AUSTRALIA: ESTIMATES OF SUPPORT TO AGRICULTURE

Contact person: Kevin PARRIS

Email: Kevin.PARRIS@oecd.org

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DEFINITIONS AND SOURCES

Country Total Support Estimate (TSE) and derived indicators in Table 1 cover all agricultural production, i.e., all agricultural commodities produced in the country. Definitions of basic data sets refer to the specific name of the programmes with specific sources indicated in square brackets. For the Producer Support Estimates (PSE) and Consumer Support Estimates (CSE), the description of policy measures indicates the commodities covered by the measures, as well as the method of allocation of the corresponding transfers among commodities. "MPS commodities", which vary across countries, are those for which market price support is explicitly calculated in Table 2.

Market Price Support (MPS) and Consumer Support Estimates (CSE) by commodity in Table 2 are calculated for the following commodities: wheat, barley, oats, rice, sorghum, soybeans, sunflower, rapeseed, sugar, milk, beef and veal, pigmeat, poultry meat, sheep meat, wool, eggs and cotton. Definitions are provided only for basic data sets from which all the other data sets in this table are derived, following the formula indicated in each commodity table. Specific sources are indicated in square brackets.

Producer Support Estimates (PSE) by commodity in Table 3 are calculated only for the commodities produced in the country within a common set of commodities (wheat, other grains, rice, oilseeds, sugar, milk, beef and veal, pigmeat, poultry meat, sheep meat, wool and eggs), provided that the value of production of that commodity exceeds 1 per cent of the total value of production in the country concerned. All data sets in the calculation of PSE by commodity come from Tables 1 and 2 where definitions are included.

Definitions of the indicators, criteria of classification of programmes included, and methods of calculation can be seen in OECD, Methodology for the measurement of support and use in policy evaluation [http://www.oecd.org/agr/policy].

 

Fiscal year: 1 for example, 1 July 2002 - 30 June 2003 is attributed to calendar year 2002.

Crop and livestock years: Vary according to commodities, but for example 1997 – 1998 crop or livestock year is attributed to year 1997. Statistics on production, consumption and prices of livestock products refer to the year beginning 1 July, for example: production of wheat in crop year 2002-2003 is attributed to the calendar year 2002.

Statistics on production, consumption and prices of crops refer, in the main, to crops sown during the year beginning 1 April. Statistics on wheat, for example, refer to grain sown during the period from April to September and harvested between October and the following February -- i.e., the 2002-03 season (2002 for PSE/CSE purposes) relates to the harvesting period October 2002 to February 2003. Crop years are defined as relating to a 12-month harvest period beginning the first day of the following months: October for wheat, November for barley and oats, March for sorghum and July for sugar.

In the case of rice, the statistics relate to total national production, but the crop years differ by State. That for New South Wales (which accounts for over 90 per cent of national production) refers to rice harvested from April of the following year. The statistics for Queensland refer to the sum of grain harvested in the summer (beginning December) and the following winter (beginning June); thus rice harvested in NSW from April 1990 through June 1990 and in Queensland from June 1990 through August 1990 are included in the statistics for 1989.

 

Table 1. AUSTRALIA: Total Support Estimate

 Definitions:

I. Total value of production (at farm gate): Total agricultural production valued at farm gate prices, i.e. value (at farm gate) of all agricultural commodities produced in the country [1].

1. Of which share of MPS commodities (%): Share of commodities for which MPS is explicitly calculated (in Table 2) in the total value of agricultural production.

II. Total value of consumption (at farm gate): Consumption of all commodities domestically produced valued at farm gate prices, and estimated by increasing the value of consumption (at farm gate) of the MPS commodities according to their share in the total value of agricultural production [(II.1) / (I.1) x100].

1. Of which MPS commodities: Sum of the value of consumption (at farm gate prices) of the MPS commodities as indicated in Table 2.

III.1 Producer Support Estimate (PSE): Associated with total agricultural production, i.e. for all commodities domestically produced [Sum of A to H; when negative, the amounts represent an implicit or explicit tax on producers].

A. Market Price Support: On quantities domestically produced (excluding for on-farm feed use -- excess feed cost) of all agricultural commodities, estimated by increasing the MPS for the MPS commodities according to their share in the total value of agricultural production [(A.1) / (I.1) x 100].

