55 J
T
. zS UNITE" D C' AM . CCITIO 7HSLA ; D
I anm leased to be here to open your Annual Confe rence.
Your association is a most valua! hie forum for marshalling and
exchanc-in7 vi ews at a time whl-en exp-; ertise andi manaaenment skills
are SO central to the cmpetitiveness of rural indust ries.
1.979-80 has been an eventful year for the livestock indust-ries;
and we mee-,, for tile fIrst tim-e th-is dJecade, With signifrc*-ant
ach-' ievements . beh-Lnd us i. n the rural sector.
Cf course, recently, thJesC I ardI--T., on achievements nave been
sorel tested by drourI-h -; n cht he history of -% ustra'-ak s
ac-culture, ha-js a lwa vs hee n a re cu * ri* n c th a.
A Ndr b-ca-use of the unccrtai. nty and financial priessure createdl
for farm-ers by Austra) l i. a' s unre-iable. cli m; te ther Govenmen
acepts a continuinog co;; imitment to provide funds to SZ: Ltes
lor r-2Lief from natural dis.. qsers.
zor e~ 2r , in 1977-78, the mwat oenet~ o e
32. ii to the S LaLes 17o rel F f fr om crou 7ht an in
19U75" -in i mproved con-I. I L r5 i1 o
Because the battle to coinit-oi it'f efct of dr": cni~ n
is an,-o7--oGic one for th utainfarmer,, i annou-cecd on.-
1.4 Aioril a seriLes OF 7, overnmen ' n-asures design7, ed ecua
tne Ce~ ei~ no~ f r-" nrrc s1c ssatreo rag; e f ac ite want: C
reiulaIonC1 systems.
As a rsi: of these r~ r o a: nimc~ t2
c add new b-. ores : is, irrigatiLon and' da.-s
to taelr faciLt C omb a t CI r-i. hr.
F'ormerl-1v, Ctha expend ltu-re ; 7.' v'rI -n th's IL1I . col
Fe e all Sc iL-atnu re w . l -ir a I c! 7 LC
dei.-tio ) r Laxaition niirp-osz-:. e i the Nerr I.: S
iLncurred.
new-. faciic es, 1r.: p-e-. u 0. as depeie l ve the coursac;.
of isl. n
Anc' thaos e i~ m led l r ifor -Lhei vsnn ~ 1O. C
thle s ions thtat hae e n~~ ued
2
Farmers who take advantage of tLe new policy will be increasing
their abLlity to withstand extnc: cd dry conditions
Such measures represent, for Aus: tralian farmers, a long-term
insurance policy against water shortages in the future; and a
long-term encouragement for the imorovement of Australia's farms.
Our entry as a nation into the new decade has been marked by
a welcome improvement in our economic health; and an increasing
world demand for supplies of food from the handful of world
net food exporters.
Because crop failures, from time to time, place varying and
sometimes extreme pressure on these food supplies, opportunities
will always exist for efficient producers who can meet world
demands. are entitled to be optimistic about this prospect because
we have had many efficient lower cost industries which will
enable us in the 80s to be among the better performers in the
world scene for commodity producers.
Our efficiency will enable us to meet any emerging difficulties.
For there are signs of deterioration in the international economy.
At the heart of this has been a dramatic rise in the price
of oil by 125 per cent since the end of 1978.
The deterioration in the world oil situation has created the
risk of oil shortages in the longer term for many countries.
Only energy efficient nations will be able to minimise disruption
to their economies. Parity pricing for oil is essential if
we are to conserve scarce oil reserves, and if we are to encourage
alternatives to the use of oil.
In the light of these demands, our oil parity pricing system,
far from being a problem for Australia's energy users is, in
fact, the only policy which can offer a long term solution.
to their needs. Ventures like the giant Rundle shale oil project
would not be viable without the incentive provided by parity
pricing. Yet now, in the light of recent announcements by the
joint venturers, Rundle could come on stream as the supplies
in Bass Strait run down. Without these developments, we risk
becoming beggars for fuel in the late 1980s.
