IN THIS SECTION:
Trade plays vital role in farm price recovery
26 June 2009
AS THE Cairns Group Ministers kick-started the Doha Development Round talks in Bali this month, the Westpac-NFF Commodity Index demonstrates the important role that trade plays for the world’s farmers.
During May, dairy was one of only two commodities to experience declining prices as global trade distortions within the sector escalated.
“The uninhibited flow of agricultural produce will play a vital role in the sector’s recovery from the impacts of the global economic crisis,” said Westpac Senior Agribusiness Economist, Andrew Hanlan.
“With the introduction of dairy export subsidies, first by the European Union and now by the United States, we have seen first-hand how market intervention can play havoc with the prices of globally traded commodities.
“While the factors influencing dairy prices are many, it comes as no surprise that in the last six months, dairy prices have moved downwards by 23.4%, significantly more than any other commodity within the Westpac-NFF Commodity Index.
“In essence, while most commodity prices appear to be stabilising, the actions by the EU and the US most definitely have not helped the world’s dairy farmers.
National Farmers’ Federation (NFF) Vice-President Charles Burke added: “Australian farmers have always had an enormous reliance on the international marketplace.
“With a domestic population of only 22 million people, a failure to access the export market will have dire consequences for the long term viability of our sector.
“For this reason we are extremely concerned about the increasing levels of protectionism emerging in the midst of the global economic crisis.
“In this context the message of needing the free flow of goods that the Cairns Group advocates has never been so important.”
Over May 2009, the Westpac-NFF Commodity Index increased 2.5%. The Index is now 7.7% lower than a year ago. The only commodities suffering falls were beef (-2.6%) and dairy (-1.2%). Wheat (4.4%), barley (7.4%), sugar (9.9%), cotton (8.8%), canola (6.2%), and wool (5.7%) all recorded upward price movements.
The Westpac-NFF Commodity Index is weighted according to the value of Australian agricultural exports and includes only rural commodities – unlike other price indices that are overshadowed by oil, mineral and energy prices. It provides daily movements based on prices of Australia’s eight key farm exports – barley, beef, canola, cotton, dairy, sugar, wheat and wool – in both $US and $A.
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