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Wheat: first advance on 1970/71 crop



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PRESS

MINISTER FOR

/STATE M EN_T y1s»° ^ ^^ PRIMARY INDUSTRY

Statement by the Minister for Primary Industry, Mr. J. D. Anthorky

Wheat e First Advance on 1 7o/71 Crop

The Minister for Primary Industry, ?JIr. Anthony, said today

that the Government had agreed to the Australian Wheat Growers'

Federation's wheat delivery quota proposals for 197071.

These proposals had already been endorsed by each of the

States, and sought the payment of a first advance to growers of $1.10

per bushel, less freight, on wheat covered by the quotas.

Mr. Anthony said that the quotas for all States would total

318 million bushels, including a special quota of 23 million bushels

reserved exclusively for Prime Hard wheat in IT.S.W, and Queensland.

He said the Reserve Bank had agreed to make funds available

to the Australian , heat Board on the customary basis. Thus an upper

limit of $407 m. would be provided from the Bank's Rural Credits

Department funds, under Commonwealth guarantee, to enable the Wheat

Board to pay first advances on quota wheat as well as freight, storage,

handling charges and administrative expenses, amounting in total to

$1.28 per bushel.

Mr. Anthony said that while the Government had accepted

the industry's agreement to a new reduced level of quotas, they

represented useful but fairly modest progress towards resolving the

problems of very large accumulated stocks and substantial indebtedness

of the Wheat Board.

2.

He said: "In this regard, growers should be aware that the

Commonwealth is guarantor for the Board with the Reserve Bank.

"Within the next few weeks it will have to find about $250

million from loan funds to lend to the Board so that it can pay off its

overdraft on the 1968/69 crop,

"The Board is again working entirely on borrowed money to

pay growers for the wheat received from the 1969/70 harvest and there

is no prospect that it can meet its debts on that crop by the due date -

31st March, 1971.

"Thus the agreement of the Commonwealth to underwrite funds

of up to $407 million for the 1970/71 crop can be regarded only as

liberal treatment of the industry.

r'It indicates that the Government has looked at the industry

and its needs in broad perspective. Had it taken a narrower view based

on collateral security and ability to repay debts within a very limited

time, the outcome must have been different.

"As it is, wheat growers will still have a substantial cash

income which should enable them to meet their current commitments and

to plan their farm operations for the future without the crippling

effects of a cut in the level of the first advance.

"In looking at this problem the Government did not lose sight

of the importance for rural towns and businesses of maintaining reasonable

liquidity as far as wheat incomes are concerned."

3.

Mr. Anthony said he thought it only reasonable to put growers

on notice yet again that their problems of excess wheat in storage were

far from solved.

The cost of this was mounting rapidly and becoming very

formidable. Growers must face up to this fact and to the likelihood

of further cuts in quotas in seasons to come in order to match avail--ability to outlets.

"Growers must recognise that they are incurring heavy expend-

itures on storage to accommodate the large carryover of unsold stocks

from last season and deliveries in the current season," he said. "This

storage bill is eroding the nett return to growers from export realisat-ions already low.

"The industry cannot expect that returns from wheat will-rise. Prospects for international trade in wheat do not offer the

prospect of higher prices in the short term.

"The industry has the assurance of a degree of stability

through the operations of the ;`!heat Industry Stabilization Plan.

"At this stage, however, it seems unlikely that a further

payment from the 1968/69 pool can be made before the middle of 1971.

The V/heat Board has to pay off the pool debt which the Commonwealth is

going to take over from the Reserve Bank and it will be some time after

that before the pool can be wound up and final payment made."

Mr. Anthony said that the allocation of quotas to farms or

individuals was a matter for the States. The Commonwealth's decision

to play its part by guaranteeing the provision of funds for the first

advance and other charges would ensure that the industry could continue

to progress towards a more stable position.

IF

He emphasised, however, that the Australian Wheat Board,

which had done well in finding export markets for wheat, needed the

support of every wheat grower and that every grower should be conscious

of the value of the orderly marketing arrangements which had served

the industry well.

Canberra. 26th February, 1970.