PROTECTION TO THE AUSTRALIAN DRIED VINE FRUIT GROWING …data.daff.gov.au/brs/data/warehouse/pe_abarebrs99001530/... · 2008-10-16 · Industry for the whole farm and the multi-purpose

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BUREAU OF AGRICULTURAL ECONOMICS CANBERRA

BUREAU OF AGRICULTURAL ECONOMICS, CANBERRA

PROTECTION TO THE AUSTRALIAN DRIED VINE FRUIT GROWING INDUSTRY

AUSTRALIAN GOVERNMENT PUBLISHING SERVICE

CANBERRA 1975

ISBN 0 642 01899 5

Printed by Canberra Reprographic Printers

( i i i )

FOREWORD

The Bureau has i n t e n s i f i e d i t s re sea rch i n t o t h e Aus t ra l i an Dried Vine F r u i t Growing Indus t ry and undertaken a continuous economic survey of d r i e d v ine f r u i t growers. The information obta ined f a c i l i t a t e s continuous review of t h e economic and welfare s i t u a t i o n of d r i e d v i n e fruit producers and enables ind iv idua l growers, Indus t ry o rgan i sa t ions and Government bodies t o have t h e most r e c e n t economic information a v a i l a b l e a t s h o r t no t i ce .

One aspect of t h e survey and as soc ia t ed r e sea rch i s t h e i n v e s t i g a t i o n o f p r o t e c t i o n accorded d r i ed v ine f r u i t growers through t h e m u l t i p l i c i t y of i n t e r v e n t i o n measures which have i n t h e p a s t inf luenced t h e s t r u c t u r e of t h e Indus t ry , t h e resources used and t h e l e v e l of r e t u r n s obtained. This Indus t r y Monograph reviews and q u a n t i f i e s t h e i n t e r v e n t i o n measures which have had an in f luence on t h e Dried Vine F r u i t Growing Industry. I t i d e n t i f i e s t h e r e l a t i v e importance of suppor t ing t h e r e t u r n s obta ined by growers and provides a b a s e from which t h e consequences of f u t u r e l e v e l s o f a s s i s t a n c e might be gauged. The a n a l y s i s r epor t ed on i s based on r e s u l t s from t h e continuous economic survey covering t h e pe r iod 1971-72 t o 1973-74.

The r e p o r t presented i n t h i s Ilonograph was made a v a i l a b l e t o Indus t ry o rgan i sa t ions and o the r bodies p a r t i c i p a t i n g i n t h e Indus t ry Ass is tance Commission's Inqui ry i n t o t h e Indus t ry , and t h e r e p o r t formed p a r t o f t h e Bureau's own submissions t o t h e I A C . The Commission i s requ i red t o i n q u i r e i n t o and r e p o r t on t h e l e v e l and pe r iod of continuing Aus t ra l i an Government f i n a n c i a l a s s i s t a n c e t o t h i s Indus t ry a s a consequence o f a r e fe rence from t h e Prime Min i s t e r of 11 March 1974.

Preparatiorl o f t h i s report, was t h e r e s p o n s i b i l i t y oZ Plessrs A. B. Stoeckel and L.T. Gatenby of t h e Bureau's Crop Prcduction Research Sect icn .

(N. D. HONAN) Dirsctor

Bureau of Agr icu l tu ra l Economics Canberra, A.C.T.

October

(v1

CONTENTS

FOREWORD

Page

( i i i )

PART I - INTRODUCTION AND SUMMARY

Introduction Summary

PART I1 - FORMS OF ASSISTANCE AND THE COST OF THE TARIFF TO THE DRIED VINE FRUIT GROWING INDUSTRY

Assistance Accorded t he Dried Vine F r u i t Growing Industry

Assistance Not Specif ic t o t h e Multi-purpose Grape Growing Industry

Tar i f f on Tradeable Inputs

PART I11 - THE EFFECTIVE RATE OF PROTECTION IN THE DRIED VINE FRUIT INDUSTRY

The Effect ive Rate of Protect ion Issues i n Applying t he Concept of Effect ive Rate of Protection t o t he Dried Vine F ru i t Growing Industry

The Dried Vine F ru i t Growing Industry : Effect ive Rate of Protect ion

Ranking with Other Indus t r i es Net Protection i n Net Farm Income Summary

APPENDIX - TREATMENT OF ITEMS AND METHODOLOGY FOR ESTIMATION OF THE EFFECTIVE RATE OF PROTECTION

Defini t ions Assistance t o t he Dried Vine F ru i t Industry Impo S t S

Estimation of t he Quantity of Fuel, F e r t i l i s e r and Agricultural Chemicals

Treatment of Items f o r Common Enterpr ise Calculat ions

INDEX TO TABLES

Part I

INTRODUCTION AND SUMMARY

Introduction

I n r ecen t yea r s , g r e a t e r a t t e n t i o n has been placed on the evalua t ion of in t e rven t ion measures a f f e c t i n g var ious s e c t o r s of t h e economy, so t h a t d i f f e r e n t p o l i c i e s may be cons i s t en t with n a t i o n a l economic and s o c i a l o b j e c t i v e s , Much o f t h i s a t t e n t i o n has stemmed from publ ic i n q u i r i e s conducted by t h e I n d u s t r i e s Ass is tance Commission i n t o t h e a s s i s t a n c e received by va r ious i n d u s t r i e s . ( l ) Included i n these publ ic i n q u i r i e s h a v e been seve ra l r u r a l i n d u s t r i e s and ma t t e r s r e l a t i n g t o t h e r u r a l sec tor . (2) The Dried Vine F r u i t Growing Indus t ry i s one such indus t ry under inquiry.

mis r e p o r t examines va r ious measures which accord p ro tec t ion t o t h e Dried Vine F r u i t Growing Indus t ry through t h e i r impact on incomes and va lue added i n production a t t h e farm l eve l . (3) A s such, p ro tec t ion accorded t h e indus t ry r e f l e c t s t h e production cos t only and does not incorpora te t h e much wider e f f e c t s .

P ro tec t ion may be accorded an i n d u s t r y by Governments f o r a number of reasons: t o compensate an indus t ry f o r environmental disadvantages; t o o f f s e t d i s t o r t i o n s i n resource p r i ces ; poss ib le divergence between s o c i a l and p r i v a t e cos t s ; o r changes i n exchange r a t e s a f f e c t i n g t h e terms of t rade . Whetever t h e reason t h a t p r o t e c t i o n i s accorded, it needs t o be reconci led with the broad po l i cy ob jec t ives o f Government such a s economic e f f i c i e n c y , f u l l employment and improving l i v i n g standards.(4) These cons idera t ions f o r in t e rven t ion and t h e in f luence of in t e rven t ion on economic e f f i c i e n c y and welfare a r e sub jec t t o continuing research by t h e Bureau.

Protec t ion 'accorded t h e Dried Vine F r u i t Growing Indus t ry ranges from consumer t r a n s f e r s and s p e c i f i c in t e rven t ion measures, such a s s t a b i l i s a t i o n payments designed t o a s s i s t d r i ed v ine f r u i t growers, t o more general forms o f a s s i s t a n c e designed t o a i d r u r a l i n d u s t r i e s i n general , such a s t axa t ion concessions and bounties on r u r a l i ndus t ry inputs . In c o n t r a s t , t h e Indus t ry has imposts imposed on it as a r e s u l t of p ro tec t ion accorded o t h e r i n d u s t r i e s . These inc lude t a r i f f s on Agr icu l tu ra l Chemicals, Cap i t a l Items, and Repair and Maintenance Mater ia ls .

(1) The IAC was founded on 1 Jan~:~ .y 1974 and i t s c h a r t e r i s s e t out i n t h e IAC, Annual R e p o r t , 2973- 74, Canberra.

( 2 ) Ibid.

( 3 ) The r e p o r t was submitted by t h e BAE t o t h e August 1975 pub l i c hear ing of the IAC.

(4) For a d iscuss ion o f e f f i c i e n c y i n t h e use o f t h e community's resources see IAC, Annual R e p o r t , 2973-74, Canberra, para. i 7 , p. 14.

An integrated and consistent approach t o the evaluation of intervention measures and the protection provided by them, has led t o the use of the e f f ec t i ve r a t e of protection a s a summary s t a t i s t i c f o r industry comparisons. The analysis i n t he present repor t app l ies the methodology developed t o the aggregate in tervent ion da ta and t o farm survey data t o estimate the e f f ec t i ve r a t e of protect ion a t the farm and e n t e r ~ r i s e levels .

The repor t i s divided in to a sequence of th ree pa r t s and an explanatory appendix. The present pa r t of the repor t provides an introduction t o the analysis of Government in tervent ion i n the Dried Vine Fru i t Growing Industry and summarises the main f indings presented i n subsequent par t s . The more important forms of ass is tance provided to the Industry and imposts upon it which have an impact on the re turns received by the resources employed i n t he Industry a re outl ined i n Par t 11, Par t I11 considers the e f f ec t i ve r a t e of protection and the p rac t ica l l imi ta t ions of the measure; est imates of the r a t e s a r e obtained by quantifying the measures discussed i n Par t 11. Final ly , the appendix urovides spec i f i c d e t a i l of t he methodology used i n the analysis and various subsidy and impost r a t e s applying during the period covered by t he analysis .

The leve l of protect ion accorded the Dried Vine F ru i t Growing Industry f o r t he whole farm and the multi-purpose grape growing and dried vine f r u i t en te rpr i ses i s heavily dependent on the extent of the consumer t rans fe r which, i n turn , i s determined by the re la t ionsh ip between the export and home market pr ices .

The e f f ec t i ve r a t e of protection f o r the th ree years covered by the survey f luctuated between years according t o t h i s p r i ce re la t ionship . The actual annual r a t e s disclosed by the survey a t the whole farm and en te rpr i ses level , together with the contribution of ne t protection t o net farm income on a regional ba s i s as three year averages, are shown i n the following summary tables .

Summary Table No. 1

EFFECTIVE RATE OF PROTECTION: AUSTRALIA

Year Three Year Enterprise

1973-74 Average

1971-72 1972-73

% % % %

Whole farm . 17 - 2 2 4

Multi-puruose grapes 28 - 4 4 8

Dried vine f r u i t 37 - 3 6 10

Summary Table No. 2

RELATIONSHIP BETWEEN NET PROTECTION AND NET FARM 1NCOME:

WHOLE FARM: BY REGION

Three Year Average per Farm, 1971-72 t o 1973-74

Region

Item Unit New South Wales Vic to r ia Aus t- r a l i a

Sun- Mid- Sun- Robin- Mid- State rays ia Murray State rays ia vale Murray

Net farm income d 6919 2595 6426 5460 4835 4829 5292 2126 4552

Net protect ion d 737 108 667 816 462 -577 630 -182 406

A s % of ne t farm income % 11 4 10 15 10 -12 1 2 -9 9

Except f o r Victor ia Mid-Murray and South Austra l ia , where r e l a t i v e l y smaller quan t i t i e s of dr ied vine f r u i t were produced and the consumer t r an s f e r s were l e s s than i n o ther regions, the e f f ec t i ve r a t e s of protect ion d id not vary widely between regions.

Analysis of the consumer t r an s f e r over the pas t decade ind ica tes t h a t protect ion l eve l s i n e a r l i e r years would have been much c lose r t o the higher l eve l s o f 1971-72 than those i n the pas t two years. A t the 1971-72 r a t e , the d r ied vine f r u i t en te rpr i se , on average, has received a level of protect ion which i s comparable with the average of 35% t h a t t he I A C has estimated as appl icable t o secondary indus t r i es i n the Austral ian economy f o r 1969-70. (5) In the pas t two years, however, protect ion o f t he d r ied vine f r u i t en te rpr i se has been c lose t o zero.

(5) IAC , Annwzi! Report, 1973-74, Canberra.

(6) F.H. Gruen, 'The Optimal Size o f Austral ian Agriculture ' (mimeograph paper), 44th Congress ANZAAS, Sydney, August 1973.

Part I 1

FORMS OF ASSISTANCE AND THE COST OF THE TARIFF TO THE DRIED VINE FRUIT GROWING INDUSTRY

Assistance Accorded the Dr ied Vine F r u i t Growing Indust ry

The main form of ass i s t ance accorded t h i s Industry i s through consumer t r an s f e r s obtained by a t a r i f f on imported suppl ies of dr ied vine f r u i t and domestic pr ic ing arrangements,which together have maintained the domestic p r i c e above the export p r i c e i n most years. Additional ass i s t ance is provided by the S t ab i l i s a t i on Scheme and a number of other measures non-specif ic t o t h e Industry, such as input subsidies and taxat ion concessions. The Industry, however, a l s o bears cos ts imposed by t a r i f f s on inputs r e su l t i ng from protect ion given t o o ther indus t r i es .

Forms of ass i s t ance accorded and the costs imposed on the Industry a r e discussed below. Estimates of protect ion a r e made on a whole farm and an en te rpr i se bas i s ; the two en te rpr i ses considered a r e multi-purpose grape growing and dr ied vine f r u i t . The reasons fo r the inclus ion of en te rpr i se ca lcula t ions a r e f u l l y discussed i n Par t I11 and i n the appendix.

The Consumer Transfer

Over most of t h e pas t decade the domestic market p r i c e f o r dr ied vine f r u i t has been g r ea t e r than both the export pa r i t y p r i c e and the import p a r i t y pr ice . This s i t ua t i on has a r i sen f o r a number of reasons, the f i r s t of which i s the presence of a t a r i f f on imports of dr ied vine f r u i t . This is equivalent t o $0.0825 per kilogram plus 7% primage and has applied, v i r t u a l l y unchanged, s ince 1926.

However, a s t he Industry produces f o r both domestic and export markets, the presence of the t a r i f f alone does not cause domestic p r ices t o be g rea te r than export p a r i t y p r ices . In the absence of any e f fec t ive domestic pr ic ing arrangement, it could be an t ic ipa ted t ha t the competition f o r markets would have r e su l t ed i n the re being r e l a t i v e p a r i t y between the re turns t o the Industry from domestic and export markets. Therefore, the s i z e of the consumer t r a n s f e r from the t a r i f f a l s o depends on control of t he domestic market, the s i z e of the t a r i f f and p r i c e d i f ference maintained between domestic and export p a r i t y p r ices .

The Austral ian Dried Fru i t s Association controls the marketing of d r ied vine f r u i t on t he domestic market by granting a d i s t r ibu t ion f ranchise t o a l l leading wholesalers and reg i s te red manufacturers. This a b i l i t y t o s e t domestic p r i c e s means t h a t , even i n the absence of the t a r i f f , the p r i c e could be s e t above the export p a r i t y because of na tu ra l protect ion from the r e l a t i v e l y higher cos t of t ranspor t f o r imported f r u i t .