We would not then be paying, as we are today, the lowest world
price. Rather, we would be at the mercy of spot prices, prices
whic. h cash in on factors of limited supply and unlimited demand,
factors which we must seek to avoid now. / 3
3
In an energy scarce world, wxe 1iv@ in a privileged position
of relative energy abundance. Uc must match that position of
privilege with a sense of resoonsiblhty for the energy needs
of the generations of Australl-ns who follow us. I am mi. ndful
of the short-term ffect parity : rici. n has on rural producers,
hut I bel. ieve it is the only res: onsible course to secure the
utCure energy needs of all Austral. i. ans. Even with pari* y or icing
for oil, the price of super petrol in , ustralia at 32 cents
a litre is amongst the cheapest in the western world, on a
par with the U. S. A. and com-parinz more than favourably NNeewth
Zealand at 45 cents a litre; Germany at 59 cents: at 68
cents; Japan at 66; the Nethei. and-! s at 68, Italy at 72; and
France at 75 cents a litre.
Nonetheless, the latest oil crisis has contributed to a number
of key countries passing through a stage of accelerating inflationi
and rising interest rates.
In the 12 months to March 1980, inflation in the U. S. A. rose
by over 4-percentage points from about 10% to nearly
In the same period, inflation in the U. K. rose from under
to almost 207, and the avera e inflation rate for OECD countries
rose by over 4 percentage points in the same period.
It is a measure of the success of our Government's policies that
in the year to the March Quarter, Australia's inflation rate
rose by a little over 2 percentage points from just over 8%
to 10%; more than 2 percentage points below the OECD average.
This means that the American farmer is not only facing hi. gher
inflation than his Australian counterpart; but also, the costs
induced by that inflation have accelerated.
, hile farm unit costs in Australia are expected to increase
by 10' in 1979-80; in the USA for example, they are expected
to rise by 14%, and in New Zealand by 167.
This serves to emphasise our international advantage and this
advantage has been hard-won. Our challenge in the decade ahead,
is to continue to keep our economic balance.
To achieve this, we must use all the economic weapnons at our
disposal restraint in public expenditure; reduction of the
Sudget deficit; responsible monetary policies and increasing
resistance to excessive wage increases.
. e also need to be competitive enouvJ and flexible enough to
expand our existing markets; to r2-enter old ones and to penetrate
i. nto new ones.
And we will achieve all these thns whl. le the Covern:. ent cont nu
to create the economic clirnate and rovide the incentive in
which the expansion of Australi a's i. ndustry can occur profitably. / 4
In spite of the difficult world economic environment, we can
claim considerable success on all these fronts.
In absolute terms, and relative to the achievements of our
major trading partners, our success against inflation has been
noteworthy. Our production costs are down with the result that our
international competitiveness has been substantially improved.
It is because of this position of growing economic strength
that the Government's negotiations to achieve increased access
to overseas markets has met with such success.
The major forum for these negotiations was the recently concluded
Multilateral Trade discussions.
There are, of course, on-going bilateral deliberations.
But through the MTN negotiations, Australia has secured improved
access to the European and United States' markets; and has
secured new commitments from the Japanese.
The Government's policy has been to fight for a reduction of
restrictive barriers which deny full justice to the efficient
producer and inhibit world trade.
This problem is particularly acute with the E. E. C.
But the Government has been successful in securing an improvement
in access for Australian exports to the European market. Under
the " ITN arrangements concluded last year, there will be a useful
but somewhat modest increase in access to the EEC for beef
from Australia.
W'e will benefit from a new Australia only quota, levy-free,
of 5,000 tonnes of high-quality beef.
1! e wi, ll also benefit from arrangements for increased access
for beef for ' direct consumption under the GATT levy free quota.
And in addition, our expectation is that the EEC will increase
access for all countries supplying frozen beef for m. nufacturing.
Other zains include a 2,250 tonne levy free quota per annum
for frozen buffalo meat and tariff concessions on offals, meat
e-, tracts, dried fruits and certain canned fruits.
CO. r discussions with the EEC are continuing in an atte:-t. to
:. orove market access for Austral-:: in products.
In AnriL, Minister . al discussions : wecre held in Canberra with
the V. ice-PresLdent of the EEC Commission, in the first of a
series of regular annual consultations at Ministerial level
between Australia and the Eurobean Economic Community.
The atcc ofthese cons ul -atons was good, addisusson
T'ne Cc-misssz Eo-ne-c was, however, left in no doubt_)_ as tothe io~
we attach~ oo to obtainingc reasonable access to t_-he Cormunitv
ior oui: r primary products and to moderation of the s
Dracti-ce of dlumning its heavily suhsidised. rural. surpLus on third
Oeugr oiatonswith the U. S. have nroduced sati-sfactory results
in ter-,-s. of: access.
