Spitting chips over protection

YET another debate is raging over the importation of fruit and vegetables, this time about potatoes. Responding to a 2006 request by the NZ government, Biosecurity Australia has reviewed the rules limiting the import of fresh potatoes from New Zealand for processing.

Potatoes were imported from NZ until 1988, when they were stopped due to an inability to guarantee freedom from a nematode pest. This pest is present in Australia but has a limited distribution. Since then NZ has become infected with a bacterium that causes “zebra chip disease”, first discovered in Mexico in 1994 and now widespread in North and Central America but not yet present in Australia.

The report recommends potatoes be admitted subject to quarantine conditions that include processing in quarantine premises with an approved waste disposal program to control the zebra chip organism. It also says potatoes should originate from certified growers in areas free of the nematode pest and be subject to specific handling and transport requirements, with pre-export and on-arrival inspection.

Numerous articles have appeared recently describing the tough times facing the vegetable industry. Australia exports a little over 10 per cent of its vegetable production and producers are suffering from the effects of a high dollar and surging processed vegetable imports.

The industry group Ausveg argues that zebra chip disease represents a huge threat to the potato sector with potential yield losses of 50pc. It claims the Biosecurity Australia review is “poorly researched”, “non-scientific” and based on opinion.

The NSW Department of Primary Industries, in a submission to Biosecurity Australia’s review, argued against allowing imports due to the risk of zebra chip disease.

Australia has a well-earned reputation internationally for using its quarantine rules as a trade barrier to keep out competitors. This puts it in breach of its obligations as a member of the World Trade Organisation and also invites retaliation against Australia’s own exports.

Biosecurity Australia is well aware of this and seeks to base its proposals on the ill-defined concept of an “appropriate level of protection”, about which I have written previously. This seeks to strike the right balance between legitimate measures to keep out diseases and illegitimate (and legally prohibited) measures designed to keep out competitors.

For the vegetable industry lobby group to be arguing for protection is no surprise. Nor is it a surprise to find a National Party Minister arguing for protection. But neither of these is concerned about the impact on consumers. It is mainly from their perspective that the Biosecurity Australia proposal needs to be considered.

An obvious question is, why would New Zealand want to send its potatoes to Australia unless it could sell them at a profit? And if a profit can still be made despite the additional cost of freight and turning them into chips and crisps under the terms of the quarantine conditions, doesn’t that mean they are more efficient at growing them than Australian growers?

The question Australian growers need to answer is, why should Australian consumers pay more for chips and crisps in order to keep them in business? If they can’t make money by growing potatoes in competition with NZ growers, why not grow something they are competitive at?

This lack of competitiveness is revealed by Ausveg itself. It claims zebra chip disease caused losses of over $60 million to the NZ potato industry in 2008/09, implying Australia risks the same loss. But much of the loss was due to import bans by countries such as Australia. And if NZ growers can still grow and export potatoes in spite of the disease, how big a problem is it really?

On that front it is worth noting that Australia already imports tomatoes, capsicums and tamarillos from New Zealand, which can also be infected with the zebra chip bacterium, subject to the same quarantine measures as proposed for the import of potatoes. In other words, Biosecurity Australia is hardly recommending a radical change in biosecurity policy.

It would be bad for consumers and the Australian economy for the price of processed potatoes to be kept high simply to keep our potato growers in business. If they need that kind of support, they should register with Centrelink.

On the other hand, it is also potentially bad for the economy if we import a disease that is currently spreading in the international potato world and for which full control measures are still being developed.

If only the debate could be couched in those terms.

David Leyonhjelm is an agribusiness consultant with Baron Strategic Services. He may be contacted at reclaimfreedom@gmail.com

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Agribuzz with David LeyonhjelmCommentary, news and analysis with agribusiness consultant David Leyonhjelm. Email David at reclaimfreedom@gmail.com

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