The value o f t he consumer t r an s f e r can be calculated using e i t h e r export p a r i t y o r import p a r i t y r e l a t i v e t o the domestic pr ice . The appropriate p r i c e w i l l depend upon the a b i l i t y of the Austral ian Industry t o remain a net exporter o f d r ied vine f r u i t , i f p r i ces were b id down t o export p a r i t y pr ices . I f Austra l ia remained a ne t exporter , then the

domestic market would be supplied a t export p a r i t y p ~ i c e s . However, ru l ing export p r ices may cause a su f f i c i en t number of ~r 'oducers t o cease production t o prevent Austra l ia remaining a ne t exporter , Fai lure t o meet domestic requirements would then necess i t a te importing suppl ies and the import p a r i t y p r i ce would be the domestic market pr ice . In t h i s case the import p a r i t y p r i ce would be the re levant p r i ce t o use when calcula t ing the consumer t rans fe r .

To determine the appropriate pr ice , survey farms were ranked according t o the r a t e of re turn t o cap i t a l and management, and a cumulative t o t a l production calculated. The analysis indicated t ha t farms f a l l i n g i n t h e top q u a r t i l e and consequently earning a r a t e of re turn i n excess of 8.62% produced 37.8% of t o t a l output i n 1973. This was equivalent t o 91% of domestic market requirements. In addit ion, those farms f a l l i n g i n the two qua r t i l e s having the highest average r a t e s of re tu rn , produced 68.1% of t o t a l d r ied vine f r u i t i n t ha t year.

As the domestic market consumed 41.7% of t o t a l output i n 1973, t he r e s u l t s of the ana lys i s ind ica te t ha t those farms earning r e l a t i v e l y high r a t e s of re tu rn produced suf f ic ien t quan t i t i e s t o exceed domestic requirements a t current pr ices . Consequently, i f domestic p r ices had been bid down t o export p a r i t y i n tha t year, Austra l ia would have remained a ne t exporter even i f the l e a s t e f f i c i e n t 50% of growers had not produced a t a l l . The evidence, therefore , supports the use i n t h i s study of export p a r i t y p r ices when ca lcu la t ing t he consumer t rans fe r .

The s i z e of t he consumer t r ans f e r was estimated by taking t he di f ference between the domestic and export p r i ce f o r each var ie ty of dr ied f r u i t a t a common point of value (ex-packing shed door p r i ce s ) . For purposes of comparison t he calcula t ion was repeated f o r a s ing le year using the di f ference between the domestic and import pa r i t y p r ice . These d i f f e r e n t i a l s a r e shown i n Tables No. 11-1 and No. 11-2.

Estimates of the consumer t rans fe rs , based upon t he current l eve l of domestic consumption, a r e a l so shown i n these t ab les . This procedure, however, assumes t ha t the demand f o r dr ied vine f r u i t is per fec t ly i n e l a s t i c and t h a t t he f u l l amount of protect ion i s transmitted through the marketing chain to the farm leve l . Depending on the ac tua l e l a s t i c i t y of consumer demand and the r e l a t i v e e l a s t i c i t i e s i n the marketing chain, the r e a l consumer t rans fe r could vary from the f igures contained i n Tables No. 11-1 and No. 11-2. The average value of the consumer t r ans f e r per farm i s shown i n Table No. 11-3. The value of the t rans fe r was g rea tes t i n 1971-72, when it averaged $1769 per farm; the highest protection per farm was recorded i n both Sunraysia regions where it averaged $2146 in New South Wales and $2634 i n Victor ia f o r t ha t year.

The conslmeu t ~ : l i n ~ f e r r e l a t i ve ly LOW i n the two years 1973 and 1974, and i n t he former year was i n f a c t negative. Table No. 11-4 indicates the estimated consumer t r ans f e r which had applied over the pas t decade. (7) His to r ica l ly there has been a pos i t ive consumer t r ans f e r as the r e s u l t s indicate . The t r ans f e r generally increased over the period t o 1972. For the period 1970 t o 1972 t he consumer t rans fe r was r e l a t i v e l y high, the main reason being t h e maintenance of a r e l a t i v e l y large home

(7) Actual p r ices a re averages f o r calendar years. Since crop year f inanc ia l est imates a r e used i n the BAE survey r e s u l t s , it i s correct to a t t r i b u t e the calendar year values t o BAE survey r e s u l t s .

Table No. 11-1

ESTIMATED VALUE OF CONSUMER TRANSFER USING DOMESTIC

AND EXPORT PRICE DIFFERENTIALS TAKEN FROM

AVERAGE PACKING SHED FRONT DOOR PRICES

(BASIC GRADES) : 1972 TO 1974

Variety Year Domestic Export P r ice Domestic Consumer Pr ices Pr ices Di f fe ren t ia l consumption Transfer

- P-

$/ tonne $/tonne $/ tonne tonnes C$ ' 0001

Sultanas 1972 532 256 276 1 6 725 4616

1973 56 5 585 -21 15 464 -247

1974 (a) 683 579 104 15 320 1593

Currants 1972 512 270 24 2 4 163 1007

1973 560 556 4 4 226 169

1974 (a) 6 64 574 9 1 3 473 316

Raisins 1972 430 346 84 3 426 28 7

1973 4 67 502 -34 3 301 -1122

1974 (a) 615 652 -37 2 490 -92

(a) The 1974 f igures a r e from preliminary est imates based on Estimates of Production, DisposaZ and Average FOB ReaZisation, Season 1974, November 19 74.

Source: ADFA, Submission t o t he IAC inquiry i n t o Dried Vine F ru i t s , Mildura, December 1974, and ADFA records of 1974 pr ices .

Table NO. 11-2

ESTIMATED VALUE OF CONSUMER TRANSFER USING DOMESTIC AND IMPORT PARITY PRICE DIFFERENTIALS TAKEN FROM AVERAGE PACKING SHED FRONT DOOR PRICES

(BASIC GRADES) : 1972 SEASON

Domestic Import Par i ty Pr ice Domestic Consumer Variety Pr ices Pr ices D i f f e r en t i a l Consumption Transfer

$/tonne $/tonne $/tonne tonnes $ ' O O O

Sultanas 532 296 232 16 725 3880

Currants 512 314 198 4 163 824

Raisins 430 39 1 39 3 426 134

Table No. 11-3

ESTIMATED VALUE OF CONSUMER TRANSFER AT FARM LEVEL(a)

1 CROP YEAR BASIS ~ Average per Farm, 1971-72 t o 1973-74

~ (Dollars)

Region

Year New South Wales Victor ia Aust - Sunray Mid- State Sunray Robin Mid-

r a l i a Aust- - s i a Murray - s i a -vale Murray State r a l i a

(a) Using export p a r i t y p r ices .

consumption and export p r i ce d i f f e r e n t i a l . Export p r ices higher than domestic p r ices i n 1973 meant t h a t the revenue t r ans f e r was i n f a c t negative i n t h a t year. The r e l a t i v e l y low f igure i n 1974 a l s o r e f l e c t s r e l a t i v e l y high export pr ices .

Table No. 11-4

ESTIMATED VALUE OF CONSUMER TRANSFER FOR DRIED VINE

FRUIT : BY VARIETY 1964 TO 1974 ($ ' 000)

Year Sultanas Currant S Raisins Total (Aust . )

1964 1554 448 196 21 98 1965 1633 466 272 2371 1966 1964 343 33 7 2644 1967 2451 398 4 00 3249 1968 2286 425 201 2911 1969 2263 533 2 51 3046 1970 3789 859 4 00 5049 1971 3390 979 3 07 4675 1972 4626 1008 287 5920 1973 -320 17 -114 -417 1974 1598 314 - 93 1820

Source: ADFA Submission t o t h e IAC Inquiry i n to t h e Dried Vine F ru i t Industry, December 1974.

The d i f f e r e n t i a l s i n 1975 a r e expected t o be higher than i n the preceding two years. Over the past decade r e a l domestic p r ices have remained r e l a t i v e l y constant and, given ex i s t ing marketing arrangements, t h i s s i t ua t i on i s expected t o continue. Domestic p r ices a re l i k e l y t o be higher i n 1975 than i n the previous year and export r e a l i s a t i on lower.(8) Therefore, t he d i f f e r e n t i a l between domestic and export p r ices is expected to be above the 1974 d i f f e r e n t i a l and the s i z e of the consumer t rans fe r ,greater than the l eve l observed i n t ha t year.

Stabi Zisation

The Dried Vine F ru i t s S t ab i l i s a t i on Scheme commenced with the 1971 pack following t he termination o f the Internat ional Sultana Agreement.

The main fea tures of t he Scheme a r e contained i n the Dried Vine Fruits StabiZisation Act, 1971, t he ~ r i e d Vine Frmits Levy ~ c t , 1971 and the Dried Vine Fruits Levy CoZZection A c t , 1971. The Scheme covers a l l s a l e s of currants, sul tanas and r a i s i n s f o r t he 1971 t o 1975 seasons. A base pr ice , which represented the p r i ce f o r sul tanas of $268.70 per tonne, was

f (8) The Austral ian Multi-purpose Grape Growing Industry : Preliminary Results of an Economic survey: BAE Submission t o the IAC, Melbourne, 1 May 1975.

s e t i n 1971, with t he p r ices o f currants and r a i s i n s being $39.37 per tonne above and $29.53 per tonne below the base p r i ce respect ively . The base p r i ce was adjusted annually i n accordance with movements i n cash costs.

I n t he event t h a t the average r ea l i s ed p r i ce exceeded the base p r ice by more than $9.84, growers were t o contr ibute t o the fund up t o a l i m i t o f $19.69 per tonne. Conversely, i f t he average r ea l i s ed p r i ce per tonne was l e s s than the base p r i ce by more than $9.84, growers received payments from the fund t o make up the s h o r t f a l l .

Payments in to , o r r ece ip t s from the funds were t o be waived f o r a f r u i t i n seasons where t he quant i ty of t ha t f r u i t , received f o r packing, d id not exceed the spec i f ied range. The range i s shown i n Table NO. 11-5.

- - - Table No. 11-5 4 SUMMARY OF STABILISATION SCHEME PROVISIONS

Fru i t Minimum Maximum Fund Ceiling

tonnes tonnes $m

Currants

Raisins

Sultanas

I f moneys i n t he fund were i n su f f i c i en t t he Government undertook t o meet the s h o r t f a l l up t o a maximum of $22.6 per tonne. Where de l i ve r i e s f o r packing exceeded s e t upper l i m i t s , as shown i n Table No. 11-5, combined Government and fund pay-outs were t o be calcula ted on a pro rata bas i s .

Ceilings were s e t f o r the amount of money i n each fund. In the event of a fund surplus, Government contributions were t o be re-paid and then proportional pay-outs were t o be made t o growers.

During 1971, world p r ices f o r currants and sul tanas continued t o f a l l . Although domestic p r ices were increased the average pr ice f o r these f r u i t s f e l l , so payments from the scheme equalled $4.15 per tonne f o r currants and $6.87 per tonne fo r sul tanas . In con t ras t , the world p r ices fo r r a i s i n s rose subs tan t ia l ly , so average pr ices received were above the base p r i ce f o r r a i s i n s . However, no pay-in was required as r a i s i n production was l e s s than the s e t minimum. Therefore, i n the 1971-72 season the t o t a l pay-outs from the funds ( these being made by the Austral ian Government) were $975 713.

Both world and domestic market p r i ce s f o r currants , sul tanas and r a i s i n s rose i n the 1972-73 and 1973-74 seasons. Growers were required t o pay i n $3.37 per tonne f o r currants and a t the maximum r a t e of $19.69 per tonne f o r r a i s i n s i n 1972-73. Payments were made from the fund f o r sultanas, calculated on a pro rats bas i s , as production exceeded the s e t

maximum, and growers received $12.15 per tonne. A s the tonnages of the th ree v a r i e t i e s produced i n 1973-74 were below the spec i f i ed minima, t he t o t a l production was exempt from payment of contr ibut ions t o the funds.

The average amount of ass i s t ance per farm, provided by t he S t a b i l i s a t i o n Scheme, i s shown l a t e r i n Tables No. 111-1 t o No. 111-5. I t was g r ea t e s t i n the Sunraysia region of Vic to r ia i n 1971-72 when it amounted t o near ly $700 per farm. Quant i t ies del ivered i n 1974-75 a r e a l s o expected t o be below the spec i f i ed minima and the re fore no payments a r e expected i n t o o r from t h e fund.

Research and Promotion

Some moneys a r e co l l ec ted under the Dried Vine Fruits Research Act and a r e used f o r research and promotion. The Austral ian Government contr ibutes funds f o r t h i s purpose and, as t h i s bene f i t t o the Industry increases the re tu rn t o value adding f ac to r s , they a r e included i n protect ion. Amounts of research a r e approximated by a l loca t ing t o t a l funds on a per tonne b a s i s which i s s e t out i n t he appendix. f i e r e su l t i ng benef i t s , which a r e ne t of Industry l ev ies and do not include S t a t e Government contr ibut ions , a r e s e t out i n Table No. 11-6.

Table No. 11-6

FARM VALUE OF GOVERNMENT EXPENDITURE ON RESEARCH WHOLE FARM

Average per Farm, 1971-72 t o 1973-74

(Do1 l a r s )

Region

New South Wales V ic to r i a Aust - Year South r a l i a Aust-

Sunray Mid- State Sunray Robin Mid- State ralia - s i a Murray - s i a -vale Murray

Assistance Not Specific to the Mu1 ti-purpose -- Grape Growing Industry

Rural Cre di t Concessions

Primary producers a r e ab le t o obta in c r e d i t from sources not normally avai lable t o non-primary producers. The concessions ava i l ab le t o producers usual ly involve p r e f e r en t i a l i n t e r e s t r a t e s and more favourable repayment terms.

The add i t iona l f a c i l i t i e s ava i l ab le t o producers include lower overdraf t i n t e r e s t r a t e s (removed 1973) and Commonwealth Development Bank Term and Farm Development Loans. In addi t ion, concessional c r e d i t f a c i l i t i e s apply through various S t a t e agencies, Rural Reconstruction Boards and War Service Land Settlement Schemes. A major f a c i l i t y is a l s o provided by t he Reserve Bank t o enable marketing boards t o advance payments t o growers, so t h a t the time between product del ivery and i n i t i a l payment i s reduced.

The qua l i f i c a t i ons surrounding the est imation of t h i s concession, mentioned i n the appendix, should be borne i n mind when in te rpre t ing t h e r e s u l t s . The value of the concession was r e l a t i v e l y small over a l l regions ($117 per farm f o r the three years) except i n New South Wales Sunraysia and Robinvale i n Vic to r ia where the respect ive amounts were $355 and $336. A s shown i n Table No.11-7 the value of the concession was l e s s f o r t h e multi-purpose grape and dr ied vine f r u i t en te rpr i ses (being $94 and $79 respec t ive ly ) .

Table No. 11-7

VALUE OF RURAL CREDIT CONCESSrONS


[Dollars)

Region

Enterpr ise New South Wales Vic to r ia Aus t - r a l i a

Sunray Mid- Aust- Sunray Robin Mid- State ralia - s i a Murray State - s i a -vale k r r a y

Whole farm 355 53 321 80 336 13 123 6 117

Multi-purpose grape en te rpr i se 28 0 34 252 64 282 11 100 5 94

Dried vine f r u i t en te rpr i se 252 16 225 62 192 2 81 2 79

A d i s t r i b u t i o n of debt outstanding by i n t e r e s t r a t e , shown i n Table No. 11-8 revealed t h a t i n New South Wales Sunraysia and Robinvale i n Victor ia , the average amounts of debt outstanding t o banks and Government agencies a t 30 June 1974, with an i n t e r e s t charge of below 5.0% (reducible) , were $3833 and $5376 respect ively .

