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Address by the Minister for Primary Industry, the Hon John Kerin to the National Agricultural outlook conference, Canberra



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EMBARGO: 5.45 PM 30 JAN 85

A D D R E S S BY THE M I N I S T E R F O R P R I M A R Y I N D U S T R Y / THE HON J O H N K E R I N T O THE N A T I O N A L A G R I C U L T U R A L O U T L O O K C O N F E R E N C E C A N B E R R A / W E D N E S D A Y 30 J A N U A R Y 1985

MR C H A I R M A N , L A D I E S A N D G E N T L E M E N ,

IT IS MY P R I V I L E G E T O BE ABLE, ONCE MORE, T O O PE N T H E B U R E A U OF A G R I C U L T U R A L E C O N O M I C S ' O U T L O O K C O N F E R E N C E A N D T O H A V E T H E O P P O R T U N I T Y T O SAY A FEW W O R D S A B O U T A U S T R A L I A ' S A G R I C U L T U R A L , P A S T O R A L , F I S H I N G AND F O R E S T I N D U S T R I E S .

O U T L O O K IS NOW E S T A B L I S H E D AS A U S T R A L I A ' S S U P R E M E P R I M A R Y I N D U S T R Y C O N F E R E N C E - AN A N N U A L S U M MIT.

I A M C O N S T A N T L Y T O L D IT'S NOT A G OO D Y E A R T O BE M I N I S T E R FOR P R I M A R Y IND USTR Y. AT * ANY T I M E IN P O L I T I C A L L I F E M U C H IS. H A P P E N I N G . ’ IN T E R M S OF THE P R E S E N T A N D T H E F U T U R E FOR A U S T R A L I A ' S P R I M A R Y P R O D U C E R S T H E R E ARE , INDEED, M A N Y P R O B L E M S

A N D I S S U E S B E F O R E ME AND M A N Y T H E M E S R U N N I N G T H R O U G H MY M IN D.

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T H E R E C E N T E L E C T I O N C A M P A I G N A N D T H E P L I G H T OF THE P R O D U C E R S A N D T H E I R F A M I L I E S IN THE I N D U S T R I E S M O S T IN T R O U B L E , H E I G H T E N E D M A N Y OF MY P E R C E P T I O N S .

THE W O R D " C R I S I S " IS B E I N G B A N D I E D ABO U T . " C R I S I S " IS A W O R D W H I C H M E A N S A T U R N I N G POI N T , OR IN M OR E C O M M O N U S A GE, A M O M E N T OF D A N G E R OR S U S P E N S E IN P O L I T I C S .

IF ONE C A S T S O N E ' S M I N D B A C K T O THE P R O B L E M S OF V A R I O U S C O M M O D I T I E S O V E R THE P A S T T H R E E D E C A D E S ONE CAN R E C A L L T H E SAME P H E N O M E N A OF S P E C I F I C I N D U S T R I E S IN T R O U B L E , OF D R O U G H T , F L O O D A N D FIRE, OF I N D U S T R I E S W A X I N G A N D W A N I N G A S M U C H A S ONE CAN ANY P A R T I C U L A R T U R N I N G P O I N T OR M O M E N T OF S U S P E N S E .

THE L A N G U A G E , T H E C H A R G E S , T H E C O U N T E R C H A R G E S , T H E E M O T I V E S T A T E M E N T S OF FOR E X A M P L E , T H E 1970-71 W O O L " C R I S I S " , ARE W I T H U S NOW FOR T H E " C R I S E S " IN THE SUG AR, D A I R Y A N D G R A P E I N D U S T R I E S BUT, L IK E W O O L , I HAVE NO D O U B T T H E Y WI L L S U R V I V E A N D P R O S P E R AGA IN.

IT WIL L BE T H E E F F E C T OF C H A N G E S ON P E O P L E T H A T W I L L BE T H E M O S T MAR KED. S U R V I V A L OF AN I N D U S T R Y A L W A Y S M E A N S M OR E P R O D U C T I V I T Y A N D L E S S P E O P L E .

