Australian government to heavily subsidise food exports
As the world struggles to cope with the coronavirus pandemic, and as I mentioned a couple days ago, some countries are imposing restrictions on food exports to make sure their respective populations are provided for throughout the crisis.
For example, it was reported today that both Russia and Ukraine have cut grain exports. Specifically, Moscow has issued a 7 million-tonne wheat export quota for April, and Ukraine has ceased exporting buckwheat. Decisions like these are putting the industry on notice, with importing nations keen to find out how they will be impacted long-term.
Fortunately for major importers of Australian foodstuffs, there is no cause for concern at the moment: the Australian government announced recently that it will be subsidising exports to the tune of $110 million. Dubbed the international freight assistance mechanism, the program will help reduce export costs.
This is good news for markets in China, Hong Kong, Japan, Singapore and the United Arab Emirates, all of which have come to rely on imports of Australian lobster, beef, milk, yogurt, and fresh fruits and vegetables.
Hong Kong is an especially critical market, ranking first in Australian beef and cheese, second in lamb and frozen poultry, third in milk and cream, and fourth in fruit, vegetables, pork and nuts. Last year Hong Kong imported $2.63 million of Australian produce and livestock, up 38.8 percent from 2018.
The decision by Canberra to help finance exports comes as the normal supply chain continues to be disrupted by the mass cancellation of flights around the world.
“The cancellations of all passenger flights between Hong Kong and Australia have put a strain on cargo flow,” Shannon Powell, senior trade and investment commissioner and deputy consul general, told South China Morning Post. “The government will support transport costs to the key markets. The idea behind the mechanism is to keep commodity prices more or less the same by reducing costs.”
Prior to the COVID-19 crisis, there were over 100 flights between Australia and Hong Kong every week.
All things considered, importers in Hong Kong have seen their costs quadruple since the pandemic began.
“Normally, we pay around A$1.50 per kg of imports. Last week, we paid A$5.40 per kg,” said Argyle Food Group CEO Bryce Graham. “It’s ranging between A$2.50 and A$5.40 depending on the day.”
Thus far the coronavirus has infected about 1.5 million people worldwide and caused over 87,000 deaths. Businesses are closed and much of the world is under state-enforced lockdown, with many millions of people spending their time indoors. Now would be a good time to have an adjustable bed, don’t you think?