Policy Brief

Should Banana imports be allowed into Australia?

SID 309195985

What is the Problem? Due to recent unforeseen circumstances (natural disasters such as Queensland Floods, Cyclone Yasi etc), domestic Banana supply has been severely hampered. This lack of supply has resulted in extremely high prices for consumers (up to $17/kg). Importing Bananas has been long considered a possible alternative to help increase competition and therefore drive down prices for consumers. The issue is, imported Bananas (particularly from the Philippines area) bring a possibility of introduction of exotic diseases such as Moko, Black Sigatoka and Freckle. As soon as exotic diseases are introduced, costs of Australian banana producers would increase as they looked to implement measures to control the spread of the diseases. Therefore, the problem is faced is whether or not to allow banana imports into Australia. On one hand, we must balance high retail banana prices whilst on the other hand we must consider the potential impacts of introduction of several exotic diseases into the Australian growing regions. Recommendation: I recommend a policy whereby imported bananas are allowed into Australia under the following relaxed quarantine measures: Exports only from areas that demonstrate low pest prevalence Registration of export blocks Random inspections of bananas by Australian Quarantine Inspection Officers Small import tariff Background: The Philippines first made an application to the Australian government to allow them to import their Cavendish bananas into Australia in early 2000. Biosecurity Australia (BA) was commissioned to undertake an import risk analysis (IRA) to assess the situation and offer a recommendation. The IRA decides what can be imported and under what circumstances it can be imported. Since the first application in early 2000, the Australian Banana Growers Council have campaigned against the applications, looking to ensure that their local industry is protected from the foreign diseases and competition. The council benefited has benefited from strong support from its growers in donations to help fight the cause. An industry imports fighting fund, which generated 5c in fundraising per carton sold from growers has generated roughly $2.2 million from growers over the decade since the first application was made. This money has allowed the industry to commission experiments to be conducted to attempt to support their theory that the introduction of these exotic diseases into Australia would be catastrophic for their industry. The original IRA in 2000 rejected the application, citing the threat of introduction of the exotic foreign diseases. However In 2004, BA released a revised draft IRA that recommended allowing importation of bananas under certain conditions. The Australian Growers Council lobbied the federal

government hard over this issue and eventually managed to force a senate inquiry into the issue. During the senate inquiry, the council used all the experimental evidence they had found to rebuff the proposal, and the IRA ended up being revised to not allow bananas to be imported. However in 2008, the IRA was once again revised to recommend banana imports be allowed into Australia. Current policy now permits bananas to be imported to Australia, subject to strict quarantine procedures. At present, there has been no application made by any foreign country to import bananas into Australia. Analysis: What must be considered before offering a recommendation on this topic is the potential impact on the economy as a whole. Current policy is effectively still a ban on the imports, as the price-competitiveness of Philippines bananas has been completely eroded by the heavy quarantine measures imposed upon them. What we must consider is the effect that relaxing these quarantine measures would have on the price of bananas and therefore on the economy as a whole. Reduced banana retail prices would result in a large saving for families at retail level. This saving would far outweigh any small costs associated with controlling the disease. Australian Banana Growers have long enjoyed a market free from any foreign competition, and have thus been able to manipulate prices to obtain large profits at the expense of the consumer. Banana grower Len Collins, from Tully in north Queensland, led the fight against imported bananas for the better part of a decade. He believes the imported bananas would have had been a disaster for the local market. Once they were here, we would have their diseases, and it would make our bananas a lot more expensive to grow and we would become uncompetitive because of their diseases". The argument that introduction of the exotic diseases mentioned would erode competitiveness of Australian growers is just used by the growers as a tool to attempt to maintain their monopoly on the market. Philippines and other Asian growers have successfully managed to control the diseases whilst still producing a quality product for decades. These diseases have been successfully controlled in areas such as the Philippines for many years. There is no reason the same could not occur in Australia. There would be small costs associated with controlling the disease, however the industry would not be devastated as they suggest. Arguments presented by the growers council only consider the potential impact of the introduction of the exotic diseases. All there evidence is scientific based, and none takes into account the economic benefit a lower banana price could have on the economy as a whole. We must also consider the potential bias in the researchers. The growers council has commissioned these experiments in the hope that they will be able to prove to Biosecurity Australia how devastating the introduction of the diseases could be. These are not independent tests and are

possibly biased due to the large amounts of money the growers council have to offer. Twice recently, there have been instances of major natural disasters that have decimated the local banana market and hence seen prices increase up to five times their normal level. Graham Borrel makes a fantastic point in his opinion article for the Bendigo Advertiser. Australian growers argue that by allowing imported bananas to fill the void, we would be allowing foreign competitors to benefit from the misfortune faced by producers (mainly in far northern Queensland). However Graeme questions arent Australian banana farmers who avoided damage from Cyclone Yasi guilty of exactly the same thing by creating artificial shortages and a subsequent high price to the consumer? Conclusion: Clearly, the benefits to the economy as a whole by allowing imported bananas into Australia would far outweigh any costs associated with controlling and preventing an outbreak of the exotic diseases such as Moko, Black Sigatoka or Freckle. For this reason, I would recommend imported bananas be allowed in Australia under the following conditions: Exports only from areas that demonstrate low pest prevalence Registration of export blocks Random inspections of bananas by Australian Quarantine Inspection Officers Small tariff

The first two points are contained in the current quarantine measures, and require exports to only be allowed form areas demonstrating low pest prevalence. These blocks must be registered. The third point suggests we can randomly inspect bananas to ensure they are coming from registered areas. Currently, every banana to be imported must be checked, however random checking would have a similar effect whilst minimizing costs. The third point suggests a small import tariff could be placed on the imported bananas. The revenue generated by the government could be redistributed to the local growers. The costs they incur in controlling/preventing the spread of diseases could therefore be subsidized, ensuring they continue to benefit. Introducing imported bananas into the Australian market would create great benefits for Australian families, due to the increased competition putting downward pressure on prices. These benefits to the greater economy would far outweigh any small costs associated with controlling diseases.

References: http://www.johnston-independent.com/banana_imports.htm http://www.bendigoadvertiser.com.au/news/opinion/letters/general/importbananas-and-stop-these-ludicrous-prices/2257104.aspx http://www.abc.net.au/rural/content/2009/s2772680.htm http://www.richmond.ac.uk/content/library/subjects/politics/policybriefs.aspx http://theconversation.edu.au/as-the-apple-import-ban-crumbles-is-it-time-togo-bananas-2945 http://www.cnngo.com/sydney/shop/end-worlds-most-expensive-bananas173250 http://www.foodsafety.edu.au/news/2009/03/banana-imports-approved/ http://petergallagher.com.au/index.php/site/article/a-great-big-banana-tax http://knowledge.asb.unsw.edu.au/article.cfm?articleid=1446