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Wednesday, 11 November 1964

Senator HENTY - The Minister for Trade and Industry has provided the following answers - 1 and 2. Surpluses, as the term is normally used, and the problems involved in their disposal, are most conveniently considered as arising from two separate kinds of circumstances. The first is the case where some part of Government held strategic stockpiles of raw materials is considered to be surplus to requirements. At one time or another, the Governments of most countries have been in such a situation with respect to particular commodities. The normal procedure is for surpluses of this kind to be fed into commercial marketing channels in a manner calculated to disrupt normal commercial transactions as little as possible. In most cases surplus disposal activities of this type are small in relation to the volume of international trade in the commodity concerned, and do not significantly affect Australia's trade. In some cases, however, the disposal of parcels of strategic stocks can tend to depress prices, or retard rises in market prices. As an exporter of metals and other raw materials which are often involved in these cases, Australia undoubtedly at times has been disadvantaged by these disposal measures, but it is not possible to estimate the extent of damage which has occurred.

The second, and far more important, type of surplus disposal activity arises where domestic price support or other protective measures give rise to levels of production higher than can be marketed internally or exported on commercial terms without Government financial assistance of one type or another. Surpluses of this kind are moved by a wide variety of measures of which the more important are the use of export subsidies and programmes under which surplus agricultural products are made available on concessional terms to underdeveloped countries. In view of Senator Murphy's separate question on subsidies, it is presumed he has in mind here the latter type of arrangement.

A number of countries make available as gifts modest volumes of agricultural commodities as part of economic aid programmes. Australia does so under the Colombo Plan, although in this case donations are not related to the existence of surpluses but are made in response to requests by recipient countries. However, the United States of America, whose agricultural policies generate surpluses of the kind described above, has instituted under its Public Law 480 a conscious programme of moving surplus commodities to underdeveloped countries. In the ten years to 30th June 1964, actual exports under Public Law 480 programmes total about 12.3 billion dollars at world market prices with substantial quantities still to be moved under existing commitments. The commodities mainly concerned are wheat, rice and cotton. During the ten year period exports of these commodities under Public Law 480 have approximated: wheat 3.5 billion bushels, equal to three average U.S. crops; rice 355 million bushels, equal to two average U.S. crops; cotton 5.3 billion lb., equal to two-thirds of an average U.S. crop.

It is, I believe, a fair statement of the position to say that the damage to the commercial trading interests of exporters of commodities covered in Public Law 480 programme has been reduced to a minimum as a result of the sensible and responsible attitude that has been adopted by the U.S. There has, nevertheless, been damage in the sense that the movement of agricultural commodities on non-commercial terms has undoubtedly been reflected in lower export earnings accruing to commercial exporters. It is not possible, however, to give an accurate quantitative assessment of the extent of any damage.

3.   Australia, together with the other countries concerned, has accepted that the disposal of surplus commodities be governed by the "F.A.O. Principles of Surplus Disposal". These principles provide, among other things, for surpluses to be disposed of in an orderly manner and so as not to interfere with normal patterns of production and international trade. It is also provided that wherever possible interested countries should consult on the possible effects of such transactions. Consultation arrangements have been established and Australia has used such consultations to ensure that her international trading interests have been protected to the fullest possible extent.

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