QUESTION 1 (25 marks)

Jason an organic farmer based in northern NSW grows saffron crocus flowers for the production of saffron which he sells into the domestic Australian market.

Jason is the president of the NSW Saffron Council, an industry body representing saffron producers in the mainland states. The majority of saffron producers in Australia are based in Tasmania. The Tasmanian growers produce approximately 75% of the saffron grown in Australia.

Jason's farming philosophy is that a healthy plant is a happy plant, this farming philosophy is shared by the mainland saffron growers. To achieve this end mainland saffron growers, use no fertilizers on crops, all weeding and harvesting is done by hand and the harvested saffron is packed for transport is specially manufactured packing crates. The cost of producing a kilogram of saffron in mainland states is $4000 per kilogram compared to $3000 in Tasmania.

Recently saffron growers on mainland Australia have found it difficulty retaining local markets. Jason travels to the Sydney Spice Market to do some research. He finds that saffron produced in Iran is being sold for $2,750 per kilogram. After further investigation Jason finds that wages in Iran are substantially lower than on the Australian mainland and that the Iranian farmers use fertilizer on their crops as well as chemicals for weeding purposes. Jason finds that saffron is sold on the local Iranian market for the equivalent of $2,500 per kilogram.

Jason believes that the Iranian saffron is a real threat to the continued viability of the saffron growing industry in northern NSW as the Iranian producers have sufficient product to export to Australia and fill 75% of the Australian local market demand for saffron and believes that the Australian government should step in impose significant tariffs on Iranian saffron.

Advise Jason on

1. Whether the Iranian saffron producers are dumping saffron on to the Australian market?