Federated Farmers complains to Obama over subsidies

Federated Farmers is cheesed off with the United States' decision to resume subsidising its dairy exporters - and it's taking its complaint to the top: right to the White House.

Federated Farmers president Don Nicolson has dropped a line to 1600 Pennsylvania Ave in Washington, asking "why your administration has decided to punish New Zealand for the inefficiency of American dairy farmers?".

Mr Nicolson, of Waimatua, near Invercargill, invited President Barack Obama and his family to visit his farm, but urged him in the meantime to cut export subsidies.

He warned the success of the National Milk Producers Federation (NMPF) lobby in the United States gaining new subsidies under the Dairy Export Incentive Program (DEIP) "will cost every American family at the supermarket checkout".

"We take issue with the NMPF and the DEIP," Mr Nicolson said in a letter he dropped off at the United States Embassy in Wellington to be delivered in a diplomatic pouch.

"Subsidies corrupt business practice just as it (sic) corrupts the truth," he said.

He called on Mr Obama to change America's 2008 Farm Act to "rein in" the DEIP subsidies.

The NMPF's lobbying was self-serving and cost American households money: "Subsidies are insidious in the way they soak up billions of your fellow citizens' dollars by adding a few cents here and few cents there."

Mr Nicolson said that "farm assistance" was taking up 20 per cent of the US Department of Agriculture budget -- money that could be better invested in Medicare, education or social welfare "than supporting a small but vocal number of inefficient farmers". "Someone needs to stand up to a lobby whose actions make basic commodities more expensive for your citizens," he said. "New Zealand's farmers look to your leadership to bring real change to DEIP, especially since it was introduced during President (Ronald) Reagan's administration".

Mr Nicolson said that primary product contributed 64 per cent of everything New Zealand exported, and that the farmer-owned cooperative, Fonterra, which controls about 40 per cent of international dairy trade, does not receive NZ Government subsidies.

"Like farmers in the United States, we have seen the value of whole milkpowder collapse by over 50 per cent," he said. "Unlike American farm lobbyists we are not seeking government support or protection from the market place.

"Despite this, we still outperform subsidised farmers in America and Europe, with a lower carbon foot print.

"If we are poor at running our farm businesses we go out of business.

"What makes the American dairy industry immune from the global marketplace and business norms?"

Mr Nicolson disputed claims by the NMPF that Fonterra is dumping of product "at any price" and this was hurting downtrodden American farmers.

"The price is set by the international market and markets correct all the time," he said. "If American farmers cannot compete they are in the wrong business."

He said the NMPF argued that it was unfair New Zealand farmers were so efficient, "but subsidies are anything but fair".

Ending of subsidies for American farmers could help them improve, he suggested.

And, blaming the European Union for providing its farmers with export subsidies was childish. EU export subsidies, re-introduced in January, average $1192/tonne on milkpowder, $2158/tonne on cheese and $3873/tonne on butter.

Federated Farmers dairy section chairman Lachlan McKenzie, last week described subsidies and tariffs as the trade equivalent of "crack cocaine" and said "America's farmers are hooked".

Mr McKenzie was less diplomatic that Mr Nicolson, describing the EU and the US as "evil twins" undermining the potential for economic recovery in New Zealand.

He said the DEIP subsidies were "underhanded, dangerous and un-American" partly because they provided an excuse for other nations to retaliate, with NZ exporters caught in the middle.

The milkpowder subsidies under the DEIP was being sent to the same markets NZ targeted, and Mr McKenzie said it was galling that America's compost heap of a dairy lobby blamed New Zealand's subsidy-free farmers for being too efficient.

- NZPA