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Address to the Organic Retailers and Growers Association of Australia Conference, Burnley, Victoria

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Australian Department of Primary Industries & Energy

Senator The Hon Judith Troeth Parliamentary Secretary for Primary Industries and Energy Address to the Organic Retailers and Growers Association of

Australia Conference,

Victorian College of Agriculture & Horticulture, Burnley, Victoria, 29 August 1998

Ladies and gentlemen, I would like to thank you for inviting me here today to open your conference.

The organic industry has had a major influence on the rest of agriculture. It has shown alternative ways to address issues and in particular the need to have a deep understanding of the ecology of the soil, plants and animals.

Increasingly organic practices are being adopted and adapted for use in traditional agriculture where there is a need to develop improved production systems that provide large quantities of produce at affordable prices to consumers, while maintaining the resource base.

Last Thursday, some of the women who went to the International Rural Women's Conference that was held in Washington in July, gathered again to give the Minister for Primary Industries and Energy, John Anderson, their views and impressions of what they saw in the US and what they learnt from the conference.

One of the overriding messages they brought back, was the growing awareness of food safety, quality assurance, biotechnology and the huge potential for organic foods in the US.

And according to the trend, Australia usually follows closely behind.

There is no doubt that Australian agriculture has come under an increasing range of pressures in recent times and there is continuing and growing concern for the need to develop better methods of production systems that not only return a profit for growers, but also protect the natural resource base and meet the increasingly discerning needs of consumers.

Organic agriculture is one major group of production systems. While this system and its variants are partly based on philosophy, they are also based on well tried practices. A foundation principle is that the system needs to be sustainable.

I must say, that when I talk about sustainable agriculture I am not talking about just one system. I am talking about a range of systems tailored to the local climate, aspect, soil, markets and other factors affecting individual farms.

But, of course, the final arbiter of any product is the consumer.

While many farmers have wanted to move to organic processes for their own reasons, many consumers have been looking for products which meet their desires and are consistent with their values.

In particular, they are increasingly seeking products which have integrity in terms of quality, including freedom from residues and contaminants, and which they believe have been produced in an environmentally friendly way.

This strength in demand in international markets has increasingly provided new opportunities overseas for our organic produce.

Our location in the southern hemisphere and across a wide climatic range enables us to supply a huge variety of produce at times of shortage in the high value northern hemisphere markets.

However, for domestic as well as overseas consumers, there is a need to ensure that the produce is what it is claimed to be.

The establishment of labels and certification arrangements continues to be a major issue for you all.

Having recently introduced stronger country of origin labelling laws, I understand all too well the priority that some consumers and producers place on informative and reliable labelling. 08/10/1998

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A lot of time and effort in the industry and Government has gone into this work over the years. It is important to develop systems that minimise fraudulent activities to ensure the long term future willingness of consumers to pay premiums for organic produce.

I understand that a meeting was held this week in Sydney between the industry and government agencies to look at the issue again and the options that are available to the industry in developing a workable and meaningful system.

I believe that self regulation, codes of practice, labelling arrangements and certification of the whole supply chain from producer to retailer are needed. This presents a big but necessary challenge for the industry. It is important that all the links in the supply chain are covered so that any breakdown can be really addressed.

Conferences such as this are valuable opportunities to progress this.

As well as ensuring the integrity of organic produce there is also a big challenge for the industry to develop integrated supply management systems. These systems are needed to ensure continuity of both quality and quantity of produce. Continuity of quality supplies is necessary to keep the loyalty of your customers.

As I see it, the two issues go hand in hand, if the industry is to supply a product that meets customers requirements and is more likely to attract a premium in doing so.

This is not easy for an industry largely established on small scale production and direct selling, but it is a must if the industry is to fulfil its potential.

The Government, through a number of its agencies is working with industry to identify key supply chain impediments which limit the industry's capacity to meet both export and domestic demand.

The Government has also made significant contributions to the organics industry through funding of research and development. The rural industries Research and Development Corporation (RIRDC) has a significant research and development program dedicated to the organics industry.

The program, which was drawn up after consultation with the industry, has five priority areas. In order of priority they are: communication and education; conversion processes; organic systems design; soil management; pest and disease; plant and animal nutrition; and market development.

