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Opening address by the chairman the RT Hon Ian Sinclair, at the 107th meeting of the Australian Agricultural Council, Perth



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AUSTRALIAN AGRICULTURAL COUNCIL P ress R elease

OPENING ADDRESS by the Chairman

the Rt Hon. Ian Sinclair, at the 107th Meeting

of the Australian Agricultural Council

PERTH, Monday 6 August 1979

Gentlemen,

S ' I am pleased to welcome you to Perth for this 107th

Meeting of the Australian Agricultural Council. This year is a

significant one for Western Australia which is celebrating

150 years of growth and achievement.

The progressive rural sector of the State has so far

played a major role in these celebrations. The highlight for

rural people was the Agro 179 Conference held here in Perth

last March.

2 .

That Conference, concerned with "Agricultural

Marketing Policies in the 1980's", made an important

contribution towards Understanding and, hopefully, solving many

of the problems involved in successfully marketing Australia's

rural output in the decade almost upon us. I trust that this

meeting of the Australian Agricultural Council will carry

forward the good work of Agro '79.

On behalf of all visiting Ministers I would like to

thank the Western Australian Minister for Agriculture,

Mr Dick Old, for inviting Council to meet in Perth and for the

warm hospitality given us and our officials.

I welcome Mr Duncan McIntyre, the New Zealand Minister

for Agriculture and Fisheries, to this Meeting and again thank

him for his generosity in inviting us to hold our previous

Council meeting in Christchurch. That meeting further

demonstrated the advantages of high level co-operation and

understanding between our two countries in agricultural matters.

A warm welcome is also extended to Mr Roy Evara, the

Papua New Guinea Minister for Agriculture. His attendance at

this and previous Meetings emphasises the importance of the

continuing close association between Papua New Guinea and

Australia, particularly in the formulation of rural policy, an

area of major significance in both countries.

3.

On behalf of us all I also welcome Mr Peter Core to

his first Council Meeting. Mr Core has replaced Mr Chris Power

as Council Secretary and we hope his stay with us will be

interesting and rewarding.

Last time we met it was evident that the rural

recovery had strengthened. The combination of a magnificant

season and much improved commodity prices had substantially

boosted farm incomes compared with the preceding few years.

The situation since then has been generally one of continuing

strength in Agriculture with the Bureau of Agricultural

Economics estimating average farm income for 1978-79 at $27,520

compared with $12,586 for 1977-78.

Recently the Bureau released its first estimates of

farm incomes and rural exports for 1979-80. Average farm

income is predicted to decline slightly to $25,800. Subject to

the rate of inflation for 1979-80, real farm income is

projected to fall by up to 13 per cent. Farm returns and

incomes will, however, remain relatively high allowing many

producers to build upon the strong recovery experienced last

financial year.

4.

It is gratifying to see a substantial rise in Income

Equalisation Deposits - an indication of increased on-farm

liquidity and a growing willingness by farmers to use I.E.D.'s

to help offset future slumps in earnings. On 30 June last,

I.E.D.'s held by the Commonwealth amounted to $79.4 million

more than 18 per cent above the level a year earlier. Deposits

are expected to have risen still further by the close of the

I.E.D. year on 31 August.

We, as Ministers concerned with primary production,

must remember that BAE income estimates are an average for the

rural sector as a whole and that, as in past seasons, over half

Australia's farms will earn incomes below the average. In

addition the boost in incomes is mainly confined to the grain

and livestock industries. There is no room for complacency

despite the prediction of another good season. As we all

realise reversals can quickly occur in both markets and seasons

In 1979-80 rural exports should again make a

substantial and, indeed, most valuable contribution to

Australia's foreign exchange earnings. The Bureau of

Agricultural Economics estimates rural export earnings at

nearly $6,500 million, a rise of more than $600 million over

1978-79.

5.

It is early days yet as far as 1979-80 is concerned

and the BAE will be re-assessing its estimates at three monthly

intervals. Seasonal conditions and the market outlook will

determine the extent of variations in estimates.

Gentlemen, I now turn to discuss specific industry

matters.

