Fran O'Sullivan: D-Day for dairy farmers at TPP endgam

Tim Groser has a sector seeking an ambitious outcome.

Kiwi dairy farmers will be waiting to see whether New Zealand can this week finally break decades of protectionism which have hindered their access to global markets.

The leading lights of the Kiwi dairy industry are now putting direct pressure on Trade Minister Tim Groser not to accept a substandard outcome for dairy market access within this week's Trans Pacific Partnership (TP) negotiations in Hawaii.

The major New Zealand dairy lobbies have written to Groser saying farmers and consumers are suffering as a result of the "decades of blatant protectionism" which have placed constraints on New Zealand's access to the global dairy market.

Dairy farmers are suffering through a winter of discontent due to the major slump in global dairy prices. In the July 22 letter - which was signed by John Luxton, Malcolm Bailey and Andrew Hoggard - they maintain that TPP offers a major opportunity to build liquidity in dairy markets and "ease the volatility of prices that is hurting farmers and also producers in other TPP markets".

Bailey is chairman of DCANZ (the Dairy Companies Association of NZ); Luxton is chairman of DairyNZ and Hoggard chairs Federated Farmers dairy division.

The case they stake out in the letter is to the point, spelling out opponents of liberalising market access for New Zealand products will "point to New Zealand being the largest exporter of dairy products" - but the reality is that New Zealand produces less than 3 per cent of global supply.

"We are under no illusion as to the degree of protectionist pressure at play in the TPP negotiations - and we do not underestimate the scale of the challenge you face in getting a decent deal for dairy," the letter states. "However the current emergency imports in Japan and the dumping of milk in Canada clearly illustrate the failure of isolationist agricultural policies."

Two key players - Luxton and Bailey - are in Maui to be on hand for to provide advice and feedback during what has been billed as the TPP endgame.

They hope their presence will stiffen Groser's arm to seek as equally an ambitious an outcome for dairy as those on the table for other goods such as beef - a position staked out in last week's letter: "The New Zealand dairy industry is united on the need for any deal to provide parity in terms of outcomes on our leading export products.

"We cannot accept a comparably less valuable outcome on dairy for New Zealand than that delivered on autos for Japan, on beef and pork for the US and on beef and grains for Canada."

Dairy accounts for a major slice of New Zealand's merchandise trade exports and it is an essential contributor to New Zealand's rural communities.

When the TPP talks initially began, Groser said New Zealand would seek a high-quality and comprehensive outcome for dairy access. This was interpreted to mean the phase-out of all dairy tariffs within the other 11 TPP negotiating nations over a lengthy phase-out period.

But New Zealand has come up against still resistance from Canada in particular, which has a highly protected domestic dairy sector.

Yesterday Bailey noted that from a dairy perspective China has already come forward and entered free trade agreements that result in complete tariff elimination with New Zealand and Australia. "It would be very strange if TPP were to be less liberal than those agreements."

The earlier letter was sanguine. The trio of Bailey, Hoggard and Luxton acknowledged that the negotiation was likely to fall short of the objective for total tariff elimination that the TPP trade and economic ministers set at an early meeting. "Notwithstanding this we reiterate that a TPP deal cannot be considered to stack up for New Zealand without a good outcome on dairy products."

The TPP negotiating timetable suggests that by Saturday afternoon there will be a clear indication of whether the talks have succeeded or failed.