Tariff cuts kick in at the start of 2022 to expand farm export opportunities

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Our record breaking $78 billion in farm gate produce will benefit from improved market access and tariff cuts that come into play on a range of commodities worldwide

The world can be our oyster in 2022 as a wide number of export markets offer more favourable trading terms to place our record breaking farmgate produce as we trend towards $100 billion in 2030

Ongoing tariff reductions under free trade agreements negotiated by the Federal Government will start to return some huge benefits back to farmers already in expansion mode and coming off this all-time great record-breaking season of 2021-22.

Our entry into additional export markets is coming through the Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade agreement with 15 signatories in place, including Australia. It enters into force from 1 January 2022.

Local exporters will be able to tap into regional value chains through rules that will support the use of Aussie inputs into goods produced and exported across the RCEP region.

A series of tariff reductions and other market access improvements also roll out on 1 January 2022 under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and other free trade agreements.

For example, tariffs on barley to Mexico will be eliminated completely, and this is expected to open up that market further as we increase our competitiveness in the region.

Even prior to the extra benefits that will flow in 2022, during 2021 the very first shipment of barley was sent to Mexico under the CPTPP agreement with a value of more than $69 million – already a fantastic achievement.

From 1 January 2022 we’ll see expanded Tariff Rate Quotas on cheese to Canada and Mexico, further supporting opportunities in these markets. 

Tariff Rate Quotas under the Indonesia-Australia Comprehensive Economic Partnership Agreement will also increase for live cattle, citrus, and feed grain.

And we’ll see the ninth round of tariff cuts under the Korea Australia Free Trade Agreement, with tariffs on beef falling to 16% and lamb to 2.25%, and quotas for cheese and malt barley all increasing.

Farmers have been tasked with producing $100 billion in farm gate value by 2030 and much of that extra produce will need to find its way into export markets where we have free trade agreements.

We are in an ideal position to stimulate investment in farm produce and supply the demand worldwide for premium produce that we can offer.

Local growers and livestock producers are already looking ahead into 2022-23 to propel the agriculture sector towards even higher results as they tally up their income from this current record 2021-22 season.

And while farmgate value is on track to top a hard earned $78 billion in 2021-22, a record for the industry, our farming exports are also predicted to hit an historic high of $61 billion from the season as well.

The Federal government has renewed its commitment to support farmers all the way as part of the Ag 2030 plan to help the agriculture sector achieve its $100 billion goal by 2030.

There are export markets and deals we need to build upon in 2022 to push our premium produce to higher levels

These are the export deals we need to build on

The CPTPP is a free trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. It entered into force for the initial ratifying countries on 30 December 2018.

o   On full implementation the CPTPP will eliminate more than 98% of tariffs in a trade zone worth $14 trillion (2020) when it was signed, covering 500 million people and providing preferential access for over $5.5 billion of Australian agricultural exports.

o   From 1 January 2022 a range of additional tariff improvements will commence, including further opportunities for expanding trade in barley, beef, dairy and horticulture.

o   Mexico’s tariff for barley will be eliminated in full (down from 115% prior to CPTPP coming into force).

o   Mexico’s tariffs for certain beef products will drop to 12.5%, down from 25% prior to the CPTPP.

o   Mexico and Canada’s Tariff Rate Quotas on cheese will increase from 4,925 to 5,150 tonnes and 2,417 to 3,021 tonnes per year respectively. Cheese exports to Canada have increased from a low base to around $9.6m in 2021.

The IA-CEPA entered into force on 5 July 2020. More than 99% of Australian goods exported to Indonesia now enter duty free or under improved and preferential arrangements.

o   From 1 January 2022, there will be further expanded TRQs for live cattle, feed grain and citrus.

o   Live cattle from 598,000 to 621,920 head (saving the industry approximately $9m).

o   Feed grain from 525,250 to 551,250 tonnes

o   Oranges from 10,500 to 11,025 tonnes

o   Lemons and limes from 5,125 to 5,253 tonnes

The Peru-Australia Free Trade Agreement (PAFTA) came into force on 11 February 2020.

o   PAFTA delivered immediate tariff eliminations to key agricultural commodities such as wheat, seafood, sheep meat, most wines, kangaroo meat, almonds, most horticultural goods and most pork goods.

o   From 1 January 2022 rice, dairy, sugar, and sorghum Tariff Rate Quotas will increase into Peru.

The Korea Australia Free Trade Agreement (KAFTA) entered into force on 12 December 2014.

o   Trade with South Korea has remained strong over the first three quarters of 2021 compared to the same period in 2020. Beef and veal exports have increased by 12% and lamb has increased by 19%.

o   On 1 January 2021 another round of KAFTA tariff cuts come into effect, delivering benefits across a range of agricultural commodities:

o   Beef tariffs will fall from 18.6 to 16%.

o   Cheese Tariff Rate Quotas will increase from 5,694 to 5,865 tonnes

o   Lamb tariffs will fall from 4.5 to 2.25%.

RCEP comes into force on the 1 January 2022 and is the world’s largest FTA, with the 15 signatories making up 29% of the world’s GDP and 30% of the world’s population

o   RCEP brings nine of Australia’s top 15 agricultural, fisheries, and forestry trading partners into a single economic framework.

o   RCEP’s regional nature will increase opportunities for Australian business to build and access regional value chains, by providing a single set of rules and procedures for accessing preferential tariffs across the region o   At the same time, traders will continue to have access to Australia’s high standard existing FTAs, including where they are more favourable.