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C H A N G E IS A L W A Y S UPON US, YET, IN A G R I C U L T U R E T H O S E M A T T E R S T H A T ARE C O N S T A N T ARE J U S T AS I M P O R T A N T T O R E C O G N I S E A S " C R I S E S " .

THE E X T E N T TO W H I C H A F E D E R A L G O V E R N M E N T C A N I N I T I A T E , D I R E C T OR D I C T A T E C H A N G E IN A P R I V A T E E N T E R P R I S E E C O N O M Y , IN A S E C T O R E X P O S E D 70 P E R C E N T T O I N T E R N A T I O N A L M A R K E T S , IS S E V E R E L Y L I M I T E D .

WE CAN A S S I S T C H A N G E , A M E L I O R A T E THE IMP A C T OF F O R C E S B E Y O N D T H E I N D I V I D U A L ' S P O W E R T O C O N T R O L , B U T WE HAV E T O G O V E R N W I S E L Y IN THE I N T E R E S T S OF ALL IN O U R SOC IETY , NOT J U S T ONE S E C T O R .

A N D OF C O U R S E , W H E R E P R I M A R Y P R O D U C E R S ARE AS P O L I T I C A L L Y C O N S E R V A T I V E AS T H E Y ARE, C H A N G E WILL BE R E S I S T E D E V E N W H E N G O V E R N M E N T S A N D A D M I N I S T R A T O R S ARE A C T I N G IN AN I N D U S T R Y ' S L O N G E R T E R M I N T E R E S T S , IF THE S T A T U S Q U O IS UPSET.

THE A S P E C T S OF P R I M A R Y P R O D U C T I O N T H A T ARE C O N S T A N T A R E OUR M O S T V A R I A B L E C L I M A T E , F L U C T U A T I N G I N T E R N A T I O N A L M A R K E T S A N D A G R I C U L T U R A L S U B S I D I S A T I O N BY THE I N D U S T R I A L G I A N T S , L O U S Y - I N D U S T R I A L R E L A T I O N S , C O M P E T I N G L E G I T I M A T E C O M M U N I T Y I N T E R E S T S

AND, T H E R E B Y , G O V E R N M E N T A C T I O N S THA T DO NOT N E C E S S A R I L Y OR E X C L U S I V E L Y M EE T A L L T H E W I S H E S OF OUR R U R A L S E C T O R .

SIN CE B E C O M I N G M I N I S T E R I HAV E BEEN S T R U C K BY THE F A C T T H A T M A N Y OF THE L E T T E R S I SE N D OUT, S T A T E M E N T S I M A K E A N D A R G U M E N T S I USE - W O U L D N ' T HAVE MADE M U C H S E N S E T O ME W HE N I W A S A F A R M E R .

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THE R E A S O N S F O R T H I S ARE T H A T A C A B I N E T M I N I S T E R M U S T SEE I S S U E S F R O M A W I D E R P E R S P E C T I V E , E C O N O M I C , P O L I T I C A L A N D S O C I A L R E A L I T Y N EV ER M A K E S M U C H S E N S E TO A S P E C I F I C I N T E R E S T G R O U P A N D I O F T E N HAV E T O T A L K S H O R T H A N D T O C O N D E N S E D E T A I L E D R E A S O N I N G .

FOR E X A M P L E , T H E M O S T I N S I S T E N T D E M A N D F R O M F A R M E R S , G R A Z I E R S A N D F I S H E R M E N IS FOR T H E G O V E R N M E N T T O S U B S I D I S E INPUTS. T H E R E A S O N S WHY G O V E R N M E N T S C A N N O T A L W A Y S ME E T T H E S E D E M A N D S , A P A R T FOR B U D G E T A R Y C O N S I D E R A T I O N S ARE:

. S U B S I D I E S E N C O U R A G E USE AND W A S T E .