Today, as well as opening this conference I have been asked to launch a new quarterly research and industry newsletter Australian Organics produced by RIRDC's Organic Produce R&D Advisory Committee and the Organic Federation of Australia.

This will be posted to all known certified organic and bio-dynamic members across Australia as well as key people in research, government, industry and retail.

I congratulate those people behind this initiative and hope you will all find it very informative in keeping up to date on industry developments.

Macroeconomy The Government, along with farm businesses and agribusinesses, is also a major partner in maximising the sector's contribution to the economic, social and environmental well-being of the nation.

The flow-on effects to the agriculture and agribusiness sectors of economy-wide policies are quite profound.

This can be seen clearly in our demonstrated fiscal responsibility and achieving and maintaining the Budget surplus.

The flow on effect is the lowest inflation and interest rates we have had in 30 years.

In spite of the media focus on the currently low of the Australian dollar the upside is that this makes our exports more attractive and encourages growth in our vital export industries and provides some unique opportunities for Australian exporters to target niche markets.

For business people and farmers carrying debt, lower interest rates improve their ability to service their debt and to meet general business and living costs.

The Government's sound economic management has also ensured Australia is well-placed to deal with the fallout from Asia’s economic crisis.

Taxation Fet me now tell you about the Government's proposals for reforming the taxation system.

Rather than trying to tinker with or patch-up the present inequitable taxation arrangements, the Government is 08/10/1998

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proposing major reform of the Australian tax system at both Commonwealth and State Government levels. It would have positive effects across the board for all agricultural industries and business generally.

The tax package proposals are about recognising that a modem tax system is one of the keys to Australia's future economic growth and dynamism. They are about helping to gear-up the Australian economy to meet the challenges of the twenty-first century.

Some of the key elements of the package include:

• the introduction of a 10 per cent Goods and Service Tax (GST) to replace not only the Wholesale Sales Tax but also nine indirect State taxes; • exports of goods and services to be GST-free, making them competitive against our overseas competition that already has such a system; • an input tax credit system will operate so that the GST that businesses pay out is returned to them; • substantially reduced fuel costs lowering both business and living costs in rural and regional Australia; • significant income tax cuts through lower tax rates and higher income thresholds; and • provisional tax, and the Reportable Payments System which farmers have always hated, is to go.

This tax package also sets out to alleviate the biggest headache of all for business and farmers - the high cost of fuel. It will cost less to transport produce with the excise on diesel for heavy transport dropping from 43 cents a litre to 18 cents per litre.

Lower road and rail transport costs will reduce both business and living expenses in mral Australia. The costs of transporting groceries, clothing and furniture will also go down.

The tax package will not only bring down farm business costs but increase equity between rural and regional Australia and the cities.

Everyone in this audience should be looking forward to the introduction of the government's tax package - it reduces income taxes; brings down business costs; gives more to families and, through lower transport costs (this can not be over emphasised in the rural and remote Australia), will bring the city and country closer together.

The Government will continue to pursue other areas of reform to encourage investment and growth. This will include, labour market reform and reform of Australia's waterfront.

Internationally, the Government will continue to pursue trade liberalisation to ensure fair access to overseas markets for Australia's farm products.

For a country that exports 80 per cent of what we produce in agriculture we simply can't afford not to fight for trade liberalisation if we are to find markets for our produce.

And any barriers we might put consider putting up, will simply lead to retaliatory responses from our trading partners.

With organics, the domestic market still offers much potential with growth estimated at around 20 per cent. But as with most of our agricultural products, our big future is in exports. I understand that the US industry is worth US$2.6 billion and is growing at a similar rate to our own domestic market. If this is any indication, the potential is huge.

Ladies and gentlemen. I would like to conclude by saying that your industry has great potential, not only in meeting consumers needs but in helping Australian agriculture move towards more sustainable production systems.

Yes, you do face some serious challenges in ensuring the integrity of your product, but I am sure that given your enthusiasm these will be addressed.

I wish you all well, and declare this conference open.

Last updated 29 August 1998

URL 08/10/1998