DAIRY INDUSTRY

After considering the economic outlook for the dairy

industry in 1979/80 the Commonwealth has decided to underwrite

the total production of all prescribed dairy products - butter,

skim milk powder, casein, cheese and wholemilk powder - at a

level equivalent to $1.75 per kg butter fat at the farm gate for

the 1979/80 season.

The system of selective underwriting introduced on

. 1 July 1978 has, however, been discontinued as the Government

considers that changes within the industry obviate the need to

impose underwriting quotas for the 1979/80 season. An expected

decline in the availability of milk for manufacturing purposes

and an increased capacity by manufacturers to diversify into

more profitable product lines, were factors which influenced

the Government's decision.

6

With respect to international trade, the major

developments have occurred within the recently concluded

GATT/Multilateral Trade Negotiations.

As a result of the bilateral negotiations with the

EEC, Australia will now have guaranteed annual access to that

market for 2,500 tonnes of Cheddar and 500 tonnes of cheese for

processing. The terms and conditions negotiated for this trade

should provide for satisfactory returns to the Australian

industry.

In return we have offered certain concessions to the

EEC for quantities of cheese imported into Australia. On some

soft surface-ripened and goats' milk cheeses and certain other

fancy cheeses, such as Stilton, which do not receive any export

subsidies, we will allow duty free access. For Edam and Gouda

we will bind the current duty rate within a tariff quota of

1,000 tonnes annually, and for other varieties, mainly hard

Italian cheeses, the duty rate will be bound at current levels

within an annual tariff quota of 2,500 tonnes.

The effect of these concessions will be to give the

EEC access to the Australian market for certain specified

cheeses at around current levels of trade on terms no less

favourable than currently applying.

7.

Negotiations with the USA under the GATT/MTN have also

produced expanded access to that market for certain dairy

products. A quota of 4,000 tonnes per annum has been obtained

for cheese and 2,000 tonnes per annum for chocolate crumb.

The GATT Multilateral Trade Negotiations Dairy

Sub-Group has finalised the text of a new International Dairy

Arrangement. When formally established the new agreement will

be administered by an International Dairy Products Council and

is expected to take effect on 1 January 1980.

The new agreement will implement minimum export prices

for milk powders, butter, butter fat and cheese and will be more

comprehensive and have broader product coverage than the

existing minimum export price arrangement for dairy products

operating under GATT and OECD. The consultative procedures

associated with the new agreement, together with the provision

for a comprehensive system for exchange of information on

production and marketing of dairy products, should contribute

also to a more stable international marketing environment.

Before leaving the dairy industry I would like to

mention the resignation of the Chairman of the Australian Dairy

Corporation, Mr Tony Webster, from 31 December, next. He has

presided over the industry through a period of significant

adjustment and his leadership and guidance have been of great

value throughout this period. I am sure members of Council

will join me in wishing him well for the future.

8 .

Wheat

It is pleasing to see the wheat industry in such very

good shape. The season has indeed been a most remarkable one.

Unprecedented yields per hectare (20% above the

previous record) led to a record crop of about 18.4 m. tonnes,

approximately one quarter greater than the 1968-69 bumper

harvest. With the increase in the first advance from $66 to

$75 per tonne, the immediate cash flow to growers was a record

high.

The unexpectedly high volume of funds required for the

first advance necessitated, in the interests of the national

economy, some departure from the Australian Wheat Board's

traditional method of financing through the use of Reserve Bank

Rural Credit funds. At the request of the Government the Wheat

Board obtained some of its first advance funds from commercial

borrowings. The borrowing arrangement protected the first

advance and was at no additional cost to the industry.

The Board's selling performance this season has been

most commendable - all but a relatively minor part of the

bumper crop now being sold or committed. One difficulty for

the Wheat Board has been to meet its heavy shipping program

especially in the face of stoppages from industrial disputes

affecting particularly the Grain Elevators Board in N.S.W. but

also prejudicing waterfront grain loading in Western Australia

and other States.

9.

Another problem resulting from the bountiful season is

receival and storage. The problem could be compounded if the

coming crop is average or better, Since the carryover will be

close to record levels. This meeting of Council is to receive

the report of an official working party set up to examine the

options available to meet likely storage and handling problems

in 1979-80.