1. Of which MPS commodities: Sum of the MPS (net of price levies and excess feed cost) for the MPS commodities as calculated in Table 2.

B. Payments based on output

1. Based on unlimited output

2. Based on limited output

C. Payments based on area planted/animal numbers

1. Based on unlimited area or animal numbers

2. Based on limited area or animal numbers

D. Payments based on historical entitlements

Dairy Structural Adjustment Programme: Dairy farmers eligible for DSAP assistance receive a fixed quarterly payment over 8 years. The DSAP payments are based on milk production in 1998-99, they are unaffected by current or future milk production decisions and are subject to income tax. The payments assist producers to adjust to the expected reduction in farm incomes resulting from the deregulation of producer prices, taking into account variations between states according to the size of the regulated milk price premium and the shares of fresh and manufacturing milk. The programme started in July 2000 and the total cost of the programme is AUD 1.63 billion over 8 years. Allocated to milk.

1. Based on historical plantings/animal numbers or production

2. Based on historical support programmes

E. Payments based on input use

1. Based on use of variable inputs

Diesel fuel rebates: Secretariat estimates derived from portfolio budget statements, which include rebate figures for all primary production [1b]. Precise figures have been used whenever available, and the percentage share for 2000/2001 (AUD 560 million to agriculture, AUD 42 million to forestry, AUD 97 million to fishing) has been used to estimate the share of agriculture for the following years. Allocated to all commodities by their share in the total value of production.

2. Based on the use of on-farm services

Training Services

Skills Enhancement (Rural Adjustment Scheme): Budgetary expenditure for improving farmers’ farm management skills and providing professional advice, either in isolation or as part of an integrated package of measures to increase the productivity of farm businesses. Replaced by FarmBis in 1998. [1a],[1b]. Allocated to all commodities according to their share in total gross value of production.

Farm Business Improvement Program (FarmBis): Budgetary expenditure under the Agriculture - Advancing Australia Scheme (AAA) to improve farmers’ business management knowledge and experience through such activities as skills development, farm business and financial planning/advice, farm performance benchmarking, quality assurance, risk management, rural leadership development, marketing and natural resource management. FarmBis commenced in 1998 and replaced Skills Enhancement under the Rural Adjustment Scheme. [1a, 1b]. Allocated to all commodities according to their share in the total gross value of production (GVP).

Advanced Property Management Planning: Budgetary expenditure under the Agriculture - Advancing Australia Scheme (AAA): to assist farmers to attend advanced property management training courses and to engage professional consultants in the field of advanced integrated farm management planning, taking account of financial, natural resource and regional planning. Part of Natural Heritage Trust. [1a], [1b]. Allocated to all commodities according to their share in total gross value of production.

State programmes: Budgetary expenditure of State governments on extension and advisory services to agricultural producers to enhance production practices, promote ecologically sustainable development, etc. [For 1986 - 1995 data from [9a] and [9b]. From 1994/95 to 2003/04, OECD Secretariat estimates, based on the assumption that State governments continue to spend 21 % of total agricultural expenditure on extension and that the expenditures have evolved at the same rate as the increase in the consumer price index [9b, 16-31]. Allocated to all commodities according to their share in total gross value of production.

Pest and disease control

Commonwealth programmes [1b], [2] and [3]: Net budgetary expenditure on Bovine Brucellosis and Tuberculosis Eradication Campaign, allocated to dairy and beef according to the relative numbers of milk and beef cattle; National Weeds Strategy to control weeds of national significance threatening the natural environment and agriculture and National Feral Animal Control Strategy to reduce the damage caused to agriculture and the environment by feral animals. Both are part of Natural Heritage Trust Programmes and allocated by share in GVP. Expenditures on commodity specific programmes are attributed to the specific commodities. Expenditures on other programmes are allocated to all crops accounting to their share in total gross value of production.

State programmes: Net budgetary expenditure of State governments on disease and pest control. For 1986 - 1995, data from [9a] and [9b]. From 1992/93 to 2003/04, OECD Secretariat estimates based on the assumption that State governments continue to spend 15 % of their total agricultural expenditure on pest and disease control and that the expenditures have evolved at the same rate as the increase in the consumer price index [9b, 16-31]. Allocated to all commodities according to their share in total gross value of production.