. L E A D T O AN I N A P P R O P R I A T E MIX OF I N P U T S . M A I N T A I N O V E R P R O D U C T I O N

. R E D U C E I N C E N T I V E T O M I N I M I S E C O S T S

. R E P R E S E N T AN A R T I F I C I A L I M P R O V E M E N T IN ONE I N D U S T R Y ' S . C O M P E T I T I V E P O S I T I O N AT THE E X P E N S E OF O T H E R I N D U S T R I E S

. T E N D T O GET C A P I T A L I S E D INTO L A N D V A L U E S A N D F I X E D A S S E T S

. CAN L E A D T O AN I N A P P R O P R I A T E I N D U S T R Y S T R U C T U R E

R E Q U I R I N G E X T E N S I O N OF S U B S I D I E S A N D I M P O S S I B L E E V E R TO W I N D B A C K . CAN L E A D T O AN I N A P P R O P R I A T E L E V E L OF R E S E A R C H A C T I V I T I E S A N D T E C H N O L O G I C A L D E V E L O P M E N T '

' . CAN H AV E U N F O R E S E E N C O S T S ‘

. . ARE R E G R E S S I V E I N A S M U C H AS T H E Y B E N E F I T T H E L A R G E S T '

P R O D U C E R S

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. ARE O F T E N I N A P P R O P R I A T E FOR B O T H S H O R T A N D L O N G T E R M P R O B L E M S W H I C H MAY BE S O L V E D IN O T H E R W A Y S . A N D F I N A L L Y , IF FOR E X A M P L E A L L T A X E S W E R E R E M O V E D F R O M F UE L P R I C E S , T H I S W O U L D HAVE T O A P P L Y T O A L L U S E R S A N D

G O V E R N M E N T S W O U L D H AV E T O R A I S E R E V E N U E BY O T H E R M E A NS.

W H I L E E C O N O M I S T S IN THE A U D I E N C E MAY A G R E E W I T H W H A T I H A V E S A I D I'M S U R E FEW OF THE F A R M E R S I'VE MET L A T E L Y WILL.

W H E R E A F E D E R A L G O V E R N M E N T CAN ACT T O H EL P, T H E H A W K E L A B O R G O V E R N M E N T IS. H O W E V E R , IN A R E A S SUCH AS T H E M A N A G E M E N T OF T H E E C O N O M Y , T H E T I M E T O GET IT RIG HT, T H E T I M E FOR T H E A C C O R D T O GIVE B E N E F I C I A L R E S U L T S , THE TI M E FOR N E C E S S A R Y N E G O T I A T I O N W I T H T H E S T A T E S A N D V A R I O U S I N T E R E S T S GO B E Y O N D T H E U S U A L D U R A T I O N OF

AN A U S T R A L I A N P A R L I A M E N T .

A N D E X T E R N A L F A C T O R S SUCH A S THE U.S., E.C . OR J A P A N E S E E C O N O M I C P O L I C Y C A N D R A M A T I C A L L Y A F F E C T THE P R O G R E S S B E I N G MADE.

IN T H E B U B B L I N G O LL A P OO R I DA OF A U S T R A L I A N P O L I T I C S , T H E E V I D E N C E F O R C R I S I S IS E A S Y T O FIND. Y E T I N F O R M A T I O N R E L E A S E D BY T H E 3 . A .E. Y E S T E R D A Y A N D I N F O R M A T I O N R E L E A S E D T O D A Y S H O W S T H A T ' P R E V I O U S E S T I M A T E S OF THE S T A T E OF T H E R U R A L S E C T O R H A V E C H A N G E D

S L I G H T L Y FOR THE BETTER.

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THE B . A . E . IS AN I N D E P E N D E N T O R G A N I S A T I O N . IT IS E S S E N T I A L IT S T A Y S T H A T W A Y NO M A T T E R H O W MUCH IT E M B A R R A S S E S M I N I S T E R S OR O T H ERS. IN D A Y S OF OLD, B E A R E R S OF B A D T I D I N G S W E R E P U T T O DEATH.

