Mr VAILE(5.05 p.m.) —It is with a little bit of a heavy heart that I participate in the grievance debate this evening. I want to highlight to the House the absolute dilemma the beef industry is in at the moment. It is one of the primary industries at the centre of primary production in my electorate. I particularly want to highlight to the House the dilemma that the beef producers along the coastal section of New South Wales are in. It is easy for us to say that farmers can get into other pursuits and that beef producers who have a mixed farm can hop into crop production or into fat lambs, but the beef producers along that part of the coast do not have that flexibility or alternative. So they are restricted to the beef industry.

This dilemma has been brought to my attention obviously by a number of my constituents. Importantly, I recently read in a paper a letter to the editor from Mr Jim Henderson of Gloucester. I wish to read some extracts of that because it highlights the seriousness of the problem. He says:

Two years ago a 370kg grass-fed Jap Ox carcass was worth $980. Today it is worth $460. A large proportion of the $1.30 per kg drop to producers can be attributed to the increased value of the Australian dollar.

While returns to producers have dropped by half, production costs from items such as rates, fuel, seed, fertiliser, drench etc. have all increased in price. During the same period, producers have battled one of the worst droughts on record, and farm debt has gone up.

The public would understand the rural crisis better if they compared it with, for instance, the halving of the value of BHP shares, or the basic wage or the dole. If you relate the same drop in value across the beef industry—which is a reality—it means that the producer with 200 breeders has lost at least $105,000 in the value of his stock on hand. His yearly income has dropped from $60,000—

that is, gross—

to $30,000—

gross—

while the running expense of the property is at least $40,000, which doesn't include any wages for himself or his family. When you add interest on the average farm debt of $200,000 one is able to get some insight into the extent of the disaster—

the disaster that has currently beset the beef industry. Jim Henderson continued:

Rural Australia put faith in the change of government to give it back some hope of prosperity.

Farmers don't appreciate being made the peasants of society while they are producing food and export dollars for the nation.

What really annoys beef producers is the bad publicity their industry receives, which impacts on consumer confidence. Also the fact that retail prices don't mirror returns to producers.

That is just one example of the deep anxiety and concern that is being felt within the beef industry, particularly along coastal New South Wales. Henderson said that with the change of government they expected some action. The government is taking action with some of the basic structures which affect some of those problems facing the beef industry at the moment.

If we look at some of the statistics on beef prices and market share we will see that current beef prices have fallen 40 per cent on average since December 1995. Prices are the lowest in actual dollar terms since 1982-83. Prices in real terms—minus inflation—are equal to the lowest prices ever received for beef; that is, going back to 1975 at the height of the beef crash.

There has been significant loss in Australia's market share in a number of key export markets. The following figures are quite compelling. In 1994 we had 53 per cent of the market in Japan; in 1996 we have 45 per cent. In 1994 we had 43 per cent of the market in Korea; in 1996 we have 27 per cent. In 1994 we had 70 per cent of the market in Taiwan; today we have 50 per cent. Much of that market share has been lost to the USA and New Zealand. The US share of the Japanese market has gone from 43 per cent to 50 per cent. New Zealand is about to overtake Australia in terms of market share in Korea. Some of the causes of the dilemma in the beef industry at the moment are the US beef oversupply, the increase in the value of the Australian dollar and the cost disadvantages facing the Australian beef industry; that is, processing costs and industrial relations—waterfront reform, transport and so on.

One of the areas that the Minister for Primary Industries and Energy (Mr Anderson) and the government have taken steps to address is AMLC promotions. Over the past three or four years there has been a steady decline in funding for the whole range of AMLC programs, including the Japanese market promotional program. This has been due to a cut in processor levies since March 1993. This has been using up a lot of the AMLC cash reserves.

The overall AMLC budget for the Japanese promotional exercise has fallen from $26 million in 1994-95 to $20 million in 1995-96. Let us compare that with the budget that is being expended in the growing marketplaces. In 1994-95 in South-East Asia—that excludes Korea, Japan and China—the budget was only $1 million. Only $1 million was spent on promotion in that area, when developing nations like Indonesia and the Philippines are looking for live cattle exports—and sheep exports as well. At the same time, $23 million is being spent on promotion in the domestic market.

The minister has established the meat industry review task force which is reviewing the activities of the Australian Meat and Livestock Corporation and the Meat Research Council. The task force is looking at three key areas and is going to report back to the minister on all options for reform of the meat industry. It will be reviewing the performance of the Australian Meat and Livestock Corporation and the Meat Research Council. It is going to recommend to the minister a number of specific areas in which the government can take immediate action so that we can try to address some of the problems that have beset the beef industry.

From a personal perspective, I would hope that that review is also going to look at the structure of the AMLC. In other areas of primary production, for instance wool and wheat, we have individual entities promoting individual products. Within the gamut of the AMLC there are probably four product areas: beef, sheep meat, live sheep and live cattle. I do not believe they should all be lumped together. There are conflicting interests in those four areas and they should be separated. I am hopeful that the review that is being undertaken into the AMLC and the Meat Research Council, on behalf of the government, will address that very issue of what I perceive as a conflict of interest between those competing sectors of the meat production and processing industries in Australia.

I certainly hope this review will result in the AMLC being more flexible and accountable. The beef industry expects and deserves better value for its dollar as far as promotion is concerned. I do not believe it is getting value for dollar. Hopefully this review will ensure that the levies the producers pay in the marketplace—they go straight to the AMLC for promotion of their product—are better and more efficiently spent. It is very important that we see that brought to fruition. I look forward to the report from that task force coming to the minister.

We have grappled for a lot of years with a marketing and grading system for the beef industry in this country but within this industry, as in a lot of other rural industries, it is difficult to get consensus on grading. It seems that, before we can get consensus, we have to get to the stage where the demise of the industry is imminent. That is a sad situation and a sad indictment of a lot of the players within the production and processing parts of the industry. It is high time we got a universal grading system across the spectrum in the beef industry, one that is recognised domestically and internationally, so we get faith in the industry.

Madam Deputy Speaker, I put it to you that the grading system should be an objective measurement using criteria such as age, muscle or marbling, fat cover and meat colour. Feeding regime—that is, grass fed or grain fed—should not be a grading criterion. It is a description in the marketplace, not a grading criterion. Terms like `export quality' and `A-grade beef' should be eliminated from the beef industry vocabulary because they draw attention to one thing or another. We export all sorts of differing grades of beef, not just `export quality' beef. We have to get back to an objective grading system. (Time expired)