Voluntary Report - public distribution

**Date:** 1/13/2006

**GAIN Report Number:** AS6002

AS6002

**Australia**

**Agricultural Situation**

**Ag Down Under, Issue 1**

**2006**

**Approved by:**

![](media/image1.wmf)Kathleen Wainio, Agricultural Counselor

U.S. Embassy

**Prepared by:**

Mike Darby, Agricultural Specialist; Lindy Crothers, Agricultural
Marketing Assistant; Meredith Elliott, Agricultural Assistant

**Report Highlights:**

\*\*\* Inquiry Into AWB Oil-for-Food Scandal to Begin January 16 \*\*\*
MP Considers Bill to Abolish AWB Export Veto Power \*\*\* Agriculture
Minister Outlines 2006 Priorities \*\*\* Trade Minister To Seek
Increased Access to U.S. Sugar Market \*\*\* Australia Reacts to the
Resumption of U.S. Beef to Japan \*\*\* Sweeping Reforms of Health and
Nutrition Claims Proposed \*\*\* Comment Period for NZ Apple IRA Closes
March 31, 2006 \*\*\* Fine Food 2006, Melbourne, Australia, Sept 11-14
\*\*\* Lapse of Protocol Halts Australian Stone Fruit Exports to Taiwan
\*\*\* Drought Recovery Yields Improved Crop Outlook \*\*\* Animal ID
Expands to Include Sheep \*\*\*

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Canberra \[AS1\]

\[AS\]

FAS/Canberra is pleased to release the first issue of ***Ag Down
Under***, a biweekly update of Australian agricultural news and events
of interest to U.S. exporters.

**Inquiry Into AWB Oil-for-Food Scandal to Begin January 16:** Beginning
next week, AWB faces an inquiry into its involvement in the Iraq
Oil-for-Food scandal to determine if its actions violated Australian
law. Prime Minister Howard called for the investigation in November 2005
following the report of an independent United Nations inquiry into the
Oil-for-Food program that found that the approximately \$220 million the
AWB allegedly paid for transport services in Iraq was actually funneled
to the Iraqi government. Since the scandal, calls for dismantling of
AWB's monopoly powers have grown, but Agriculture Minister McGauran has
stated the government will not examine the issue until a review
scheduled for 2010.

**MP Considers Bill to Abolish AWB Export Veto Power:** Western
Australian Federal Member of Parliament Wilson Tuckey is considering
introducing a bill that would abolish the Australian Wheat Board's (AWB)
power to veto shipments from rival companies. The proposed action
follows AWB's veto of Co-operative Bulk Handling (CBH) Group's second
application to the Wheat Export Authority (WEA) to supply 100,000 tons
of Western Australian wheat to Interflour mills in Indonesia, Malaysia
and Vietnam. CBH has a 50 per cent stake in Interflour. CBH chief
executive Imre Mencshelyi says the action costs Western Australian
growers \$10/ton and that company will lobby to have AWB\'s veto right
dissolved. Agriculture Minister Peter McGauran expressed support for
AWB's decision and questioned the claim of a loss of \$10/ton for
Western Australian growers.

**Agriculture Minister Outlines 2006 Priorities**: Agriculture Minister
McGauran has stated horticulture is his top priority in 2006. In an
interview with *The Weekly Times* Mr. McGauran said the industry has to
develop a "more competitive edge" against imports and expand new export
markets. McGauran pledged to take a personal role in further changes to
country-of-origin labeling, and to urge supermarkets to promote local
products. The minister stated he will also address other priority
issues, including: stepping into the public debate on genetically
modified crops, in an effort to pressure states into ending their
moratoria; pushing for tougher laws to give farmers better protection
against animal welfare activists; increasing awareness of the importance
of intensive livestock industries and live exports; and accelerating
national water reform, especially the expansion of water trading.

**Trade Minister To Seek Increased Access to U.S. Sugar Market:** Trade
Minister Mark Vaile has announced that he would ask for consideration of
increased access for U.S. sugar when he meets with USTR Portman in
Washington in March. National Farmers Federation President Peter Corish
welcomed Mr. Vaile's decision to raise the issue, noting, "These
agreements are designed to be dynamic..." However, Mr. Corish further
noted it would be very difficult to get movement on sugar.

**Australia Reacts to the Resumption of U.S. Beef to Japan**: Australian
beef exporters anticipate retaining a larger share of the Japanese
market following the re-entry of U.S. beef (compared with pre-2003
levels), however demand for Australian beef is expected to ease. Major
marketing initiatives, in part funded by mandatory cattle transaction
levies, are planned for the Japanese market. Industry sources see the
resumption of U.S. trade as an important step toward more consistent
trading conditions. (See Gain Report AS 5049 for further information.)

