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Productivity Commission to inquire into citrus industry.



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HON WARREN TRUSS MP MINISTER FOR AGRICULTURE, FISHERIES AND FORESTRY

AFFA01/264WT 26 September 2001

Productivity Commission to inquire into citrus industry

The Federal Government has asked the Productivity Commission to conduct an inquiry into Australia’s citrus growing and processing industry, the Federal Agriculture Minister, Warren Truss, announced today.

Mr Truss said the inquiry, which must be completed within 6 months, will look at issues such as competitiveness and profitability, as well as the industry's future prospects.

"Despite the gross production value for citrus rising by around $175 million between 1991 and 1999, and the value of exports increasing by $55 million between 1994 and 2000, some sectors of the industry are doing it tough," Mr Truss said.

"Some sectors remain especially vulnerable to fluctuations in the world price for fresh and processed citrus products, such as frozen concentrated orange juice, and these producers are experiencing low returns.

"The Government and industry have consulted extensively on these issues in the past 12 months, and one result of these meetings was my recommendation to the Treasurer to initiate an inquiry.

"The Productivity Commission inquiry will enable the concerns of the Australian citrus industry to be carefully examined.

"The inquiry will also review the effectiveness of Federal and State assistance programs and report whether additional measures may be necessary to enhance the industry's future prosperity and sustainability.

"This includes whether sufficient evidence exists to proceed to a formal 'safeguards investigation' under World Trade Organisation rules. The Productivity Commission inquiry will help identify whether a sharp increase in imports of a particular product is adversely impacting on the local industry. The Government will consider this matter further once it receives advice from the Commission about whether a prima facie case exists for ‘safeguards’ action.

"In simple terms, a safeguard measure may be applied when a surge in imports causes or threatens to cause serious injury to the domestic industry producing a like, or directly competing product. The measure provides temporary assistance and an opportunity for the local industry to adjust when there is a significant overall impairment to the position of the industry.

"The Commission will shortly be releasing an issues paper and calling for expressions of interest from parties wanting to participate in the inquiry. I encourage all stakeholders to consider making a submission and attending one of the Commission's public hearings.

"The Government believes the Australian citrus industry has a strong future and remains committed to working with it to ensure its long-term viability.

"The industry will continue, for example, to have access to broader Government programs such as FarmHelp and FarmBis, as part of the Agriculture, Advancing Australia package.

FarmHelp recognises that farmers, particularly those who have been on the family property for many years, are faced with extremely difficult decisions when the farm is no longer viable. "FarmHelp provides up to a year of income support for farmers who are no longer able to borrow commercially.

It also includes a $3,000 grant for a range of professional advice, including a financial assessment of the farm business. There is no compulsion for farmers to leave the industry; in fact, the income support allows them to continue farming while they use the professional advice to consider restructuring their present business.

"At its heart, FarmHelp is all about encouraging producers facing severe financial difficulties to make an informed decision about their future before their farm assets are severely depleted. And it's about giving them greater control over their futures.

FarmBis provides funding to cover up to 75 per cent of the cost of training programs that help improve the business and natural resource management skills of primary producers and land managers.

"In addition, the Rural Partnerships Program (RPP), conducted in 12 regions nationally, includes specific measures for citrus producing regions such as the Sunraysia, Riverland and the Murrumbidgee irrigation area.

"The Government has recently received a proposal from the Murrumbigee irrigation area called Power Pact to expand their RPP program and the Government expects to respond shortly.

"These include assistance in the form of business planning advice, benchmarking, grants for new and re-development activities, as well as property expansion grants.

"The RPP allows rural communities to enter into partnerships with their State government to develop integrated strategies that address the economic, structural adjustment, natural resource management and social issues affecting their particular region."

The Federal Government has also provided specific assistance to the citrus industry through the $8.4 million Citrus Market Diversification Program. The Program, which ended in June 1999, included a range of targeted assistance and restructuring initiatives for members of the citrus industry.

"This program allowed helped the citrus industry to restructure its marketing away from the low-return frozen concentrated orange juice market towards more profitable fresh fruit and fresh juice markets, with a strong emphasis on exports.

"Although it officially ended in June 1999, it continues to benefit the citrus industry by providing some of the tools required to become more competitive against imports and boost its export potential."

The inquiry's terms of reference are attached.

Citrus Growing and Processing Industry

PRODUCTIVITY COMMISSION ACT 1998

I, Peter Costello, under Parts 2 and 3 of the Productivity Commission Act 1998, hereby :

1 refer for inquiry and report the competitive situation and outlook for the citrus growing and processing industry, taking into account :

(a) the financial conditions, including profitability, of the industry; (b) trends in relation to demand and supply factors, including imports such as frozen concentrate orange juice; (c) the competitiveness of the industry, including efforts taken by the industry to enhance competitiveness; and (d) the impact and effectiveness of existing and recent Commonwealth/State policies and programs.

2 specify that :

(a) the Commission report on whether the circumstances are such that measures are necessary to enhance the competitiveness of the industry: and (b) if so, what measures would be necessary and appropriate, including whether a formal safeguards investigation is warranted.

3 the Commission is to report within 6 months of receipt of this reference and is to hold hearings for the purposes of the inquiry.

4 the government will consider the Commission’s recommendations and the Government’s response will be announced after the receipt of the Commission’s reports.

PETER COSTELLO

Minister's office: Yvonne Best (02) 6277 7520 or 0418 415 772

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Last updated 26 September 2001

URL: http://www.affa.gov.au/ministers/truss/releases/00/01264wt.html Commonwealth of Australia 2001