Wednesday, March 22, 2006

Cyclone Bob hits soon after Larry


Nth Queensland Federal MP Bob Katter blew several gaskets last night on ABC news over the possibility of importing fresh bananas to deal with the destruction of Australian production due to Cyclone Larry.

Anyone watching Cyclone Bob might have been mistaken to believe that the importation of bananas is a fresh issue. But alas, it is another step in the long walk of protectionism that began afresh in 2000 after the banning of Filipino bananas (the Philippines is the world’s fourth largest producer).

Cyclone Bob crowed on the ABC that Larry will destroy up to 4 000 jobs in banana industry in Nth Queensland. Of course, this isn’t the first incidence of Cyclone Bob claiming job losses for the banana industry. In response to a draft proposal to allow Filipino Bananas in 2004, the ABC reported:

‘Federal Independent MP Bob Katter says Queensland producers have been dealt another blow, with the Government clearing the way for the importation of bananas from the Philippines.

Mr Katter says the banana decision could cost up to 7,000 jobs, many in marginal seats.

"It's dreadful news for the Australian economy, for the people of north Queensland, northern New South Wales and ... it's very bad news for the Australian Government politically," Mr Katter said.’

I don’t doubt the 4 000 job losses associated with Cyclone Larry. But it does put into perspective the ‘realism’ of claims that free trade would wipe out 175% more jobs than the actual physical destruction of 90% of Australian banana plantations. Apparently Cyclone Bob comes with a hyperbole warning.

Quarantine is all about risk management. However, if the risk of importing disease is above zero, it does not mean that a blanket ban is appropriate. Where is the detailed economic analysis of the true costs of import bans on bananas (like those done for TCF and motor vehicle tariffs). Experience tells us that there is little doubt that the consumer benefit outweighs the potential Australian producer detriment.

Quarantine restrictions are just another tariff. Unfortunately, the government has been unwilling to perform a true economic analysis on its trade restricting effects. Hopefully Cyclone Bob will quickly pass and we, the consumers, will have access to fresh, cheap and plentiful Filipino bananas.

4 comments:

Pip said...

Classic quotes from today’s Australian (22/3/06):
“The federal Government has to make a decision now to look after this industry or none of us can afford to replant,” said Innisfail banana farmer Daniel Borsato, 36.
“There will be more disease issues if that is allowed. If we do bust our arses replanting the crop, how can we be sure we will get a reasonable return on our product if we have to compete with imported bananas.”

Indeed, Mr. Borsato, you can’t be sure you will get a reasonable return on your investment (and neither should you) but surely if you use efficient farming practices and produce your goods at a competitive price you will have no problem competing on an equal playing field with those pesky Filipinos in 9 to 12 months time.
I’m sure you don’t have the same protectionist attitude when it comes to exporting your bananas.

Mr Borsato might also like to take note that Filipino bananas are not the only substitute for his precious bounty (apple growers of Tasmania rejoice). Why stop at prohibiting our choice to buy foreign bananas just because our northern compatriots can’t stock the shelves, why not also restrict our choice to buy apples, pears or oranges? Banana growers must be somewhat concerned that disloyal consumers will discover the delight from biting into a crisp royal gala. If buying Filipino means these consumers remain happily oblivious to their other dietary options, surely this would be a good thing. After all, ignorance is bliss!

Matt Canavan said...

May I add that plastic, banana shaped objects (a plentiful supply of which is available in the ACT and NT) are also close substitutes for bananas.

pip said...

Matt, I think the objects you are referring to are actual meant as a substitute for something else (so i've heard).

Anonymous said...

Hi Kids.

Luke, for an economic analysis refer to http://www.esteycentre.ca/journal/ 'Costs and Benefits of a WTO Dispute: Philippine Bananas and the Australian Market', specifically page 68.

And you're right, the over all economic benefit overrides the loss to the producer – and Pip, you're half right, the producer will not be able to compete with those pesky Filipinos – but, indeed, Mr Borsato doesn't have the same protectionist attitude when it comes to exporting his bananas, because his bananas are almost entirely consumed in Australia.