3. Based on use of fixed inputs

Commonwealth tax concessions: The value of tax deductions on certain capital expenditures on conservation measures, as allowed under sections 75B and 75D of the Australian Income Tax Assessment Act (1936), is included in the PSE starting in 1991. For 1991 data from [12, p. 23]; and for subsequent years from 1996-97 [11] and [15]. Allocated to all commodities according to their share in GVP. The value to farmers of the tax deduction for conserving or conveying water is included in the PSE starting in 1994. Allocation is to rice and (cane) sugar, and to bovine and ovine products, by share in GVP.

Productivity Improvement: Budgetary expenditure on investment aids under the Rural Adjustment Scheme through interest rate subsidies up to a maximum value of 50 % of the total interest payable on new or existing loans for up to 3 years. The total amount of interest subsidy may not exceed AUD 100 000 per applicant in any 12 month period, or a cumulative total of support of AUD 300 000 over the previous 5 years. Allocation to all commodities according to their share in GVP [1a].

Young Farmers Scheme – subsidy: Interest rate subsidy to assist young farmers commence a career in farming. [No data available] [1a].

F. Payments based on input constraints

1. Based on constraints on variable inputs

2. Based on constraints on fixed inputs

3. Based on constraints on a set of inputs

G. Payments based on overall farming income

1. Based on farm income level

Income tax averaging for primary producers. [2], [15]. Value of the tax rebate calculated by the Industry Commission as the difference in the agricultural sector's income tax liability with and without income averaging [7], which does not represent all of the value of this concession [10]. Allocated to various agricultural activities on the basis of broad activity categories and then within these categories to individual commodities by their respective values in total gross values of production.

Income Equalisation Deposits Scheme: Value of income tax concessions to primary producers under the Income Equalisation Deposits Scheme, as estimated by the Industry Commission [11] [15]. Replaced by Farm Management Deposit Scheme in 1998. Allocated to all commodities according to their share in total gross value of production [1a][15].

Farm Management Deposit Scheme: Budgetary expenditure under the Agriculture - Advancing Australia -package (AAA) to finance the commercially operated scheme: to enhance farmers' capacity to manage the significant climatic and price risks in farming with improved financial tools. Replaced the Income Equalisation Deposit Scheme and Farm Management Bond Scheme in 1998. Allocated to all commodities according to their share in total gross value of production [1a][15].

Farm Family Restart Scheme (FFRS): Agriculture - Advancing Australia -package (AAA) for a short-term safety net providing a flexible and tailored package of up to AUD 45 000 in welfare support. Payments are granted to low income farmers and their families who are experiencing financial hardship and who cannot borrow further against their assets. It can also provide adjustment assistance for those farmers who have decided to leave the industry [this part of the programme expenditure is included under L. Infrastructure] [1a] [15]. Allocated to all commodities according to their share in total gross value of production.

Farm Household Support Scheme (FHS): [Terminated in the 1996-97 budget.] To assist farmers unable to meet their day-to-day living expenses and denied further commercial finance. The scheme granted a low interest rate loan which could under certain circumstances be converted to a grant. The scheme terminated in 1996-97 and approximately AUD 5 million in outstanding debts were converted to grants and farmers who had repaid their debts were reimbursed [1a]. Allocated to all commodities according to their share in total gross value of production.

Drought Relief Payments Scheme: Payments to farmers under the Farm Household Support Act 1992 were granted since 1994. The payment, unlike other disaster payments, extended certain welfare benefits to farm families in drought-stricken areas, mainly those involved in broadacre industries. In estimating the allocation of payments to individual commodities, it was necessary to estimate the approximate distribution of farms by commodity produced. This was done using the numbers of farms under the five broadacre industry categories (wheat and other crops industry; mixed livestock-crops industry; beef industry; sheep industry; and sheep-beef industry) reported in ABARE's "Australian Farm Surveys Report 2003"; multiplying these farm numbers by the proportion of gross receipts from sales of wheat, barley, sorghum, beef, sheep and wool produced within those categories; and summing up the resulting commodity-farm pairs across all five farm categories. The share of these in the total number of broadacre farms was then multiplied by the total annual appropriation for Drought Relief Payments for each year [1b].

