Dairy Industry Stabilization Levy Regulations (Amendment)

EXPLANATORY STATEMENT

STATUTORY RULES 1984 No. 124

Issued by the Authority of the Minister of State for Primary Industry

DAIRY INDUSTRY STABILIZATION LEVY REGULATIONS (AMENDMENT)

The Dairy Industry Stabilization Levy Act 1977, which forms an integral part of the present marketing/stabilization arrangements for the dairy industry, provides for levies to be imposed on the production of prescribed dairy products.

Section 11 of the Act provides that the Governor-General may make regulations, inter alia, for the purpose of:

(a) fixing the operative rates of levy for each kind of dairy product under section 7; and

(b) exempting from levy a minimum quantity of a specified kind of dairy product produced in a prescribed period.

Sub-section 11(3) of the Act requires the Governor-General, before making any such regulations, to take into consideration any relevant recommendations made by the Australian Dairy Corporation to the Minister for Primary Industry.

The purpose of the levies is to protect the domestic price structure for prescribed dairy products and, through their disbursement, to provide each manufacturer with an equalised return from domestic and export sales of such products.

The rate of levy for each prescribed product is based on the difference between the domestic value for levy purposes and the assessed export price for that product. The assessed export price is fixed by the Minister for Primary Industry under sub-section 20AB(4) of the Dairy Produce Act 1924 and is the price that the Minister considers will be the average export price for the prescribed product during a particular season.

In accordance with sub-section 11(2) of the Dairy Industry Stabilization Levy Act 1977, the Australian Dairy Corporation, after consultation with the Australian Dairy Industry Advisory Committee, recommended to the Minister for Primary Industry levy rates to apply from 1 July 1984 which would have resulted in an increase in domestic values for levy purposes.

The Minister for Primary Industry, determined, however, that the domestic values for levy purposes should be maintained at their current levels from 1 July 1984. In making his decision on this matter, the Minister noted that an increase in domestic values for levy purposes would have been out of step with the realities of domestic and international dairy markets and would have given producers the wrong market signals.

Given that stabilization levies are equal to the difference between the domestic value for levy purposes (which will be unchanged as of 1 July 1984) and the assessed export price, the levy rates will need to change since the assessed export prices for prescribed dairy products during 1984/85 are lower than in 1983/84. In this regard, the Regulations provide for the following rates of stabilization levy to apply from 1 July 1984:

The Regulations also provide for the continuation of the current exemption from levy under sub-sections 9(1) and (2) of processed butteroil, where production does not exceed 30,000 tonnes, and of processed cheese, where production does not exceed 60,000 tonnes, during the year commencing on 1 July 1984. The exemption ensures that levy is not paid twice on processed butteroil and processed cheese produced from butter and cheese respectively.