A O

MEDIAMINISTER FOR PRIMARY INDUSTRIES AND ENERGYJOHN KERIN M.P.CANBERRA RELEASEPIE 88/190JÃÂ±ÃÂ¸?..;:/ÃÂ¸:Â·=ÃÂ½/ÃÂ:Ã‘ÃÂÃÂÃÂ PARLIAMS-MVASY LIBRARY C. I. S.May 31 1988J o in t Statem ent by the M in is te r fo r Prim ary In d u s trie s  and Energy, Mr John K e rin , and the A cting M in is te r fo r  Foreign A ff a ir s  and M in is te r fo r  Trade N e g o tia tio n s , Mr Michael D uffyU .S . ABOUT FACE ON WHEAT PRODUCTIONPrim ary In d u s trie s  and Energy M in is te r, Mr John K e rin , and Trade N e g o tiatio n s M in is te r , Mr Michael D u ffy , today accused the United S tates o f a b la ta n t about face over wheat produ ctio n .R e fe rrin g  to  the US Wheat Program fo r  1989 announced by the S ec re ta ry  o f the US Department o f A g r ic u ltu re , Mr K erin and Mr D uffy said the d ecision could see the U nited S tates produce as much as an a d d itio n a l 12 m illio n  tonnes o f wheat next year -  an amount almost e q u iv a le n t to  A u s tr a lia 's  to ta l 1988 p ro d u c tio n .The M in is te rs  said the United S tates had claimed to  be doing o th e r wheat-producing c o u n trie s  a favour by reducing the acreage o f wheat p la n te d , so reducing the stocks o f surplus wheat. Now the US was saying i t  was having to  expand i t s  p o te n tia l production to  redress an imbalance in  world stocks.The U nited S tates could not have i t  both ways.The key element o f the US d ecision sets an acreage reductio n ra te  fo r 1989 o f 10 per c e n t, compared w ith  a ra te  o f 2 7 .5  per cent fo r 1988 -  w ell below the le v e l o f 20 per cent allowed under the US Farm A ct." A u s tra lia n  farmers have a lre a d y  s u ffe re d  s u b s ta n tia l losses as a r e s u lt o f US wheat p o lic ie s ,"  the M in is te rs  s a id ."They are now faced w ith  the prospect o f even more subsidised wheat e n te rin g  world markets next y e a r."The e x te n t to  which the acreage re d u ctio n  program depresses world p ric e s  w ill need to  be assessed in  the lig h t  o f market s e ttin g s  next y e a r. What is  c e r t a in , however, is  th a t the d ecisio n  w ill add s tra in  to  an a lre a d y  d i f f i c u l t  n e g o tia tin g  environment in  the lead-up to  the December Mid-Term Review o f the Uruguay Round."C ountries are l i k e l y  to  view the US d e c is io n , w ith some j u s t i f i c a t i o n ,  as d e s ta b ilis in g  and in c o n s is te n t w ith  in te rn a tio n a l commitments given a t the launch o f the Round and by OECD M in is te rs  less than a fo r t n ig h t ago," the M in is te rs  s a id .

EXPLANATORY NOTES OK THE U'5 frri&A'iÂ· PRULKAfl

P ric e  support is  provided by the loan ra te  which is  the

le v e l a t which US farm ers can o b ta in  a loan from the

commodity c r e d it c o rp o ra tio n  (CCC) w ith  t h e ir  wheat as  c o lla t e r a l

-  farm ers can d e liv e r  t h e ir  wheat to  the CCC in  f u l l

s a tis fa c tio n  o f the loan

-  the loan ra te  th e re fo re  sets a f lo o r  p r ic e .

Income support f o r  crop farm ers is  p ro vid e d  through the

ta rg e t p ric e  mechanism. E lig ib le  farm ers o b ta in  d e fic ie n c y

payments based on the d iffe re n c e  between the ta r g e t p ric e   and the h ig h e r o f (1) average market re tu rn s  o r (2) the

loan ra te  fo r  each crop.