Exceptional Circumstances Provisions (Rural Adjustment Scheme): For farmers whose farm business incomes have been adversely affected by exceptional circumstances (such as extreme and prolonged drought). Includes interest subsidies. Has now been replaced by the AAA-package. For allocation to individual commodities, see allocation of Drought Relief Payments above [1a].

Exceptional Circumstances Relief Payment (ECRP): Budgetary expenditure under the Agriculture - Advancing Australia -package (AAA) to assist farm families in exceptional circumstances areas to meet basic living expenses by providing sufficient immediate cash. To ensure the farm sector has access to an adequate welfare safety net by extending welfare arrangements available to farmers in severe drought to other equally exceptional circumstances. A farm in an Exceptional Circumstances declared area may be eligible for business support in the form of up to 100 per cent interest rate subsidies; ECRP an income support payment, subject to an income test and off-farm assets test and if receiving ECRP farmer may also be eligible for additional Family Payment for dependent children, a Health Care Card and possible exemption from the assets test for Austudy. Business support is accessed through the Rural Assistance Authority in States. For allocation to individual commodities, see allocation of Drought Relief Payments above [1a].

State programmes: Budgetary expenditure of State governments on payments to farmers under disaster relief programmes. [For 1986 - 1995, data from [9a] and [9b]. From 1994/95 to 2003/04, OECD Secretariat estimates, based on the assumption that State governments continued to spend 6 per cent of total state agricultural expenditure on disaster relief and that the expenditures have evolved at the same rate as the increase in the consumer price index. [9b, 16-31]. Allocated to all commodities, see allocation of Drought Relief Payments above [1a].

2. Based on established minimum income

H. Miscellaneous payments

1. National payments

2. Sub-national payments

III.2 Percentage PSE [(III.1) / ((I) + (Sum of B to H)) x 100]

III.3 Producer NPC: For all agricultural commodities the Producer NPC is estimated as a weighted average of the producer NPC calculated for the individual MPS commodities and shown in Table 2. For each commodity Producer NPC = [domestic price received by producers (at the farm gate) + unit payments based on output] / border price (also at the farm gate).

III.4 Producer NAC [1 / (100 - (III.2)) x 100]

IV. General Services Support Estimate (GSSE): Total budgetary expenditure to support general services provided to agriculture [ Sum of I to O] .

I. Research and development

Commonwealth programmes: Net budgetary expenditure for research and product development, improvement of production efficiency and optimal use of the natural resource base, including grants from the Department of Agriculture, Fisheries and Forestry to industry trust funds([1b], [2] and [3]) and part of the expenditure by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) in the grains industry. Commonwealth budgetary outlays, estimates are derived partly from the Science and Technology Budget Statement [2], [3], [15].

State programmes: Net budgetary expenditure of State governments for research and product development, improvement of production efficiency and optimal use of the natural resource base. [For 1986 - 1995, data from [9a] [9b]. From 1992/93 to 2003/04, OECD Secretariat estimates, based on the assumption that State governments continue to spend 37 % of total state agricultural expenditure on research and that the expenditures have evolved at the same rate as the increase in the consumer price index. [9b, 16-31]].

J. Agricultural schools

K. Inspection services

Commonwealth programmes: Net budgetary payments for inspection services, [1b], [2] and [3], in particular for export inspection related to meat inspection. [Since 1993 data reflect the value of the 'meat inspection subsidy" to the AQIS [1a] [2] [15].

State programmes: Net budgetary payments by State governments for inspection services. 1986 - 1995: figures based on IAC reports [9a] and [9b]. From 1992/93 to 2003/04: OECD Secretariat estimates, based on the assumption that State governments continue to spend 5 % of agricultural expenditure on inspection and that the expenditures have evolved at the same rate as the increase in the consumer price index. [9b, 16-31].

L. Infrastructure

Commonwealth programmes

Murray-Darling Basin 2001 Program: Budgetary expenditure under the national Heritage Trust for the rehabilitation of the Murray-Darling Basin, with a view to achieving a sustainable development of the Basin, by: reducing salt and nutrient levels in the river system; developing integrated catchment plans for all Murray-Darling catchment areas and commence major on-ground works to address land and water degradation; restoring riparian land systems, wetlands and floodplains; improving the health of key river systems; and encouraging ecological and sustainable land use by reducing salinity and waterlogging in irrigated areas [1a].