THE B . A . E . E S T I M A T E S I H A D T O L I V E W I T H ’T H R O U G H M O S T OF 1984 A N D THE R E C E N T E L E C T I O N C A M P A I G N WER E T H A T THE R E A L NET V A L U E OF R U R A L P R O D U C T I O N W O U L D BE 29 PER C EN T L O W E R IN 1 9 8 4 - 8 5 T H A N THE R E C O R D Y E A R OF 1983-84 AND T H A T F A R M C O S T S W O U L D BE UP BY 7.6 P E R

C E N T . A N D OF C O U R S E , IT W A S ALL MY FAULT.

A F T E R , T H E E L E C T I O N THE B.A .E. I N D E P E N D E N T L Y F O R E C A S T A 24 P E R CENT D E C L I N E IN V A L U E OF P R O D U C T I O N A N D F A R M C O S T S UP B Y O N L Y 4.6 P E R CENT. T H E I R L A T E S T I N D E P E N D E N T E S T I M A T E IS A 17 P E R C E N T D E C L I N E IN THE REAL NET V A L U E OF R U R A L P R O D U C T I O N A N D F A R M C O S T S UP BY 5 P E R CENT.

DR S T O E C K E L S T I L L W E A R S A B U L L E T - P R O O F J A C K E T W H E N HE G I V E S ME T I D I N G S OF T H I S NATURE - BUT HE IS I M P R O V I N G .

H O W E V E R , M O R E S E R I O U S L Y , WE N EE D T O U N D E R S T A N D WHY A V E R Y S M A L L C H A N G E IN E I T H E R P R I C E S , V O L U M E OF P R O D U C T I O N OR C O S T S G I V E S S UC H A L A R G E E F F E C T ON THE REAL NET V A L U E OF R U R A L P R O D U C T I O N .

THE A N S W E R IS T HA T M A R G I N S IN P R I M A R Y P R O D U C T I O N A R E V E R Y S M A L L J U S T AS R E T U R N S T O C A P I T A L ARE V E R Y S MA LL DUE T O T H E U N R E A L P R I C E OF LAND.

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W H A T H A S C H A N G E D IN T H E L A S T FEW W E E K S IS T H A T WE NOW K N O W THE W H E A T C R O P W IL L BE THE H I G H E S T ON R E C O R D IN T E R M S OF Q U A L I T Y A N D • T O N N A G E , THE B A R L E Y C RO P W IL L BE A R E C O R D , C O T T O N A N D S U N F L O W E R

P R O D U C T I O N C O U L D BE A R E C O R D A N D WE A W A I T R A I N T O SEE H O W L A R G E

T H E S O R G H U M C RO P W IL L BE.

THE L A T E S T E S T I M A T E S S H O W O V E R A L L V O L U M E OF R U R A L P R O D U C T I O N W I L L BE D OW N BY ONLY 2 P E R CENT, T H E G R O S S V A L U E OF P R O D U C T WI L L BE D O W N BY O NL Y ONE PER C EN T A N D T H E INDEX OF P R I C E S W I L L BE UP BY

O NL Y 2 P E R CENT, ALL ON THE R E C O R D 1 9 8 3 - 8 4 YEAR.

W H A T HAS T R I G G E R E D T H E D RO P OF 17 PER C E N T IN R E A L NET V A L U E OF R U R A L P R O D U C T I O N ARE THE WEAK, IF NOT D I S A S T R O U S , I N T E R N A T I O N A L C O M M O D I T Y P R I C E S A N D THE 5 P E R CE N T L I F T IN F A R M COS T S . .

A U S T R A L I A AND NEW Z E A L A N D ARE U N I Q U E IN H A V I N G S UC H A HIGH P O R T I O N OF A G R I C U L T U R A L P R O D U C T I O N E X P O R T E D .

THE E X P O R T S OF SOME OF OUR C O M P E T I T O R S R E P R E S E N T A R E S I D U A L OF T H E I R V E R Y L A R G E D O M E S T I C P R O D U C T I O N W H I C H IN T O T A L D W A R F S OUR O V E R A L L P R O D U C T I O N .

W H A T CAN BE D ON E A B O U T F A R M C O S T S A N D I N T E R N A T I O N A L C O M M O D I T Y P R I C E S ?