**Sweeping Reform of Health and Nutrition Claims Proposed:** Food
Standards Australia New Zealand (FSANZ) is proposing sweeping reforms of
the regulations governing nutrition and health claims. At present, the
use of health claims on food labels is prohibited, except by specific
approval. Australian industry views this limitation as a constraint to
innovation and one that limits consumer choice. The proposed new
measures identify two levels of claims: 1) General Health Claims:
including content and health claims that do not refer to serious
disease; and 2) High-level Health Claims which tout the benefits of an
ingredient on a serious illness, such as heart disease. Full details on
the proposed standard are available at
[www.foodstandards.gov.au](http://www.foodstandards.gov.au/). Comments
on the proposed standard must be received by February 22, 2006. (See
GAIN Report AS 5046 for further information.)

**Comment Period for NZ Apple IRA Closes on March 31, 2006**: On
December 1, 2005 Biosecurity Australia issued a revised draft import
risk analysis report (IRA) assessing an application from New Zealand to
export apples to Australia. The extended comment period for the draft
IRA closes on March 30, 2006. Establishing market access for U.S. apples
to Australia is a high priority for USDA. In response to USDA\'s request
in 2000 that Australia initiate an IRA for U.S. apples, the Government
of Australia has stated that it first intends to issue the final IRA for
New Zealand apples, and access for U.S. apples would then be addressed
through a modification of the New Zealand import policy. (See Gain
Report AS 5044 for further information.)

**Mark Your Calendars\--*Fine Food 2006*, Melbourne, Australia Sept.
11-14:** Interested in the Australian market? Don't miss Australia's
largest food trade show, *Fine Food 2006*, in Melbourne, September
11-14, 2006. *Fine Food* attracts 30,000 'trade only' buyers and
decision makers, including representatives of the food importing,
distribution, retail, and catering industries. A large proportion of
Australia's major food processors and importers actually exhibit at the
show - an ideal opportunity to "walk" the show and meet potential buyers
one-on-one.

To assist U.S. exporters interested in this market, FAS/Canberra is
organizing exhibition space at Fine Food 2006. We are currently
recruiting U.S. companies to participate with us in the show. In
partnership with the U.S. Commercial Service in Australia, we will be
offering additional options for participants, including appointments
with prospective distributors before, during or after the show. Contact
Lindy Crothers at <AgCanberra@usda.gov> for further information.

**Lapse of Protocol Halts Australian Stone Fruit Exports to Taiwan:**
Press reports grower outrage that the Australian government has failed
to re-negotiate a protocol with Taiwan to allow the continuation of
stone fruit exports, a market valued at approximately A\$15 million. The
existing protocol expired January 1, but an agreement has not been
reached, causing some exporters to call for compensation from the
government over lost sales. The revised protocol would address the risk
of the Queensland fruit fly in imports. Agriculture Minister McGuaran
expressed support for Biosecurity Australia officials who have been
working on the issue, but conceded that they need to develop a "better
sense of commercial reality" in their activities.

**Drought Recovery Yields Improved Crop Outlook:** Above average
seasonal conditions that began in July 2005 continued through December
2005 and have benefited Australian grain production. Greatly improved
yields are expected for winter cereals (wheat and barley), which are
currently being harvested. Australian wheat production for 2005/06 is
forecast at 23.9 MMT, which would be the fourth largest crop on record.
Production of summer crop (sorghum) will likely increase due to
increases in projected planted area. The bulk of the sorghum crop is
sown and will be harvested from March to June 2006. (See GAIN Report
AS5050 for further information.)

**Animal ID Expands to Include Sheep and Goats:** Effective January 1,
2006 Australia's National Livestock Identification Scheme (NLIS) has
been expanded to include sheep and goats. The system became mandatory
for cattle, both dairy and beef, July 1, 2005, with the exception of
Queensland and the Northern Territory, which will not achieve full
compliance until 2007.

**Recent Reports from FAS/Canberra:**

The reports listed below can all be downloaded from the FAS website at:
<http://www.fas.usda.gov/scriptsw/AttacheRep/default.asp>.

  ---------- --------------------------------------------------- ----------
  **Report   **Title of Report**                                 **Date**
  Number**                                                       

                                                                 

  5041       Australian Federal Court Ends Pork Legal Challenge  11/21/05

  5042       Citrus Annual                                       11/23/05

  5043       Cotton Quarterly Update                             11/29/05

  5044       Australia Issues Draft IRA Report for Apples from   12/02/05
             New Zealand                                         

  5045       Top Food Trends in Australia                        12/05/05

  5046       Nutrition & Health Claims Draft Standard Issued for 12/08/05
             Comment                                             

  5047       New Glycemic Index Food Label System                12/08/05

  5048       New Country of Origin Labeling Standard Becomes Law 12/08/05

  5049       Australia Prepares for Return of U.S. Beef to Japan 12/15/05

  5050       Grain Quarterly Update                              12/16/05

  5051       Cotton Outlook 2006/07                              12/21/05

  6001       Fresh Deciduous Fruit Annual                        12/28/05
  ---------- --------------------------------------------------- ----------