National Landcare Program: Budgetary expenditure under the Natural Heritage Trust to support actions by communities to manage natural resources (land, water, vegetation and biological diversity) sustainably, in partnership with government [1a].

Re-establishment Scheme: Budgetary expenditure under the Rural Adjustment Scheme for structural adjustment assistance through producer retirement programme: grants or loans provided to farmers (in financial difficulty and without prospects for long-term profitability) to leave the farming sector. Replaced by the Farm Family Restart Scheme [1a].

Farm Family Restart Scheme: Budgetary expenditure under Agriculture - Advancing Australia -package (AAA), for structural adjustment assistance through producer retirement programme, grants (up to AUD 45 000) to farmers in financial difficulty, and who cannot borrow further against their assets, to leave the farming sector before their assets are completely depleted. Farmers can also be eligible for up to AUD 3 000 to remunerate professional advice, to explore options for the future including a maximum of AUD 450 in associated costs, such as travel and childcare). [1a].

Retirement Assistance for Farmers Scheme: Budgetary expenditure under Agriculture - Advancing Australia -package (AAA), to provide incentives for farm adjustment by encouraging farmers at retirement age to transfer ownership of the business to a younger generation of their family [1a].

Rural Strategic Planning Initiative: Budgetary expenditure under the Agriculture - Advancing Australia -package (AAA) to assist communities develop strategic regional plans [1a].

Rural Communities Programme: Budgetary expenditure under the Agriculture - Advancing Australia -package (AAA) to improve the access of rural communities to information and services, through community planning, financial counselling, information provision, information services technology and community development projects [1a].

Rural Partnership Programme: Budgetary expenditure to finance projects of regional producer communities for structural adjustment [1a].

State programmes

Rural Adjustment: Budgetary expenditure of State governments on rural adjustment: [For 1986 - 1995, data from [9a] [9b]. From 1993/94 to 2003/04, OECD Secretariat estimates, based on the assumption that State governments continue to spend 4 % of agricultural expenditure on rural adjustment and that the expenditures have evolved at the same rate as the increase in the consumer price index. [9b, 16-31]].

Land and water conservation: Budgetary expenditure of State governments on land and water conservation. [For 1986 - 1995, data from [9a] [9b]. From 1994/95 to 2003/04, OECD Secretariat estimates, based on the assumption that State governments continue to spend 11 % of agricultural expenditure on conservation and that the expenditures have evolved at the same rate as the increase in the consumer price index. [9b, 16-31]].

M. Marketing and promotion

Commonwealth programmes: Budgetary expenditure on export assistance (EMDGs and IAMP) and the annual grant to the Australian Wool Realisation Corporation [1a], [1b] and [2].

State programmes: Budgetary expenditure of State governments on export assistance. [For 1986 - 1995, data from [9a] and [9b]. From 1991/92 to 2003/04, OECD Secretariat estimates, based on the assumption that State governments continue to spend 1 % of agricultural expenditure on marketing and that the expenditures have evolved at the same rate as the increase in the consumer price index. [9b, 16-31]].

N. Public stockholding

O. Miscellaneous

V.1 Consumer Support Estimate (CSE): Associated with agricultural production, i.e. for the quantities of commodities domestically produced, excluding the quantities used on-farm as feed -- excess feed cost. [Sum of P to S; when negative, the amounts represent an implicit tax on consumers].

P. Transfers to producers from consumers: Associated with market price support on all domestically produced commodities, estimated by increasing the transfers calculated for the MPS commodities according to their share in the total value of production [(P.1) / (I.1) x 100].

1. Of which MPS commodities: Sum of the values of transfers from consumers to producers associated with market price support for the MPS commodities as calculated in Table 2.

Q. Other transfers from consumers: Transfers to the budget associated with market price support on the quantities imported of domestically produced commodities, estimated by increasing the transfers calculated for the MPS commodities according to their share in the total value of production [(Q.1) / (I.1) x 100].

1. Of which MPS commodities: Sum of the transfers to the budget associated with market price support on the quantities imported of the MPS commodities as calculated in Table 2.