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THE B E S T T H I N G A F E D E R A L G O V E R N M E N T CAN DO FOR T H E F A R M S E C T O R IS T O GET T H E E C O N O M Y RIGHT. A F A R M I N F L A T I O N R A T E OF 5 P E R C E N T IS B E T T E R T H A N THE D O U B L I N G OF F A R M C O S T S B E W E E N 1977 A N D 1982, A N D THE F A R M I N F L A T I O N RATE OF 12 PER C EN T IN 198 2-83 .

THE P R I C E S A N D I N C O M E S A C C O R D IS B E T T E R T H A N T H E W AG E E X P L O S I O N OF 1981 A N D E C O N O M I C G R O W T H OF 3-5 P E R C E N T IS B E T T E R T H A N THE N E G A T I V E G R O W T H R A T E S OF THE E A R L Y E I G H T I E S .

THE G O V E R N M E N T HAS T O C O N T I N U E T O B EA R D O W N ON I N F L A T I O N A N D T O S T I M U L A T E G R O W T H AT THE SAME T I M E AS H O L D I N G D O W N T H E B U D G E T D E F I C I T . IT IS FOR T H I S R E A S O N I C A N N O T M E E T T H E D E M A N D S BY S P E C I F I C P R I M A R Y I N D U S T R Y G R O U P S FOR H U N D R E D S OF M I L L I O N S OF D O L L A R S IN A S S I S T A N C E .

T H E P R I M E M I N I S T E R HAS C A L L E D A F AR M C O S T S C O N F E R E N C E FOR E A R L Y ' M A R C H B E T W E E N THE N.F.F. A N D THE F I S H I N G I N D U S T R Y A N D KEY M I N I S T E R S T O I D E N T I F Y T H E C A P A C I T Y OF G O V E R N M E N T A N D I N D U S T R Y T O M I N I M I S E COSTS.

OUR E F F O R T S ON THE I N T E R N A T I O N A L F RO NT IN T E R M S OF T H E R E M O V A L OF R E S T R I C T I O N S ON A C C E S S T O M A R K E T S AND THE L I M I T I N G OF C O M M O D I T Y A N D E X P O R T S U B S I D I S A T I O N HA V E B E E N U N R E L E N T I N G .

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P R I M E M I N I S T E R N A K A S O N E OF J A P A N WAS R E C E N T L Y HER E, MR R O C A R D ,

T H E F R E N C H M I N I S T E R FOR A G R I C U L T U R E , W A S H E R E T H I S W E E K A N D B O B HAW KE A N D I FLY T O B R U S S E L S T H I S S A T U R D A Y . HE G O E S ON TO THE U.S. A N D I G O ON T O L O N D O N T O S PE AK WITH MR J O P L I N G , T H E B R I T I S H M I N I S T E R FOR A G R I C U L T U R E .

A S O V I E T V I C E - M I N I S T E R OF A G R I C U L T U R E W I L L BE H E R E IN T W O WEEKS' T IM E A N D I H OP E TO BE G O I N G TO THE U.S. IN M A R C H P R I O R TO T H E DEB A T E IN C O N G R E S S A N D T H E U.S. SEN A T E ON T H E F A R M B I L L S .

IN ALL OF T H E S E I N T E R N A T I O N A L C O N T A C T S T H E P O L I C I E S OF A G R I C U L T U R A L S U B S I D I S A T I O N A N D P R O T E C T I O N , T H E S U B S E Q U E N T P R O B L E M S OF L A R G E S T O C K P I L E S OF A G R I C U L T U R A L C O M M O D I T I E S A N D D E S T R U C T I O N OF M A R K E T S A N D T H E D E C I M A T I O N OF D E V E L O P I N G

C O U N T R I E S , P L U S THE O V E R W H E L M I N G P R O B L E M S OF THE G E N E R A L I N T E R N A T I O N A L T R A D I N G E N V I R O N M E N T HAV E B E E N A N D W I L L BE ON TOP OF THE A G E NDA.

