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Friday, 1 May 1987
Page: 2448


Mr CUNNINGHAM —My question, which is addressed to the Minister for Trade, has real substance as it relates to the Australian economy. I refer the Minister to the announcement in Washington last night that the United States of America has offered the Union of Soviet Socialist Republics four million tonnes of wheat under the export enhancement program. Will the Minister advise the House of the Government's views of this action?


Mr DAWKINS —I am advised that the United States has offered to the Soviet Union four million tonnes of subsidised wheat under the export enhancement program and that the Union of Soviet Socialist Republics has apparently assured the United States that it will purchase the full amount of the offer in the period up to 30 September this year. The House will recall that an earlier offer was made by the United States which was constrained by a fixed subsidy of $13 a tonne, later lifted to $15 a tonne. The present offer is not constrained by any limitation on the subsidy that would apply.

I wish to say something about this matter which we view with some concern. The major reason we are concerned about it is that this sale has been made in the context of a long term agreement with the Soviet Union. Whilst the apparent justification for these subsidy programs is to allow the United States to meet the market, the reality is that, for very minimal extra sales by the United States, the effect of its subsidy programs has been to halve the price of wheat. So it has sold very little additional wheat, but the effect of its policies in halving the world price has had an extraordinary impact on wheat producers around the world, and particularly in Australia. If we aggregate the total effect of the United States farm program on Australian farmers we see that, in the last year, farmers in Australia have lost $1.3 billion as a result of these programs being conducted by the United States. I think the important point is that we have to maintain our efforts to ensure that some kind of sanity is reintroduced into world agricultural markets. Hence we are not only sending a group from this Parliament to Washington but also, later this month, I will be there and I will raise this matter, amongst others, with the Cairns group meeting which will now take place in Ottawa.

Let me make a final observation about this point. As a result of this subsidy from the United States to the Soviet Union, which is worth some $120m, households in the Soviet Union will pay less for their bread and wheat products than households in the United States will pay for their bread and wheat products. As this subsidy of $120m represents about a quarter of the value of the total consignment, perhaps it would be appropriate for 25 per cent of this four million tonnes to be shipped to the Union of Soviet Socialist Republics in United States aid bags marked: `This is a gift of the United States Government and its people to the people of the Soviet Union'.