R. Transfers to consumers from taxpayers

S. Excess Feed Cost: associated with market price support on quantities domestically produced and used on-farm as feed as calculated in Table 2.

V.2 Percentage CSE [(V.1) / ((II) - (R)) x 100]

V.3 Consumer NPC: For all agricultural commodities the Consumer NPC is estimated as a weighted average of the consumer NPC calculated for the individual MPS commodities and shown in Table 2. For each commodity Consumer NPC = domestic price paid by consumers (at the farm gate)/ border price (also at the farm gate).

V.4 Consumer NAC [(1 / (100 -(V.2)) x 100]

VI. Total Support Estimate [(III.1) + (IV) + (R)] and [ (T) + (U) - (V)]

T. Transfers from consumers [(P)+(Q)]

U. Transfers from taxpayers [(III.1)-(P)+(IV)+(R)]

V. Budget revenues [(Q)]

Sources :

[1a] Information provided by Department of Agriculture, Fisheries and Forestry Australia (AFFA or DPIE).

[1b] DPIE, "Portfolio Budget Statements", various years.

[2] Industry Commission, "Annual Report" (Canberra: AGPS, various years).

[3] Ministry of Finance, "Budget Statements -- Budget Paper No. 1" (Canberra: AGPS, various years).

[4] Industry Commission, Annual Report 1990-91, (Canberra: Aus. Govt. Pub. Service, 1982).

[5] Industries Assistance Commission, "Assistance to Australian Agriculture" (Canberra: AGPS, 1982).

[7] DPIE, "Assistance to farmers in 1991-92 through the rural adjustment scheme", mimeograph, Canberra, 29 October 1991; DPIE, "Rural Adjustment Scheme, 1990-91" (Canberra: AGPS, 1996); Parliament of the Commonwealth of Australia, "Rural Adjustment, Rural Debt and Rural Reconstruction" (Canberra: Senate Printing Unit, 1994); Rural Adjustment Scheme Advisory Council, "Annual Report 1996-97"

[8] DPIE, "National Landcare Program -- Report on the Operations of the Land and Water Elements, 1993-94" (Canberra: AGPS, 1996); National Landcare Facilitator Project, "Annual Report: The State of the Community Landcare Movement in Australia" (P.O. Box 3141, Manuka, ACT, Australia, September 1996).

[9a] Industries Assistance Commission, "State Government Assistance to Agriculture" (Canberra: Aus. Govt. Pub. Service, April 1988).

[9b] Industry Commission, "State, Territory and Local Government Assistance to Industry", Report no. 55 (Canberra: AGPS, 1996).

[10] OECD, "National Policies and Agricultural Trade -- Country Study: Australia" (Paris: OECD Publications, 1987).

[11] Industry Commission, "Annual Report", various years (Canberra: AGPS). Industries Assistance Commission, "Annual Report", various years (Canberra: AGPS).

[12] OECD, "Tax Expenditures -- Recent Experiences", OECD Publications, Paris, 1996.

[13] ABARE, "CSB 1991", Table 87 (AWB prices). Also reported in ABARE, "ACS 1997" -- Table, "Australian wheat prices".

[14] OECD Secretariat, results of the MTM (Ministerial Trade Mandate Model).

[15] Productivity Commission, "Trade and Assistance Review 1997-1998" (Canberra: AGPS).

[16] New South Wales State Budget, various years.

[17] Queensland State Budget , various years.

[18] South Australia State Budget , various years.

[19] Tasmania State Budget, various years.

[20] Victoria State Budget, various years.

[21] Western Australia State Budget, various years.

[22] Northern Territory Budget, various years.

[23] Australian Capital Territory Budget, various years.

[24] Information provided by Primary Industries and Resources South Australia.

[25] Information provided by Agriculture Western Australia.

[26] Information provided by New South Wales Agriculture.

[27] Information provided by New South Wales Dept of Land and Water Conservation.

[28] Information provided by Northern Territory Dept of Primary Industries and Fisheries.

[29] Information provided by Queensland Dept of Natural Resources.

[30] Information provided by Primary Industries and Fisheries Tasmania

[31] Information provided by Victorian Dept of Natural Resources and the Environment

 

Table 3. Producer Support Estimate by commodity

Definitions and Sources: see Tables 1 and 2 above.