Tnve euaranteed a minimum access level f or al obal b,, eef aot
oE: 1.2 Illi 4on pound s per annum
is ith'e first time such a guarnioe has been given.
. kn' 1. s 2ew e n orm all1y -s upvI an ro imaey hal o f thIe ar c a r
-a~ e t. Astralian boeef corrsrenow better able to Dolarn
Cor ; 7r f. ture on th-e ba-7sis of aj ti. r7 and! jredictableexo
Io-w vLl the American unor eef tan, be turned, on an-4
0: be e~ ner su cc esf ul In s e cuiJ. ng a r e(. Iu c tio n . S.
r2: ro2. : " S 3 cents a sudto U. S. 2 cents a -c'undC. . hc
ex'o o yield an extra r: ilo n t o S7 mi-i11on t--o Al sr a I a s
or Tefirst time [ or many decades US dutIY on ra-q woolis
0 ~ v~ dby 60". over a 3 year period. jO
6
These initiatives, in support of Australia's rural industries,
are further improved by our expectation that Japanese beef imports
are to increase steadily over the next two years and to reach a
peak 142,000 tonnes in 1983.
These successes in securing guaranteed access to overseas markets,
especially for our beef, take us a long way from the impoverished
Labor years.
In 1974-75, the Labor government, ignoring the fundamental stability
and basic insurance for the beef industry, provided by secure access
to markets, for 15 months ignored Australia's total exclusion from
the Japanese beef market.
It has been our determination since that time, that this should never
happen again to such a vital rural industry. It has been our
determination that never again should prosperity be sacrificed
by a lamentable indifference of government to the needs of rural
S industry. It is a tribute to the resilience of the rural sector and its
capacity to take advantage of an encouraging economic climate
that the recovery from the trough of 1974-75 has been so commanding.
In order to secure this recovery, the Government has acted, since
we ca.' e to office, to assist rural industries overcome the
uncertainty of the financial pressure that arises from variable
weather conditions and fluctuating commodity returns.
We believe that rural industries in Australia require a special
understanding from governments an. special measures which
minimize the consequences of adverse conditions.
To improve the long term viability of rural industries, the
Government has modified the tax averaging provision; established
the Primary Industry Bank of Australia which has already approved
$ 210 million to 3,000 borrowers; introduced in full the fuel price
Sequalisation scheme which will benefit people in country areas by
over $ 120 million in 1980-81; created the income equalisation
deposit scheme; abolished federal death duties; introduced a
comprehensive rural adjustment scheme; provided special
depreciation provisions for buildings and for the storage of
hay, grain and fodder; and recently announced the introduction
of new taxation concessions to assist in increased water storage.
To assist specific industries, the Government has increased the
wool floor price from $ 2.50 in 1975-76 to $ 3.13 per kilo in 1979-80,
and given a commitment that i L-wil be at least this level in
1980-81; introduced nev; wheat marketing arrangrements which
stabilise returns and facilitate earlier payment cor wheat
deliveries; provided assistance to beef producers during the
recent beef recession; underwritten prescribed dairy products;
renegotiated the Commonwealth-State sugar agreemrent with the
Queensland government to provide an improved system for feeding
domestic sugar prices; and helped fund a wider range of industry
research programmes.
The Government's dedication to economic growth, its determination
to secure international competitiveness, its. success in increasing
access to overseas markets, and its willingness to provide incentiV.: s
7
to Australia's farming cormmunity all these have created a new
buoyancy for rural industries.
Real income per farm more than doubled in the year ended June 1979
and has been approximately maintained this year.
The gross value of rural production this year is estimated
to be more than 60% higher than the level of two years ago.
And the value of rural exports is estimated this year to be
almost 60% above the level of two years ago.
Across a wide spectrum of industries, current performance
augurs well for the future.
For livestock producers, I know that central and northern areas
of Queensland are carrying a fair to good body of nature feed,
and will enter the winter period in fair shape.
The rural problem areas in Australia are southern Queensland
. and many parts of inland New South Wales.
I know that many of your members in southern Queensland are
facing a very grim winter and that the need for agistment is
very real indeed.
Drought, of course, is much tougher when it coincides with
poor export returns.
Fortunately, the market basics are sound for Australia's rural
industries, although I know that the faltering US economy is
casting a shadow over the beef trade.
However, beef prices in recent weeks have shown encouraging
signs of firming.
The sheep meat industry has also enjoyed strong prices at auction.