Fer t i Ziser Bounty

There were two f e r t i l i s e r concessions ava i l ab le t o growers:

Table No. 11-8

WHOLE FARM - DEBT TO BANKS AND GOVERNMENT AGENCIES(a) BY INTEREST RATE

Average per Farm, A s a t 30.6.74

(Do1 l a r s )

Region

New South Wales Vic to r ia Aust- I n t e r e s t Rate r a l i a

Sunray Mid- Sunray Robin Aust - - s i a Murray Mid- S t a t e r a l i a State - s i a -vale Murray

l Under 4.0 3335 79 3011 237 1 899 1 7 530 15 754

10.0 and over 328 420 337 175 998 318 342 762 448

Total 6775 4428 6541 4484 1 2 604 1814 5779 3982 5429

(a) Overdrafts a r e included a s a source of debt .

(a) The Phosphatic F e r t i l i s e r s Subsidy: following a previous period of operation t he phosphatic f e r t i l i s e r s subsidy was re-introduced i n 1963. I t had the primary aim of promoting g r ea t e r use o f superphosphate and more economic production; it had t he secondary object ives of f a c i l i t a t i n g t he growth of r u r a l output , improving the competitive pos i t ion of exports and providing an enhanced incent ive t o develop new lands. In 1972-73 the subsidy cos t $60 mill ion, having been paid a t the r a t e of $11.81 per tonne o f superphosphate content s ince 1969. The subsidy was withdrawn by the Government i n 1974.

(b) The Nitrogenous F e r t i l i s e r Bounty: the bounty was introduced i n 1966 being designed t o reduce costs i n the sugar and h o r t i c u l t u r a l i ndus t r i e s and encourage g rea te r use o f n i t rogen f e r t i l i s e r . Currently the bounty is a t the r a t e o f $78.74 per tonne o f contained nitrogen.

The average value per farm of each f e r t i l i s e r bounty and the t o t a l co s t of f e r t i l i s e r a r e shown inTable No. 11-9.The t o t a l value of t h e bounty f o r both f e r t i l i s e r s was r e l a t i v e l y small and f o r a l l S t a t e s amounted t o $86 per farm f o r the whole farm, $46 f o r the multi-purpose grape en te rpr i se and $32 f o r the dr ied vine f r u i t en te rpr i se , over t he three years, 1971-72 t o 1973-74.

Petroleum Products Subsidy Scheme

This subsidy was introduced i n 1965, with the s t a t e d purpose of reducing r u r a l co s t s , p a r t i c u l a r l y i n remote locat ions , by subsidis ing t he f r e igh t on petroleum products sold i n country areas . Under the scheme the Government paid the ex t r a f r e i gh t where the cos t t o areas outs ide metropolitan a reas exceeded 0 . 7 3 ~ per l i t r e . This r a t e was increased t o l . l c per l i t r e i n 1973 and the subsidy was t o t a l l y removed i n 1974. Because most of the d r ied vine f r u i t farms i n the t h r ee S t a t e s d id not use g rea t quan t i t i e s of fue l , and t he r a t e s of subsidy were r e l a t i v e l y low, t he benef i t f r oh t h i s subsidy was not large. On average, the subsidy was $8 per farm and was g r ea t e s t i n t he Sunraysia regions. I t was s l i g h t l y l e s s f o r the multi-purpose grape growing and dr ied vine f r u i t en te rpr i se , being $6 f o r both en te rpr i ses , and again highest i n t he Sunraysia regions.

Tamtion Concessions

A number of concessions, which confine benef i t s not ava i l ab le t o non-rural producers, e x i s t f o r persons engaged i n primary production. The nature and form of these concessions have been ou t l ined previously.(9)

The taxat ion concessions of double deduc t ib i l i ty , i nde f in i t e carryforward of losses and concessions applying on primary producers e s t a t e s were not evaluated a s t h e i r r e l a t i v e importance i s minor compared t o the t o t a l p ro tec t ive s t ructure . ( lO) I n addi t ion, data were not ava i l ab le on an individual farm bas i s f o r a time period long enough t o evaluate the concession, i f any, ava i l ab le from the averaging provision. -- p

(9) BAE, Economic Policies and the AustraZian Dried Vine Fruits Industry - A Preliminary Submission, Industry Economics Monograph No. 5, Canberra, 1975.

(10) Review of the Continuing Expenditure PoZi&es of the Previous Government, June 1973 - Report of a Task Force headed by D r . H.C. Coombs, Canberra, 1973.

Table No. 11-9

FARM COST OF FERTILISER AND VALUE OF BOUNTY ON

NITROGENOUS AND PHOSPHATIC FERTILISERS

Three Year Average per Farm,1971-72 t o 1973-74

(Do1 l a r s )

l Region

CO s t and New South Wales Vic tor ia Aust - Bounty Sunray Mid- State Sunray Robin Mid-

r a l i a Aust- - s i a Murray - s i a -vale Murray State r a l i a

WHOLE FARM

Total cost of f e r t i l i s e r 225 129 214 161 203 218 174 344 228

Phosphatic f e r t i l i s e r bounty 8 9 3 1 83 2 0 2 7 79 26 79 49

Nitrogenous f e r t i l i s e r bounty

MULTI-PURPOSE GRAPE E m P R I S E

Total cost of f e r t i l i s e r 123 87 119 139 1 4 5 38 1 3 2 1 3 5 131

Phosphatic f e r t i l i s e r bounty 39 25 38 1 8 22 1 5 18 28 24

Nitrogenous f e r t i l i s e r bounty

DRIED VINE FRUIT ENI%RPRISE

Total cost of f e r t i l i s e r 83 50 79 138 1 0 6 22 123 36 92

Phosphatic f e r t i l i s e r bounty 3 1 1 2 29 1 7 1 6 1 0 1 7 6 1 5

Nitrogenous f e r t i l i s e r bounty 2 3 3 21 26 1 9 4 23 4 1 7

Final ly , the value of the concessions of the investment allowance, accelera ted deprecia t ion and deduc t i b i l i t y of c e r t a i n c a p i t a l items, were not included i n t he est imates of e f f ec t i ve protect ion a s they no longer apply o r requ i re tenuous assumptions t o be evaluated. Estimates of each of these concessions were made. The methodology u t i l i s e d i s de ta i l ed i n t he appendix while t he est imates a r e reported i n Table No. 11-10.

Table No.11-10

TAXATION CONCESSIONS

PRELIMINARY ESTIMATES OF ANNUAL BENEFITS

Average per Farm, 1971-72 t o 1973-74

(Dollars)

Region

Item New South Wales Vic to r ia South AUS t -

Sunray Mid- Sunray Robin Mid- ralia - s i a Murray - s i a -vale Murray

Investment allowance 5.02 1.81 8.56 4.40 0.47 2.46

Accelerated deprecia t ion 8.83 4.27 3.17 8.19 6.89 2.78

Deduct ib i l i ty of c e r t a i n c ap i t a l items (a) 2.97 1.11 1,26 4.50 -2.62 2.72

(a) Includes only cap i t a l expenditures subject t o depreciat ion.

T a r i f f on Tradeable Inpu t s

A s mentioned previously, the t a r i f f on t radeable inputs i s the main cost imposed on t he Dried Vine F ru i t Industry. Table No. 11-11 shows t he average cost of the t a r i f f f o r each of these items. However, the t a r i f f r a t e s used f o r o ther r epa i r and maint?nance mate r ia l s and packing mater ia ls were zero,

The t ab l e shows t h a t t he t o t a l cos t of the t a r i f f on a whole farm bas i s was $670 per farm, f o r t he th ree years 1971-72 t o 1973-74. For the multi-purpose grape and dr ied vine f r u i t en te rpr i ses i t was $455 and $347 respect ively . The most important component was t he t a r i f f on cap i t a l items and i n t u rn t he l a rge s t s i ng l e cos t i n t h i s group of items was on vehic les . Sprays and chemicals were a l so important t radeable inputs used on dr ied vine f r u i t farms and on average the cos t of the t a r i f f was over $118 per farfi,

Table No. 11- l1

TARIFF ON TRADEABLE INPUTS


Region

Item New South Wales Victoria

Aust-

Sunray Mid- Sunray Robin Mid- Aust- South r a l i a -s ia Murray State - s i a -vale Murray State r a l i a

$ $ $ $ $ $ $ $ $ Tari f f on tradeables - Whole Fann

l ( i ) Sprays and chemicals 151 86 143 122 118 83 118 106 118

l

( i i ) Materials f o r r epa i r s and maintenance 79 74 79 56 29 127 57 42 56

l ( i i i ) Packing materials 66 68 66 15 178 232 64 - 46

(iv) Capital items 524 3 75 507 451 530 485 469 383 450

Total t a r i f f component 820 603 795 644 855 927 708 531 670

Multi-purpose Grape Enterprise

I ( i ) Sprays and chemicals 127 75 130 116 109 31 108 44 93

( i i ) Materials fo r repairs and maintenance 6 1 45 5 0 46 2 5 48 42 21 37

I ( i i i ) Packing materials - - - - - -

1 (iv) Capital items 389 248 373 371 428 247 372 207 325


Dried Vine F k i t Enterprise

( i ) Sprays and chemicals 99 45 93 115 79 10 99 10 7 3

( i i ) Materials fo r r epa i r s and maintenance 51 2 2 48 46 16 18 38 3 30

( i i i ) Packing materials - - - - - - - -

(iv) Capital items 313 138 293 367 282 62 325 54 244


Par t I11

THE EFFECTIVE RATE OF PROTECTION I N THE DRIED VINE FRUIT INDUSTRY

The E f fec t ive Rate o f Protect ion

The effect ive r a t e of protection measures the assistance given to an industry. The concept r e f l e c t s the amount of protection given t o the value adding fac tors of production, such as labour and established capi tal , and is defined as the percentage increase i n the value added due to protection.

The level of protection w i l l vary according to how the Industry is defined. Three possible definit ions a re adopted here: f i r s t l y , the Industry is considered on a whole farm basis; secondly, on the basis of the multi-purpose grape growing enterprise; and thirdly, according t o the dried vine f r u i t enterprise.

In estimating the value added without protection a number of r e s t r i c t ive assumptions are made within a s t a t i c equilibrium framework. Extending the analysis t o general equilibrium conditions requires knowledge of supply and demand responses and the subst i tut ions which can occur between factors of production. General equilibrium interpretat ions from the s t a t i c analysis a re therefore tenuous.

Issues i n Applying the Concept o f E f fec t ive Rate o f Protection t o the Dried Vine F r u i t Growing Industry

The concept of the effect ive r a t e of protection developed around the theory of international trade and has keen applied t o the secondary sector and manufacturing industr ies . Application of the concept to agricul tural industries and i t s quantification present prac t ica l and theoretical problems.

The problems encountered include those created by the assumptions used t o estimate the effect ive r a t e of protection. A problem of t h i s type a r i se s from the inconsistency between the assumptions and the observed nature of agricul tural production, which varies under seasonal influences i n both output and i n i t s input-output structure. The concept is also unable to measure the divergence between soc ia l and pr ivate costs. This is c r i t i c a l when Government intervention measures have welfare i n addition to economic objectives.

Problems are also created by the assumption that production may be divided in to d i s t i n c t industr ies [processes). This assumption is fundamental t o the concept of the effect ive r a t e of protection. I t is

*convenient i n agriculture t o define an industry i n terms of a group of farms, producing a cer tain product o r group of products, so tha t accurate representative cost data can be defined. However, there is no general agreement on an industry defini t ion, whether i n terms of farms or pa r t s of farms.

The measurement of protection a t the whole farm level includes the value added from non-grape growing enterprises, such as livestock; the i r re la t ive contribution t o t o t a l value added w i l l influence the whole

farm r e su l t s . There are , however, cost a l loca t ion problems where common inputs apply t o more than one farm enterpr ise . +This problem has necess i ta ted, i n the s i ng l e en te rpr i se calcula t ions , subject ive decis ions on cost a l loca t ion , which may reduce the- accuracy of the common en te rpr i se r e s u l t s . (11)

In estimating t he e f f ec t i ve r a t e s of protection f o r the Dried Vine Fru i t Growing Industry a number of fu r ther qua l i f i ca t ions have been made :

(a) Water Subsi.dies A subsidy may be impl ic i t i n the provision o f i r r i g a t i o n water t o producers of multi-purpose grapes. However, t he Bureau does not h'ave data on t h i s subsidy and it was therefore not included i n t h e est imates of tlre e f f ec t i ve r a t e of protectton accorded such producers,

(b) Consumer Transfer In calcula t ing the consumer t rans fe r the domestic and export p a r i t y p r ice d i f f e r e n t i a l was multiplied by t he domestic consumption of dr ied vine f r u i t i n each survey year. The t o t a l consumer t rans fe r calcula ted was then divided by t o t a l domestic production of dr ied vine f r u i t i n each survey year t o y ie ld annual consumer t rans fe rs accorded per tonne of dr ied vine f r u i t produced. The use of export pa r i t y ra ther than import pa r i t y p r i ce is based on t he consideration tha t the Industry would remain a ne t exporter of dr ied vine f r u i t i n t he absence of domestic market production. This point was discussed i n Par t 11.

The Dr ied Vine F r u i t Growing Industry: E f f ec t i ve Rate o f Protect ion

The average e f f ec t i ve r a t e of protect ion was much greater i n 1971-72 than i n 1972-73 o r 1973-74. The estimated r a t e s a r e contained i n Tables No. 111-1 to No. 111-7, and Appendix Tables A.9 t o A . l l . Table No. 111-2 gives a reca lcu la t ion of Table No.' 111-1 subs t i tu t ing import p a r i t y pr ices f o r export p a r i t y i n 1971-72. Table No. 111-5 shows tha t over the three survey years the average whole farm e f f ec t i ve r a t e of protection was 4%. However, the annual r a t e s were 17% i n 1971-72, -2% i n 1972-73 and 2% i n 1973-74.

The e f fec t ive r a t e of protection over the three survey years was 8% f o r the multi-purpose grape en te rpr i se and 10% f o r the d r ied vine f r u i t enterpr ise . Again considerable var ia t ion was observed between years. Effect ive r a t e s of protect ion f o r the multi-purpose grape en te rpr i se f luctuated from 28% i n 1971-72 t o -4% i n 1972-73 and 4% i n 1973-74. For the dried vine. f r u i t en t e rp r i s e t he e f fec t ive r a t e s of protection var ied between 37% i n 1971-72, -3% i n 1972-73 and 6% i n 1973-74.

(11) These and other i s sues encountered when applying t he concept have been discussed previously i n a number of Bureau publications including: G. Motha and H. Plunkett, 'The Effect ive Rate of Protection - An Invest igat ion i n t o t he Application of the Concept t o the Austral ian Rural Sector1 , &uarterZy Review of AgricuZturaZ ~conomics, Vol. X X V I I , No, 3, Ju ly 1974.