The season is an outstanding one, also, in that

overseas prices have unexpectedly soared beyond previous record

levels and indications are that they will remain high for the

remainder of the year. If this proves correct, the return to

growers from the pool could well be a record.

It is disappointing that the I.W.A. negotiations in

February were fruitless. A considerable effort was made .

towards a concensus but countries other than Australia were not

prepared to comply with the regime proposed. It is pleasing to

see meetings of exporters still taking place aimed at real

co-operation among them. This development will provide some

future stability in the international market.

10.

Clearly the most significant matter for the future is

the conclusion of the substantive negotiations with the

industry on the marketing and pricing arrangements fcb apply for

the next five seasons. These have been on the basis of

proposals agreed to at our Christchurch Meeting and as modified

through consultations between officials since then. Subject to

your agreeing to introduce complementary legislation future

security for the industry will be provided by the guaranteed

minimum delivery price equivalent to 95% of the average of the

net returns of the subject pool and the two previous pools. At

the same time that price will ensure that growers receive a

substantial part of the final return on delivery of their

wheat. Some aspects of theNnew wheat arrangements have yet to

be clarified. These are matters of consideration later in this

meeting.

Looking to the coming crop, although many areas have

received sub-normal rainfall seasonal conditions have generally

been conducive to plantings. Early indications are that the

area sown will be moderately larger than last season's. Given

the favourable elements I have mentioned above but subject to

the passage of the complementary marketing proposals for wheat

wheatgrowers can go forward into 1979/80 with great confidence.

11.

Apples and Pears

The 1979 apple and pear season has been a mixed one

for the industry. Apple production at 18m boxes was some 3.4m

boxes above the 1978 level whilst the pear output remained much

the same at 7.5m boxes. There have been reports that the

outturn in Europe of certain varieties of Australian apples has

been comparatively poor. In contrast, the pear export trade

continues to reflect the popularity and quality of the

Australian product particularly on what has been a generally

under-supplied export market.

Action by the EEC in imposing voluntary restraints on

apple imports earlier this season further demonstrates the

difficulties the industry faces in exporting to Europe. Action

by the Government's representatives in Brussels in persuading

the EEC Commission to raise the voluntary restraint level

accorded Australia from 28,000 tonnes to 31,000 tonnes

certainly eased the situation but there is no assurance that

similar action by the Commission will not occur in the future.

, It is noted that after nine years of Stabilisation and

five years of supplementary assistance involving a total

payment of $23m of public funds, the apple industry still

directs more than 70% of its exports to Europe. This ' ' %

highlights the need for all connected with the industry to give

greater emphasis to developing alternative, more remunerative

outlets.

12.

Dried Vine Fruits

The buoyant world market conditions for sultanas,

mainly due to the failure of the 1978 Californian crop, show

every sign of continuing.for some time.

The 1979 Conference of Sultana (Raisin) Producing

Countries, recently held in England, unanimously concluded

that, in the light of depleted world stocks and the anticipated

low 1979 Northern Hemisphere harvest, existing high prices were

expected to firm as the Northern season progressed.

However, while returns to the Australian industry for

this year's sultana crop should be at a record, they will be

lower than anticipated due to a significant cut in production

following heavy rains at harvest.

Because of existing market conditions for dried vine

fruit it will not be necessary this season to use the statutory

scheme for equalising market returns. The scheme came into

force at the beginning of the year.

High export prices received for 1978 sultanas have

ensured that there will be a pay-in to the stabilisation fund

by sultana growers in respect of that season, which is the

first of three seasons to be covered by the stabilisation

scheme. The operation of this scheme is to be reviewed at the

completion of the 1979 season, to determine long term action.

13.

Wine and Brandy

The most recent industry estimates place this year's

wine grape surplus at around 30,000 tonnes which is

considerably smaller than the 1978 surplus. The total

crushings for 1979, estimated at around 435,000 tonnes,

represent a slight increase on the 1978 level. Problems of the

winegrape growing and wine and brandy producing industries are

currently being reviewed by the Government in the context of

reports from the Industries Assistance Commission.

