EXPLANATORY STATEMENT
STATUTORY RULES 1999 No. 433
Issued by the Authority of the Minister of State for Primary Industries and Energy.
DAIRY PRODUCE ACT 1986
DAIRY PRODUCE REGULATIONS (AMENDMENT)
Section 98 of the Dairy Produce Act (the Act) provides for the Australian Dairy Corporation (ADC) to augment from the Market Support Fund the export return of declared dairy products when the estimated average export price (determined by the ADC) at the time of export is less than 85% of the trend price (determined by the Australian Bureau of Agricultural and Resource Economics (ABARE)). This arrangement is usually referred to as ‘pot holing’
The actual payment made is the difference between the specified percentage of the trend price and the estimated average export price. The current specified percentage of the trend price is 110%. Whilst 110% is appropriate when the level of market support is at its maximum permitted level of 30%, a different percentage is required to maintain equivalence at lower levels of support. There is provision to set a different rate by regulation.
The current level of support is around 20% and both the ADC and the ABARE consider there is a strong possibility that levels below 30% will continue and that the actual numbers may vary over short periods. Consequently, a formula has been developed for setting specified percentages to overcome the need for frequent changes in the regulations.
The purpose therefore of the proposed regulation is to prescribe the specified percentage in accordance with the following formula:
where:
‘UV’ is the underwritten value of the underwritten dairy produce;
‘CS’ is the amount per unit of the market support payment referred to in section 95 of the Act