HORTICULTURE producers are warning of a likely surge in food imports if Australia broadens the goods and services tax (GST) to include fresh and packaged grocery lines.
NSW Farmers horticulture committee chairman and Persimmons Australia boss, Brett Guthrey said the sector was not just worried about a backlash from consumers reluctant to pay extra for fresh fruit, vegetables and other foods.
"The last thing the horticulture sector can afford at the moment is the added economic pressure on our farm incomes which is likely to come from several directions if GST is imposed, particularly if the tax jumps above 10 per cent," he said.
Mr Guthrey believed the rising trend in fresh food imports would go much higher, while producers supplying canneries or other processing operations would see a flood of extra imports landed in Australia, pushing local production margins to the limit and potentially forcing more food processing industry closures.
Although food was looking increasingly like a tax target, NSW Farmers was saying "no" to the GST on grocery lines in the current taxation environment.
The association wants serious research undertaken to examine the impact of GST on farmers' earnings, also identifying where the fairness and efficiency of the tax system could be improved.
Its business economics and trade committee chairman Peter Wilson said the association was not just interested in seeing fairer business taxation - including possibly lifting the threshold point at which farm tax payments kicked in - consumers also needed compensation with personal tax cuts.
Unless well considered measures were in place to help compensate the industry, including pruning existing costs, Mr Guthrie said GST on food would put Australian producers at an increasing disadvantage against cheap imports from overseas farms and processors with lower labour and regulatory costs.
Local fresh product suppliers would also be unlikely to avoid price gouging tactics employed by the highly competitive food retailers as they tried to restrain price increases for their customers.
"The market power of the supermarkets means if they decide they don't want to pay the extra price, they'll use whatever tactics possible to influence supply and demand, ensuring they don't pay more," said Mr Guthrey who farms at Cobbitty, south west of Sydney.
Horticulture markets were complex with no easy way for regulators or competition authorities to identify price distorting activities.
"Growers and market wholesalers all have very similar feelings about what a GST means," he said.
"A 60 cent bunch bunch of shallots which rises to 66c with GST won't sell at the markets for 70c - buyers will only pay 60c.
"Growers will have to absorb the cost."