Table No. 111-1

EFFECTIVE RATE OF PROTECTION (CONSUMER TRANSFER CALCULATED

USING EXPORT PARITY PRICES) : WHOLE FARJf

Average p e r Farm, 1971-72

Region

Item New South Wales V i c t o r i a South *l1 -- Aust- Regions Sunray Mid- Sunray Robin Mid-

- s i a Murray - s i a - v a l e Murray ralia

$ $ $ S S S $ $ $

1. Gross v a l u e o f farm produc t ion 1 7 061 1 4 083 1 6 722 1 7 481 1 5 217 1 5 038 1 6 850 11 230 1 5 246

2. Tradeab le i n p u t s - m a t e r i a l s 2 297 1 929 2 255 1 621 2 064 2 615 1 788 1 580 1 795

3. - c a p i t a l 1 592 1 U 7 1 538 1 349 1 5Q7 1 617 1 402 1 214 1 368

4. T o t a l t r a d e a b l e 5 (2+3) 3 889 3 046 3 793 2 970 3 571 4 232 3 180 2 794 3 163

5. P ro tec ted v a l u e added (1-4) 1 3 172 11 037 12 929 14 511 11 646 1 0 806 13 660 8 436 1 2 083

6. Research 132 85 127 159 125 36 142 2 1 106

7. P r e f e r e n t i a l c r e d i t 349 53 315 70 299 1 6 108 107

8. T o t a l s u b s i d i e s 481 138 442 229 424 52 251 21 250

9. Return t o v a l u e adding f a c t o r s (5+8) 1 3 653 11 175 1 3 371 14 740 1 2 070 1 0 858 13 910 8 457 12 296

1 0 S t a b i l i s a t i o h 408 320 398 699 385 104 589 4 0 4 08

11. Consumer t r a n s f e r 2 146 1 298 2 050 2 634 1 941 543 2 327 486 1 769

12. Research and promotion 132 85 127 159 125 36 142 21 106

13. P r e f e r e n t i a l c r e d i t 34 9 53 315 70 299 16 108 107

14. P e t r o l e m subs idy 11 7 11 9 7 6 8 6

15 . F e r t i l i s e r bounty - phosphate 113 33 104 1 9 34 96 28 7 7 53

16. - n i t r o g e n 7 9 5 7 1 28 29 15 2 7 42 3 7

17. T a r i f f on m a t e r i a l s 284 248 279 191 329 417 236 148 218

18. T a r i f f on c a p i t a l i t e n s ( a ) 529 359 510 455 524 466 469 377 449

19. T o t a l t a r i f f on t r a d e a b l e s ( l 7 + 18) 813 607 789 646 853 883 705 525 667

20. Non-protected v a l u e added

l (9- ( s w 10,16) + 19) 11 228 9 981 1 1 084 11 768 10 103 10 925 11 386 8 316 10 477

% I %

21. E f f e c t i v e r a t e of p r o t e c t i o n (9-20) '20 X 100 2 2 12 21 25 l 9 -1 L2 2 17

(a) Excluding l abour on fences , b u i l d i n g s and s t r u c t u r e s - s e e Appendix.

Table No. 111-2


USING IMPORT PARITY PRICES): WHOLE FARM

Average per Farm, 1971-72

Region

Item New South Wales Victoria South All Regions

Sunray Mid- Sunray Robin Mid- - s i a Murray - s i a -vale Murray ralia

$ $ $ $ $ $ $ $ $

1. Gross value of farm production 17 061 14 083 16 722 17 481 15 217 15 038 16 850 11 230 15 246

2. Tradeable inputs - mater ia ls 2 297 1 929 2 255 1 621 2 064 2 615 1 788 1 580 1 795

4. Total tradeables (2+3) 3 889 3 046 3 793 2 970 3 571 4 232 3 190 2 794 3 163

5. Protected value added (1-4) 13 172 11 037 12 929 14 511 11 646 10 806 13 660 8 436 12 083

6. Research 132 85 127 159 125 36 142 21 106

7. Preferent ia l c r ed i t 349 53 315 70 299 16 108

8. Total subsidies 481 138 442 229 424 52 251

9. Return t o value adding f ac to r s (S+&) 13 653 11 175 13 371 14 740 12 070 10 858 13 910

S tab i l i s a t i on

Consumer t r ans fe r

Research and promotion

Preferent ia l c r e d i t

Petroleum subsidy

F e r t i l i s e r bounty - phosphate

- nitrogen

Ta r i f f on materials

Ta r i f f on cap i t a l items(a)

19. Total t a r i f f on t radeables( l7 + 18) 813 607 789 646 853 883 705

20. Non-protected value added (9 - ( S U ~ 10, 16) + 19) 11 636 10 202 11 487 12 251 10 457 l 1 015 12 367

% % % % 2 1 Effective r a t e of protection

(9-20)/20 X 100 17 10 16 20 15 1 12 1 14

( a ) Cxcludjng labour on fences, buildings and s t ruc tu re s - see Appendix

Table No. 111-3


USING EXPORT PARITY PRICES) : WHOLE FARM


Region

Item New South Wales Vic tor ia South All Aust-

Sunray Mid- Sunray Robin Mid- qtate ralia Regions - s i a **ray State - s i a -vale hturrjiy

$ $ S $ $ $ $ $ $ 1. Gross value o f farm production l 7 974 14 170 17 S42 18 599 14 556 15 410 17 571 11 290 15 794

2. Tradeable inputs - mater ia ls 2 433 2 066 2 391 1 835 2 111 3 133 1 997 1 575 1 933

3. (a) 1 704 1 283 1 656 1 416 1 672 1 881 1 503 1 271 1 459


5. Protected value added (1-41 13 837 10 821 1 3 495 15 348 10 773 10 396 14 071 8 444 12 402

6. Research 161 113 156 226 147 48 196 26 142

7. Preferent ia l c r ed i t 370 58 335 82 348 13 126 8 122

8. Total subsidies 531 171 4.91 308 495 61 322 34 264

9. Return t o value adding f ac to r s (5+8) 14 368 10 992 13 986 15 656 11 268 10 457 14 393 8 478 12 666

10. S t ab i l i s a t i on - 11. Consumer t r ans fe r -213 -142 -205 -252 185 -52 -223 -14 -161



14. Petroleum subsidy 10 7 10 10 8 6 10 7

15. F e r t i l i s e r bounty - phosphate 124 31 114 19 29 74 25 94 57

16. - nitrogen 88 8 79 32 34 21 31 44 42

17. Tar i f f on materials 525 285 321 199 331 536 252 136 228

18. Tzri f f on cap i t a l items(a) 564 407 546 483 576 543 505 414 485

19. Total t a r i f f on tradeable5 (17+18) 889 692 867 682 907 1 0 7 9 757 550 713

20. Non-protected value added (9- (sum l0,16) + 19) 14 717 11 h09 14 364 16 221 11 794 11 426 14 985 8 870 13 170

21. Effective r a t e of protection (9-20)/20 X 100 - 2 -5 -3 -3 -4 -8 -4 - 4 - 2

laJ Excluding labour on fences, buildings and s t ructures - see Appendix.

Table No. III-4




Region

Item New South Wales Victoria South Aust Regions

Sunray Mid- Sunray Robin Mid- Total ralia - s i a Murray -sia -vale Murray

$ $ $ $ $ $ $ $ $

1. Gross value of farm production 22 325 14 685 21 456 19 028 17 543 21 786 18 984 12 736 17 567

2. Tradeable inputs - materials 3 500 2 972 3 440 3 l32 3 467 4 851 3 340 2 714 3 177


5. Protected value added (1-4) 16 986 10 228 16 217 14 320 12 261 15 036 13 996 8 611 12 788


7. Preferent ia l c red i t 345 49 312 90 360 9 134 11 124

8. Total subsidies 524 136 481 289 500 31 307 32 25 3

9. Return t o value adding factors (5+8) 17 510 10 364 16 698 14 609 12 761 15 067 14 303 8 643 13 041

10. Stabi l isa t ion - - - - - 11. Consureer t ransfer 768 358 721 881 597 95 761 138 580

12. Research and promotion 179 87 169 199 140 22 173 2 1 129

13. Preferential credi t 345 49 312 90 360 9 134 l l 124



16. - nitrogen 30 12 28 21 35 26 24 53 33

17. Tar i f f on materials 279 150 264 189 315 374 229 161 215

18. Tar i f f on capi ta l items(a) 478 360 464 416 491 445 432 357 416

1g .Tota l tar i f fontradeables ( l7+18) 757 510 729 605 806 819 661 519 6 30

20. Non-protected value added (9-(sUrn 10, 16) + 19) 16 903 10 332 16 156 13 986 12 406 19 659 13 833 8 873 12 758 l

% % % % % % 4 % %

21. Effective r a t e of protection (9-20) /20 X 100 4 0 3 4 3 -4 3 -3 2

(a) Excluding labour on fences, buildings and s t ructures - see Appendix.

Table No. 111-5

EFFECTTVE RATE OF PROTECTION (CONSUMER TRANSFER CALCULATED



Region

TteJ" New South Wales Vic tor ia South All Aust-

Sunray Mid- State Sunray Robin Mid State ralia Regions - A a Murrav - s i a -vale Murray

$ $ $ . $ $ $ $ $ $ 1. Gross value o f farm production l g 120 14 313 18 573 18 369 15 772 17 411 17 802 11 752 16 202

2. Tradeable inputs - Materials 2 743 2 322 2 695 2 196 2 547 3 533 2 375 1 957 2 302


5. Protected value added cl-4) 14 665 10 696 14 214 14 726 11 560 12 079 13 910 8 496 12 424


7. Preferent ia l c r e d i t 355 53 321 80 336 13 123 6 117

8. Total subsidies 513 148 472 275 473 48 293 29 243

9. Return t o value adding fac tors

(5+8) 15 178 10 844 14 686 15 001 12 033 12 127 14 203 8 525 12 667

10. S t ab i l i s a t i on 136 107 133 233 128 35 196 13 136

11, Consumer t r ans fe r 900 505 855 1 088 784 195 955 204 729





16. - nitrogen 66 8 59 27 33 21 27 47 37

17. Tar i f f on mater ia ls 296 228 288 193 325 442 239 148 220

18. Tar i f f on cap i t a l items (a? 524 375 507 451 530 485 469 383 450

19. Total t a r i f f on tradeables (17+18) 820 603 795 644 855 927 708 521 670

20. on-protected value added (9-(sum 10,16) + 19) 14 283 10 641 13 868 13 900 11 434 12 669 13 403 8 684 1 2 135

21. Effective r a t e of protection (9-20)/20 X 100 6 2 6 7 5 -4 6 - 2 4

(a) Excluding labour on fences, buildings and s t ructures - see Appendix

Table 240. I114

EFFECTIVE BATE OF m Z 3 N (CONSUEBIR TMUSFER W I A T E D .

USING EXPORT PARITY PRICES) : FanTI-PURPOSE W E ENTERPRISE

Three Year Average, 1971-72 to 1973-74

Region

Vic tor ia A 1 l Item New South Wales South Regions Aust -

Sunray Mid- Total Sunray Robin Mid- ralia -s ia Mumay - s i a -vale Murray

S S $ 5 $ $ $ $ $

1. Gross value o f farm production 13 738 1 0 287 13 346 14 928 12 996 8929 14 057 5625 11 578

2. Tradeable inputs - mater ia ls 1 52$ 1 106 1 478 1 458 1 350 734 1 376 777 1 221

3. - c a p i t a l l a ) l 263 834 1 214 1 166 1 339 800 1 167 689 1 039

4. Total tradeables (2+3) 2 788 1 940 2 692 2 624 2 689 1534 2 543 1466 2 260

5. Protected value added (1-4) 10 950 8 347 10 654 12 304 10 307 7395 11 514 4159 9 318



8. Total subsidies 438 129 403 259 419 46 270 28 220

9. Return to value adding f ac to r s (5+8) 11 388 8'476 11 057 12 563 10 726 7441 11 784 4187 9 538

10. S t ab i l i s a t i on 136 107 133 233 128 35 1% 1 3 136

11. Consumer t r ans fe r 900 505 855 1 088 784 195 955 204 729



14. Petroleum subsidy 9 4 8 1 0 8 3 9 - 6


16. - nitrogen 25 5 23 26 26 7 25 1 8 22


18. Tar i f f on c a p i t a l items(a) 389 248 373 371 428 247 372 207 325

19. Total t a r i f f on tradeables(l7 + 18) 577 368 553 533 562 326 522 272 455

20. Non-protected value added (9 - (SW 10, 16) + 19) 10 418 8 069 10 150 11 462 9 901 7466 10 833 4168 8856

21. Effective r a t e o f protection (9-20)/20 X 100 9 5 9 10 8 0 9 0 8 ---p

(a) Excluding labour on fences, buildings and s t ruc tu re s - see Appendix,

Table No. 111-7


USING EXPORT PARITY PRICES) : DRIED VINE FRUIT ENTERPRISE

Three Year Average, 1971-72 t o 1973-74

Region

Item New South Wales Vic tor ia South *l1 Aust- Regions

Sunray Mid- Sunray Robin Mid- Total ralia - s i a Murray - s i a -vale Murray

$ $ $ $ $ $ $ $ $ 1. Gross value of farm production 11 457 6593 10 905 14 764 9732 2406 12 773 1773 9407

4. Total tradeables (2+3) 2 076 1016 1 955 2 455 1661 432 2 134 315 1596

5. Protected value added (1-4) 9 381 5577 8 950 12 309 8071 1974 10 639 1458 7811



8. Total subs id ies 410 111 376 257 329 37 252 25 205

9. Return t o value adding f ac to r s ( 5 4 )

10. S t a b i l i s a t i o n 136 107 133 233 128 35 196 13 136

11. Consumer t r ans fe r 900 505 855 1 088 784 195 955 204 729

12. Research and promotion 158 95 l 5 1 195 137 35 170 23 126

13. Preferent ia l c r e d i t 252 1 6 225 62 192 2 81 2 79

'14. Petroleum subsidy 7 2 7 10 5 1 8 6

15. F e r t i l i s e r bounty - phosphate 31 12 29 17 1 6 1 0 17 6 1 5

16. - nitrogen 23 3 21 26 1 9 4 23 4 17


18:Tariff on cap i t a l items(a) 313 138 293 367 282 62 325 54 244

19. Total t a r i f f on tradeables (17 + 18) 463 205 434 528 377 90 462 67 347

20: Non-protected value added (9 - ($U 10, 16) + 19) 8 747 5153 8 339 11 463 7496 1819 9 903 1298 7255

% % , % % % $ % * 21. Effective r a t e of protection

(9-20)/20 X 100 12 10 1 2 10 12 11 10 14 10

------- -

(a) Excluding labour on fences, buildings and s t ruc tu re s - see Appendix

This very wide f luc tua t ion i n e f f ec t i ve r a t e s between years is near ly a l l caused by va r i a t i on i n t he amount of consumer t r an s f e r t o t h e Industry. The measurement o f the consumer t r an s f e r i s based upon the d i f f e r e n t i a l between t he domestic and export p r ice . The former has remained comparatively s t a b l e whi l s t t he export p r i c e , which had been a t a r e l a t i v e l y low level , increased subs t an t i a l l y and remained a t about domestic p a r i t y i n 1973 and 1974. I n 1972-73, export p r i c e s a c tua l l y exceeded domestic p r i c e s and t h i s a typ ica l s i t ua t i on r e su l t ed i n a t r an s f e r from the producer t o the consumer. This s i t ua t i on , and the f a c t t h a t the other subsidies on inputs roughly o f f s e t the cos t of the t a r i f f , accounts f o r the negative e f f ec t i ve r a t e s .

