Community in growing storm over cheese

Press, 9 June 1986, Page 32

Community in growing storm over cheese

By

CHRIS PETERS,

NZPA staff correspondent Sydney The European Community has got itself into a growing row with Australia in a bid to reclaim a market share for cheese that has been taken in large part by New Zealand.

The Europeans have decided on big increases in subsidies to much of the cheese they sell .to Australia after seeing their market eroded because of an agreement signed three years ago. That agreement was designed to head off heavy duties being imposed by the Australians to counteract European subsidies, but the present action in boosting the benefits 135 to 180 per cent could land tljie Europeans back in

same situation. European Commission representatives in Canberra defended the move as being in line with the 1983 agreement, but are believed to privately agree that the timing and size of the increases could not have been worse.

Any subsidies — which are on the lines of the S.M.P. scheme abandoned in New Zealand — would cut the price of European cheese on the Australian market just at the time when the price of the local product is set to rise under a special agreement with the Government as part of the longawaited dairy industry readjustment plan. Observers describe the European decision to lift subsidies by such a huge amount in one hit as insensitive and the timing appalling.

The problem for the Europeans is they have seen the 14,000 tonnes of cheese they sold to Australia in 1983 whittled away to just 8000, with much of the balance coming from across the Tasman.

The difference is that cheese from New Zealand, thanks to the abolition of price supports, is not subsidised and the Australian industry can, reluctantly, live with that.

gßut the industry is finding it difficult to stomach the huge boosts in subsidies on European cheese — the sAust43s ($561) a tonne subsidy on Cheddar has jumped to sAustl22l ($1575) a tonne, and the sAust44o boost to edam, gouda and similar cheeses to sAustlO44 a tonne.

The Europeans say that whatf fhey are doing is

within the letter of the agreement they signed in 1983, which allows them to increase subsidies as long as the Australian market structure is not disturbed.

They say they are merely seeking to regain their traditional share of the market, and point out that the Australian dollar has devalued 50 per cent against the European Currency Unit since 1983. Australia, however, asserts the huge subsidies will make European cheese cheaper than the Australian product once the dairy agreement comes into force and therefore the market is being disturbed.

To rub salt into the Australian wounds, the Europeans have also boosted subsidies on cheese they sell to Japan, which is Australia’s largest market.