A Working Party comprising representatives of the wine

and grape growing industries was convened early in 1979 by my

Department to consider the future role and structure of the

Australian Wine Board. The Working Party met on a number of

occasions and has produced a report which I have referred to

industry organisations and individual levy payers for comment.

Royal Assent has recently been given to the Wine

Grapes Levy Bill and associated legislation which extends

liability for levy, originally imposed under the now repealed

Wine Grapes Charges Act 1929, to include single strength grape

juice committed to the winemaking process. The legislation

aims to ensure that the original intention of the Wine Grape

Charges Act, to impose a levy on all grapes ultimately finding

their way into the wine making process, is not eroded as a

consequence of the technological developments within the wine

making industry.

14.

Canned Fruits

Ministers will recall that last December the

Commonwealth Government approved in principle a proposal

submitted by the canned deciduous fruits industry for the

restructure of the industry marketing arrangements under

complementary Commonwealth/State legislation and for the

reconstitution of the Australian Canned Fruits Board.

State Ministers for Agriculture were informed of the

Commonwealth's decision and their advice was sought on whether

the States would provide the legislative support necessary to

implement the scheme.

After consideration of the scheme, four States

(Victoria, NSW, South Australia and Queensland) have agreed to

introduce complementary legislation. The scheme is expected to

commence on 1 January, 1980.

Draft legislation has been prepared and it is hoped

that it will be introduced in the Commonwealth and State

Parliaments in the forthcoming sessions.

15.

Citrus

In March 1979 the Government announced its decision on

the industries Assistance Commission's Report on the Australian X

Citrus Industry. It was decided that a variable tariff would

be applied from 13 April 1979 to imported orange juice, of the

amount by which the value for duty, per kilogram, of the total

soluable solids, was less than $2.40.

The Government will review the operation of the

variable tariff after three years, with the IAC requested to

provide a report on the matter at that time.

The juices of tangerines (including mandarins) and

substitutable hybrids are dutiable at the same rate and on the

same basis as orange juice. The duty on all other citrus

juices remains unchanged.

Sugar

In early April 1979 the Commonwealth and Queensland

Governments received the report of the Sugar Industry Inquiry

Committee.

The Inquiry was established by Agreement between the

two Governments. Operating under the auspices, and using the

resources of the Industries Assistance Commission, it examined

the whole ramifications of the Australian sugar industry

16.

In particular, the Inquiry Committee was asked to make'

recommendations as to the appropriate level of the domestic

price for refined sugar and a method Of future price

adjustment. The Committee was also asked to recommend changes

which should be made in a sugar agreement to follow the

Commonwealth Queensland Sugar Agreement 1975.

Following receipt of the report, it was announced on

1 May 1979 that the maximum price of IXD (manufacturing) grade

refined sugar would be increased by $80 per tonne.

The maximum price of 1A (grocery) grade is now $379.49

per tonne and the maximum price of IXD (manufacturing) grade

$370.00 per tonne. No further increase will be granted until

at least 1 July 1980.

The Commonwealth Queensland Sugar Agreement 1975,

which- was due to expire on 30 June 1979 has been extended for

three months to 30 September 1979.

I am currently negotiating with the Queensland

Minister for Primary Industries on the terms of a new sugar

agreement and the two Governments will consider the other

recommendations in the Inquiry Report during these negotiations

17.

Wool

Members of Council have read with deep regret last

week's announcement of the death of the Chairman of the

Australian Wool Corporation and the International Wool

Secretariat, Mr Alf Maiden, CBE. Formerly Permanent Head of

the Department of Primary Industry and Director of the Bureau

of Agricultural Economics, Mr Maiden spent his life in the

service of rural industry. His term with the AWC has seen the

introduction of the floor price scheme and the recovery of the

wool market. He was truly a great Australian. To his widow

and two children I extend, on behalf of all members of this

Council, our deepest sympathy.

The wool market in 1978-79 gave the industry its first

real respite since 1973. The substantial and sustained

increase in wool prices during the second half of the 1978-79

season has brought new confidence to growers.