To be e lig ib le  f o r  p ric e  and income s u p p o rt, crop farm ers

are re q u ire d  to  p a r tic ip a te  in  acreage re d u c tio n  programs

(ARPs)

-  when a farm er opts to p a r tic ip a te  in  a commodity

program he is  assigned a base acreage, based on h is   h is t o r ic a l p la n tin g s . Required cu ts  in  acreage in

in d iv id u a l years are expressed as a percentage o f t h is

base acreage. Farmers agree to  devote such id le d   acres to  co n se rva tio n  uses o r non-program crops

-  d e fic ie n c y  payments are designed to  compensate farm ers

fo r  id lin g  land (and to  c o n s tra in  government o u tla y s )

-  in  a d d itio n , farm ers can be re q u ire d  (o r can

p a r tic ip a te  v o lu n ta r ily )  in  p a id  land d iv e rs io n

program s.

In  1986, wheat farm ers were re q u ire d  to  id le  25% o f t h e ir

base acreage and, in  1987 and 1988 to  id le  27.5%.  L e g is la tio n  p ro v id e s  in  1989 f o r  a maximum d is c r e tio n a r y   le v e l o f 20% which has been s e t a t 10%.

Under the US Farm le g is la t io n ,  the ARP ra te  f o r  th e  wheat

program in  each year is  based on estim a te d  sto cks a t the

commencement o f th a t season. Stocks as a t May 1989 were  estim ated on 10 May 1988 a t 800 m bu she ls, below the  th re s h o ld  fig u r e  o f 1,000 m .b. a t which ARP o f between

20-30% become m andatory. The S e cre ta ry th e re fo re  had  d is c r e tio n  to  s e t an ARP o f 0-20% f o r  the 1989 c ro p . The

run-down in  sto cks which has occurred in  the c u rre n t season

is  la r g e ly  a ttr ib u ta b le  to the bonus com m odities used in

the EBP subsidy program and to  re g u la r a u c tio n s  by USDA o f  s u rp lu s  s to c k s , which have leaked in to  the tra d e  system.

: f 5

US CROP YEAR (JUNE/MAY)

1987/88 1988/89 1989/9

( m illio n  acres)

Harvested Acreage 55.9 55.5 65.6

( m illio n  tonnes)

P ro d u ctio n 57.3 57.8 69.6

E xports 42,2 42.2 38.8

Ending Stocks 34.9 21.9 24.0

(US $ I t )

Farm P ric e 95.53 112.07 102.88

(US $)

D e fic ie n c y  Payments 3,210 1,972 2,808

(a) Based on an acreage re d u c tio n  program o f 10%, loan ra te !  Of

(U S $ 1 5 0 .6 5 /t).

Source: P re lim in a ry  R e g u la to ry im p o rt A n a ly s is , US Department o f  A g r ic u ltu r e / A g r ic u lt u r a l S t a b ilis a t io n  and C o n se rva tio n  S e rv ic e , 5

A p r il 1988.