1 Consideration of ass i s t ance received over t he pas t decade suggests t h a t the e f f ec t i ve r a t e s of protect ion, as reported f o r the three years 1971-72 t o 1973-74, would be lower than those experienced i n e a r l i e r years. In an e a r l i e r discussion it was suggested t h a t the s i z e of consumer t r an s f e r i n 1975 could be higher than i n the previous year. This deduction was made a f t e r considerat ion of l i k e l y domestic and export p r i c e movements and domestic quan t i t i e s sold . Given the expected divergence i n domestic and export p r ices , and t h e maintenance of t he ex i s t ing domestic marketing arrangements, it i s l i k e l y t h a t the e f f ec t i ve r a t e s o f protect ion could r e tu rn t o a l eve l s imi la r t o t ha t which prevailed i n 1971-72. S t ab i l i s a t i on payments were a l so important i n t h a t year but these a re not expected f o r the 1974-75 season; however, t he consumer t r an s f e r i s l i k e l y t o be s u f f i c i e n t l y above the l eve l prevai l ing i n 1971-72 t o o f f s e t any f a l l i n s t a b i l i s a t i o n payments.

Ranking with Other Industries

The e f fec t ive r a t e of protect ion ind ica tes the r e l a t i v e pos i t ion of the Dried Vine F ru i t Growing Industry t o a l l other i ndus t r i e s when ranked on a sca le of increasing r a t e s . Within the cons t ra in t s imposed by the previously s t a t ed assumptions, t he ranking of i ndus t r i e s indicates the d i rec t ion i n which the ex i s t ing p ro tec t ive s t r uc tu r e has encouraged domestic resources t o be a l loca ted ( i n con t ras t t o the a l loca t ion which may e x i s t under normal market fo rces ) , as between i ndus t r i e s producing traded goods. The higher the level o f protect ion obtained by an industry, the more l i k e l y resources w i l l be a t t r a c t e d t o the industry. The ranking

~ therefore, permits c e r t a i n inferences t o be made about the a b i l i t y of the Dried Vine F ru i t Growing Industry t o a t t r a c t and r e t a i n resources, through the protect ion accorded i t .

Additional qua l i f i c a t i ons must be made when comparing e f fec t ive r a t e s of protect ion between i ndus t r i e s . This is espec ia l ly so when comparing the protect ion accorded r u r a l i ndus t r i e s with t h a t received by those i ndus t r i e s producing import competing goods and receiving protect ion through t a r i f f s on imports. For the l a t t e r , the ac tua l l eve l of protect ion used may be l e s s than the level of protect ion made avai lable , while much of the protect ion received by r u r a l i ndus t r i e s is i n the form of export subsidies , bounties on inputs and so on, r a t he r than by way of the t a r i f f . Consequently, comparisons o f e f f ec t i ve r a t e s between r u r a l indus t r i es may be more meaningful than comparisons with manufacturing indus t r i es .

Notwithstanding these qua l i f i c a t i ons , the e f f ec t i ve r a t e s o f protection f o r some o ther i ndus t r i e s have a l ready been made by the Bureau. These a r e s e t out i n Table No. 111-8 t o provide the bas i s o f the r e l a t i v e ranking of the Dried Vine F ru i t Growing Industry.

Table No. 111-8

EXAMPLES OF EFFECTIVE PROTECTION I N OTHER RURAL INDUSTRIES

(Percentages)

--

Indus try 1969-70 1970-71 1971-72 1972-73 1973-74

Wheat farms (a) '14 (average) na na Sheep farms (a) 8 11 na na na Apple and pear farms (b) na na -1 -1 * 14 Dairy farms (c) na na 4 8 44 3 5 Egg farms(a) 104 na na na na

na, not available.

Sources: (a) G . Motha and H. Plunkett, op. c i t . , pp. 134-137. (b) Excluding market real locat ion e f fec t s , BAE, Protection t o the Australian App Ze and Pear Growing Indus try , industry Economics Monograph No. 12 (forthcoming). (c) Assuming minimum f lu id milk protection, BAE, unpublished survey data.

The estimated effect ive r a t e s of protection cover d i f fe rent periods and therefore do not permit d i rec t comparisons a t common points of time. In addition, the only avai lable estimate f o r the average ef fec t ive r a t e of protection f o r a l l farming industr ies is 18% fo r 1967-68. Although not d i r ec t ly comparable, manufacturing industr ies a lso show a large degree of var iat ion i n effect ive ra tes . Estimates f o r the manufacturing sector made by the IAC f o r the period 1969-70 ranged between 11% i n the ~ o o d , Beverage and Tobacco Industry and 83% i n the Clothing and Footwear Industry (including kni t t ing mills).(12) The Dried Vine Fru i t Industry has received l e s s ne t protection than many other industr ies , although the amount of protection, i n the f i r s t survey year and especially i n the case of the two enterprises , was cer tainly higher than the average for a l l rura l industr ies .

Net Protect ion i n Net Farm Income

The measure of ne t farm income has been the t rad i t iona l measure used t o represent the economic performance of the farm. The following analysis attempts t o indicate the contribution t o ne t farm income by the various intervention measures applying i n t h i s Industry.

I n Table No. 111-9, the average value of assistance i n the value of production and of imposts i n the tradeable inputs and subsidies i n other farm costs a re shown and t h e i r r e l a t ive importance i n net farm income is demonstrated.

The net protection obtained accounts f o r approximately 9% of ne t farm income ($4552) f o r the three years 1971-72 t o 1973-74. The amount of ne t protection varied widely between some regions and was in fac t negative i n the Mid-Murray regjon of Victoria and i n South Australia. The highest level of ne t protection was 15% observed i n Victoria Sunraysia.

(12) Effective r a t e s of protection estimated for : 1. Manufacturing industr ies 1969-70: IAC, AnnuaZ Report, 1973-74, p. 69. 2. A l l farming industr ies 1967-1968: F.H. Gruen, op. c i t .

Table No. 111-9

IMPACT OF INTERVENTION MEASURES ON DRIED VINE FRUIT FARM INCOME

Three Year Average per Farm, 1971-72 to 1973-74

New South Wales Victoria South Australia Australia Sunraysia Mid-Murray State Sunraysia Robinvale Mid-Murray State

Item Pro- Pro- Pro- Pro- Pro- Pro- Pro- Pro- Pro- AmOMt portion A, portion portion portion portion Am portion Amount portion A,,, portion A,,, portion

Ount of of Ount of Ount of ount of of of of of N.F.I. N.F.I. N.P.I. N.F.I. N.F.I. N.F.I. N.F.I. N.P.I. N.F.I.

Non-protected value of production 18 084 13 701 17 585 17 048 14 860 17 181 16 651 11 535 15 337

Plug protection on production 1036 15 612 24 988 15 1 321 24 912 l9 230 5 l 151 22 217 10 865 19

J

Gross value of N

production 00 (including I

protection) 19 120 14 313 18 573 18 369 15 772 17 411 17 802 11 752 16 202

Less non-protected ' value of cash costs 8 216 7 027 8 083 8 98i 6 629 8 099 8 463 5 661 7 623

PZus cost subsidies 521 8 99 4 474 7 139 3 405 8 120 2 187 4 132 6 211 5

Less

- imposts 820 12 603 23 795 12 -644 12 855 18 927 18 708 13 531 25 670 15

- depreciation provision 2 117 1 574 2 055 2 084 .2 121 2 073 2 090 1 595 1 946

Net farm income 6 919 2 595 6 426 5 460 4 835 4 829 5 292 2 126 4 552

Net protection in income 737 21 108 4 667 20 816 15 462 10 -577 -12 630 12 -182 -9 406 9 .

I t was indicated above t h a t t he Industry r e s u l t s i n 1972-73 and 1973-74 were somewhat d i f f e r en t from e a r l i e r years and, i f export p r i c e s were t o f a l l i n f u tu r e years, l eve l s of net protect ion would more c lo se ly approximate those applying i n 1971-72 r a the r than t he r a t e s applying i n 1972-73 o r 1973-74. Table No. 111-10, repor ts a summary of the ne t protect ion i n ne t farm income observed i n 1971-72 which i s regarded a s a more typ ica l year f o r export p r ices . I t may be noted t h a t t he l eve l of ne t protect ion i n ne t farm income was 45% i n t h a t year. This l eve l was common across a l l regions except f o r Victor ia Mid-Murray which recorded -2%. The average l eve l of ne t protect ion was found t o be $1819 i n 1971-72. The conclusion t h a t , i n the absence o f any in tervent ion measures, ne t farm income, $4027, would have been $1819 lower i n t h a t year does not necessa r i ly follow. Clearly, a d i f f e r en t s e t of organisa t ion of resources would have occurred i n 1971-72, o r any o ther year, i n the absence o f a l l in tervent ion. The reduction i n ne t farm income would most l i k e l y not have been a s g r ea t a s suggested by t he l eve l ne t protect ion.

Table 111-10

IMPACT OF INTERVENTION MEASURES ON DRIED V I N E FRUIT

FARM INCOME : 1971-72

Average per Farm

Region

Item New South Wales Victor ia Aust - Sunray Mid- Sunray Robin Mid-

South r a l i a Aust-

- s i a Murray State - s i a -vale Murray State r a l i a

Net farm income ($) 5781 2325 5388 4577 4783 3811 4551 2279 4027

Gross

l pro tec t ion on production ($) 3238 1801 3076 3618 2820 816 3229 666 2486

l

Net protect ion C$) 2425 1194 2287 2972 1967 -67 2524 141 1819

Net protect ion as a proport ion of ne t farm income 0) 42 51 42 65 41 -2 55 62 45

Summary

The major ass i s t ance measures and imposts which have an impact on t he Dried Vine F ru i t Industry have been quan t i f i ed f o r t he period 1971-72 t o 1973-74, on both a whole farm and an en te rpr i se ba s i s . Over t h i s period, average whole farm l eve l of e f f ec t i ve protect ion was 4%, while f o r the multi-purpose grape en t e rp r i s e and the d r ied vine f r u i t en te rpr i se it was 8% and 10% respect ively .

Effect ive r a t e s o f protect ion did not vary widely between regions with the exception o f Victor ia Mid-blurray and South Austra l ia . In these regions r e l a t i v e l y l i t t l e d r ied f r u i t is grown and t he consumer t r an s f e r , which i s the main form of protect ion, was lower. Also, r e l a t i v e l y more f r e sh f r u i t i s packed, and t he e x t r a material input incurs a t a r i f f , which means the average t a r i f f i n t h a t region was r e l a t i v e l y high. Therefore, i n each year , except i n 1971-72, these regions received negative protect ion.

There was wide var ia t ion i n e f f ec t i ve r a t e s o f protect ion between survey years. This observation was a t t r i b u t a b l e t o varying export p r ices , which, when combined with r e l a t i v e l y s t a t i c domestic p r i c e s , meant t h a t the consumer t r a n s f e r of $1769 per farm i n 1971-72 became a producer t r an s f e r of $161 per farm i n 1972-73 followed by a consumer t r an s f e r of $580 i n 1973-74. The average f o r t he th ree years was a consumer t r an s f e r of $729. Effect ive r a t e s o f protect ion var ied with t h i s changing consumer t r an s f e r . The average r a t e s f o r the t h r ee years 1971-72, 1972-73 and 1973-74 were 17%, -2% and 2% respec t ive ly a t t he whole farm level . The e f f ec t i ve r a t e s of protect ion f o r the two en te rpr i ses under considerat ion a l so f luctuated. For t he multi-purpose grape en t e rp r i s e t h e e f f ec t i ve r a t e s of protect ion were 28%, -4% and 4%, i n 1971-72, 1972-73, and 1973-74 respect ively , while f o r t h e dr ied vine f r u i t en t e rp r i s e t h e e f f ec t i ve r a t e s o f protect ion, i n 1971-72, 1972-73 and 1973-74, were 37%, -3% and 6% respect ively .

The influence of varying export p r i c e s on t he level of e f f ec t i ve protect ion was discussed i n t h i s p a r t of t he repor t . Analysis of t he s i z e of the consumer t r a n s f e r prevai l ing over t h e pas t decade suggests t ha t the protect ion l e v e l s i n e a r l i e r years would have been much c lose r t o those prevai l ing i n 1971-72 than i n the other two years. Also, i f export p r ices f a l l i n fu tu re years, the average l eve l of protect ion could r i s e , given ex i s t ing domestic p r ic ing arrangements.

In terms of ove ra l l protect ion t o t he Industry, the r e s u l t s from the th ree year survey, a t whole farm leve l and have shown t h a t multi-purpose grape growers have, on average, received a l eve l o f protect ion which i s below t h e r a t e s observed f o r many o ther indus t r i es .

Appendi X

TREATMENT OF ITEMS AND METHODOLOGY FOR ESTIMATION OF THE EFFECTIVE RATE OF PROTECTION

De f i n i t i ons

Gross V a l ~ ~ e of Farm Production The e f f ec t i ve r a t e of protect ion i s concerned with t h e value added i n a productive a c t i v i t y . Therefore, t he gross value of production i s defined as t he sum of a l l farm r ece ip t s excluding insurance claims and any cap i ta l t rading p r o f i t and loss . A l l r ece ip t s a r e valued a t farm gate and therefore the a c t i v i t y which i s being examined i s the growing of dr ied vine f r u i t . Final ly , i t should be noted t h a t the gross value of farm production includes a l l d i r ec t Government subsidies and s t a b i l i s a t i o n payments.

Protected Domestic Value ~ d d e d (D. V. A. ) The protected value added represents t he domestic value added by the f irm (or industry) t o the tradeable inputs used by t ha t firm (or industry) . I t is calculated a s the di f ference between gross value of production and the value of tradeable input S.

Return for Domestic Value Added t o Tradeabla Inputs The protected D.V.A. shows t he value added d i r e c t l y t o the tradeable inputs. However, other protect ive s t ruc tures a l t e r t he re tu rns t o value adding fac tors without d i r e c t l y a f fec t ing t he value they add, namely - taxat ion concessions, research ass i s tance and p re f e r en t i a l c r ed i t . These re turns when added t o protected D.V.A. give the re tu rn t o the value adding fac tors .

Non-Protected VaZua Added The non-protected value added represents t he value added t o t radeable inputs without any level of assistance. I t i s calcula ted by subtract ing the ne t l eve l of protect ion from the protected re tu rn t o value adding fac tors .

Value of Tradeable Inputs Tradeable inputs are those inputs which can be traded even though they may not a c tua l l y be traded. Therefore, they include a l l mater ia l inputs (except e l e c t r i c i t y ) plus tradeable cap i t a l items. A l i s t of inputs t rea ted a s tradeable and non-tradeable i s s e t out below.

