Australia-India free trade deal hailed by wine exporters and sheep farmers, but dairy and grains miss out

A new interim Free Trade Agreement (FTA) between Australia and India, designed to reduce Australia’s economic dependence on China, has opened up significant market opportunities for certain industries , but others were excluded.

Australian wine exporters and sheep farmers are among those who will see their tariffs drastically reduced.

But the dairy and grain industries are clamoring for better deals, saying the deal is a major missed opportunity for market expansion.

Wine

The wine industry has been doing its best to find new markets since the start of the trade war with China.(Flickr: Ken Hawkins)

Australian wine producers found themselves with a giant hole in the export market in 2020 when the Chinese government announced it would impose tariffs of up to 200% on all Australian wine.

Australian Grape and Wine chief executive Tony Battaglene says the new deal with India will not recoup all losses, but is a key step in addressing the country’s oversupply of wine .

“The deal is beneficial for very high-value wine producers, many of which are small and medium-sized businesses,” he said.

“They will now have the confidence to explore new opportunities in the Indian market as the phased tariff reductions are implemented.

Australian wine exports to India grew by 71% in volume and 81% in value in 2021, albeit from a very small base.

Mr Battaglene said the industry was looking to grow in South East Asia, India and Scandinavia while developing established markets such as the US, Canada and the UK.

Australian Grape and Wine also received a grant of $1,817,000 from the federal government to help improve international market access.

Wool

Scott Morrison, dressed in a suit, looks at a table full of wool, holding up a piece to inspect.
Scott Morrison meets wool producers in Tasmania. The sector has performed well in the new FTA.(ABC News: Damian McIntyre)

There is a 5% tariff on wool exported to India – which is Australia’s second largest export market for this product – but it will be reduced to zero later this year under the new FTA .

Endeavor Wool Exports founder Josh Lamb said it was great news for the industry and could help further diversify markets.

“We definitely need an increase in processing capacity in India to really take advantage of that,” he said.

Tasmanian state wool manager for Nutrien Stewart Raine said India bought about 7% of the national clip.

“They range from this superfine type all the way up to the 28 micron wide wool type – they cover the whole gambit,” he said.

“I don’t think we’ve realized that extra capability or that extra capability of them supporting our market and adding another serious layer of competition.”

Mutton

A rack of lamb, cooked and ready to eat.
Exporters say it was impossible to send lamb to India until now.(Rural ABC: Brooke Neindorf)

Lamb and mutton producers will also benefit from the FTA, with exporters saying they were unable to send lamb to India due to a 30% tariff.

Fletcher International Exports Director Roger Fletcher said that so far the focus has been on the premium five-star market, which accounts for around 111 tonnes of mutton exported to India annually.

“Removing the tariff will go a long way to providing more certainty for this trade,” he said.

“We know there is a market for our products in India and now we can take advantage of it.

“The majority of other global mutton customers pay significantly less duty when importing Australian lamb and mutton.”

Dairy

A glass milk bottle resting on a fence post in front of cows.
Dairy farmers are disappointed not to have been included in the FTA.(Rural ABC: Jess Davis)

One of the biggest losers from the agreement is the dairy sector, which has been completely excluded.

United Dairy Farmers of Victoria chairman Paul Mumford said the industry was “hugely disappointed”.

“The problem here is that the Indian government saw our industry as a threat to the social fabric of its own industry,” he said.

“There’s a lot of opportunity and a lot of work to be done, though – this is an interim deal and there’s room for our trade minister to put dairy back on the table.”

Cereals

A handful of Ord River chickpeas above the grading machine.
GrainGrowers chairman Brett Hosking said the Indian market lacked premium Australian chickpeas.(ABC Kimberley: Courtney Fowler)

The grain sector is also asking for more work to be done to improve its access to the Indian market.

The interim FTA offers some potential benefits for Australian lentils and over time it will see benefits for faba beans, canola oil and soybeans.

But GrainGrowers chairman Brett Hosking said it was largely “business as usual” for the sector.

“There is a huge missed opportunity for the chickpea market,” he said.

“We have a reputation for producing chickpeas of incredible quality here in Australia, and India is a country that loves them, it’s a staple in their diet.”

Mr Hosking said India’s domestic chickpea production was strong at the moment, but there had been – and will continue to be – periods when seasonal conditions could not meet demand.

“India is a country in the northern hemisphere and we are in the southern hemisphere,” he said.

Comments are closed.