general agreement on fmjl'i^l
TRANSCRIPT
CONFIDENTIAL
GENERAL AGREEMENT ON fmJl'i^l TARIFFS A N D T R A D E Special D i s t r i bu t i on
Group on Dairy Products O r i g i n a l : Engl i sh
AUSTRALIA
The following information has been submitted by the Australian delegation in accordance with the programme of work laid down in document TN.64/DP/5.
I. Existing dairy policies
(i) (a) The levels and methods of maintaining the guaranteed or supported prices including direct price supports
Milk for liquid consumption
In the main centres of population, the prices paid for milk for liquid consumption are determined by Milk Boards operating under legislation of the respective State Governments (for details see l(i)(c)).
Butter, cheese and related products
Under the present stabilization arrangement for the five years commencing 1 July 1962 there is no longer a price guaranteed by the Government, but the full responsibility for the domestic price policy is exercised by the industry through the Australian Dairy Industry Council which is representative of producers, manufacturers, distributors and exporters.
The Government subsidy, payable to producers in accordance with the provisions of the Dairying Industry Act 1962, has been fixed at $30.24 million per annum until JO June 1967. This is the same amount as that paid annually during the previous five-year stabilization scheme. Thu subsidy applies to butter-fat used in the manufacture of butter, cheese and related butter-fat products (minimum butter-fat content of 40 per cent) but does not apply to these products manufactured by any factory not participating in the voluntary equalization scheme.
TN.64/DP/W/7 Page 2
The Australian Government underwrites the equalization values for butter and cheese at a level reviewed before ^ach season. The level of 82.3 cents per kilo -ramme of commercial butter equivalent: established in 1958 has been retained for the 1965/66 season.
The sole purpose of the underwriting provision is to assist the Equalization Committee to obtain financial accommodation from the banking system to enable the payment of reasonable interim equalization values to factories in the early part of the season before finance from sales is available.
Processed milk products
The Processed Milk Products Bounty Act 1962, provides for a small export subsidy for processed milk products. It is designed to correct an anomaly in competition for milk supplies between subsidized butter and cheese factories and previously unsubsidized processors of milk products.
The subsidy is paid on the butter-fa^: content of the product. The subsidy was introduced in 1962, the maximum amount being fixed at US$784,000 for 1962/63, at US$1,120,000 for 1963/64 and at US$896,000 for 1964/65, 1965/66 and 1966/67 respectively.
(b) Average level of returns to milk producers
Year
1959/6O
1960/61
1961/62
1962/63
1963/641
Avt
US/* per gallon
22.1
22.3
21.2
21.9
22.3
srage for
pried whole
1
received milk
US$ per 100 litres
4.86
4.91
4.66
4.82
4.91
Subject to revision.
TN.6VDP/Ȕ/7 Page 3
The average level of return to milk producers has been calculated on a weighted basis and covers whole milk supplied to factories for manufacturing purposes as well as whole milk supplied principally for human consumption.
The return to producers of whole milk used for manufacturing contains the subsidy paid by the Commonwealth.
For comparative purposes the returns received by producers of whole milk used for manufacturing and of whole milk used principally for human consumption are shown in the following schedule.
Year
1959/60
1960/61
1961/62
1962/63
1963/642
Average returns
Manufacturing
US/ per gallon
I8.9
18.7
17.8
18.5
18.6
US$ per 100 litres
4.16
4.11
3.92
4.07
4.09
for whole milk
Liquid Consumption
US/ per gallon
33.5
33.7
33.7
34.2
35.2
US$ per 100 litres
7-37
7.41
7.41
7.52
6.45
Includes Commonwealth subsidy.
Subject to revision.
(c) The system of arriving at returns to milk producers, including pooling total receipts from all milk products, pooling of domestic and export returns from butter, etc
Milk for liquid consumption
The greatest concentration of demand for liquid milk in Australia is in the capital and other cities and major towns throughout the Commonwealth. Milk-Boards have been established in each of the six Australian States under legislation enacted by the respective State Governments to control supplies of liquid milk for human consumption.
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The powers of the Boards are not uniform, but broadly each Board is responsible for the organization of adequate supplies of liquid milk for daily distribution to consumers within their prescribed zones or districts.