Inputs

Tradeable Non-Tradeab l e

mater ia ls - fue l , o i l and grease, r epa i r s and maintenance (materials)

f e r t i l i s e r fodder and seed packing mater ia ls sprays and pes t i c ides miscellaneous crop mater ia ls other mater ia ls

labour and contracts e l e c t r i c i t y repa i r s and maintenance (labour) r a t e s and taxes insurance advisory services vehicle r eg i s t r a t i on o f f i c e expenses water charges other services

Capital Items

Tradeable Non-Tradeab l e

depreciat ion on i n t e r e s t on

- plant and machinery - land - t he material components - l ivestock

i n fences, water supply - other cap i ta l l and building s t ruc tu r e s depreciat ion on the labour

(assumed t o be 50% of t he components i n t o t a l cost ) - fences and roads

l - water - buildings

Assistance t o the Dr ied Vine F r u i t I ndus t ry

The following sec t ion dea l s with the forms of ass is tance given t o t he Dried Vine F ru i t Industry and the methodology involved i n calcula t ing individual ass i s tance measures.

1. D i r e c t Assistance

The S t ab i l i s a t i on Scheme f o r the Dried Vine F ru i t Industry has been described e a r l i e r i n t he t ex t . Data on t he amounts of s t a b i l i s a t i o n were shown separate ly on farm records and col lected as such.

Conswner Transfers

The domestic marketing arrangements f o r dried vine f r u i t have resu l ted i n domestic p r ices being general ly g rea te r than export pa r i t y p r ices . (13) This s i t ua t i on has led t o a ne t t r ans f e r from consumers t o producers. Under the assumption t h a t Austra l ia would be a ne t exporter of dried vine f r u i t i n t h e absence of a l l in tervent ion measures and marketing arrangements outl ined i n t he preliminary submission, competition between producers would mean t h a t the domestic p r i ce would approximate export pa r i ty . The di f ference between t he export p a r i t y p r ice and t he domestic pr ice , both valued a t a common point represents the s i z e o f the consumer t rans fe r . This d i f ference i s shown i n Appendix Table A. 1 f o r the three years 1971-72 t o 1973-74.

(13) BAE, Economic Policies and the AustraZicm Dricd V<ne Frilits Induatrg, A Pre Zimimry Szibmission, Industry Economics Monograph No. 5, Canberra, 1974.

Appendix Table A . l

DOMESTIC AND EXPORT PRICE DIFFERENTIALS FOR SULTANAS, CURRANTS AND RA1 S INS

1971-72 t o 1973-74

(Dollars per Tonne - Dry Weight) (a)

Variety

- -- p

Year

1971-72 1972-73 1973-74 (b)

Sultanas

Currants

Raisins

(a) D i f f e r en t i a l s valued a t ex-packing shed p r ices . (b) Preliminary est imates from ADFA records.

Sowlce: ADFA Submission t o the IAC Inquiry i n t o Dried Vine Fru i t s , Mildura, December 1974 and ADFA records.

Due t o t he operation of p r i c e equal isa t ion arrangements i n the Indust ry it i s not poss ible t o i den t i f y quan t i t i e s a t the farm level which have been so ld on t h e domestic o r export markets. To evaluate the consumer t r an s f e r a t t he farm l eve l it would be necessary t o reduce t he above d i f f e r e n t i a l s by the proport ion of f r u i t so ld domestically and then mult iply t h i s d i f f e r en t i a l by t o t a l farm s a l e s of each va r i e t y o f d r ied f r u i t .

Research

The amount of expenditure on research i n t he Dried Vine F r u i t Industry was estimated by a l loca t ing f r u i t indust ry research expenditure on a proport ional ba s i s o f average gross value of production fo r dr ied vine f r u i t t o average gross value o f production f o r a l l f r u i t f o r 1971-72 t o 1973-74. A proportion of general expenditure on a l l ag r i cu l t u r a l research and promotion i s s im i l a r l y a l loca ted t o d r ied vine f r u i t by the r a t i o of average gross value of production of dr ied vine f r u i t t o the gross value o f a l l ag r i cu l t u r a l production.

The expenditure on d r ied vine f r u i t indust ry research, promotion and extension i s shown i n Appendix Table A. 2 .

Appendix Table A.2

GOVERNMENT EXPENDITURE ON RESEARCH DRIED VINE FRUIT

1971-72 t o 1973-74

Austral ian Average Value Year Government of Research

Contribution (a) (Wet Weight)

$ $ per tonne

~ (a) Source : Austral ian Government Budget Speech (various i s sues) .

I t i s important t o note t ha t these f igures a re only Austral ian Government contributions and do not include various S t a t e Government expenditures. The Government Budget f igures a l so include emergency adjustment ass i s tance payments under t he heading of expenditure on research, promotion and extension. This amount was excluded t o avoid double counting.

2. Indirect Assistance

l Petro .leum

~ There was provision t h a t subsidies be paid t o a l l o i l companies t o reduce the wholesale p r i ce of motor s p i r i t (and ce r t a in other fue l s ) i n non-metropolitan areas t o not more than 0 . 7 3 ~ per l i t r e above cap i t a l c i t y pr ices . This provision was changed t o not more than l . l c per l i t r e above

1 cap i ta l c i t y p r ices i n t h e 1973-74 Budget.

The subsidy therefore appl ies a t d i f f e r e n t i a l r a t e s depending upon the dis tance of t h e sample f a r m from the nearest metropolitan a r ea and the fue l type. This information appears i n Appendix Table A.3.

The petroleum subsidy was calcula ted f o r each sample farm, based on the subsidy r a t e (see Appendix Table A.3) applicable t o tha t farm f o r each type of fuel i n each year. Fuel usage was then taken t o est imate a t o t a l f ue l usage on dr ied vine f r u i t f o r Austral ia.

Phosphatic F e r t i l i s e r s Subsidy

The approach adopted i n measuring the value of the bounty a t t he sample farm level was t o mult iply the estimated quant i ty of elemental phosphorus used on the farm by t h e appropriate bounty r a t e .

The bounty on phosphatic f e r t i l i s e r s applied a t the r a t e of $11.81 per tonne f o r superphosphate, while f o r other phosphate f e r t i l i s e r s the bounty r a t e i s paid on t h e b a s i s of contained phosphorus pentoxide.

Appendix Table A. 3

FUEL SUBSIDY

Horticulture Motor Power and Auto MO t o r Power and Auto Regions S p i r i t Kero S ene D i s t i l l a t e S p i r i t Kerosene D i s t i l l a t e

1970-71 to 1972-73 1973-74

New South Wales

North 0.26 0.64 0.35 0.13 0.48 0.18 Mid-ivlurr ay 0.07 0.18 0.15 0.07 0.18 0.15 Central 0.20 0.40 0.20 0.10 0.42 0.10 Southern 0.53 1.03 0.70 0.34 1.13 0.48 Sunraysia 0.33 0.48 0.48 0.19 0.32 0.30

Victor ia

Sunraysia 0.33 Robinval e 0.33 Northern - Mid-Murray 0.07 Southern - South Austra l ia - Queensland

Tasmania

Southern Northern

Western Austra l ia

-

Source: Department of Customs and Excise.

The average bounty r a t e was determined as follows:

Bounty per tonne of superphosphate = $11.81 Elemental P content of superphosphate = 9% .'. Bounty per tonne of elemental P = $131

Bounty per tonne of phosphorus pentoxide i n other f e r t i l i s e r s = $59.74. (14)

Elemental P content of others = 44%(15) .* . Bounty per tonne of elemental P = $136 .'. Average bounty per tonne of elemental P = $134

Considering t h a t superphosphate is the most widely used phosphatic f e r t i l i s e r t he average bounty f igure was taken t o be c loser t o t h a t

l applying t o superphosphate. l ~ Nitrogenous FertiZiser Bounty

A bounty on nitrogenous f e r t i l i s e r s was introduced i n 1968 which enabled r u r a l producers t o obta in nitrogen a t lower p r ices . Currently the bounty is a t a r a t e of $78.74 per tonne of contained nitrogen. The pr incipal form of nitrogenous f e r t i l i s e r is sulphate of ammonia, which has 21% contained nitrogen.

The bas i s f o r t h e calcula t ion of the value of t he nitrogen bounty is e s sen t i a l l y t he same a s t h a t previously outl ined f o r the phosphatic f e r t i l i s e r bounty.

To est imate t he subsidy on p re f e r en t i a l c r ed i t , e s sen t i a l l y the Baker-Darbyshire method was followed.(l6) Conceptually, the procedure i s t o apply the amount of p r e f e r en t i a l i n t e r e s t which farmers can obtain on loans and multiply t h i s f igure by the average amount outstanding f o r each type of loan i n each year. The p r e f e r en t i a l r a t e of i n t e r e s t is estimated by taking the di f ference between the ac tua l r a t e of i n t e r e s t charged farmers and an estimated 'marketf r a t e of i n t e r e s t f o r t ha t type of loan.

The 'marketf r a t e was estimated f o r each loan by adding t o the maximum overdraft r a t e f o r farmers the y i e ld earned by buyers of a comparable term non-rebate bond l e s s the y i e ld earned by buyers of 13-week Treasury notes. Conceptually the overdraft r a t e i s presumed t o r e f l e c t the r i s k element and the prevai l ing r e l a t i v e demand and supply f o r r u r a l loans. The d i f f e r e n t i a l between the appropriate non-rebate bond and the 13-week Treasury Notes i s presumed t o r e f l e c t the term component f o r each type of loan.

(14) Average est imate from manufacturers.

(15) Based on t he percentage o f P i n P2 OS according t o atomic weight.

(16) Baker and Darbyshire, ' Credit Concessions t o Farmers ', I A C mimeograph, 1974.

To ob ta in a comparable term on non-rebate bonds, a weighted average of t h e length of term f o r each type of loan f o r which farmers can obtain p r e f e r e n t i a l c r e d i t was ca lcu la t ed , using da ta from the Reserve Bank Statist ical Bulletin. (17)

The est imated market r a t e s f o r t h e var ious loans on which p r e f e r e n t i a l i n t e r e s t r a t e s may apply a r e shown i n Appendix Table A.4.

Appendix Table A.4

ESTIMATED 'MARKET ' RATES OF INTEREST AND AVERAGE TERM OF LOAN FOR VARIOUS LOANS TO FARMERS

1971-72 t o 1973-74

Type o f Loan Average Term of 1971-72 1972-73 1973-74

Loan

Years % % %

Term loan 5 8.75 9.26 10.20

Farm development 10 9.10 9.56 9.80

Commonwealth development 10 9.10 9.56 9.80

Ex-servicemen's loan 2 0 9.24 9.83 9.77

S t a t e agency - term 1 10 9.10 9.56 9.80

S t a t e agency - term 2 20 9.24 9.83 9.77

Source: Reserve Bank o f Aus t ra l i a , StatisticaZ Bulletin (various i s sues ) .

A s l i g h t depa r tu re from t h e normal method o f c a l c u l a t i n g the 'market1 r a t e o f i n t e r e s t , was app l i ed i n 1973-74 s i n c e an a t y p i c a l r e s t r i c t i o n o f t h e money supply, i n t h e l a t t e r p a r t o f the f i n a n c i a l yea r , caused t h e i n t e r e s t r a t e d i f f e r e n t i a l s between loans t o change markedly. I t was noted t h a t i n e a r l i e r per iods , maximum overd ra f t r a t e s were i n f a c t above t h e y i e l d earned on 13-week Treasury Notes. However, i n t h e l a t t e r p a r t of 1973-74 maximum o v e r d r a f t s were i n f a c t below t h a t y i e ld . Because of the s h o r t money supply a t t h e t ime, it was assumed t h a t farmers could n o t obta in c r e d i t a t t h e r a t e s s p e c i f i e d and the ove rd ra f t r a t e d i d not r e f l e c t t h e t r u e r a t e a t which farmers could borrow. Consequently, t h e 'normal1 d i f f e r e n t i a l which appl ied between ove rd ra f t and 13-week Treasury Note r a t e s was a l s o assumed t o apply i n 1973-74.

I t should b e noted t h a t t h e concession on o v e r d r a f t s t o farmers was removed i n September 1973. Data were no t c o l l e c t e d on amounts of o v e r d r a f t s outs tanding i n previous per iods .

To ob ta in an ' i d e a l 1 weighted average of ove rd ra f t outs tanding i n any year , it would be necessary t o c o l l e c t d a t a on a t l e a s t t h e monthly balances outstanding. This t a s k was considered beyond t h e d a t a c o l l e c t i o n resources a v a i l a b l e .

(17) Reserve Rank o f Aus t ra l i a , Stcztistieaz BuZ Ze t i n (various i s sues ) .

Taxation Concessions

A s noted previously estimates of a number of taxat ion concessions were made. The value of the investment allowance, considered f i r s t , i s regarded a s a d i r e c t benef i t t o the grower a s it lowers the cos t of the c a p i t a l goods. The benef i t was estimated by applying each grower's marginal taxat ion r a t e s to the deduction claimed i n each year.

The concessions of accelera ted depreciat ion and deduc t ib i l i ty of c e r t a in cap i t a l items were a l so evaluated. Assuming constant average incomes and normal depreciat ion r a t e s , the t ax paid with the concession and without it, was evaluated. This procedure r e s u l t s i n a stream of taxation savings depending on when the equipment, and how much, was bought. This stream of t ax savings was then discounted back t o present value and expressed as an annuity t o give an annual saving from the concession.

The discount r a t e has r e l a t i v e l y l i t t l e e f f e c t on t he s i z e of savings and 10% p.a. was used before 1971 and 15% a f t e r t ha t date. Results shown previously i n Table 11-10 ind ica te t ha t on a regional bas i s the value from the concession of accelerated depreciat ion varied between $3 and $9 per farm. The r e s u l t i s pa r t l y influenced by the s t a t i c income assumption since, i f growers expect a f luc tua t ing income of a c e r t a in pa t te rn , they could benef i t more from the concession by buying equipment a t c e r t a in times.

Imposts

Tar i f f s on tradeable inputs form the main impost on the Dried Vine F ru i t Industry. Under the assumptions made e a r l i e r the e f f ec t of the t a r i f f is t o r a i s e t he p r i ce of tradeable inputs i n t o t he Industry by the amount of t he t a r i f f .

Ta r i f f r a t e s on inputs were obtained from the Australian Custom Tar i f f Schedules. The estimated value of the mater ia l component of each cap i ta l item was multiplied by the appropriate t a r i f f r a t e which had been adjusted by the Value f o r Duty t o Landed Duty Free (VFD/LDF) r a t i o .

Tari f f Rates on Tradeable Capital Inputs and Tradeable Materials

The percentage t a r i f f r a t e s which were applied t o the annual farm inputs of tradeable c a p i t a l a r e shown i n Appendix Table A.5. These t a r i f f r a t e s were applied t o t h e depreciated cos t of each item. The depreciated cos t used was s t r a i g h t l i n e replacement cos t , adjusted f o r i n f l a t i on a s described below.