T R A D E M I N I S T E R D A W K I N S IS A C U T E L Y A W A R E OF T H E P R O B L E M S WE F A C E IN A G R I C U L T U R A L T R A D E D E S P I T E THE P E R V E R S I T Y T H A T IN 1 9 8 4 - 8 5 OUR A G R I C U L T U R A L T R A D E W I L L BE A REC O R D AT S OM E $ 1 0 . 1 3 B I L L I O N .

THE P R O F I T A B I L I T Y OF D A I R Y P R O DUCT S, SUG A R , G R A I N S , BE E F A N D H O R T I C U L T U R A L P R O D U C T S ARE ALL D I R E C T L Y A F F E C T E D BY T H E E C O N O M I C L U N A C Y OF THE E . C . ' S P O L I C I E S .

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T HI S A U S T R A L I A N G O V E R N M E N T IS NOT P R E P A R E D T O SIT BY A N D SEE I N D U S T R I E S D E S T R O Y E D THE M O M E N T U N S O U N D P O L I C I E S W R E C K I N T E R N A T I O N A L M A R K E T S - BUT T O DO S O M E T H I N G IS NOT A S E A S Y AS IT IS T O B L E A T A B O U T IT.

IT IS I N S T R U C T I V E T O R E A L I S E T H A T E.C. E X P O R T S U B S I D I E S ARE NOW R U N N I N G AT $5 . 6 B I L L I O N PER ANNUM. WE DO N O T H AV E T H E P O P U L A T I O N OR T H E T A X B A S E T O G E T IN THE GAME OF C O M P E T I T I V E S U B S I D I S A T I O N OF P R O D U C T I O N OR E X P O R T S . IF WE DID H A V E WE W O U L D O N L Y A D D TO

B U R G E O N I N G C O M M O D I T Y S T O C K S A N D D E S T R O Y T H E V A L I D A R G U M E N T S WE USE IN I N T E R N A T I O N A L FORA.

F E D E R A L G O V E R N M E N T S CAN DO A LOT C O - O P E R A T I V E L Y W I T H T H E F A R M A N D P R I V A T E S E C T O R S A B O U T RES E A R C H , F I N A N C I N G , M A R K E T I N G A N D B A S I C R E S O U R C E S . '

F U N D I N G C O N S I D E R A T I O N S ASIDE, T H E S E I S S U E S A R E A N D W I L L BE H IG H ON THE G O V E R N M E N T ' S AGENDA. TIM E DOES NOT A L L O W ME T O S P E A K ON

R E F O R M OF S T A T U T O R Y M A R K E T I N G A U T H O R I T I E S , T H E E X P O R T I N S P E C T I O N S E R VICE , THE N E E D FOR FAR B E T T E R M A R K E T I N G OF OUR P R O D U C T S A T ALL LEVELS, T H E R E - O R G A N I S A T I O N A N D F U N D I N G OF R E S E A R C H , R E V A M P E D

RURAL A D J U S T M E N T M E C H A N I S M S A N D D R O U G H T A S S I S T A N C E , SO I L C O N S E R V A T I O N A N D F I S H E R I E S M A N A G E M E N T .

BUT WE A R E ON T H E J O B AND T H I S WEEK I HAV E C O N V E N E D M A J O R C O N F E R E N C E S OF T H E S T A T U T O R Y M A R K E T I N G A U T H O R I T I E S AND, S E P A R A T E L Y , OF F I S H I N G I N D USTR Y LEA DERS .

I C O N C L U D E B Y R E M A R K I N G THA T W H E R E A S T H E P H Y S I C A L E N V I R O N M E N T HAS BEEN G E N E R A L L Y K I N D TO US T H I S YEAR A N D S H E E P A N D C A T T L E N U M B E R S HAVE I N C R E A S E D , T H E M A R K E T AND E C O N O M I C E N V I R O N M E N T IS NOT SO G E N E ROU S. T H I S IS W HE RE WE WILL BE D I R E C T I N G OUR A T T E N T I O N IN THE Y E A R A H E A D .

I C O N G R A T U L A T E T H E B.A.E. FOR ONCE A G A I N H A V I N G A R R A N G E D A S U P E R B C O N F E R E N C E A N D D E C L A R E O U T L O O K '85 OPEN.