With the exception of Queensland where liquid milk for domestic consumption is subject to Government price control, it is the State Milk Boards which are charged with the responsibility of collecting cost data upon which pricing judgments are based. The State Boards carry out these cost investigations independently of each other and there is no uniformity in pricing between the various States.
The rate of payment to producers, the wholesale and retail margins and the level of the retail price are based upon their conclusions. In some States, the Board itself makes these decisions and in others they are subject to Ministerial approval. Sometimes the responsibility extends to the fixation of prices for sweet cream.
Producers of city milk are required to maintain a daily supply on quota the whole year round so that Milk Boards are assured of a minimum pool from which to draw their day-to-day requirements.
Boards generally contract or arrange for quotas which will provide th<_m with a safety margin. The extent of the surplus varies in the different States but may be as high as 20 per cent, the provision made in New South Wales.
Generally, the price received by the producer for his "quota" milk is much higher than that received for his surplus milk which is finally used for the manufacture of butter and cheese.
Producers outside the milk zones receive only the lower payment for milk used for manufacture although some separate the milk on the farm, using the skim milk for feeding pigs and calves.
Butter and cheese
The pooling of domestic and export returns from butter and from cheese is conducted by the Commonwealth Dairy Produce Equalization Committee Ltd., a voluntary organization established by butter and cheese factories for this purpose.
The Committee determines at the beginning of each production season (july-June), an interim equalization value based on choicest quality butter and choicest quality cheese. The factories adjust their payments to and from the Committee on
TN.64/DP/W/7 Page 5
the basis of these values. When returns from sales on the United Kingdom and other export markets and on the domestic market are below or above the interim equalization value, the difference is adjusted with the Equalization Committee.
As the season progresses and the likely results of the season's sales become clearer the Committee may"make a step up in its interim equalization value. The Committee then makes payments to factories at the difference between the previous interim rate arid the new interim rate, retrospectively on production since the beginning of the season.
At the end of the equalization period (usually the end of the production season) the Committee makes a final adjustment with the factories after all butter and cheese has been sold. The net result is that each factory receives exactly the same unit return for the butter or cheese which it produces.
The Committee has separate agreements with all butter and cheese factories and makes provision for its own administrative arrangements in determining interim equalization values.
Processed milk products
There is no pooling of domestic and export returns from processed milk products. Processed milk product manufacturers have to compete with butter and cheese factories for their supplies of milk and prices paid for milk by the processors are usually comparable with prices received by the farmers supplying butter and cheese factories.
(d) The level of producer subsidies
Subsidies have been paid by the Australian Government to milk producers since 194-2. During the period 19^2 to 1952 the subsidy was payable on milk used in the manufacture of butter, cheese and processed milk products but since 1952 the assistance applies only to butter and cheese producers although a small subsidy has, since 1962, been paid to milk processors.
The level of producer subsidies in recent years is shown in the following tables:
TW.64/DPA'/7 Page 6
Subsidy Paid on Butter-rat, Use 1 in Butter a:
Butter
Cheese
196C/61
18.50
16.00
'heese '-'anufacture
1961/62 1962/63 1963/64
(US<* per kg. of butter-fa:)
16.79 16.50 16.38
13.71 13.11 13.25
1964/65
16.33
12.53
Subsidy Paid on the Butter-?at Ccntant -f Precessée Milk Products Exported
1962/63 1963/64 1964/65
(US/ per kg. of butter-fat)
13.87 I6.38 12.96
Butter
Cheese
Processed milk products
Total Amount
1960/61
27.44
2.80
-
30.24
3 Paid by
1961/62
27.44
2.80
-
30.24
Way of Subsj
1962/63
Ay
(US$ million)
27.44
2.80
0.78
31.02
1963/64
27.44
2.80
0.981
31.22
1964/65
27.44
2.80
0.90
31.14
The maximum amount of US$1.12 million made available was not fully expended.
