Federated Farmers encouraged by U.S. talks

Federated Farmers wishes to commend Prime Minister, the Hon John Key for pushing free trade in his talks with United States Vice-President, Joe Biden and Agriculture Secretary, Tom Vilsack.

“It seems like the Prime Minister is on the same page as Federated Farmers on the matter of the Trans Pacific Partnership (TPP),” says Don Nicolson, Federated Farmers President.

“Last week I sent a letter to the 30 U.S. senators who showed scepticism about the TPP. I’m still waiting on a reply, but I’m really hoping at least some of the senators will take the opportunity to attend our conference in Invercargill from 23-25 June.

“Mr Key suggested the TPP, far from hindering American agriculture exports, would allow both countries to work together. That’s exactly what I’m telling these 30 senators, the glass of milk for U.S. dairy farmers is actually half-full.

“We are writing to the further 70 senators, who didn’t sign the letter, inviting them down under to see how we farm.

“The TPP is a major foreign policy initiative for New Zealand and I must commend the work of Phil Goff for starting the ball rolling as well as Prime Minister, John Key and Trade Minister, Tim Groser for doing an outstanding job,” Mr Nicolson concluded.

Text of the letter sent to 30 U.S. senators:

RE: Trans Pacific Partnership

In light of the letter, Bipartisan group raises concern over anti-competitive practices in New Zealand’s dairy industry, sent to United States’ Trade Ambassador, Ron Kirk, Federated Farmers of New Zealand wishes to invite you to attend our 2010 National Conference being held 23-25 June, 2010.

As New Zealand’s leading agricultural representatives, we were concerned by the way New Zealand and our dairy industry has been described. This is why we believe a fact finding mission to New Zealand will fundamentally dispel the misinformation your office has been supplied by U.S. dairy lobbyists.

We are concerned by U.S. dairy lobbyist claims - repeated in the letter sent to Ambassador Kirk - that losses to the U.S. industry could total US$20 billion over the first 10 years of a trade treaty, if U.S restrictions on imports from New Zealand were fully phased out.

Yet with a global population that will grow by some three billion over the next four decades, there are immense opportunities for New Zealand and U.S. dairy farmers under the TPP. That’s why we believe the glass for U.S. dairy farmers is half-full of milk and not half-empty

New Zealand’s exports into the U.S. compete with both domestic production and other imported product. Relative size has to be considered in terms of the relevant export markets, which for dry milkpowders, is global. In terms of non-fat solids sold in the U.S. for instance, Fonterra’s market share is only 0.5 percent. I must, however, point out, that Fonterra is one of the largest milkpowder exporters from the U.S., through its partnership with your domestic dairy co-operatives. The ability for us to do more in respect of exporting from the U.S. will be enhanced by the TPP.

Your letter to Ambassador Kirk incorrectly describes Fonterra Cooperative Group as being a company when in fact, it is a cooperative, owned by 10,000, mainly farming families. It isn’t even close to being the world’s largest cooperative either – it is ranked at number 30 by the International Co-operative Alliance while Minnesota’s CHS Inc, is ranked at number 13. While Fonterra Cooperative Group may be the world’s largest dairy exporter and New Zealand’s largest commercial enterprise, by US standards, its size is unexceptional - Dairy Farmers of America and Dean Foods are of a similar size.

New Zealand may be the second largest exporter of dairy commodities in the world, sandwiched between the European Union (number one) and the U.S. (number three). However, I must also point out that New Zealand’s share of global milk production amounts to a mere two percent. In the light of day, a sense of perspective needs to be maintained.

Given there are no Government subsidies for New Zealand's farmers and no impediment to outside competition in the form of import tariffs, quota restrictions or investment constraints, the TPP means the gate will swing both ways. Indeed, a listed Hong Kong company has moved to invest US$1.1 billion under the New Zealand-China free trade agreement. This will establish a dairy company, involving the purchase of farms and the building of plants, so Fonterra is not the dominant quasi-government organisation the U.S. dairy lobby makes it out to be. The proposed Trans Pacific Partnership is about taking the best of the United States and blending that with the best from New Zealand. It’s about optimal outcomes for both countries.

I guess the best way to demonstrate this to you, is to extend an invitation to you to attend Federated Farmers National Conference being held 23 - 25 June in Invercargill, New Zealand. We feel this is the best way for you to caucus with New Zealand’s farmers. By meeting with us and seeing our farmers in unsubsidised action, I think this will put a whole new perspective on the Trans Pacific Partnership.

As a not-for-profit organisation, Federated Farmers is not in a position to offer you travel gratis, but we would be delighted to host you on a farm. This, I feel, is the best way to understand the psychology and outlook of our farmers. It is why we believe the TPP will help spark a renaissance in the U.S. dairy industry based on, as we do, the export of products that the world demands.

I would welcome contact with you at any stage so feel free to call me +64 4 494 9190 or +64 3 216 7405 or by email to dnicolson@fedfarm.org.nz.

Thank you for your attention.

With warmest regards,

Don Nicolson
PRESIDENT