Dairy Farmers of America leaders oppose Australia Free Trade Agreement

December 5, 2003

The 24,124 dairy farmers, who market their milk through Kansas City, Mo.-based cooperative, Dairy Farmers of America, Inc. (DFA), went straight to the nation's commander in chief to oppose the proposed U.S.-Australia Free Trade Agreement (FTA), currently being negotiated by the U.S. Trade Representative's Office.

In a joint letter sent this week to President George Bush, Tom Camerlo, a Florence, Colo. dairy farmer and DFA board chairman, and Gary Hanman, DFA president and CEO, expressed "deep concern" over the Administration's seeming support for providing Australia - one of the U.S. top trading partners and Iraq War allies -- with much broader access to U.S. food markets.

In the letter, DFA's leaders told the President that the Australia FTA would hurt dairy farm families, affect their ability to compete in their own marketplace, and, ultimately, hurt the U.S. job market : "An agreement like this, which opens wide the doors to Australian imports of butterfat, milk proteins, cheeses and other dairy products, will flood the market and cause substantial decreases in U.S. farm milk prices. We've seen this happen already with an unfettered flow of milk protein concentrate and other milk protein blends from other countries into the United States."

Camerlo, who operates a dairy in Florence, Colo., says dairy farmers need to get angry.

"It appears the Bush Administration intends to act on this (early in 2004) as a 'thank you' to Australia for its support of the U.S. in the Iraq War. This is a huge insult to Rural America whose families have sent children to the battlefields while the President is selling their businesses short on the home front by giving away their dairy markets. It's a terrible idea and it makes no sense."

Australia seeks to remove quota restrictions on dairy, beef, sugar, peanut and cotton exports to the United States. Australia also wants the U.S. Administration to drop or cut rural subsidies, remove legislation barring the export of Australian-built ferries to the U.S., align technical standards on manufactured goods, and change quarantine measures.

Even though the Australia FTA reads like a two-way street to market access, it isn't. Australia is not a market for U.S. agricultural products, so the FTA really only opens the door to Australian products. "The Administration should focus on building trade relationships through the World Trade Organization (WTO) with nations like Japan, Korea, Canada and the European Union, where demand for more balanced import and export relationships exist. We should not be brokering separate deals for dairy that only serve to destroy our domestic prices and give us nothing in return," says CEO Hanman.

DFA, along with many in the dairy industry, believe that the additional imports of Australian dairy products would cause substantial decreases in U.S. farm milk prices. According to estimates by the National Milk Producers Federation (NMPF), m ilk prices received by dairy farmers would decline dramatically. Gross revenues could drop by nearly $1 billion per year. In addition, several thousand dairy farms would leave the business at an accelerated rate.

Dairy farm families won't be the only ones affected. U.S. jobs are also at stake.

"When dairy farmers go out of business there is a domino effect that touches the economic lives of many outside of agriculture," says Hanman. " The decline in U.S. farm numbers would affect hundreds of food manufacturers and the people they employ. As processing operations close, Americans with household incomes attached to the U.S. food sector will lose jobs, too. Additional Australian imports could cost this nation nearly one million jobs."

DFA's leadership is so concerned about the pending agreement that the cooperative has urged its dairy farm families to contact their legislators when they are home for the holidays.