TN.64/bP/W/7 Page 7
(e) Other forms of aid
Some of the major Commonwealth and State Government measures which indirectly assist the dairy industry are as follows:
(1) Table margarine - production quotas
As early as 1935. steps were taken in Australia to exercise some control over table margarine, the principal substitute for butter. Production quotas on table margarine were first imposed by each of the six State Governments in 1940 (the Commonwealth Government is given no powers, under its Constitution, in the field of production), after a discussion at the Australian Agricultural Council - an advisory body comprising the six State Ministers of Agriculture with the Commonwealth Minister for Primary Industry as chairman.
In 1940, the respective quotas were based upon the existing volume of production (3,857 metric" tons') but they have since been increased'to a total of 16,330 metric tons.
(2) Filled milk
The manufacture in Australia of filled milk (i.e. milk for liquid consumption which has had the butter-fat replaced by vegetable fat) Is prohibited by State legislation.
(3) Research
In October 1958, following representations by the Australian Dairy Industry Council, the Commonwealth Government enacted the Dairy Produce Research and Sales Promotion Act 1958 to enable the Australian Dairy Produce Board to administer research and sales promotion schemes in Australia.
The finance required to carry out the research and sales promotion activities is provided by a levy on butter-fat used in the manufacture of butter and cheese and related butter-fat products.
The Commonwealth Government meets half the costs incurred on research projects approved by the Minister for Primary Industry after recommendation by the Australian Dairy Produce Board.
Total expenditure on approved dairy industry research projects amounted to US$630,000 in 1964/65 and is expected to reach US$920,000 in 1965/66.
(4) Commonwealth Dairy Industry Extension Grant
Under the Commonwealth Dairy Industry Extension Grant which was established in 1948, the Commonwealth provides finance for the purpose of strengthening State extension services to dairy farmers and to encourage the adoption of proven and approved practices on dairy farms. Activities on which grant moneys are spent include herd recording, infertility surveys, farm demonstrations, and extension aids and publications.
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The Commonwealth renewed the Grant for five years from 1 July 1963 » at a level of US$784,000 p.a. or US$224,000 p.a. higher than in the previous five years.
(5) Overseas publicity
The Commonwealth contributes on a £ for £ basis for joint promotional campaigns overseas with Commonwealth statutory marketing Boards. Ihe Australian Dairy Produce Board participates in this scheme.
These matching contributions from respective industries and the Commonwealth, are incorporated into world-wide campaigns for the general promotion of Australian foodstuffs and are under the control of the Overseas Trade Publicity Committee of which each Board Chairman is a member and on which the Commonwealth Government is represented by senior officers of the Departments of Trade and Industry and Primary Industry.
(ii) Statement on actual levels of butter-fat content of butter and milk sold for liquid consumption, any regulations governing or influencing these levels, and any significant changes in the past five years.
State
N.S.W.
Victoria
Queensland
South Australia
Western Australia
Tasmania
A.C.T.
Minimum :VolS BUT ;r-Fat in Butter anc
Batter Milk % Butter-
80
80
80
80
80
80
n.a.
-fat % Butter-fat
3-2
3-5
3-3
3-5
3-2
3-3
3.5
Authority
Pure Food Act No.^l 1908 (as amended)
Health Act 1956 Regs., relating to Foods , Drugs etc.
The Food and Drug Regulations 1957
Food and Drugs Act 1908-1962
Food and Drug Regulations 196l
Food and Drug Regulations 1941
Public Health (Food) Ordinances
There have been no significant changes in the butter-fat content of butter and liquid milk during the last five years.
TN.64/DP/W/7 Page 9
(iii) (a) Retail and wholesale prices of milk sold for.liquid consumption, butter, cheese and other milk products including major seasonal variations _
Retail Prices - Butter, Cheese, Milk - Sydney
P" -
Year
L960/61 .961/62 1962/63 H963/64 1964/65
-
Butter
US / per
n.a. 119.8 119-3 119.0 123.8
kg-
Cheese
US / per
n.a. 91.4 90.8 89.s (b)
kg. US / per
10.73 10.84 10.84 11.20 11.20
Milk
pint
(a
US
)
i per litre
18.89 19.08 19.08 19.72 19.72
Notes : (a) Bottled - delivered. (b) New series commenced - not comparable with previous years.
Wholesale Prices - Butter and Cheese
I Butter Cheese
US$ per metric ton US$ per metric ton
As from 1 July 1958: 1,069.67 642.82 As from 1 July i960: 1,105-66 653.11 jAs from 14 June 1964: i,i4l.67 673.67
Prices of dairy products are not subject to seasonal variations.