Throughout the first seven months of the 1978-79

season the wool market did not maintain its initial strength

and required constant support by the Australian Wool

Corporation. However, after the end of January the market

improved dramatically with the Market Indicator moving up from

319 cents/kg clean to 374 cents in early April. There has been

some slight weakening since with the Market Indicator closing

the season at 361 cents. .

18.

Keen trade demand in the last five months of the

season enabled the Corporation to reduce its stockpile to

around 356,000 bales by the end of the season. This compares

with about 1 million bales at the end of December. The

stockpile has been reduced further since 30 June, and it

currently stands at less than 340,000 bales.

On 3 July I announced the Government's decision to

raise the floor price to 318 cents/kg clean for the 1979-80

season and that the floor price scheme would be continued in

1980-81 at not less than 318 cents.

There are indications that there could be some slowing

of economic growth rates in our main wool markets during

1979-80, but I believe the market can well support the increase

in the floor. Should it become necessary for the Wool

Corporation to add to the stockpile in support of the higher

floor, the Corporation has available to it substantial reserves

on which it can draw to finance its market support operations.

Limited Offer to Purchase Scheme

Woolgrowers continue to show increased interest in the

Corporation's Limited Offer to Purchase Scheme for wool. This

experimental two-year trial of alternative handling and

marketing methods completed its first year of operation in

Melbourne in October 1978, in Fremantle in March 1979 and in

Brisbane on 2 July 1979. A report on the outcome of the first

year of the trial in the Melbourne region was tabled in

Parliament on 3 May 1979.

19.

On 4 July, I announced that the Corporation had been

authorised to set a common termination date of 30 June, 1960

for the Scheme. I said that a common termination date Would

allow for a more complete examination of handling and selling

techniques. It would also allow the Corporation sufficient

time prior to the 1980-81 season to adequately evaluate

possible alternatives to the present arrangements.

AWC Wool Marketing Proposals

The Wool Corporation's marketing plan of 1973 was

reviewed, amended and further clarified in October 1978 and

February 1979 at the request of the Australian Wool Industry

Conference. The Corporation has provided to the Conference its

assessment of the effectiveness of its proposals in terms of

quantified benefits to woolgrowers.

At this stage, the proposals remain under

consideration within the constituent organisations of the

Conference, and no firm request is presently before the

Government for the implementation of the marketing plan.

I assume the newly established Wool Council within the

National Farmers' Federation will be giving attention to wool

marketing arrangements, and I anticipate having close

discussions with woolgrowers on this subject during the course

of the current season.

20.

At this point it would be appropriate to mention that

I have entered into preliminary discussions with the Executive

of the Wool Council on the future of the Australian Wool

Industry Conference. As a statutory body within the AWC

legislation its relationship with the new amalgamated federal

farmers' organisation needs to be determined.

Merino Ram Embargo

I welcome the acceptance by the trade union movement

of an arrangement to assess the impact of the partial

relaxation of the ban on the export of Merino rams.

The proposal is that an eight-man committee,

comprising four representatives of the Merino industry and four

trade union.representatives, should review the effect on the

Australian industry of the export of those Merino rams acquired

under the conditions imposed by the Government after

consultation with the AWIC and the federal producer bodies.

They will report to the Government in due course. The

report will be tabled in the Parliament.

This new procedure should enable the proper commercial

trial of the relaxation of the ban. Hopefully, it will mean

enhanced overseas demand at auctions authorised by the

Australian Association of Stud Merino Breeders.

Australian Wool Measurement Standards Authority

To incorporate provisions to recover approximately

half the costs of inspection and supervision of wool sampling

and testing by AWMSA, the Wool Industry Act was amended with

effect from 1 July 1979.

' . ■ . ■ I

A registration fee of $100 is imposed for- initial

registration of a sampling site. A fee of 53 cents for each

I WTO certificate issued at the site will be imposed on a

continuing basis.

Economic Conditions and Research

Although wool prices and wool production have

increased above recent years, the present market situation

should not be taken as a sign of overall prosperity for the

industry. Far from it, as all woolgrowers who have endured the

depressed wool demand circumstances of the past several years

are acutely aware.

