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Tuesday, 28 February 1984
Page: 86

(Question No. 566)

Senator Jessop asked the Minister representing the Minister for Primary Industry, upon notice, on 1 December 1983:

(1) Is the Minister for Primary Industry aware of the level of the cost benefits pertaining to pre-sale dumping.

(2) Have comparisons of costs of post and pre-sale dumping been made during the last 3 years; if so, what are the details.

(3) Would the difference in costs between the two methods be more than the amounts by which jumbo bales have been discounted, i.e. some 10c to 13c per kilo as indicated by the Australian Wool Processors Council.

(4) Will the Government suggest, if the comparisons of post and pre-sale dumping have not been undertaken, that they be conducted by an international authority on commodity handling so that the entire wool industry will have access to the information.

(5) What action is being taken by the Government to assure our largest overseas buyers that pre-sale dumping will not become widespread so our future trading arrangements will not be jeopardised.

(6) Will the Minister seek the views of the Australian Wool Corporation regarding the commercial risks involved in pre-sale dumped packs at substantially the same price levels as farm bales plus dumping charges.

(7) Will the Government intervene should wool brokers proceed with the installation of further pre-sale dumping arrangements.

Senator Walsh —The Minister for Primary Industry has provided the following answer to the honourable senator's question:

(1) There has to date been no public disclosure of the cost-benefits associated with the commercial introduction of pre-sale dumping of wool in Brisbane in October 1983.

The Australian Wool Corporation has previously undertaken some desk studies which suggest there would be significant net benefits from this system, but these findings could only be substantiated through full-scale commercial trials.

(2) Detailed comparison of post and pre-sale dumping are presently being undertaken by the Australian Wool Corporation, the results of which could determine future reserve price support for wool prepared in a dumped form prior to sale and continued support by Queensland woolgrowers.

(3) Although discounts at auction of 10c to 13c per kilo on jumbo bales may apply on occasion, the Australian Wool Corporation has no evidence to support the view they are that high consistently, or on average. A detailed comparative study undertaken by the Corporation in 1980 disclosed average levels of discounts for jumbo bales at that time of 5c to 6c per kilo greasy and offsetting savings to growers of 3c per kilo.

The Australian Wool Corporation considers it is unlikely that the difference in costs between post and pre-sale high density dumping is more than the amounts by which jumbo bales have been discounted.

(4) As I indicated above, a study into the comparative effects of pre-sale dumping on the wool industry is being undertaken by the Australian Wool Corporation on behalf of woolgrowers. The Government believes that the Corporation is fully competent to undertake the study, the results of which will be available to all interested parties in the wool industry.

(5) The pre-sale dumping of wool is essentially a commercial matter which should be resolved between the parties involved, principally woolgrowers, brokers and the buyers. I have, however, been advised that unless the introduction of pre-sale dumping can be justified on commercial grounds in each case it is not likely that the system will be supported by growers or the Australian Wool Corporation through the wool reserve price scheme.

(6) Yes. The Australian Wool Corporation has reported that it recognises that some overseas markets do not support tri-packed bales, while others require only part of their wool in this form. It recognises also that local processors oppose tri-pack wool, and other high density package forms. The Corporation is continuing to monitor the extent of discounting at Brisbane sales as part of its evaluation of the system.

(7) The Corporation has indicated it will not continue reserve price support indefinitely for pre-sale dumped wool unless the system proves its commercial viability and potential net benefit to the wool industry. If this is not achieved, the absence of reserve price support and consequent lack of grower support, could be sufficient to discourage a general movement towards pre-sale dumping without the need for Government intervention.

Further, following representations from the Australian Wool Processors Council, I did write on 12 September 1983 to the principal parties involved in the pre- sale dumping of wool stressing that there should be considerable consultations between appropriate groups in the industry on the effects of the development in Brisbane, and that I would be concerned if there was a move towards pre-sale dumping of wool in other wool selling centres before the evaluation of the development in Brisbane was completed.