(b) Retail and wholesale prices of margarine
Average Wholesale and Retail Prices (Metropolitan)
Table Margarine
(US / per kg.)
At December 1962 1963 1964 1965
Wholesale price 64 74 80 80 Retail price 80 90 99 99
TN.64/DP/\V/7 Page 10
(iv) Consumer subsidies
Butter and cheese
The subsidies described in answer to question l(i)(d) are the only subsidies paid on dairy products in Australia. The effect of such subsidies on butter and cheese is to keep prices down to consumers and so whilst technically a producer subsidy in that it is paid to producers , it can properly be regarded as a subsidy of prices paid by Australian consumers for butter and cheese.
By keeping prices lower than they would otherwise be, the consumption of butter in Australia has been maintained et high levels.
There are nc consumer subsidies on milk for liquid consumption or on processed milk products.
(v) Use of dairy products in domestic and foreign welfare schemes
Domestic
The States Grants (Milk for School Children) Act 1950 was passed with the object of improving the diet of school children by the addition of a small quantity of milk each day.
The scheme provides for one .third of a pint of milk to be supplied free of charge on each school day to each school child under thirteen years of age. At 30 June 1964, approximately 1,687,000 children were entitled to receive free milk under this scheme.
The present cost of the scheme which is met by the Commonwealth Government is US$8.7 million per annum.
Foreign
There is no regular or continuous scheme for the donation of dairy products abroad by Australia. On a number of occasions recipient countries have requested foodstuffs under the Colombo Plan and where possible these requests have been met.
Dairy products have been included among the foodstuffs donated overseas under the Colombo Plan. To date dairy products to the value of US$1.2 million have been donated abroad.
Australia also participates in the World Pood Programme of the FA0 and has supplied cheese to the value of US$88,000 to overseas countries under this scheme in recent years.
TN.64/DP/W/7 Page 11
(vi) Other measures to stimulate domestic consumption
The sale of.milk for liquid, consumption in Australia is entirely the responsibility of the respective Milk Boards established under legislation of the six States of the Commonwealth. Each Board acting independently determines the level of payments to producers for milk and cream supplied, and also a rate of levy which is deducted to finance the Board's operations. Each of the State Boards other than that of South Australia, conducts its own advertising campaign to promote the sale of milk for liquid consumption. The finance for these promotional activities is derived from the money contributed by producers.
The South Australian Board is not given the power to engage in sales promotion under the legislation by which it is constituted.
For the promotion of milk, the State Milk Boards use such media as television, radio, newspapers and magazines, publicity posters in shop windows and in public transport, exhibits at agricultural shows and the sponsoring of sporting events (e.g. the "Milk Six", the six-day cycle race sponsored by the Victorian Board). In each case emphasis is placed on milk for its nutritional value and its healthful qualities.
In some States committees have been established, comprising representatives of the State Board, producers and distributors (wholesalers, retailers and vendors) to handle promotion within their States. On occasions promotion campaigns have been'conducted jointly by the State Boards, on a national basis but this does not occur frequently.
Sales promotion of butter and cheese in Australia is conducted by the Australian Dairy Produce Board, on a national basis, under Federal legislation enacted in 1958 - the Dairy Produce Research and Sales Promotion Act 1958-1965-
Finance for the scheme is provided by a levy imposed by the Butter-F?.b Levy Act 1965 on butter-fat used in the manufacture of butter and cheese. The maximum rate of levy allowed by the Act is US$5.27 per metric ton but the current prescribed operative rate is US$4.96 per metric ton. Expenditure amounts to about US$660,000 per annum.
Additional brand promotion is carried out by individual manufacturers.
TO.64/DP/W/7 Page 12
(vii) Measures of projection at the frontier
An import tariff is the only measure of protection, for the local industry at the frontier. Current rates of duty applicable to dairy products imported into Australia are:
Products Rates of Duty
(US t per kg.)