Many growers still experienced very low net cash

incomes in 1978-79. Estimates made by the Bureau of

Agricultural Economics indicate that last year about

one-quarter of specialist woolgrowers had net cash incomes less

than $5,000.

22.

The constant pressures of the cost-price squeeze on

rural producers in general and on woolgrbwers in particular

emphasise the need to either reduce expenditure or to increase

productivity.

In the area of freight costs, the Australian Wool

Corporation has secured a change in the structure of wool

freight rates to Europe with possible savings in the order of

9% in 1979-80 as compared with the preceding year. The new

rates are more economical the more densely packed the wool is

in the container.

In a wider context, the Government will again be

contributing with growers to a programme of research costing

some $14 million in 1979-80 as well as to the cost of wool

promotion both in Australia and internationally.

Beef

The beef situation has changed dramatically over the

last year largely as a result of improved access to the US

market. An easing of supply pressures in Australia has also

contributed.

23.

Australian saleyard prices rose strongly to peak in

June at more than three times the level Of mid-1978 although

they have since fallen back following a weakening of thfe U.S.

market. U.S. Market prices have fallen considerably since

their April peak and the market remains soft. The medium term

outlook, however, indicates a firmer trend. For example, the

price of Australian cow meat sold to the U.S.A. which averaged

$A2.46 per kg f.a.s. in April, was down to $A1.65 on 20 July

and has remained around this level since. A recent B.A.E.

study clearly indicates the major influence of the U.S. export

market on saleyard prices of cattle in Australia.

Global access for beef in the United States this year

is a record 712,000 tonnes, of which Australia’s current .

allocation is 375,000 tonnes. If the United States decides to

reallocate quantities from countries who are currently

experiencing difficulties in meeting permitted access levels,

Australia's allocation for 1979 could reach a record 400,000

tonnes. By comparison, our previous peak level of shipments

was achieved last year when we exported 365,000 tonnes to the

US market.

i

24.

While short term prospects for Australian beef exports

to the United States are certainly bright, the stability of the

long term future of the trade will be threatened if

countercyclical meat import legislation is introduced in the

United States this year. The US Congress is expected to

consider legislation in the next few weeks designed to replace

the market sharing arrangement in the present law with a regime

which treats imports as residual to domestic supplies. The

bill before Congress provides minimum global access of only

544,000 tonnes (1.2 million lb) nearly 25% below the present

level of access, and would effectively limit the availability

of Presidential discretion to times when it is least needed

from an exporting country's point of view.

Both Mr Anthony and myself have recently written to

senior members of the US Administration expressing the

Government's disappointment and concern at the restrictive

nature of these proposals and seeking renewed assurances that

the Administration will continue to insist on a minimum access

level of at least 590,000 tonnes under any countercyclical

law. A level below this would be inconsistent with the

understandings reached between the Australian and US

Governments in the context of the recently concluded round of

Multilateral Trade Negotiations.

25.

In respect of our second most important export market

for beef, Japan, it is encouraging to note that the

Government's repeated efforts to increase access for Australian

beef have now paid very healthy dividends for Australian

producers. Total imports by Japan in 1979 are now expected to

be some 135,000 tonnes, 60% above the level of a year earlier.

Australia can be expected to provide 70%-80% of Japan's

requirements.

Because of its dependence on export markets, the beef

industry will remain subject to major fluctuations in demand

and prices resulting from international events largely beyond

Australian control. Although prospects are certainly

favourable for the next few years at least, tough times could

occur again.

To help mitigate against these external influences

Australia put special emphasis in the Multilateral Trade

Negotiations (MTN) on attempts to gain more stable access for

Australian beef in the major world markets. These efforts have

resulted in guaranteed minimum levels of access in the United

States, Canada and Japan. The EEC has agreed to increase the

global GATT levy free quota from 50,000 tonnes to 65,000 tonnes

(carcase weight equivalent) and has agreed to a special quota

for Australia of 5,000 tonnes of high quality beef..

26.

