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Kerin criticises WA reaction to growers' pressure

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DPIE91/84K 27 March 1990


John Kerin, Minister for Primary Industries & Energy, said today that the decision by the Western Australian Premier, Carmen Lawrence, to introduce some form of Guaranteed Minimum Price (GMP) for wheat does not address the real, longer term interests of the wheat farmers of Western Australia.

"The WA decision - even though initially it may be popular - is wrong, because it will distort market signals to growers and offer a 'false dawn' for many WA wheatgrowers that they and the State's taxpayers may regret," Mr Kerin said.

"The most effective means of helping farmers in real difficulty is targetted assistance - not a subsidy to a whole industry in which many farmers are in a healthy financial position."

"My clear message to all Australian wheatgrowers is threefold:

* The international wheat market is a high risk export market. The Australian Government recognises this and already supplies significant support to the wheat industry through export income guarantees of around one billion dollars and underwriting of Australian Wheat Board borrowings to a similar extent.

* The world price for wheat fluctuates each year - and is likely to become more volatile in the future. Wheat growers must accept the gains and losses from this reality, not expect to be protected from it.

* The pressure for a GMP has ignored a central fact: there is a 50% probability that the world price for wheat will be $150/tonne or greater for the coming season. Over recent days this prospect appears to be firming. Farmers should make their planting decisions

in the light of this and technical information available from the Australian Wheat Board and other relevant authorities."

The WA decision comes in response to significant pressure from a number of WA's wheat growers. Despite similar pressure, the Federal Government decided against instituting a GMP for the reasons detailed in Mr Kerin's statement yesterday.

"That decision will not be altered," Mr Kerin said today.

"Details of the WA scheme, including the price level and the administrative arrangements, have yet to be finalised. However I am concerned that any GMP will unduly raise expectations for those growers who are in difficult financial circumstances.

"I will be examining the legal, constitutional and technical issues associated with the WA proposal. The Minister for Trade Negotiations, Dr Blewett, is also examining the implications for our position in international trade negotiations.

"The Rural Adjustment Scheme (RAS) is now in place to assist individual farmers in difficulty. Next month I will bring forward a proposal to increase RAS funding in response to the current rural downturn.

"RAS Part B carry-on finance, funded on a dollar-for-dollar basis with the States, may be the most suitable vehicle to assist wheat farmers," Mr Kerin said.

"In addition, the Government has still to make a judgement on the question of compensation to the wheat industry for the Iraq sanctions. This matter is still under consideration."

For more information contact: Simon Grose 06 2777 520