Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Wednesday, 24 September 1941

Senator LECKIE (Victoria) (Minister for Aircraft Production) . - I move -

That the bill be now read a second time.

The sole purpose of the bill is to enable the Commonwealth to guarantee to cotton-growers an average net return of 15d. perlb. on raw cotton above the grade of strict good ordinary, i.e., all except low-grade cotton, that will be produced during the 1942 season and thereafter until the completion of one cotton season after the cessation of the present hostilities with the Axis powers. That net return will include any net return to growers from sales of by-products of raw cotton, such as linters, cotton-seed oil, seed cake, oil cake and sheep nuts. The bill seeks to amend the existing Raw Cotton Bounty Act under which it was originally arranged to pay during the years 1941 to 1945 inclusive, rates of bounty which would increase or decrease each week by precisely the same amount as the spot price of American middling raw cotton in Liverpool was below or above 6d. sterling per lb. Under that arrangement, cotton-growers in Queensland had obtained an average net return of11½d. per lb. of raw cotton since 1935. Early this year, however, the war caused the Liverpool Cotton Exchange to close down, and it was recognized by the Government that increased production costs in Australia would need to be covered by a higher price if growers were to produce the increased supplies of cotton which are required by Australian manufacturers, principally in order to enable clothes and equipment to be supplied for the fighting services. Consequently, the act was a mended to substitute the New York spot price for the Liverpool price, and also to guarantee to growers an average net return of 12½d. per lb. of raw cotton. That amendment resulted in the 1941 crop, now almost harvested, yielding about l 2,000 bales, as against only 8,370 bales for the 1940 crop. Meanwhile, however, manufacturers' requirements had far exceeded local production. These requirements, which were 45,000 hales during 1940, will be 80,000bales next year. In addition, the Government decided that manufacturers' war-time emergency reserve stocks should be increased by 40,000 bales, so that any extension of active war to the Pacific and Indian Oceans would not gravely affect Australia's capacity to clothe and equip rhe men of its fighting services. Hence, our aggregate raw cotton needs for the next year amount to 120,000 bales. A close study of this primary industry, which, so far, has been confined to Queensland, has convinced the Government that the present guaranteed net return of 1 2½d. per lb. is not likely to encourage growers to produce more than 15,000 bales during the 1942 season, because of further increased costs and, especially, the costs and hazards involved in preparing and planting many thousands of acres of new land for this crop. On this basis; at least 105,000 bales would need to he imported - four times as much as our record imports before the war. Such a volume of imports seemed to the Government to be too great to rely upon, in view of the growing and serious shortage of overseas ships and the possibility of war approach ing Australia's shores. As a matter of common prudence, it was deemed advisable to encourage the maximum possible increase of Australian-grown cotton. Recognized authorities, both Federal and State, agreed that a guaranteed average price of 15d. per lb. for the remainder of the war period and one cotton season thereafter, as provided in this bill, is essential to obtain a marked expansion of our raw cotton yield.

Plans are in train for doubling in 1942 the present total area of 55,000 acres now under cotton. From the resultant 110,000 acres, and having regard to an extension of irrigation facilities, it is expected that in 1942 a crop of 30,000 bales will be produced. If climatic conditions are favorable the yield should be as high as 40,000 bales. As the war proceeds, manufacturers' requirements will continue to increase, and there will be ample scope for the production in Australia of even larger quantities of raw cotton.

The price of l5d. per lb. of raw cotton is equivalent to 5¼d. per lb. of seed cotton as produced on the farm. This is only ¼d., per lb. less than the price paid to growers from 1920 to 1923 when the present industry was started in Australia. From 1924 to 1927, growers received nearly 5d. per lb. After that, their net return averaged slightly over 4d. per lb. until 1940. Although the proposed price of 15d. per lb. represents a substantial increase of the pre-war price, there are good reasons to justify it -

(a)   Similar quality raw cotton from the United States of America now costs1s. 3½d. per lb. landed in Australia, free of customs duty;

(b)   Price and shipping freight trends are upwards, so that the landed cost of American cotton may advancebeyond1s. 3½d. whilst the war continues;

(c)   Australia cannot afford, in these difficult times, to take the great risk of relying too much on imports of raw cotton, which is one of the most important raw materials of war;

(d)   Production costs in the large new areas expected to be devoted to cotton-growing will, in general, be higher than the costs in wellestablished farms where capital expenditure has 'been written down over a period of years. Also, new growers are not likely to be as efficient as experienced' growers.

It may be asked : What is the need for a guaranteed average net return of ls. 3d. when exactly similar cotton from the United States of America cannot be landed here under ls. did. per lb.? Without the security of the guaranteed price afforded by the bill, it is not to be expected that many new fanners would enter the industry or that existing growers would increase their production substantially, because it is only natural that present and potential growers will consider the position they would occupy should the war end suddenly and cause al! raw cotton values to recede below present levels. That is a risk that governments must shoulder during abnormal times, as, indeed, is being done in many directions by the governments of all the belligerent nations, as well as by the United States of America.