Sales to the high growth Middle East countries have expanded
strongly, as have live sheep exports. There is, ho w. ever, a
problem emerging for the Australian sheep meat industry in the
1980s. Only last Thursday, European agriculture ministers agreed
to most of the details of a common agricultural policy on sheep
meat. The fear ' is that, like other EC regimes, this agreemznt
will lead to a squeeze on imports, subsidised EC exports, or
to both. And this obviously would have adverse affects on Australia.
The decision is a most serious matter.
Up until Europe has represented a worthwhile :-r?. ret for
Australia w. hich could be threatened in the future by this decision.
But a further danger lies in. t-e very real prospect of our having
to compete In the import Middle East markets with subsidised
conmunity exports.
The Governn. nt believes that it is essential to reach ag. reement
with the EEC on their understanding of their possible future
developments on trade in third markets.
It is our determination to ensure that agreement is reached
with the EEC on a level of access to Europe which protects
8
our traditional level of sheep meat trade in that market. Prospects
in the wool market are highlighted by a concensus about an
underlying strength in wool demand.
There is reason, in a world where the cost of producing synthetic
fibres is rising sharply, to expect sound, longer run prospects
for this industry.
This is borne out by the fact that auction prices so far this
season have been 18% above the 1978-79 average.
Although the wool corporation has increased its market support
activities in recent months, its stockpile is still very low
by historical standards, and is over 100,000 bales less than
at the close of last season.
The outlook for wool in the next financial year is a good one,
and it has already been announced that the floor price for that
year will be at least at the current level.
It is unlikely that this new floor will be announced before the
end of the current season. But there may be sound reasons for it
increasing. In the wheat -industry, apart from the problems created by
drought conditions in some areas, the position is encouraging.
In this financial year, wheat exports are expected to be double
any previous level, at a record $ 2.2 billion.
On current forecasts, wheat will be Australia's largest single
export significantly exceeding -wool and coal.
This has arisen from strong world demand, and the fact that the
area planted with wheat has increased markedly in recent years;
and the 1980 crop is generally off to a good start.
I appreciate that an issue of particular concern to farmers,
especially grain growers, is that supportive action taken by the
Australian Government to the United States response to the Soviet
invasion of Afghanistan.
I anhounced on 9' January 1980 that Australia would support the
US action of embargoing 17 million tonnes of grain to the USSR
by not picking up any shortfall created by the US decision.
Consistant with the US decision, of course, normal sales were
allowed to continue, so that shipments under existing contracts
continued unaffected.
Ho.. ever, we closely examined new contracts in grain to ensure
that our commitment was being fulfilled.
In doing so, two proposed sales of sorgum and one sale of maize
to the Soviet Union were prevented from going ahead, providing
an important contribution to Australia.' s stance onthis critical,
international issue.
In regard to future policy on grain sales to the Soviet Union,
you will be aware that the Government recently conveyed to the
grain marketing board its interimn decision that exporters of course / 9
ICII--C-0-
9
grains could now contract for up to 25% of last year's crop, provided
they can demonstrate to the Government that they traditionalily
enter into forward sales contracts at this time of the year.
However, the Government still views the Soviet invasion of
Afghanistan seriously indeed.
We wish to continue our policy of full support for the US.
But the Government is concerned to clarify completely the
policies of major grain exporting countries in relation to
1980-81.
Following the recent Brussels meeting, it is now apparent
that there are some issues on which further clarification is
required.
As a result, Peter Nixon will leave tomorrow for top'level
talks in Washington and Ottawa with the US and Canadian
governments. One of the real successes amongst rural industries in recent
years has been the dairy industry.
With government help, it has achieved one of the most
remarkable, if difficult, readjustments in Australia's agricultural
history. The industry is now somewhat smaller than it was a few years ago,
but productivity and incomes have risen considerably as a result
of the industry's increased competitiveness and its success in
securing new markets.
Another vital industry enjoying a significant recovery from
recession is the sugar industry.
During the last few months, world free markets sugar prices
have risen to the highest level since 1974.
With production and export restrictions now lifted, prospects
for the industry are indeed promising. However, there remains
one notorious practice which affects the viability of all
efficient rural industries the dumping-of subsidised agricultural
products on world markets.
We have persistently argued in the European Community that the
costs to be borne ihternationally by government subsidies
and protectionist devices has reached a level which is not in
the community's best interest or in the interest of more
efficient producers.
It is of little benefit t: o industrialised nations to tax the
communities heavily, to oay for subsidised goods whose over
production leads to dumping.
