affect the grains industry, countering some free trade agreement benefits.

“Free trade agreements have been positive. They have reduced the average tariff to about 11 per cent over the past decade.”

However, the impact of non-tariff measures on the Australian grains industry is equal to roughly 30 per cent, on average.

Unnecessary non-tariff measures are actually countering many of the benefits that have been hard fought through the FTAs. The world is transitioning.

Past stability

Dr Ackerman said that global GDP growth over the past 50-plus years had been extremely positive and stable.

This had partly been driven by the expansion of free trade under a legal agreement that came into effect following World War II. It laid the groundwork for the international trading system, offering cooperation, stability, economic development and, eventually, the World Trade Organization.

Economic stability has seen the rise of the middle class, improved living standards, improved health care and longer life expectancies.

“So, it’s not too far of a reach I think to surmise that farmers are actually the unsung heroes of this stability.”

In the past 20 years, the development of Sustainable Development Goals helped reduce extreme poverty and improve food security, but challenges remained.

Tied into this is global urbanisation. “We’ve seen a significant increase in that in the last 30 to 40 years and we will expect to see more of that by 2050,” Dr Ackerman said.

“We know that urban populations themselves are predominantly disconnected from their food origins. Only a small number of US adults, for instance, actually have a high degree of trust in the information they get about their food. Some of you may have heard there’s a report out that 16 million people in the US think chocolate milk comes from brown cows. Now that particular report and the evidence behind it are probably a little spurious, but the point is clear.”

Dr John Ackerman. Photo: Nicole Baxter

Cultural change

Coupled with that is the rise in a cultural change where ‘belief’ and ‘opinion’ are becoming equal to ‘fact’ and ‘evidence’. This was creating pressure, particularly for governments.

“To make this particular point, every governing party facing an election in a developed country last year lost vote share – the first time this has ever happened.”

Dr Ackerman also spoke about the group of major emerging economies. This group, originally called BRICS for Brazil, Russia, India, China and South Africa, now includes Saudi Arabia, Egypt, the United Arab Emirates, Ethiopia, Iran and Indonesia, plus partnerships with an additional nine countries, several of which are within South-East Asia.

“They represent a significant shift in global power dynamics – 40 per cent of the global population and about 40 per cent of the global GDP.”

Inter-BRICS trading

While the group promotes peaceful cooperation, development and economic growth among its members, it is delivering an alternative voice, challenging traditional economic and political multinational institutions.

Trading within the group was increasing, Dr Ackerman said. His point in detailing this information, was: “It is not just the US administration that’s changing. The world is changing and it’s becoming extremely complex.”

He said the Australian grains industry needed to be strategic and focus on the importance
of food.

“It is fundamental – as is research, information and education. We need to engage with farmers, showcase and improve others’ understandings of our systems, approaches and practices, and improve the understanding globally and within our own domestic urban centres.”

Australia’s differences

Dr Ackerman said a good example recently had occurred in India when he was travelling with a group of Australian growers to a Pulses Conclave – a conference and exhibition.

“The one thing that truly resonated with officials in Delhi was that the farming operations in Australia were predominantly family owned. They were quite surprised to understand that these weren’t multinational conglomerate activities. It is a good example of the type of information that we can portray overseas.

“We are the envy of other nations with our RDCs [research and development corporations].

“Globally there’s a decline in research dollars, so don’t ever underestimate the value that GRDC puts forward and our other RDCs as well.

“The food and agriculture sector is the backbone of our human survival. I can’t emphasise that enough because I think it keeps getting missed.

“We need to continue to emphasise its importance, but we have to be coordinated as an industry. Not only are we going to be more involved in our own government decisions and activities, but also because, importantly, the world is watching us.”

Roman lessons

The Romans knew how to keep the masses happy, according to Dr John Ackerman, Grains Australia trade and market access general manager – and grain was a vital part of that. At the GRDC Grains Research Update – Perth, he used the term ‘bread and circuses’.

“Some of you may have heard of it. It is a term used to explain how the Roman Empire kept the population happy and stable by providing free bread and free entertainment – like fights and chariot races. I'm not suggesting we go down that road just yet. But I think we’d all be aware that there is some serious lack of awareness about food’s importance.”