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Wednesday, 29 April 1987
Page: 2008

Senator WATSON(5.05) —I move:

That the Senate take note of the paper.

The summary of the National Agricultural Outlook Conference contained in this Australian Agricultural Council paper before the Senate outlines an economic outlook for the rural sector that is far from optimistic. In fact, the high levels of subsidies for the agricultural products of Australia's trading partners are forcing world market prices down and Australian farmers are suffering as a result. The report does note that over the next five years the value of rural output is likely to increase at a lower rate than the general level of prices unless world market prices show significant improvements. The prospect of such a significant improvement is quite remote when we consider other factors, such as domestic conditions in the United States which are fostering introspection in the United States Congress-I raised this issue yesterday-and the flow of protectionist policies coming from that Democrat dominated Congress. For example, we are told that the export enhancement program, worth millions of dollars per year, is here to stay. The United States highly protectionist omnibus trade Bill appears likely to be passed into law. There is little hope, as the Minister for Trade (Mr Dawkins) informs us, that the agricultural trade problems in the United States will ease before the presidential election of 1988.

The European Community also continues to implement highly protectionist policies. It gave subsidies worth over $20 billion this year through the European Community budget. In the United States agricultural protection is worth $21 billion. I reiterate the point I have made before: There is a need to appoint a representative in Washington to lobby the relevant groups and put forward the Australian point of view before these protectionist ideas are enshrined in the legislation. As many will know, the National Farmers Federation is already taking steps in this circumstance, but we must have somebody on the spot before the legislation is enacted. While representation at international meetings does have its value and undoubtedly will contribute in the long run to a reduction in protectionist activities, there is little hard evidence that it is succeeding at the moment. Australian farmers really cannot afford to wait until the traditionally slow international decision-making processes are able to get some practical result.

The exceptionally high interest rates we are currently experiencing in Australia are also contributing to the burden of the rural sector. Many farmers are committed to high loan repayments for necessary plant and equipment, and the high interest rates are making dramatic inroads into their already low returns. The report at hand tells us that the average overall rate of return for 1986-87 in the rural sector is minus 7 per cent. More and more farmers are being forced into bankruptcy by the impact of these unpre- cedented high interest rates. Farmers can also expect to lose with the strengthening of the Australian dollar, and the advantage of the depreciating exchange rate has acted to offset in part the impact of falling world commodity prices over the past few years. But the outlook is an unfavourable one for the rural sector and one the Government should be giving its full attention to, given that agricultural products account for such a significant proportion of our export dollar.