General Preferential
1. Milk and cream, fresh, not concentrated or sweetened
2. Milk and cream, preserved, concentrated or sweetened:
- Dried or in powder form
- Other
3- Butter
4. Cheese and curd:
5,1^3 Plus primage ICffo
8,230 Plus primage 10$
5,143 Plus primage 10%
14 ,403 Plus primage lCfo
3,086 Plus primage 5$
4,630 Plus primage
3,086 Plus primage
12,346 Plus primage
- Cheese having the eye formation characteristic of the Swiss or Emmenthaler type; cheese of the Gruyère or Emmenthaler processed type in packs not exceeding 10 ounces (0.284 kg.) in weight
- Blue veined cheese
- Other
12,346
14,403
14,403
12,346
12,346
12,346
Notes : 1. In the above Schedule, "milk" means full cream milk, skimmed milk, butter milk and whey, and képhir, yoghurt and similar fermented milk.
2. For the purpose of item 2 -
(a) milk or cream put up in hermetically sealed cans shall be regarded as preserved; and
(b) milk or cream not put up in hermetically sealed cans shall not be regarded as preserved by reason only of being pasteurized, sterilized or peptonized.
TN.64/DP/\V/7 Page 13
II. Information on production, consumption, imports, exports, end-season stocks of dairy products , cow numbers^ and yield per cow. Information on national production„consumption and trade trends over the next_f_ive_ years assuming the continuation of existing national policies
Dairy Cow Numbers, Whole Mill: Production, Yield per Cow
Year ended
1961
1962
1963
1964
1965
30 June Dairy
'000
3,162
3,230
3,263
3,296
3,214
Cows (a) Whole milk
m. gals
1,339
1,444
1,468
1,496
1,507
Production
m. litres
6,263
6,564
6,674
6,675
6,851
Yield
gallons
418
452
452
456
463
per Cow
kg.(b)
1,960
2,120
2,120
2,139
2,171
Notes : (a) As at 31 March of year shown - cows in milk and dry. (b) Conversion rate: 1 gallon = 4.69 kg.
MANUFACTURE OF DAIRY PRODUCTS
Butter Chee.
Full Cream Milk Products
Condensed Concentrated and E aporatsd Full Cream Milk
I96O-6I 1961 62 1962-63 1963-64 1964-65
'000
metric
>.ons
i82 200 204 206 207
'000
metric
tons
8 57 5y 59 62
000 metric
tons
62 62 67 83 92
oducts
Powderad Full
Cream
Milk
•000
metric
tons
19 t 0
18 19 19
Infants
and Invalids
Milk
T(i0
metric
tons
16 17 17 20 21
Condensed
Concentrated
and E.aporoted Skim Milk
'000
metric
tons
5 6 9 12 10
Milk By-
Powaers Skim Mi
'000
metric
-ons
37 r8 4.3 4L' 4 c)
Products
d Ik
Powdered Buttermilk or
Mixed skim and Buttermilk
'000 .
metric tons
7 8 10 10 10
Cc.scj.n
'000
metric tons
11 14 16 17 17
Factor,/ product ion only.
APPARENT DISAPPEARANCE OF DAIRY PRODUCTS
Year
1959-60 1960-61 1961-62 1962-63 1963-64c
Butter
'000 metric tons
120.6 118 2 115.6 116.6 117.1
Cheese
'000 metric tons
29 3 30.3 31.5 32.9
35-9
Condensed, concentrated and evaporated
Subject to revision.
TOTAL DISAPPEARANCE
Condensed M m b Milka
'000 metric tons '000 metric tons
47.7 29.I 46.4 32 7 51.6 33.7 50-7 31.5 62.6 36.1
, full cream and skim. Full
. Infants and
Invalids Food
'000 metric tons
13.2
12.0
11 7
13.0
14.3
Dream and skim.
Milk and
Cream
mill, gall
310 7 318.6
323.9 322.0 333.1
APPARENT DISAPPEARANCE OF DAIRY PRODUCTS
DISAPPEARANCE PER PERSON
Year
1959-60 I96O-6I 1961-62
1962-63e
1963-64c
Butter
kilogrammes
11.9 11. >l 10.9 10.8 10.6
Cheese
kilogramme:.;
2.9 2.9 3.0 3.0 3-3
Condensed m a
milk
kilogrammes
4.7 4.4 4.8
4.7 5-6
Dried Milkb
kilogrammes
2.9 3.1 3.2 2-9
3.3
Infants' Invalids'
and Food
kilogrammes
1.3 1 1 1.1 1.2 l 3
Milk and Cream
gallons
30.6 30.7 30.5 29.8 30 .2
"Condensed, concentrated and evaporated, full cream and skim milk.
