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Debt reconstruction and farm adjustment



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DEBT RECGIIS T:RUCTION AND FARM ADJUS TE NT

The Minister for Primary Industry, Mr. Anthony, said

today that he had received a preliminary report from the Bureau

of Agricultural Economics on the immediate and longer-term needs

for debt reconstruction and farm adjustment.

He said the report, which he had called for on the 19th

August this year, paid particular attention to the sheep

industry, but also considered the problems of-other industries

in the rural. sector.

Mr. Anthony said the report showed that a substantial

part of the sheep industry (including the wheat-sheep industry) was experiencing a period of considerably reduced incomes.

"The Bureau's report notes that both short and longer-term factors can be identified as contributing to the

difficulties in the sheep indu.stry," he said.

"The short-term factors such as drought - prolonged in

some regions - have placed a severe financial stress on the sheep industry, particularly at a time when the number of long-term factors such as increased market difficulties for both wool and wheat and continued inflation in operating costs have

been of increasing importance,

"These short-term and Ion;-term factors have had their

effect on the rural sector gneraliy, although they have been

most serious for the export industries.

"The financial situation of farmers and graziers in Queensland, many parts of Western Australia and in the Western

Division of N.S.W. is particularly serious.

"From the data obtained by the Bureau during its investigations it is clear that a significant proportion of

producers in these areas are likely to become insolvent unless

they are provided with access to Io^ig-term credit for the

reconstruction of their debts.

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"However, the report emphasises that long-term debt

reconstruction would be of assistance only to those producers

whose businesses are basically sound and who have good prospects of servicing the capital value of their debt after debt reconstruction has taken place.

"Debt restructuring must therefore be tied in with

farm adjustment and it is possible that in the process of industry adjustment there will need to be an adjustment of the structure of the industry, including some re-organisation of capital and labour inputs.

"The report discusses a number of possible measures which could be taken to tackle the indebtedness and structural problems of the rural sector, and I am examining these measures very carefully."

Mr. Anthony said he was conscious of the need for an integrated series of policy measures to facilitate a more rapid adjustment in the structure of the sheep industry to its economic outlook.

CANBERRA,

30th October, 1970.