The reduction in cattle slaughterings in recent

months, which has been most marked in southern Australia, is

clear evidence that the decline in the Australian cattle herd

is coming to an end. Stabilisation of the cattle herd will

mean a substantial reduction in beef production and export

availability. The fall in export availability will, however,

be less than the fall in production due to reduced domestic

consumption of beef. I am confident that Australia will be

able to supply our major export markets at the level of their

current requirements and supply other markets willing to pay

reasonable prices for Australian beef.

The return to more prosperous times for most beef z

* producers has also meant that consumers are having to pay much

more for their beef. I believe, however, that current consumer

prices should be put into perspective. Only recently has the

retail price of beef regained levels that would have existed

had it followed a similar trend to the general level of

inflation as reflected in the Consumer Price Index over the

past six years. Retail prices for beef still compare very

favourably with prices in other countries and Australian

consumers continue to have available some of the cheapest meat

in the world. However the recent reduction in saleyard prices

for cattle should reflect in prices quoted to the Australian

housewife through domestic retail outlets. -This should reduce

the fall off in domestic consumption that followed recent price

increases.

I

27.

Sheepmeat

There has also been a substantial increase in the

profitability of sheepmeat production over the past year. The

higher prices of mutton largely reflect a marked reduction in • , ■ > '

yardings of adult sheep as producers rebuild their depleted

f l o c k s , together with continued strong export d e m a n d . Lamb

prices have also benefited from strong export demand together

with increased demand for lambs from Australian consumers

wishing to substitute lamb for more expensive b e e f .

The export market for sheepmeat will be further

strengthened by the recent contracts signed for very

substantial shipments of sheepmeat to Iran, in addition I

understand that contracts for the supply of live sheep to Iran

look likely to restore the trade to the level which existed

before the recent disturbances in that country.

Slaughter Levies

In view of the much improved circumstances of the meat

industry the Federal Government has decided that it is

appropriate to relieve general taxpayers of some of the costs

of services provided to the industry. Accordingly, as from

1 July, charges have been imposed on slaughterings in export

abattoirs to recoup one-half of the cost of Commonwealth meat

inspection and the slaughter levy for cattle disease

eradication has been increased from $1 per head to $3.

28.

These charges should be viewed against the very

substantial assistance which the Government provided to the

industry Over the previous three years. This included the full

cost of meat inspection totalling some $80 million,

$8.5 million for compensation and $19 million over and above

levy receipts for operational costs of the brucellosis and TB

campaign, and payments of $117 million to cattlemen under the

beef husbandry incentives scheme.

Imposition of the charges met with some opposition and

for a time livestock sales were disrupted by processor attempts

to have the charges deducted from accounts payable for

livestock purchases. Producers strongly resisted such

deductions particularly for auction sales where deduction of

variable charges would have caused considerable confusion.

Since normal trading resumed I have met with the

various organisations concerned and have invited them to work

with my Department on a review of the incidence and levels of

the various components of the levies and charges with a view to

overcoming inequities.

In this respect the inter-relationship of Commonwealth

and State meat inspectors and the charges imposed for each

service by respective Governments will be a matter for urgent

consideration following the receipt of the Kelly-Buettel report

in a few months time.

29.

PJT Report on Beef Marketing

Since our last meeting the Commonwealth Government has

considered the Prices Justification Tribunal's report on beef

marketing and processing. A number of the Tribunal's proposals

relating to livestock selling practices, including the conduct

of the auction system, livestock market reporting and carcase

classification are matters of concern to both the Commonwealth

and State Governments. They will be considered during our

current meeting. Commonwealth Government decisions arising

from the PJT recommendations are that the Bureau of Transport

Economics should undertake detailed examination of the road

transport aspects of the beef industry and rail freight

differentials for cattle. In addition the PJT would be

requested to undertake an inquiry into the basis of stock and

station agents' commission rates for livestock selling. In

respect of the PJT recommendation for a review of the tally

system in meat works, the Government considered that there was

a need for a wider ranging inquiry to encompass all issues

relating to improved efficiency and productivity in the

abattoir sector. A Working Party of Commonwealth officials has

been established to explore these issues, and to make

recommendations for the Government's consideration.

30.

