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Dairy industry proposals on production problem



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RES.S

MINISTER FOR

DAIRY INDUSTRY PROPOSALS ON PRODUCTION PROBLEM

Proposals aimed at meeting the problems caused by

increasing production in the dairy industry were presented to the

Minister for Primary Industry, Mr. Anthony, in Canberra today by

dairy industry leaders.

The immediate objective of the proposals is to restrict

production to a level which would allow a reasonable return to

producers without a continual increase in the Government's already—

heavy financial involvement.

The longer—term objective is to adjust production to

market opportunities.

After his meeting with industry leaders today, Mr. Anthony.

said the industry's proposals for production restraint were conditional on the Government's continuing to underwrite returns

to producers at 34 cents per pound commercial butter basis in 1970-71.

At the same time the Government, before considering the industry's request on the underwriting level, would have to be convinced of the effectiveness of the proposals to restrain

production, as also would the Commonwealth Dairy Produce Equalisation Committee Limited.

The industry leaders who met Mr. Anthony today represented

the Australian Dairy Industry Council, the Australian Dairy Farmers'

Federation and the Federal Dairy Committee.

The proposals were submitted by the Australian Dairy Industry

Council with the joint support of the other two groups.

Mr. Anthony said after the meeting that, in its submission, the Australian Dairy Industry Council accepted that butter

production could reach 230,000 tons in 1970-71 and head the industry

into a serious surplus problem with'a further reduction in producers' returns because of the higher proportion of production

which would have to be sold on the export market.

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In addition, it was accepted that this level of

production would involve a substantial increase in the underwriting

risk for the Government if the level of underwriting should be

continued at 34 cents in 1970-71.

Mr. Anthony said: "0n the basis of expected production

levels and available markets, and bearing in mind particularly the

implications should Britain enter the Common Market, the Australian

Dairy Industry Council has concluded that it would be in the best

interests of the industry to limit the production of butter and

cheese both in the short and the long term.

t'The Council said the objective for the short term would be to restrict -production to a level that would allow a reasonable

return to producers without an unreasonable amount of Government

assistance.

The Council accepted that, because of the sustained rise

in butter production in Victoria and Tasmania, the adjustments

required to meet the situation in 1970-71 would need to be made in

those States.

"The ultimate objective would be to adjust production to market changes so as to provide returns more closely related to

actual market realisations."

Mr. Anthony said the Council ts proposals to meet these

objectives covered two phases:

First, immediate action to secure the support of dairy

factories and farmers in Victoria and Tasmania for a plan to limit

their production of milk during 1970-71, with the objective of

containing total Australian Droduction to 220,000 tons of butter

and 70,000 tons of cheese.

In its submission, the Council had stressed that any

decrease in the underwriting level for butter and cheese in 1970-71

would have widespread repercussions throughout the industry, and

its proposals to implement production restraints next season were

therefore conditional on the Government continuing to underwrite

returns to producers at 34 cents in 1970-71.

Second, a series of supporting measures to be taken by

the Commonwealth, State Governments and the industry as part of a

national plan for the readjustment of the dairy industry.

These measures included

the early passage of the legislation to implement the

Marginal Dairy Farms econstruction Scheme and the

legislation to buttress the present voluntary

equalisation scheme

• an immediate stop to the development by State Governments

of new farms for dairy production

• the immediate licensing of all existing dairy farmers,

with a provision that no new licences be issued except

by agreement of the Australian Agricultural Council

• the prohibition of the importation of cheese while

controls on the production of Australian dairy products

were required

the introduction by all State Governments of legislation

to control the production and sale of cooking margarine

and imitation milk

a continuation of bounty on exported processed milk

milk products and an extension of the bounty to cover

all full-cream processed milk products

• the provision of devaluation compensation on all dairy

products other than butter and cheese.

Mr. Anthony said the Council had told him that, for its

part, the industry would take action to re-organise its domestic

marketing structure and to increase research into the development

of new, competitive dairy products.

Furthermore, the Australian Dairy Industry Council would

make an examination of proposals designed to reduce overall milk

production over a period, including a two-tiered price scheme.

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Mr. Anthony said: "The proposals submitted to me

today by the dairy industry are aimed at providing a solution

to the difficult problems confronting the industry.

"The position has now been reached, as with wheat,

where production restraints are required.

"Like those in the wheat industry, the dairy industry's

leaders have shown that they have the courage to accept the

responsibility of talking difficult decisions in-the long-term

interests of their industry."

Mr. Anthony said that every endeavour would be made to

have expedited the legislation dealing with the Marginal Dairy

Farms Reconstruction Scheme and the eoualisation scheme.

However, before the Government could consider the main

aspects of the industry's new proposals it would_ need to have

details of the plan to limit butter and cheese production in 1970-71.

Mr. Anthony said he had been informed by the industry

leaders that a committee had been established to formulate and

implement the proposals, and thE.t a detailed plan of action would

be forwarded to him when the discussions with the industry had

been completed.

CANBERRA

18th May, 1970