Pull cream and skim,
'Subject to revision.
IMPORTS OF DAIRY PRODUCTS
Year
I96O-6I 1961-62 1962-63 1963-64
1964-65
Cheese metric tons
1,568 1,906 2,420 2,940 3,400
pj 3
>
EXPORTS OP DAIRY PRODUCTS
Year
1960-61 1961-62 1962-63 1963-64 1964-65°
Butter and Butter fat Products8-
metric tons
64,115 81,051 81,621 92,188 98,000
Cheese
metric cons
18,326 22,736 26,353 28,273 27,634
Condensed and Concentra bed
Milk
metric tons
19,878 18,303 26,991 35,329 40,705
Full Cream Powder
metric tons
7,117 5,916 6,470 6,922 8,498
Skim Milk Powder
metric tons
15,301 16,016 24,251 18,373 25,379
Casein
metric tons
8,664 12,308 13,756 17,047 16,612
3.
Includes ghee, concentrated butter etc. expressed as butter
Subject to revision.
BUTTER AND CHEESE HELD IN COLD STORES (END OF SEASON STOCK)
Year
1960-61 1961-62 1962-63 1963-64 1964-65
Butter
metric tons
13,153 16,450 13,613 12,647 10,000
Cheese
metric tons
1,849
3,127 6,125 3,310 3,374
TN. 64 /D P/W/7 Page 17
ESTIMATED PRODUCTION AND UTILIZATION OP WHOLE MILK 1969-70
Total Production
1,640
7.455
Butter
980
4,455
Whole milk used
Cheese
(million gallons)
155
(million litres)
705
for
Condensery Products
125
568
Other Purposes
580
1,727
Principally fluid milk and cream for domestic purposes.
ESTIMATED PRODUCTION, CONSUMPTION AND EXPORTS -DAIRY PRODUCTS - 1969-70
Item
Butter Cheese Condensed Pull Cream Milk
Sweetened Unsweetened
Powdered Pull Cream Milk Infants' and Invalids' Food Condensed Skim Milk Powdered Skim Milk Casein
Production
'000 metric tons
216.0 72-0
46.0 48.0
25.0 26.0 15-0 54.0 20.0
Consumption
'000 metric tons
124.0 45. oa
14.0 43.0
16.0 18.0 15.0 29.0 2.0
Exports
'000 metric tons
92.0 27.0
32.0 5-0
9-0 8.0 nil 25.0 18.0
"Excludes imports.
i
TN.6VDP/W/7 Page l 8
III. International prices and price stabilization in international .markets
(i) Information on monthly prices , their evolution etc.
Butter and cheese
The Australian Dairy Produce Board is responsible for the sale and disposal of Australian butter and cheese in the United Kingdom. In the case of sales to the United Kingdom the Board purchases the butter and cheese from the factory, at an interim purchase price approved by the Minister, and ships the butter and cheese to the United Kingdom on consignment. Ihe Board's trading operations are financed by the Reserve Bank of Australia under a guarantee provided by the Commonwealth Government. Prices (January 1966) in the United Kingdom were US$837>7 per metric ton ex store London for Australian choicest butter and US$647.6- per metric ton ex store London for Australian first grade waxed cheddar cheese.
Annual average prices for Australian choicest butter in the United Kingdom during the last five years are as follows :
(US$ per metric ton)
1960/61 1961/62 1962/63 1963/64 1964/65
765.6 " 752.3 874.4 920.4 935-9
Sales to markets other than the United Kingdom are made on a trader--to trader basis, under conditions laid down by the Australian Dairy Produce Board. The Board determines minimum selling prices, which are based on United Kingdom market prices , and issues export permits.
As far as can be ascertained there is no regular pattern of variation in prices caused by seasonal influences. There is no apparent indication that the British butter and cheese market is influenced to any extent by seasonal variations although overall it is particularly responsive to supply and demand.