Rural Adjustment

The Rural Adjustment Scheme will continue to operate

in 1979/80, although the improved economic outlook for the farm

sector, the greater availability of rural credit and the

slackening of demand for assistance under the scheme, which

became evident in 1978/79, have allowed it to be scaled down at

least temporarily. States have been authorised to approve

assistance under the general provisions of the scheme up to $15

million. Carry-on loans up to $10,000 will be available to

wine grape growers and household support will be provided to

all eligible farmers who seek it.

Extension Services Grant

You will be aware that the current level of the

Commonwealth Extension Services Grant is $5 million. State

Ministers have already been advised of their State allocation.

I regret the scaling down of Commonwealth funds in this

important area and recognise the difficulties States will have

in reorganising programs. It is my hope that some

re-allocation from lower priority areas will be possible

between the States.

31.

Inspection Services

The question of recovering costs associated with the

inspection of foodstuffs and other primary products exported

from Australia was reviewed following an announcement in the

1978/79 Budget Speech and associated statements.

As a result charges aimed at recovering approximately

half the costs of inspection services provided for meat and

grain were implemented from 1 July 1979. A similar level of

recovery was also imposed for the services provided by the

Australian Wool Measurement Standards Authority.

Income Equalisation Deposits

Two changes were announced during June 1979 to the

terms and conditions applying to the Income Equalisation

Deposit's Scheme.

Both changes effectively eased existing limitations on

taxation deductions allowable for Income Equalisation

Deposits. First, the limit on deductions in any year for

subscriptions to IED's was increased from 40 to 60 per cent of

gross receipts from primary production, with effect for the

1978-79 income year and subsequent years. In addition, the

previous limit of $100,000 on total deductions in respect of

holdings of IED's and Drought Bonds at any one time were

increased to $250,000 as from the 1978-79 income year.

32.

4 .

The changes have been made with a view to encouraging

primary p roducers to set aside a larger part of the high

incomes which they had, on a v e r a g e , received in 1978/79, so

that it can be drawn upon in later years when incomes may be

lower.

Primary Industry Bank of Australia (PIBA)

Since PIBA commenced operations on 6 November 1978, it

has provided refinance loans totalling in excess of $100

million for the benefit of primary producers in all States.

This high level of demand has been well beyond our expectations

and serves to indicate a widespread acceptance of the Bank and

its lending policies by primary producers.

As you know the Commonwealth Government made available

to PIBA $30 million from the IED trust account at an interest

rate of 5 per cent, the rate the Government pays to IED

depositors.

This loan has enabled the Bank to make long term loans

at lower interest rates than would otherwise have been

commercially possible. .

* . ' . . . . .

* . . ' ·- ' ■

33.

The Bank released its first issue of deposits in

M a r c h . These securities have raised more than $50 million in

long term deposits as well as shorter term monies. The first

issue of PIBA deposits has been well received by both

institutional and private investors and will become a permanent

feature of the fixed interest investment market.

The first non-bank prime lenders have recently been

appointed by the PIBA. The pastoral houses of Elder Smith -

Golds br ou gh Mort Limited and W estr al ia n Farmers Co-operative

Limited have now been given access to PIBA's refinancing

facilities.

Fuel Supplies

Across all primary industry this 1978/79 year has seen

general improvement.

H o w e v e r , an area of major concern for the rural

industry is the availability and price of energy for the

f u t u r e . In this respect, the Government has constituted the

National P etroleum Advisory Council.

This council will advise the Federal Government to

ensure that if areas of shortfall in oil supplies a p p e a r , they

can be corrected as early as possible. , It is intended to have

a rural input into this Council.

34.

It is to report to the Hon. Kevin Newman, Minister for

National Development. Its work must involve co-ordination with

State Governments and that of the Northern Territory in each of

the areas of their respective responsibilities.

While principal responsibility in these matters is

generally in the hands of our respective Ministerial

colleagues, the availability of oil products for necessary

farming operations is of concern to the members of this Council

I know you will share my belief that it is essential

that there should be adequate distillate, fuel oil, gasoline

and oil available to enable critical farming processes to be

Undertaken at the optimal time.

There are many other matters with which our Agenda

deals in greater detail. These we can address at the

appropriate time.