Since the t a r i f f app l ies only t o tradeable inputs , labour on fences, buildings and s t ruc tu r e s was excluded from depreciated cost . This labour component was assumed t o be equal t o 50% of t o t a l cap i ta l value f o r these items.

The calcula ted t a r i f f matrices make use of the Customs Schedule duty r a t e s adjusted t o landed duty f ree terms by application of a VFD (Value For Duty)' /LDF (Landed Duty Free) r a t e , which adjusts f o r the

f r e igh t mark-up r a t i o .

Appendix Table ~ . 5

TARIFF RATES GN CAPITAL ITE15 MPLICABLE TO FARM GATE COST (a)

(Percentages) -

Capi ta l Items 1971/72 and 1972/73 1973/74 -

Vellicles

Car 30.09 24.41 U t i l i t y 30.09 24.41 4-Wheel Drive Vehicle 24.78 19-81 Truck 17.72 13.90 Tractor - Wheeled 22.36 17.11 Tractor - Crawler 7.13 5.45 Motor Cycle 30.88 ' 24.93 Other Vehicles 34.28 28.12

Land Freparation and Cul t ivat ion

Plough - blouldboard 15.82 12.36 - Disc 15,82 1 2 .S6 - Chisel 15 .S2 12.3G - Other 15.82 12.36

Sca r i f i e r , T i l l e r , Cul t ivator 15,82 12.36 - Disc 15.82 12.36 - Tyne 15.82 12.36 - Spring Tooth 15.82 12.36 - Other 15.82 12.36

Inter-row c u l t i v a t o r 15.82 12.36 Tool Bar 15.82 12.36 Rotary Hoe 15.82 12.36 Under Vine Weeder 15.82 12.36 Vegetable Weeder 15.82 12.36 Furrower, Bedder 15.82 12.36 Channeller, Delver 15.82 12.36 Other Land Preparation o r Cul t ivat ion equipment 15.82 12.36

Sowing F e r t i l i s i n g and Spraying Equipment

Drill 15.82 12 -36 Seed Box 15.82 12.36 Toolbar P lan te r 15.82 12.36 Other Planters 15.82 12.36 F e r t i l i s e r Dis t r ibu tor 15.82 12.36 Boom Spray 24.18 19.30 Knapsack Spray 24.18 19.30 Mister 24.18 19.30 Mobile Ai rb las t Di lute Spray Unit 24.18 19.30

l ' Variable Concentrate Spray Unit 24.18 19.30 Other Spray Units 24.18 19.30 Travel Tower o r Platforms 24.18 19.30 Pes t i c ide Duster 24.18 19. SO Rotary Slasher 24.18 19.30 Topping Machine 24.18 19.30 Vine Lifter 24.18 19.30 Other Seeding, F e r t i l i s i n g , Spraying Plant 15.82 12.36

(continued on next page)

Appendix Table A* 5 (continued)

Capi ta l . Items 1971/72 and 1972/73 1973/74

Harvesting Plant

Grain Harvesting Plant Fodder Conservation Plant Ladders Picking Bags Dipping Buckets Bulk Dip Crate Dip Crane Dip Tank - Cold

1 1 " - Hot Mechanical Grape o r other Fru i t Harvester Rack Drier Rack Shaker Trays Other Dipping Equipment Fru i t Rakes Sweat Boxes Li f te r , Sweat Box (Pat ts taker , e t c . ) L i f te r , Citrus Fork L i f t (Tractor Mounted) Fork L i f t Truck T r a i l e r For Bulk Bins Bulk Bins T r a i l e r Bins Fru i t Grader Grape Tank S tap le r Dip Tin Anvil Other Harvesting Equipment

Other Field Equipment

Mole Drainer Scoop/Front End Loader Ripper Bulldozer Blade Grader Blade Toolbar Roller T ra i l e r - Hydraulic

1 1 - Ordinary Carryall Saddlery e t c . Other F ie ld Equipment

(Continued on next page)

Appendix Table A . 5 (continued)

Capi ta l Items 1971/72 and 1972/73 1973174

Fencing and Workshop Equipment

Post Hole Digger Post Rammer Post Borer Chain Saw Bench Saw Other Fencing Equipment

Compressor E l e c t r i c D r i l l Battery Charger Fire Fighting Equipment Sta t ionary Engine General Tools Other Workshop Equipment E l e c t r i c Welder - mains power E l e c t r i c Welder - t r a c t o r p. t .0.

Oxy-acetylene Welder

Livestock Equipment

Shearing Plant (Including Wool Press, Bins e t c . ) 29.44 Grinders, Presses e t c . 29.44 J e t t i n g Plant 34.35 Spray race (Fixed o r Portable) 34.35 Other Sheep Equipment 34.35 Milking Machines 29.10 Other Dairy Plant and Equipment 29.10 Ca t t l e Crush 55.2 Other Ca t t l e Equipment 27.6 Pig Equipment 55.2 Poultry Equipment 53.39 Stock Transport Crate 55.2 Livestock Feeders 49.2 Scales 28.2 Drench/Vaccination Guns 34.35 Hammer M i l l 50.6 Feed Mixer 53.35 Other Livestock Equipment 16.4

Packing Equipment

Overhead Li f t ing Gear Bulk Bin Stand Endless Belt Hopper Other Feed Hoppers Elevator F ru i t Grader Packing Stands conveyor


Appendix Table A- 5 (continued)

Capi ta l . I tems 1971/72 and 1972/73 l973I74

Lidding Press Sealing Unit Case Planer Pa l l e t s Trolley (S) Brushes/Polisher Sorting Table Case Making Machine Lidding Machine Wiring Machine Carton Pressing Machine Carton Sticker/Sealer Supply chute Bulk Bin F i l l e r Label l i n g Machine Loading Unit Other Packing Equipment

Cool Storage Equipment

Refrigeration Plant (d i rec t expansion) Refrigeration Plant (Freon) Controlled Atmosphere Plant Other Cool Store Equipment

I r r i ga t i on and Water Supply Equipment

pump Pump G Motor Pump Motor E lec t r i c Pump Motor Fuel Piping Spray Lines - METAL Piping Spray Lines - Other Materials Dropper Lines Sprinklers Other I r r i ga t i on Plant Water Pressure System (Not Domestic) Other Water Supply Equipment

Water Supply Structures

Underground Tanks Dams We 11s Bores Windmi 11s Troughing Tanks, Galvanised (Rain Water) Tanks, 11 (Bore Water) Tanks, reinforced concrete

(Continued on next page) ~


Capi ta l . I terns 1971/72 and l972/73 1973174

Surface Piping - Metal 11 11 - Other

Underground Piping - Metal 11 I I - Other

Mains Connections Other water supply

I r r i g a t i o n Structures Above Ground - Fixed

Main Line - Metal I I - Other

Spray Line - Metal I t " - Other

Tr ick le Systems (Using open Other Tr ickle Sys tems Other

boxes)

Underground

Main Line - Metal 18.6 15.68 " " - Other 33.6 25-15

Spray Line - Metal 18.6 15.68 l1 " - Other 33.6 25.15

Other I n t e rna l concrete i r r i g a t i o n channels 18.6 15.68

(other than Commission owned) I r r i g a t i o n Drains - concrete 27.54 21.59

t~ - Underground 35.6 26.25 (Tile, Rubble)

Fencing, Yards e t c .

Boundary Fencing Subdivision Fencing Culverts , Bridges Roads Sheep Yards Ca t t l e Yards Pig Yards Plunge Dips 6 Draining Pens E l e c t r i c Fencing

Buildings

Operator's House - Stone, concrete 23.32 18.91 11 ' l - Wood, Fibro o r I ron 16.61 14.25

Woolshed - Brick, Stone o r Concrete 0.00 0.00 I I - Wood, Fibro o r Iron 0.00 0.00

Employee Accommodation - Brick, Stone o r Concrete 0.00 0.00 11 ) I - Woad, Fibro o r I ron 0.00 0.00

Dairy - Brick, Stone o r Concrete 0.00 0.00 - Wood, Fibro o r Iron 0.00 0.00



Capi ta l I terns 1971/72 and 1972/73

1973/74

Piggery - Brick, Stone o r o r Concrete II - IVood, Fibro o r Iron

Poultry Sheds - Brick, Stone o r Concrete 11 I t -Wood, Fibro o r Iron

Implement Shed - Brick, Stone o r Concrete 1 l

l1 - Other Hay Shed - Brick, Stone o r Concrete

I t " -Other Storage Sheds - Brick, Stone o r Concrete

11 " - O t h e r Packing Sheds - Brick, Stone o r Concrete

II " - Other Cool Store - Brick, Stone o r Concrete

l 1 " - Other

Drying Shed & Equipment - Brick, Stone o r Concrete l l I 1 11 - Other

Other Sheds o r Garages - Brick, Stone o r Concrete 11 11 11 - Other

Grain S i l o s Drying Racks T re l l i s i ng - T t r e l l i s

I I - Other Employee Furniture e t c .

(a) The Ta r i f f percentages have been adjusted with the VFD/LDF r a t i o t o obtain t he t a r i f f component of farm ga te cos t ; see t e x t f o r example.

Sowce: Indus t r i es Assistance Commission and Department of Customs and Excise.

Assuming percentage r e t a i l mark-ups, the t a r i f f component (TC) i n farm ga te cos t (FG) may be expressed as :

FG

TC = FG - FG - 1 + (nominal r a t e X VFD.

VFD FG (nominal r a t e X -) - - LD F

1 + (nominal r a t e X VFD -1 LDF

This ca lcu la t ion of t he value of the t a r i f f component i n farm gate cos t may be demonstrated by t he following example:

In 1973-74 the t a r i f f r a t e applying t o motor cars was 34% and t h e respect ive VFD/LDF r a t i o was 0.95. Thus the 1973-74 t a r i f f r a t e (TC) t o be applied t o farm ga te cos t on motor cars was:

FG (34.0 X 0.95) TC =

100 + (34.0 X 0.95)

De ta i l s of t a r i f f r a t e s used fo r ag r i cu l t u r a l chemicals a r e shown i n Appendix Table A.6.

Depreciation Cost fo r Tari f f CaZcuZations

The deprecia t ion cos t used was s t r a i g h t l i n e replacement cos t i n current do l l a r s . Replacement cos t depreciat ion may be defined as the cos t of using a f ixed a s s e t f o r the purposes of producing revenue during a p a r t i c u l a r accounting period. To derive current d o l l a r cos ts the depreciated cos t was adjusted f o r i n f l a t i o n by the following method:

Current cos t - Replacement cos t Replacement cos t of a s s e t -

deprecia t ion depreciat ion X t

t t=n Replacement cos t of a s s e t t=n

where t = 1 .. . . . n and current cos t deprecia t ion is defined as t he current cos t of using a f ixed a s se t t o produce revenue during t he accounting period. The de f l a t i on indexes used a r e shown i n Appendix Table A . 7 .

For reasons of computational s impl ic i ty , t he a s s e t values used r e f e r t o a s s e t groups, such a s vehic les , r a t he r than spec i f i c types of asse t s .

Appendix Table A.6

EFFECTIVE TAR1 FFS ON AGRICULTURAL CHEMICALS 1971-72 t o 1973-74 (a)

(Percentages)

Agr icu l tu ra l Chemicals 1971-72 1972-73 1973-74

Fungicides

I n s e c t i c i d e s

Spraying o i l s

S o i l fumigants

F r u i t d i p s

Other chemicals f o r d r i ed v ine f r u i t

(a) Adjusted f o r farm g a t e c o s t .

Sources: I n d u s t r i e s Assistance Commission and Department of Customs and Excise.

Appendix Table A.7

DEFLATION INDEXES FOR CURRENT COST DEPRECIATION(a) 1972 t o 1974

Asset Group 1972 1973 1974

Vehicles

Land p repa ra t ion equipment 69 7 5 8 8

Sowing, f e r t i l i s i n g and spraying equipment 6 9 7 5 8 8

Harvesting equipment 7 7 8 1 9 0

Fencing and workshop equipment 84 8 9 9 5

Livestock equipment 8 2 87 92

Water supply and i r r i g a t i o n equipment

Other f i e l d equipment

Packing equipment

Cool s to rage

Water s t r u c t u r e s

Fencing s t r u c t u r e s 8 0 8 5 9 2

Buildings 7 5 8 1 92

Employee f u r n i t u r e 75 8 1 9 1

(a) Base i s June 1974 = 100.

Estimation of the Quantity of Fuel, Fe r t i l i s e r and Aaricultural Chemicals

To est imate the proport ion of these inputs used on each farm the actual quan t i t i e s used f o r the f i n a l year o f the survey were col lec ted. The quan t i t i e s of f ue l , f e r t i l i s e r and ag r i cu l t u r a l chemicals used i n years previous t o 1973-74 were estimated on the ba s i s o f the r a t i o of movement i n t he cos t of the inputs between years. The reason f o r using t h i s method of est imation i s t h a t input cos t d e t a i l s i n the farmers1 t a x re tu rns were assumed t o provide a more accurate est imating base than t he physical es t imates provided by farmers. Therefore 1973-74 cost comes from the product o f quant i ty o f the input used and the p r i c e o f the input , while f o r t h e years 1971-72 and 1972-73 cos t comes from the farmers t ax re turn .

The est imating procedure f o r each input taken separa te ly i n each of t he two years 1971-72 and 1972-73 was as follows:

where Q* estimated quant i ty of the p a r t i c u l a r input used i n 1971-72, 1972-73 respect ively .

Q a c tua l quan t i ty o f the p a r t i c u l a r input used i n 1973-74 (obtained from survey da ta ) .

T ac tua l t o t a l cos t of a l l inputs used i n 1973-74 (obtained from survey data) .

C cos t o f the pa r t i cu l a r inputs used i n 1971-72, 1972-73 respect ively (obtained from the taxat ion re tu rn of the appropriate year) .

The r o l e of p r ices i n the above est imating equation i s t o permit a r a t i o est imate of quan t i t i e s o f inputs used i n e a r l i e r years. Therefore, ac tua l p r i c e s a r e not as important as r e l a t i v e p r ices . Detai ls of p r ices used a r e ava i l ab le on request t o the Bureau of Agricul tura l Economics .

~ Treatment of Items f o r Common Enterprise Calculations

The preceding treatment of items r e l a t e s t o ca lcula t ions of the e f f ec t i ve r a t e of protect ion f o r t he whole farm. However, most farms a r e mul t i -enterpr ise so t h a t two farms with i den t i c a l multi-purpose grape growing operations, but having d i f fe ren t secondary a c t i v i t i e s and d i f f e r en t markets, would have d i f f e r en t e f f ec t i ve r a t e s of protect ion.

To achieve homogeneity between farms, s o t h a t the e f f ec t i ve r a t e s of protect ion can be measured f o r the Multi-purpose Grape Growing Industry alone, farm r e tu rn s and cos t s were a l loca ted between various en te rpr i ses . This procedure necess i t a ted making assumptions concerning the a l loca t ion of cos t s between farm en te rpr i ses . While t h i s procedure i s accurate f o r many cos t s such as r epa i r s on c a t t l e yards, which can be c l ea r l y a l located t o a s p e c i f i c en te rpr i se , many other cos ts , such as cos ts of an overhead nature, a r e more d i f f i c u l t t o apportion.