A large expansion of cotton-growing in Queeusland, or new production in other States, will entail the preparation of 50,000 or 60,000 acres of additional land for planting by the end of November nc-xt. Costly work of this nature can be undertaken by many growers only if they receive loans or credits from. State governments or financial institutions. Such aid will not be rendered to a sufficient degree 'Unless it is clear beyond doubt that all the raw cotton produced will ho saleable at remunerative prices. Such prices are assured by the bill now before the Senate, and the extensive demand by Australian manufacturers.

The extension of the guarantee for one complete cotton-harvesting season after hostilities cease is essential, .because cotton-growers who have incurred considerable expense in the preparation of land, planting operations and cultivation of the crop up to the cessation of hostilities in the belief that a certain price will be received for their crop, are entitled to that price. If the price were not guaranteed in this way, it is clear that fears of a post-war recession in market values would result in cotton-growers adopting an ultra-cautious development policy to the detriment of our war-time needs for this vitally important raw material.

As an essential condition of the Commonwealth's extension of the bounty in 1940, the Queensland Government ga v, explicit undertakings that it would convert cotton production as quickly a? possible from dry-farming to irrigation by the most economic means for each selected locality, and that it would greatly intensify the instruction of growers in the best cultural methods arid scientificresearch on plant-breeding, pests, diseases, soils and fertilizers. So far, these undertakings have been well implemented, but much work remains to be done. It seems that the very satisfactory average net return of ls. 3d. per lb. now awaiting the approval of the Senate furnishes the cotton-growing industry and the several Queensland Government authorities responsible for giving effect to the Government's undertakings with an ideal opportunity for greatly improving the efficiency and economics of the industry, so that it may be able to overcome post-war difficulties. Tn this regard, it cannot reasonably be expected that the high price of ls. 3d. per lb. will he enjoyed when this legislation ceases to operate, by which time world prices will undoubtedly have fallen to somewhere near normal prewar levels. The bounty cost to the Commonwealth budget of the present price would then he tremendous.

Despite these remarks, which are made solely for the benefit of the cotton - growing industry, which the Government earnestly hopes will become extensive, permanent and prosperous, there is no need for pessimism in regard to lower postwar net returns. Effective remedies are available to the Queensland Government and to the cotton industry itself, in respect of irrigation and mechanical harvesting. Under irrigation, yields from each acre cropped have been three to four times greater than those obtained as under dry-farming conditions, and the cost of production is thus reduced very considerably. The Queensland Government has frankly recognized this vital fact. The advantages of irrigation are so great to the industry, and so financially found for the State, that extraordinary measures to hasten this reform are justifiable.

Cotton picking by hand is extremely costly in Australia, and far higher than in any other country. It costs our growers from 4½d. to 5d. per lb. of raw cotton. Even in the United States of America, where hand-picking costs little more than one-third of the cost incurred in Queensland, much money and time are being devoted to the development of an effective mechanical cottonpicker. One American machine has been tried in our cotton areas, and offers hope that, under suitable conditions, it will considerably reduce harvesting costs. Taking a long view of the general problem of production costs, it may be said that anything which reduces our costs to such a degree as to permit a large expansion of production is well worth while. In that event, .any loss of employment for hand cotton-pickers would be greatly outweighed by extra employment for additional growers, field workers and ginnery employees.

The bill does not alter the established practice of the last few years, whereunder Australian raw cotton must be sold to manufacturers from time to time at the Australian equivalent of world parity prices of similar cottons. To such a degree as current parity prices permit, the Queensland Cotton Board will be expected to sell its raw cotton to spinners and other users at prices which will not involve the Commonwealth in the payment of any unnecessary bounty. In other words, Queensland cotton should not be sold below import parity .prices. If present parity prices continue little, if any, bounty will be payable under this bill whilst the war is in progress.

The cotton-growing industry is one of great potential value to the Commonwealth, and that value will be realized if successful efforts are made by all concerned to conduct it on the basis of the highest attainable efficiency under Australian conditions. It offers an importanmeasure of diversification of production in many parts of Queensland, a factor of considerable value to primary producers. For many years, cotton-growing has been associated with dairying to the mutual advantage of both enterprises. It is possible, particularly if irrigation methods be applied, that the future will see cotton-growing associated with the sugar industry in certain areas. I understand that extensive experiments in that regard have been planned for the Burdekin River district in north Queensland for the coming season.

Actually, cotton-growing is one of the very few primary industries in Australia in respect of which considerable expansion is necessary in order to supply the requirements of Australia. Many primary industries have more or less acute export problems, and a complete solution of them may not be possible in all cases owing to economic activities and political policies in foreign countries which are our competitors in export markets. Therefore, to the degree to which cotton-growing can be economically expanded in Australia, it will provide a remunerative vocation for surplus producers in other primary industries. During the current season 3,500 farmers grew cotton on 55,000 acres, an area almost exactly the average for the last ten years. The estimated production of 12,000 bales for 1941 was, however, exceeded in four of those years, the highest output being 17,500 bales during 1934.

The outstanding merit of the bill is the confidence which cotton-growers may properly derive from it in their plans for meeting the urgent needs of this country for a raw material that is of first-class importance to our Defence Forces. I feel sure that this Parliament will not look in vain to the cotton-growing industry for an adequate response to those needs.

Suggest corrections