L

PARLIAMENTARY Lid' TRANSCRIPT OF DOOR STOP INTERVIEW WITH PRIMARY INDUSTRIES AND ENERGY MINISTER  JOHN KERIN -  MAY 3 1, 1988 Q: Do you b e lie v e  Senator B u tto n 's r ig h t  when he describes Labor's uranium p o lic y  as s illy ? A: T h a t's  h is d e s c rip tio n , and as f a r  as I'm  concerned, I'm  th e  M in is te r  th a t a d m in isters the p resen t p o lic y  and th a t was decided by my colleagues in   th e  Labor P a rty , and I ' l l  ta k e  th a t p a r t. Q: D o n 't you th in k  i t  would be more in  A u s tr a lia 's  in te re s ts  i f  we expanded uranium mining though and made the best use o f these resources? A: A ll I'm  saying, and I ' l l  be v e ry  p re c is e  about i t  i s ,  a t th is  tim e , th e re   is  no overwhelming economic reason to  expand th e  th re e  named mines p o lic y . Q: What about p o lic y  in  r e la tio n  to  uranium sales to  France. Do you th in k   th a t should be changed? A: W e ll, th e  conference w i ll  decide th a t . Q: W e ll, is  i t  an anomaly. We're s e llin g  uranium to  France y e t the p o lic y   says th a t we s h o u ld n 't A: C le a r ly  the Government's in  breach o f the p o lic y  and t h a t w i ll  be  c l a r i f i e d  next week in  H obart. Q: What about the uranium miners? What does the Labor P a rty  say to  P ancontinental which has spent m illio n s  o f d o lla rs  e x p lo rin g  these s it e s .  W ouldn't i t  be in  the n a tio n a l in te r e s t and the m iners' in te r e s t to  open up  those deposits? A: W e ll, in  terms o f the would-be companies, the previous Government took  i t s  d e c is io n . We added to  the two mines th a t the previous Government had  decided to  open, and the companies have known what th e  ALP p o lic y  has been.  I'm  o n ly  saying th a t a t th is  tim e th e re  is  no need to  expand th e th re e  named  mines p o lic y . And I  th in k  a ls o , and I ' l l  be v e ry  c a re fu l w ith  th e  w o r d s ...ÃÂ   th in k  people should not th in k  th a t i t  is  in e v ita b le  th a t N abarlek is  fin is h e d   e it h e r . Q: What about the pressure th a t 's  coming from a b o rig in a ls . D o n 't they deserve the o p p o rtu n ity  to  determ ine t h e ir  own d e s tin y  and w o u ld n 't expansion  o f the in d u s try  a llo w  them to  do th a t? A: The deals th a t th e  a b o rig in e s  have arranged w ith  various m ining companies  -  and I  f r e e ly  concede th e  deal th ey have w ith  Koongarra is  a v e ry  good one  from t h e ir  p o in t o f view -  but they to o  a re A u s tra lia n s  and we have a Government and we have a p a rty  t h a t 's  in  o f f ic e  in  Canberra and i t  has a p o lic y  and th a t p o lic y  may o r may not change n ext week. Q: Do you th in k  i t  w ill change next week. What's your view? A: I t ' s  my view th a t i t  w i ll  not change, and th a t th e  question o f France w i l l  be c la r i f i e d  one way o r the o th e r. 2 P Q: What do you th in k  o f people who are r a is in g  th is  issue very la t e  in  the day. Do you th in k  th e y 'r e  bowing to  very la t e  pressure from the mining  companies? A: T h e re 's  always been v e ry  strong debate w ith in  th e  ALP, and when you have  a conference every two years where these th in g s  a re d ecided, and when people  have l i t e r a l l y  m illio n s  and m illio n s  o f d o lla rs  a t  s ta k e , you can expect the  atmosphere to  heat up a b i t .  I  have to  a d m in is te r th e  p o lic y , and I ' d  also   p o in t ou t th a t I'm  under a l o t  o f pressure to  drop the minimum p ric e  because  the re a l p ric e  o f uranium has been going down and down and dow n...and to  meet  c o n tra c tu a l o b lig a tio n s , th e  e x is tin g  miners -  to  g e t new c o n tra c ts  -  r e a lly   do want th e  p ric e  dropped and what I'm  saying is  th a t Olympic Dam is  o n ly  ju s t  coming on stream . I  was o u t th e re  on Saturday and th ey say th e  progress o f  th a t mine depends on the number o f c o n tra c ts  th ey can g e t. The Ranger mine is   in  the process o f doubling i t s  c a p a c ity  by 1 99 3 -9 5, and in  terms o f what we  could expect to  g et from th e  w orld market -  a l l  th in g s  being equal -  I  b e lie v e   th a t those two mines, w ith  perhaps the c o n tin u a tio n  o f N a b a rle k , a re  s u f f ic ie n t  to  meet the immediate p erio d ahead. And t h a t 's  a l l  I'm  saying very  p r e c is e ly , and th a t ju s t  in  terms o f supply-demand e s tim a te s . On the o th e r question t h a t 's  around now on enrichm ent, I ' d  l i k e  to  say t h i s ___ th a t fo r  s tr a te g ic , f o r  business and f o r  economic reasons, I'm  very s k e p tic a l about the p o s s ib ilit y  o f A u s tr a lia  being in v o lv e d  in  enrichm ent. Even i f  e v e ry th in g  e ls e  was e q u a l, and even i f  we could fin d  a cheaper  process, I  b e lie v e  f o r  those reasons I ' d  be v ery  dubious about g e ttin g  in to   th a t game. I  th in k  we missed th a t boat a long tim e ago. Q: You d o n 't th in k  we can p ic k  up th e re  a t a ll? A: No. He c o u ld n 't produce th e  rods unless we have an atom ic power  g e n era tio n  in d u s try  o r made th e  re a c to rs  them selves, because we'd have to  be  in  cahoots w ith  one o f th e  b ig  companies overseas so our rods could be so ld .  T h e re 's  massive o v e r-c a p a c ity  in  uranium enrichm ent. The Americans are  developing la s e r enrichm ent -  th e y 'r e  not l i k e l y  to  g iv e  us th a t technology.  And f o r  s tr a te g ic  reasons, I  b e lie v e  the US is  always l i k e l y  to  underprice the  enrichm ent o f  uranium. And when you look a t these very b ig  companies in  Europe -  Eurenko -  they to o  have a vested in te r e s t in  not l e t t i n g  o th e r people  in to  th e  enrichment gam e...and th is  was looked a t by the previous Government  w ith  A u s tr a lia 's  top companies, and th e  business r is k  would be a b s o lu te ly   enormous. INTERVIEW ENDS