The two en te rpr i ses of pa r t i cu l a r i n t e r e s t were the multi-purpose grape growing en te rpr i se and t h e d r ied vine f r u i t growing enterpr ise . To ca lcu la te the e f f ec t i ve r a t e of protect ion f o r these two en te rpr i ses assumptions were made concerning t he value of tradeable inputs used t o produce multi-purpose grapes. Whole farm costs of tradeable material and cap i t a l inputs and the costs of re levant t a r i f f s were apportioned t o the multi-purpose grape growing en te rpr i se . The bases used i n t h i s process a re shown i n Appendix Table A.8. Those used t o apportion the value of p r e f e r en t i a l c r ed i t , the phosphatic f e r t i l i s e r subsidy, the nitrogenous f e r t i l i s e r bounty and the fuel subsidy a r e a l so shown i n the table.

For the d r ied vine f r u i t en te rpr i se the values calcula ted f o r the multi-purpose grape growing en te rpr i se were apportioned by using the dried vine f r u i t r a t i o , i n a l l cases except f o r s t a b i l i s a t i o n payments. The e f fec t ive r a t e s of protect ion f o r the dr ied vine f r u i t en te rpr i se i n 1971-72, 1972-73 and 1973-74 a r e shownin Appendix Tables A.9 t o A . l l which follow.

Appendix Table A.8

TREATMENT OF ITEMS FOR COMMON ENTERPRISE CALCULATIONS

Whole Farm Item Multi-purpose Grape Growing Enterprise

A. RETURNS

Dried Vine Fruit Growing Enterprise

1. Gross farm income Derived directly from survey data Derived directly from survey data

Full amount allocated to this enterprise

2. Stabilisation Full amount allocated to this enterprise

Phosphate fertiliser and the petroleum subsidy

Subsidy allocated by the ratio of subsidy on material used on multi- purpose grapes to total subsidy on material used

Allocation using the dried vine fruit ratio

Bounty allocated by the ratio of the bounty on material used on multi- purpose grapes to total bounty on material used


.Nitrogen bounty

Preferential credit Allocated by the portion of farm returns from multi-purpose grapes


COSTS

Costs of fertiliser, fuel grease and oil, and packing materials

Derived directly from survey data Cost allocated using the dried vine fruit ratio

Cost allocated using the dried vine fruit ratio

Cost of chemicals Cost in 1974 derived from survey data. For other years cost allocated by the proportion of total cost of chemicals incurred by multi-purpose grapes

Cost of repair and maintenance materials for vehicles, tractors and other plant and machinery .

Cost allocated by proportion of fuel used for multi-purpose grapes

Cost allocated by using the dried yine fruit ratio

Cost allocated by using dried vine fruit ratio

Cost of repair and maintenance materials for water supply structures

Cost allocated by the ratio of area of irrigated vines to total irrigated area

Cost of repair and maintenance materials for other items

Cost allocated by the proportion of farm returns from multi-purpose grapes

Cost allocated by using the dried vine fruit ratio

Cost of repair and maintenance materials for buildings

Cost allocated by the proportion of total buildings consisting of drying sheds and equipment, drying racks and trellising


Depreciation on vehicles. land preparation, cultivation, sowing, fertilising, spraying harvesting and other field equipment

Cost allocated by proportion of fuel used on multi-purpose grapes


Cost allocated by the proportion of farm returns from grape enterprises


Depreciation on workshop and fencing equipment and employees furniture

Depreciation on water supply and irrigation structures

Cost allocated by the ratio of area of irrigated vines to total irrigated area



Depreciation on horticultural buildings

Cost allocated by the proportion of building cost consisting of d~ying sheds and equipment, drying racks and trellising

IMPOSTS

Tariff on repairs and maintenance materials for vehicles, tractors, plant and machinery

Cost allocated by the proportion of fuel used on multi-purpose grapes


Tariff on fertiliser, fuel, grease and oil

The relevant tariff rate multiplied by the quantity used as derived from survey data


3. Tariff on packing materials

The quantities of materials not used The tariff rate on packing for export fruit are multiplied by the materials whlch are exported is zero relevant tariff rates

The cost calculated for each of these Cost of the tariff allocated by items is multiplied by the relevant using the dried vine fruit ratio tariff rate

Tariff applicable in 1974, determined Cost of the tariff allocated by on the basis of survey data. For using the dried vine fruit ratio other years cost of the tariff allocated by the proportion of total tariff cost incurred by multi-purpose grapes

Tariff allocated by the proportion Cost of the tarlff allocated by of total buildings consisting of using the dried vlne fruit ratio trellising, drying racks and drying sheds and equipment

4. Tariff on capital items

5. Tariff on chemicals

6. Tariff on repair and maintenance materials buildings

Table A.9




Region

Item New South Wales Victoria South Aust- Regions

Sunray Mid- Sunray Robin Mid- Total ralia - s i a Murray - s i a -vale Murray

$ $ $ $ $ $ $ $ $

1. Gross value of farm production 1 0 250 6431 9816 13 597 9565 2571 11 906 1879 8784

2. Tradeable inputs -materials

3. - cap i t a l (a)

4. Total tradeables (2+3)

5. Protected value added (1-4)

6. Research and promotion

7. Preferent ia l c r e d i t

8. Total subsidies

9. Return t o value adding f ac to r s (5+8)

10. S t ab i l i s a t i on

11. Consumer t r ans fe r


13. Preferent ia l c r ed i t 235 22 -211 51 188 5 73 2 72

14. Petroleum subsidy 8

15. F e r t i l i s e r bounty - phosphate i 0 13 37 18 22 13 18 9 18

16. - nitrogen 24 2 22 27 1 8 5 24 6 18

17. Tariff on mater ia ls 150 75 141 157 96 31 131 18 103

18. Tar i f f on cap i t a l items(a) 334 144 313 371 293 71 331 65 253

19. Total tariffontradeables(l7+18) 484 219 454 528 389 102 466 83 356 (18+19)

20. Non-protected value added (9 - (sum 10, 16) + 19) 6 161 4030 S919 8 598 6083 1597 7 533 1060 5480

21. Effective r a t e of protection (9-20)/20 X 100 4 1 38 41 36 38 38 3 6 4 5 3 7

(a) Excluding labour on fences, buildings and s t ructures .

Table A. l 0




Item

Region

New South Wales Victoria South A l l Aust- Regions

Sunray Mid- Sunray Robin Mid- Total r a l i a - s i a Murray -s ia -vale Wrray

1. Gross value of farm production 10 024 7425 9728 14 812 9127 3167 12 759 1827 9249

2. Tradeable inputs - materials 974

4. Total tradeables (2+3) 1 997

5. Protected value added (1-4) 8 027

6. Research and promotion 161

7. Preferential c red i t 271

8. Total subsidies 432

9. Return t o value adding factors (5+8) 8 459

10. S tab i l i sa t ion - 11.\ Consumer t ransfer -213

12. Research and promotion 161

13. Preferent ia l c red i t 271

14. Petroleum subsidy 7

15. F e r t i l i s e r bounty - phosphate 4 5

16. - nitrogen 30

17. Tar i f f on materials 157

18. Tariff on capi ta l items (a) 344

19. Total t a r i f f ontradeables ( l7 + 18) 501

20. Non-protected value added (9 - (sum 10, 16) + 19) 8 659

% 21. Effective r a t e of protection

(9-20)/20 X 100 -2

(a) Excluding labour on fences, buildings and structures.

Table A . l l


USING EXPORT PARITY PRICES) : DRIED VINE FRUIT ENTERPdISE


Region

Item New South Wales Vic tor ia A1 l South Regions Sunray Mid- Aust -

Sunray Robin Mid- Total ralia - s i a Murray - s i a -vale Murray

$ $ $ $ $ $ $ $ $

1. Gross value of farm production 14 099 5921 1 3 169 1 5 884 1 0 503 1479 13 654 1616 1 0 189

2. Tradeable inputs - materials l 282 595 1 203 1 686 1 077 148 1 441 167 1 048

3. - cap i t a l (a) 1 003 431 938 1 258 843 116 1 084 153 800

4. Total tradeables (2+3) 2 285 1026 2 141 2 944 1 920 264 2 525 320 l 848

5. Protected value added (1-4) 11 814 4895 11 028 12 940 8 583 1215 11 129 1296 8 341


7. Preferent ia l c r e d i t

8. Total subsidies

9. Return t o value adding f ac to r s (5+8) 12 243 4989 11 419 13 210 8 904 1237 11 387 1319 8 551

10. S t ab i l i s a t i on - 11. Consumer t r ans fe r 768 358 721 881 597 95 761 138 580


13. Preferent ia l c r e d i t 250 7 222 71 181 - 85 2 81

14. Petroleum subsidy 8 2 7 1 3 5 1 11 7

15. F e r t i l i s e r bounty - phosphate 9 12 9 20 8 1 16 4 1 2

16. - nitrogen 1 4 3 13 21 18 5 19 2 13

17. Tar i f f on mater ia ls 144 41 132 1 64 94 6 137 13 101

18. Tar i f f on cap i t a l items(a) 261 109 244 336 240 28 292 41 214

-19. Total t a r i f f on tradeables (17 + 18) 405 150 376 500 334 34 429 54 315

20. on-protected value added (9 - (sum 10, 16) + 19) 11 420 4670 1 0 654 12 505 8 289 1147 10 751 1206 8 044

21. Effective r a t e of protection (9-20)/20 X 100 7 7 7 6 7 8 6 9 6

(a) Excluding labour on fences, buildings and s t ruc tu re s

JNDEX TO TABLES

Table No. Page

PART I (SU'MMARY TABLES)

1 EFFECTIVE RATE OF PROTECTION : AUSTRALIA, 1971-72 to 1973-74. 2

2 RELATIONSHIP BETWEEN NET PROTECTION AND NET FARM INCOME : WHOLE FARM : BY REGION, Three Year Average per Farm, 1971-72 to 1973-74.

PART I1

11-1 ESTIMATED VALUE OF CONSUMER TRANSFER USING DOMESTIC AND EXPORT PRICE DIFFERENTIALS TAKEN FROM AVERAGE PACKING SHED FRONT DOOR PRICES (BASIC GRADES) : 1972 to 1974.

11-2 ESTIMATED VALUE OF CONSUMER TRANSFER USING DOMESTIC AND IMPORT PARITY PRICE DIFFERENTIALS TAKEN FROM AVERAGE PACKING SHED FRONT DOOR PRICES (BASIC GRADES) : 1972 SEASON

I 1-3 ESTIMATED VALUE OF CONSUMER TRANSFER AT FARM LEVEL : CROP YEAR BASIS, Average per Farm,1971-72 to 1973-74

11-4 ESTIMATED VALUE OF CONSUMER TRANSFER FOR DRIED VINE FRYIT : BY VARIETY, 1964 to 1974

11-5 SUMMARY OF STABILISATION SCHEME PROVISIONS

11-6 FARM VALUE OF GOVERNMENT EXPENDITURE ON RESEARCH : WHOLE FARM, Average per Farm, 1971-72 to 1973-74 10

11-7 VALUE OF RURAL CREDIT CONCESSIONS, Three Year Average per Farm, 1971-72 to 1973-74 11

11-8 WHOLE FARM - DEBT TO BANKS AND GOVERNMENT AGENCIES BY INTEREST RATE, Average per Farm, As at 30.6.74 12

FARM COST OF FERTILISER AND VALUE OF BOUNTY ON NITROGENOUS AND PHOSPHATIC FERTILISERS, Three Year Average per Farm, 1971-72 to 1973-74 14

11-10 TAXATION CONCESSIONS PRELIMINARY ESTIMATES OF ANNUAL BENEFITS, Average per Farm, 1971-72 to 1973-74

11-11 TARIFF ON TRADEABLE INPUTS, Three Year Average per Farm, 1971-72 to 1973-74

PART I11

111-1 EFFECTIVE RATE OF PROTECTION (CONSUMER TRANSFER CALCULATED USING EXPORT PARITY' PRICES) : WOLE FARM, Average per Ta~m, 1971-72 19

111-2 EFFECTIVE RATE OF PROTECTION (CONSUMER TRANSFER CALCULATED USING IMPORT PARITY PRICES) : WHOLE P M , Average per Farm, 1971-72 2 0

PART I I I (Continued) Page Table No.

111-3 EFFECTIVE RATE OF PROTECTION (CONSUMER TRANSFER CALCULATED USING EXPORT PARITY PRICES] : WHOLE FARM, Average per Farm, 1972-73 2 1

EFFECTIVE RATE OF PROTECTION (CONSUMER TRANSFER CALCULATED USING EXPORT PARITY PRICES) : WHOLE FARM, Average per Farm, 1973-74 22

EFFECTIVE RATE OF PROTECTION (CONSUMER TRANSFER CALCULATED USING EXPORT PARITY PRICES) : WHOLE FARM, Three Year Average per Farm, 1971-72 to 1973-74

EFFECTIVE RATE OF PROTECTION (CONSUMER TRANSFER CALCULATED USING EXPORT PARITY PRICES] : MULTI-PURPOSE GRAPE ENTERPRISE, Three Year Average, 1971-72 to 1973-74

EFFECTIVE RATE OF PROTECTION (CONSUMER TRANSFER CALCULATED USING EXPORT PARITY PRICES) : DRIED VINE FRUIT ENTERPRISE, Three Year Average, 1971-72 to 1973-74

EXAMPLES OF EFFECTIVE PROTECTION IN OTHER RURAL INDUSTRIES

IMPACT OF INTERVENTION MEASURES ON DRIED VINE FRUIT FARM INCOME, Three Year Average per Farm, 1971-72 to 1973-74

IMPACT OF INTERVENTION MEASURES ON DRIED VINE FRUIT FARM INCOME : 1971-72, Average per Farm

APPENDIX

DOMESTIC AND EXPORT PRICE DIFFERENTIALS FOR SULTANAS, CURRANTS AND RAISINS, 1971-72 to 1973-74

GOVERNMENT EXPENDITURE ON RESEARCH : DRIED VINE FRUIT, 1971-72 to 1973-74

FUEL SUBSIDY

ESTIMATED 'MARKET' RATES OF INTEREST AND AVERAGE TERM OF LOAN FOR VARIOUS LOANS TO FARMERS, 1971-72 to 1973-74

TARIFF RATES ON CAPITAL ITEMS APPLICABLE TO FARM GATE COST

EFFECTIVE TARIFFS ON AGRICULTURAL CHEMICALS, 1971-72 to 1973-74

DEFLATION INDEXES FOR CURRENT COST DEPRECIATION, 1972 to 1974

TREATMENT OF ITEMS FOR COMMON ENTERPRISE CALCULATIONS

EFFECTIVE RATE OF PROTECTION (CONSUMER TRANSFER CALCULATED USING EXPORT PARITY PRICES) : DRIED VINE FRUIT ENTERPRISE, Average per Farm, 1971-72



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PROTECTION TO THE AUSTRALIAN DRIED VINE FRUIT GROWING …data.daff.gov.au/brs/data/warehouse/pe_abarebrs99001530/... · 2008-10-16 · Industry for the whole farm and the multi-purpose