020634 Australia Plans to Regulate Beef Exports to US

Canberra. Australia - The Australian government plans to impose a controversial quota arrangement on beef exporters to the U.S. from July 1 , a spokesman for Agriculture Minister Warren Truss said.

But the industry mostly remains opposed to Truss' plan, with Australian Meat Council Chief Executive Bill Hetherington saying the industry is in turmoil as a result of it.

"People are losing confidence in" Truss, and might consider possible legal avenues to block his quota plan, he said.

Truss' spokesman said the government plans to introduce regulations covering the plan in the Senate next week for introduction from July 1 , if the Senate approves.

"At this stage we haven't been given any indication they (opposition parties) won't allow the regulations to pass," the spokesman said in an interview.

The government still is talking to the Senate minority party, the Australian Democrats, about what they intend to do. The government doesn't command a majority in the Senate and needs the support of others, such as the Democrats, to win passage of legislation and regulations.

Australia is a major global beef supplier and its biggest volume and value market is the U.S. , which limits imports of Australian beef to 378,214 metric tons a year.

Australian exporters reached the quota limit in December last year and industry sources previously said they expected this year's quota to be reached in October/November.

Early in 2002 Truss asked the Red Meat Advisory Council, comprised of representatives of all sections of the industry, including producers and processors, to formulate a fair plan to manage the quota.

But the plan put forward, with widespread industry support, was rejected by Truss who put forward his own plan May 15 , which has in turn been widely criticized by the industry.

A Senate committee hearing into Truss' plan took place this week, but the committee doesn't have the power on its own to force changes to the plan.

Want To Avoid Big Export Rush

Truss' spokesman said the government is keen to get the quota arrangements in place to avoid a "gold- rush" effect, whereby some exporters speed shipments to the U.S. ahead of the imposition of the quota.

Hetherington of the Meat Council, which represents processors and exporters, said Truss' approach to the quota plan is "completely wrong."

Eight processors win as a result of the minister's plan and "everyone else suffers. It's pretty inequitable from our perspective," he said in an interview.

"The buyers over there (in the U.S. ) know the turmoil that is going on here and they're sitting back and they're offering lower prices," he said.

"People will be trying to maximize their access to the U.S. before Truss cuts it off," he added.

Under Truss' plan, no company would receive quotas for less than 85% or more than 140% of their 2001 export levels. Processors that supplied more than 90% of their exports to the U.S. will be allocated 90% of their tonnage shipped to the U.S. in 2001, he said.

Truss defended his plan in parliament Thursday, saying the alternative plan put forward by the Red Meat Advisory Council proposed "very substantial windfall gains to many companies which hadn't been active in that market in the past."

The council's plan also "took away significant shares of the quota of those who had been active in the trade," an unfair situation, he said.

The minister said he was prepared to accept some transfer of quota away from traditional U.S. suppliers, "but I thought it was reasonable for that share to be capped," he said.

"What we have endeavored to do is divide the pain as fairly as possible," he added.

But Hetherington criticized the plan because it favored the processors that just shipped the commodity- like grinding beef grade that the U.S. imports from Australia , and didn't take into account those who endeavored to develop other beef markets rather than just shipping the commodity-grade grinding beef.

Truss' plan "effectively means that people who have filled their quota wouldn't be able to ship to the U.S. at all, which means that they could be very much in trouble," he said.

"They're really worried, because they mightn't have any place to ship product to," he said.

Australian beef exports to the U.S. have been running at high levels in recent months after a slow start to exports this year.

Beef exports to the U.S. rose to 38,722 metric tons in May, up from 37,140 tons in April, and up from 36,351 tons in May 2001 .

Beef exports to the U.S. in the first five months of this year rose to 160, 697 tons, up from 158,570 tons in the year-earlier period.

Industry sources previously said they expected the quota limit to be reached October or November.

RETURN TO HOME PAGE

E-mail: sflanagan@sprintmail.com