US subsidy program in a spin

30 Jan, 2002 10:00 PM
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WORLD wheat prices face a dramatic downward spiral if the US Government persists with its subsidy program for its grain growers.

That's the opinion of AWB Ltd chairman Trevor Flugge who last week set off on a lobbying mission to Washington to tell high ranking US Trade department and US State officials that US policies were harming Australian wheatgrowers.

In the wake of the US Senate's approval of a US$88 billion farm subsidy bill in November and calls by members of the US Senate for more subsidies, Mr Flugge said US policies were posing a "very dangerous threat to world wheat prices".

"Prices for wheat are very low now and it's only the low US dollar that's providing any respite for Australian wheat growers," he said. "We want to get the price of wheat up because we don't think we'll have the luxury of a low US dollar forever."

Mr Flugge said he would tell US officials that the farm bill represented an exercise in throwing money at their problems and in fact was skewed so that 80pc of the money went to 20pc of the growers.

"I will put our view that their levels of subsidies are ridiculous and that they should not reintroduce the EEP (Export Enhancement Program) which devastated world wheat prices a decade ago.

"And I will also be making the point that any of their Food Aid programs involving wheat don't distort wheat prices, particularly in markets which Australia supplies."

Mr Flugge said the farm bill would also continue to inflate machinery prices which flowed onto to Australian farmers.

"Basically by giving farmers more money to spend, manufacturers are in a better position to charge more for their products and that is passed down the line," he said.

"There are a lot of ripple effect issues like that and while we won't turn it all around we've got to keep making these points.

"The alternative is to sit back and take it."

Mr Flugge dismissed suggestions that Australia lacked clout to influence the United States government.

"That's a home grown perception a lot of Australians hold onto but the fact is we do have influence and when we're in town (Washington) everybody knows," he said.

"We the world's third biggest exporter of wheat and we have a major influence in the market place mainly because of our single desk and our organised marketing.

"What we are dealing with here is a very serious trade issue and it's causing problems around the world and it will increase the trade war (with the European Union)."

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