1998, Volume 1, Paper 1
ISSN 2209 – 6612

Can Australia’s Dairy Policy Survive Competition Policy Review?

James W. Dunn – Visiting Professor of Agricultural Economics, University of Adelaide, and Professor of Agricultural Economics, Pennsylvania State University, U.S.A.
28 January, 1998

Introduction

Milk probably has the most highly regulated of all the world’s agricultural markets. Of the major dairy countries, only New Zealand is not regulating milk prices in some way. However, many nations, including Australia, are re-examining their regulatory policies regarding milk markets. Trade agreements such as the General Agreement on Tariffs and Trade (GATT) are prompting some to move toward less regulation. Additional factors are budgetary constraints and a wider acceptance that the distortions of government market regulations often create more problems than they solve. Most dairy price regulation in Australia is by the states. Under Australia’s national competition policy program (the Hilmer Report), any state legislation viewed as being anti-competitive must be reviewed to see that it is in the public interest. Accordingly all state dairy policies will be reviewed in the next two years. Although the regulations differ by state, of particular interest to reviewers will be quotas, pooling, and farm-gate price setting. A related national policy scheduled to end in 2000 is the Domestic Market Support Levy.

This paper will discuss each of these methods of regulating dairy markets as they are used in Australia and discuss the costs and benefits of these policies conceptually to the industry and to the public.

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