Address by The Hon Tim Fischer MP, Deputy Prime Minister, Leader of the National Party, Minister for Trade, at the Grains Week 1997 Conference

Introduction

I am delighted to be here, and I want to thank the Australian grains industry for the opportunity to say a few words this evening.

The presentation we have just heard from the Australian Wheat Board shows that the Board and Australia's grains industry as a whole understand very clearly the challenges and opportunities facing the industry as we move into the 21st century.

I have been very impressed by some of the work that the Wheat Board is doing to secure the interests of the industry in a very competitive market. For instance, I was greatly encouraged during my recent visit to the Middle East to discuss the involvement in the Five Star Flour Mills project in Egypt, which presents an ideal opportunity to secure our position in the emerging private sector of Egypt's deregulating flour industry.

Similarly, I welcome the news that the Wheat Board is to form a strategic arrangement with Japan's Zennoh to take advantage of a deregulated market environment.

Before I turn to prospects for Australia in the international marketplace, I know that some of you will have an interest in what is happening in the context of Iran.

The Government has invested time and effort in building up the commercial relationship with Iran and the Wheat Board has taken full advantage of this. The drought in Iran has resulted in record purchases and premium payments which will benefit the Australian wheat industry.

Last week our Ambassador to Tehran was recalled following the verdict in Germany on the Mykonos case. Both I and my colleague Alexander Downer, Minister for Foreign Affairs, have had discussions with him on the situation in Iran.

Before we formulate any response to what has transpired in the judicial process we will consult with our partners in the European Union, Canada and New Zealand. All of us recognise the importance of our wheat trade and with that in mind Australia will not take any hasty and/or unilateral action and the Government is not intervening in commercial transactions between Australia and Iran.

I have informed the Australian Ambassador to Iran, Stuart Hume, and the Iranian Ambassador to Australia, Mohammad Roohi-Sefat, of this position today whilst reiterating Australia's condemnation of terrorism.

The Australian Industry - A Strong World Competitor

Turning now to prospects in the international grains market, over the longer term the outlook is very positive. Without doubt, grains will continue to represent a major proportion of both human and livestock food consumption. Global grain supplies are expected to at least keep pace with the growth of demand over the next twenty years, despite an expected increase of about 1.8 billion in the world's population.

But Australia won't reap the future benefits without putting in the `hard yards' at the industry and government level. With the international market's increasing sophistication - plus higher production levels and increased trade in grains - Australia can expect to face intensified competition across the globe. We can also expect an even stronger focus by importing countries on quality control, product and market differentiation.

The conclusion is clear - Australia's grains industry must be extremely well prepared to meet the international challenges I have just outlined if Australian farmers and growers are to make the most of the export opportunities on offer.

Over many years, Australia has looked to the international market to receive the bulk of its grain crops. This sustained and highly successful export orientation has fostered an industry which is finely tuned to developments in the global market place, and one which is very competitive.

Australia's grains industry has been raised in the market equivalent of the `school of hard knocks' and, as a result, it can fight - and beat - the best of our competitors on the world stage.

But none of us can rest on our laurels. Continuing quality control is very important. I am pleased to say that - to date - the grains industry is meeting the demands of its customers in terms of quality assurance and deserves its high reputation for excellent food safety. The challenge ahead is for industry to meet the ever more specific and stringent market demands through comprehensive quality control research and implementation.

Research and development allows the industry to adapt to the demands of technological change. Through the R & D Corporation, financed jointly by industry and Government, the industry has a proven record of improved returns directly attributable to R & D management and investment. These returns have been achieved through innovations such as new farming practices or new plant varieties.

The industry's commitment to this work is absolutely vital. My ministerial colleague, John Anderson, will be speaking about this in more detail tomorrow.

Of even greater importance, however, is the review of arrangements applying to Australia's marketing bodies so that they can respond quickly and effectively to changing marketing conditions. This review includes, of course, the restructuring of the Australian Wheat Board to utilise the capital base provided by the Wheat Industry Fund.

Industry has recognised that the AWB needs greater flexibility to respond more effectively to changes in international marketing, to compete successfully and maximise returns to growers. More than that, the industry has acknowledged that a marketing structure which is fully commercially driven is best achieved if it is owned and controlled by industry rather than by Government.

The AWB restructure is being driven by the grains industry. It is moving forward in a way which will allow the AWB to convert in an orderly and sensible way to a grower-owned and controlled company with a fully commercial approach to marketing. At the same time, the Government has made clear its commitment to the single desk export system.

Grain marketing has moved away from the concept of "bulk commodity" marketing and is focusing on differentiating between individual markets and buyers (such as processors and livestock industries), and products. This includes the development of new grain products to suit customer preferences, particularly with the increasing development of new consumer products.

That is why the AWB's `branding strategy' is on the right track. It can help strengthen Australia's competitive position with customers by differentiating our various international wheat products from each other and the respective competitor wheat grades. It can enhance the AWB's well deserved reputation for innovation in the market place.

The Government's Pragmatic Market Access Agenda

For its part, the Government has a very pragmatic market access agenda which aims to get concrete, tangible results for Australian farmers and growers. Since coming to office last March, the Government has been determined to improve market access across the board through a coordinated policy approach at the bilateral, regional and multilateral levels.

We are strongly committed to close cooperation with industry to expand existing markets and secure new markets for grains exports. I congratulate the industry on its success in negotiations against strong competition which have allowed significant sales to India, Iran, Iraq and East Africa. The Government is more than ready to help in a practical way in these types of important negotiations.

But we also have to be aware of what is happening at a wider global level. In that context, I am convinced that further agricultural trade liberalisation will help Australian exporters take advantage of the growth in world food demand. It will mean more jobs for Australians from all walks of life.

Forecasters predict a doubling of world grains trade over the next twenty years driven largely by growing demand in East Asia and especially China. Trade in grains as a proportion of world production could increase from around 10 per cent at present to 14 per cent by 2016.

That is why the Government is working hard to secure a better framework of rules governing world agricultural trade. This will help reduce the distortions caused by domestic support policies and export subsidies.

While much remains to be achieved in the liberalisation of world agricultural trade, the Uruguay Round has already brought about positive changes which will have an irreversible impact on the global grains market.

At the landmark World Trade Organization Ministerial Conference held in Singapore last year, for example, Australia took the lead in securing a full commitment that preparatory work begin this year towards the commencement of a new round of negotiations on agriculture in 1999. Organisational arrangements have been put in place in the WTO Committee on Agriculture for this preparatory work.

The Cairns Group of agricultural exporting countries, which I chair, will take an active part in the discussions leading up to the 1999 negotiations. The Group will be meeting at Ministerial level in Brazil in June to discuss its approach to further agricultural trade reform.

There are clear signs that the disciplines of the WTO Agriculture Agreement relating to support arrangements and export subsidies have already begun to change longer term marketing policies, particularly in the European Community and the United States. Of course, while there has been some respite in the level of export subsidies applied over the past year, we must continue to keep a very close eye on EU and US export subsidy programs as production and market trends unfold.

Conclusion

In conclusion, I am convinced that the Australian grains industry is poised to enter the new millennium as a key, highly competitive player in a more and more sophisticated global market.

I commend the dynamic and professional work done by the AWB over so many years. More than that, the market leadership gained by the entire Australian grains industry is something we can all be proud of.

I am delighted to launch formally the AWB product brands, and I invite everyone to join us for the `business end of proceedings' - sampling the delicious food and entertainment now on offer.