Skim milk powder
In 1962, The Australian Dairy Produce Board assumed statutory control of the registration of exports of all types of skim milk powder in packages of 25 lb. (11.4 kgs.) or more. The actual marketing of this product is conducted
TN.64/ï)P/to/? Page 19
on a trader-to -trader basis but the Board fixes a minimum export price after consultation with the Processed Milk Manufacturers' Association of Australia on which the principal manufacturers are represented.
The price does not vary seasonally, any variation being due to world supply and demand as in the case of other dairy products.
Processed Milk Products
There is no statutory control over the export marketing of processed milk products which include condensed and evaporated milks, whole milk powder, infants and invalids foods and malted milk.
Marketing of these products is conducted strictly on a trader-to-trader basis and export pricing policy is a matter for the individual manufacturers.
(ii) Exchange of data_on_ the conditions of price formation in international markets; price relationships between the various-dairy products;- -comments on the feasibility of establishing prices for these products figuring in international trade and the legal possibilities of maintaining such prices
Price formation in international markets
The Australian Dairy Produce Board has the authority to sell butter and cheese in the United Kingdom. Butter and cheese is shipped to the London Manager of the Board on consignment and sales are made through a panel of agents at ruling market prices. The Board, under certain other circumstances, may also sell butter and cheese,_e.g. where Government, bulk purchases are involved against tenders. However, in most markets other than the United Kingdom, the export of butter and cheese is in the hands of licensed exporters who sell on a trader-to trader basis and under terms and conditions laid down by the Australian Dairy Produce Board.
Price relationship between the various dairy products
So far as Australia is concerned,, there, is no planned relationship between the prices charged for the various dairy products sold in export markets.
Feasibility of establishing prices for dairy products figuring in international trade
Australia has discussed some of the difficulties hindering the satisfactory formation of prices for dairy products figuring in international trade as recently as last June in the Agricultural Committee.
TN.64/DP/W/Y Page 20
In particular, reference was made to -
(a) Internal measures by importing countries (price supports) which ensure home producers a very much higher price than is available to efficient overseas producers.
(b) Measures at the frontier which hinder the expansion of trade and distort prices of imported dairy products.
(c) Difficulties of access which rise from (a) and (b) above.
(d) Die payment of export subsidies or export refunds, which have a depressing effect in almost every world market for dairy products.
Australia is prepared to explore during the actual negotiations in the Dairy Group, the possibility of establishing prices for dairy products.
Legal possibility of maintaining prices
There is no legal barrier to fixing export prices and maintaining them. In fact the Australian Dairy Produce Board which is constituted under Federal legislation has been given the power to determine terms and conditions of export for the products under its mandate. These are butter, cheese, butter-fat products such as butter-oil and ghee, and casein and skim milk powder.
A policy decision involving amendment of legislation would be required to include other dairy products under the Board's control.
(iii) Concrete data on export subsidies and export aids ; global values and quantities, and value per unit
Other than for processed milk products, there are no direct export subsidies paid on dairy products. Details of the export subsidy on processed milk products are shown in Part l(i)(d).
(iv) Stock management policies in relation to export practices
Stock management policies for butter and cheese in Australia must necessarily embrace not only the export markets but more particularly the local market requirements for very good reasons. The situation is that the holding of stocks must be planned seasonally because -
TN.64/DP/W/7 Page 21
(a) Three of the six States of the Commonwealth - New South Wales, South Australia and Western Australia - do not produce sufficient butter for their normal consumer demands and supplies must be imported from other States (e.g. Victoria and Queensland);
(b) of the relatively small Australian population spread thinly over a vast continent ;
(c) butter and cheese must be stored in large quantities from January onwards when decreasing production is insufficient to meet overall consumer requirements during the winter months ; and
(d) shipping space reservations taken usually some weeks ahead must be planned for.
The Australian Dairy Produce Board arranges the shipment of all Australian butter and cheese and is responsible for policy in respect of the storage in Australia for domestic consumption, for export, and, when stored in London, for the sale and disposal in the United Kingdom. The Board's policy in respect of shipments to and storage in the United Kingdom is to rationalize supplies as evenly as possible over the year.