TRANSCRIPT OF DOOR STOP INTERVIEW WITH PRIMARY INDUSTRIES AND ENERGY MINISTER  JOHN KERIN -  MAY 3 1, 1988

Q: Do you b e lie v e  Senator B u tto n 's r ig h t  when he describes Labor's uranium p o lic y  as s illy ?

A: T h a t's  h is d e s c rip tio n , and as f a r  as I'm  concerned, I'm  th e  M in is te r

th a t a d m in isters the p resen t p o lic y  and th a t was decided by my colleagues in   th e  Labor P a rty , and I ' l l  ta k e  th a t p a r t.

Q: D o n 't you th in k  i t  would be more in  A u s tr a lia 's  in te re s ts  i f  we expanded

uranium mining though and made the best use o f these resources?

A: A ll I'm  saying, and I ' l l  be v e ry  p re c is e  about i t  i s ,  a t th is  tim e , th e re

is  no overwhelming economic reason to  expand th e  th re e  named mines p o lic y .

Q: What about p o lic y  in  r e la tio n  to  uranium sales to  France. Do you th in k

th a t should be changed?

A: W e ll, th e  conference w i ll  decide th a t .

Q: W e ll, is  i t  an anomaly. We're s e llin g  uranium to  France y e t the p o lic y

says th a t we s h o u ld n 't

A: C le a r ly  the Government's in  breach o f the p o lic y  and t h a t w i ll  be

c l a r i f i e d  next week in  H obart.

Q: What about the uranium miners? What does the Labor P a rty  say to  P ancontinental which has spent m illio n s  o f d o lla rs  e x p lo rin g  these s it e s .  W ouldn't i t  be in  the n a tio n a l in te r e s t and the m iners' in te r e s t to  open up

those deposits?

A: W e ll, in  terms o f the would-be companies, the previous Government took  i t s  d e c is io n . We added to  the two mines th a t the previous Government had  decided to  open, and the companies have known what th e  ALP p o lic y  has been.  I'm  o n ly  saying th a t a t th is  tim e th e re  is  no need to  expand th e th re e  named

mines p o lic y . And I  th in k  a ls o , and I ' l l  be v e ry  c a re fu l w ith  th e  w o r d s ...ÃÂ

th in k  people should not th in k  th a t i t  is  in e v ita b le  th a t N abarlek is  fin is h e d

e it h e r .

Q: What about the pressure th a t 's  coming from a b o rig in a ls . D o n 't they

deserve the o p p o rtu n ity  to  determ ine t h e ir  own d e s tin y  and w o u ld n 't expansion  o f the in d u s try  a llo w  them to  do th a t?