And it is of no benefit to efficient economic producers and
exporters who are denied markets and are unable to fully develop
low cost industries which will provide reasonably priced food,
on a sustainable basis, not subject to political interference.
We believe that our approach is eminently reasonable.
We have simply urged modification of the EEC policy so
that the Community's excessive practice of dumping on
world markets is moderated.
The Government's success at improving our access to existing
markets has been complemented by our development of new
markets. The liddle East has now become our largest market for live
sheep and sheep meat, and is an important customer for
Australian dairy produce.
The Chairman of the Australian Wheat Board, Sir Leslie Price,
co-mented recently that the Middle East is our most rapidly
expanding wheat market.
In 1979, the Wheat Board shipped 3.5 million tonnes to the
Middle East, and the figure could rise to 5 million tonnes
in 1980, or nearly 40% of Australian wheat exports.
The Asian market has also become much more important for our
rural export industries, with rising sales in grain, meat. and
dairy products.
These developments augur well for the future.
The current strength of the Australian economy; the underlying
increase in world food demand; the vigorous and successful
attempts by exporters and the Government to expand our markets;
all these have established the foundation for continuing growth
of our rural iindustries. But the fact that we have been able
to succeed in the difficult world economic environment does not
entitle us to be complacent.
We must re-double our efforts to prevent defective policies
and irresponsible economic management jeopardising the
significant results of the last four years.
It is a salutory experience. to recall the problems confronted
by our rural industries, indeed all industries, in the Labor
years. At that time, in separate 12 month periods:
Commonwealth budget outlays rose by 46%;
Federal award wages rose by 38%;
Farm unit costs increased by
SReal income per farm fell by over
SThe Australian beef industry was excluded from
Japanese markets; and
In early 1975, only a rank and file revolt prevented
the Labor dovcrnment from reducing the floor price
for wool from 250 cents to 200 cents per kilo. ./ ll
11
Inevitably, under this assault, Australian industries either.
collapsed, or were unable to compete internationally and
available markets were lost.
Farmers still remember with great anxiety, the Coombs
Report commissioned by the Whitlam Government.
Acting upon this, Labor cut a swath through assistance to
people in country areas, largely on the basis that such
assistance was not needed.
Such a look into the past reminds us that the foundations
of profitable industry are hard to build; easy to destroy.
It reminds us that hard-won gains can easily be squandered
and we have come too far to contemplate sacrificing'the
benefits that we have secured.
In the decade ahead, our efforts must be spent in consolidating
our advantages and building on our opportunities.
As always, there will be difficulties through drought, the
world economy, farm costs and the tendency towards variability
in commodityprices all these will be severe enough
tests in themselves.
We cannot allow them to be complicated by Government extravagance
and incompetence which would deal to the rural sector the
kind of body blow it experienced in the
Rural industries have much to gain from a well-managed
domestic economy.
We enter the 80s with the kind of economic stability and
international competitiveness that suggests a decade of great
opportunity for Australian farmers.
The big industries of Australian agriculture wool, meat, sugar
and wheat, have found long-term prospects.
The dairy industry is now much better placed to take advantage
of market prospects.
Moreover, there are emerging industries the growing rice
industry, the developing oilseeds industry and a spectacular
growth in cotton production.
When one realises that Australia's agricultural exports in
the last financial year represented more than 40% of Australia's
total exports, then an understanding can be gained of the
important social and economic benefits provided to the nation
by rural industries.
This export success must be maintained.
We are well located geographically to meet any increase in food
import demands of the high growth Middle'East and Asian markets.
12
Global food security, particularly for increasingly import
dependent developing countries, is likely to be a continuing
political issue in the
This grow-. ing import dependence of developing countries
reoresents a challenge for Australian agriculture that
historicallv it has met; -and organisationally and economically
it is caoable of meeting again.
In the 80s Australia will have an increasingly important role
as a net food and energy exporter.
The Government is determined to secure the economic environment
in which these roles can be fully and productively played out.
Inevitably, one of the challenges in any decade is the challenge
of change. So it will be with rural industries.
There will be new domestic and international agricultural
demands and new and rapidly developing markets.
It is through an industry-oriented organisation such as yours
that these changes can be most beneficially accommodated.
Your initiatives and those of your parent body will be central
in the decade ahead in fashioning* the response of all Australian
farmers to the opportunities of the
In this task you can be assured of the constructive support of
the Government. 000---