A: The deals th a t th e  a b o rig in e s  have arranged w ith  various m ining companies  -  and I  f r e e ly  concede th e  deal th ey have w ith  Koongarra is  a v e ry  good one

from t h e ir  p o in t o f view -  but they to o  a re A u s tra lia n s  and we have a

Government and we have a p a rty  t h a t 's  in  o f f ic e  in  Canberra and i t  has a

p o lic y  and th a t p o lic y  may o r may not change n ext week.

Q: Do you th in k  i t  w ill change next week. What's your view?

A: I t ' s  my view th a t i t  w i ll  not change, and th a t th e  question o f France

w i l l  be c la r i f i e d  one way o r the o th e r.

2

P

Q: What do you th in k  o f people who are r a is in g  th is  issue very la t e  in  the

day. Do you th in k  th e y 'r e  bowing to  very la t e  pressure from the mining

companies?

A: T h e re 's  always been v e ry  strong debate w ith in  th e  ALP, and when you have  a conference every two years where these th in g s  a re d ecided, and when people  have l i t e r a l l y  m illio n s  and m illio n s  o f d o lla rs  a t  s ta k e , you can expect the

atmosphere to  heat up a b i t .  I  have to  a d m in is te r th e  p o lic y , and I ' d  also

p o in t ou t th a t I'm  under a l o t  o f pressure to  drop the minimum p ric e  because

the re a l p ric e  o f uranium has been going down and down and dow n...and to  meet  c o n tra c tu a l o b lig a tio n s , th e  e x is tin g  miners -  to  g e t new c o n tra c ts  -  r e a lly

do want th e  p ric e  dropped and what I'm  saying is  th a t Olympic Dam is  o n ly  ju s t

coming on stream . I  was o u t th e re  on Saturday and th ey say th e  progress o f

th a t mine depends on the number o f c o n tra c ts  th ey can g e t. The Ranger mine is   in  the process o f doubling i t s  c a p a c ity  by 1 99 3 -9 5, and in  terms o f what we

could expect to  g et from th e  w orld market -  a l l  th in g s  being equal -  I  b e lie v e

th a t those two mines, w ith  perhaps the c o n tin u a tio n  o f N a b a rle k , a re  s u f f ic ie n t  to  meet the immediate p erio d ahead. And t h a t 's  a l l  I'm  saying very

p r e c is e ly , and th a t ju s t  in  terms o f supply-demand e s tim a te s . On the o th e r question t h a t 's  around now on enrichm ent, I ' d  l i k e  to  say

t h i s ___ th a t fo r  s tr a te g ic , f o r  business and f o r  economic reasons, I'm  very

s k e p tic a l about the p o s s ib ilit y  o f A u s tr a lia  being in v o lv e d  in  enrichm ent. Even i f  e v e ry th in g  e ls e  was e q u a l, and even i f  we could fin d  a cheaper

process, I  b e lie v e  f o r  those reasons I ' d  be v ery  dubious about g e ttin g  in to

th a t game. I  th in k  we missed th a t boat a long tim e ago.

Q: You d o n 't th in k  we can p ic k  up th e re  a t a ll?

A: No. He c o u ld n 't produce th e  rods unless we have an atom ic power

g e n era tio n  in d u s try  o r made th e  re a c to rs  them selves, because we'd have to  be  in  cahoots w ith  one o f th e  b ig  companies overseas so our rods could be so ld .  T h e re 's  massive o v e r-c a p a c ity  in  uranium enrichm ent. The Americans are  developing la s e r enrichm ent -  th e y 'r e  not l i k e l y  to  g iv e  us th a t technology.

And f o r  s tr a te g ic  reasons, I  b e lie v e  the US is  always l i k e l y  to  underprice the

enrichm ent o f  uranium. And when you look a t these very b ig  companies in  Europe -  Eurenko -  they to o  have a vested in te r e s t in  not l e t t i n g  o th e r people

in to  th e  enrichment gam e...and th is  was looked a t by the previous Government  w ith  A u s tr a lia 's  top companies, and th e  business r is k  would be a b s o lu te ly   enormous.

INTERVIEW ENDS

