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Monday, 22 March 2004
Page: 26854

Mr JOHN COBB (8:49 PM) —I also rise to speak in favour of the Dairy Produce Amendment Bill 2003. As you have heard, Mr Deputy Speaker, this bill is about regulating the powers of the new company known as Dairy Australia Ltd and giving it the ability to do what the Australian Dairy Corporation previously did. I have to say that in the electorate of Parkes in my region, the central west of New South Wales, there are big dairy areas, and up until the drought it was an expanding dairy region. More and more not only were the smaller farmers on the coast leaving the industry but the big ones on the coast were finding the conservation movement and local government making their lives particularly difficult. The upshot of that was that, more and more, anyone looking to expand or even continue a dairy herd was moving across the mountains and into more friendly country, as it were.

Deregulation, after all, was something that was called into the industry by the Tasmanian and Victorian dairy farmers, and then the governments of all states around Australia agreed to deregulation. The Commonwealth government were merely part of that. It was not a decision we made nor a decision we were really involved in. But, once it happened, as the member for Blair has said, the Dairy Structural Adjustment Program was put together by the Commonwealth government under Warren Truss as minister and something like $1.94 billion was put into helping the dairy industry to restructure. It has been a painful process, more so in recent times in some ways than when deregulation actually took place, because at that time, fortuitously, world markets took an upturn and in fact export markets at that stage were better than the domestic market in Australia.

There was a lot of pain, and people along the coast especially did sell out to other interests and there was a contraction in the number of herds in Australia, if not in the number of cows. It seems that herds under about 200 cows have disappeared—not in all cases but in the majority. Some of those are finding their way out into the central west of New South Wales. Certainly some of the biggest and most modern dairies in Australia are around Gulgong, running towards Forbes, and in the Dubbo area as well there is quite some dairy structuring going on.

The picture has certainly changed in recent times, with a downturn in export prices. In our region in particular, probably the biggest limiting factor, the one which has wrought the most devastation upon the industry—fight it as it has, in a very forthright way—has been the drought. It is not just the fact that there has been a lack of rainfall or that normal pasture growth has been nonexistent or very hard to come by; the biggest threat to the dairy industry in my region has been the fact that very little irrigation has been able to take place in the last two years. The Lachlan River in particular, as well as the Macquarie River, has basically had nothing to offer to dairy farmers for something like 18 months. That looks set to continue, with some talk that that river could cease to flow towards the end of 2004.

Some months ago we had a large meeting in Forbes of all the dairy farmers in the region. Minister Warren Truss was good enough to stand in front of that meeting for some three hours. While we have been able to get exceptional circumstances relief for the dairy farmers in our region for quite some time now, when we looked at all the factors affecting the economics of the dairy industry we found that at the end of the day the one thing the industry could not deal with was the drought—and they are still having enormous difficulties in doing so.

At the moment the dairy industry are dealing with the downturn in the international price, the drought and the fact that the river has little to offer by way of relief, be that for pasture or for direct feed. Obviously, the price of feed in the last couple of years has been out of sight for normal purchase and budgeting factors. When you add to that the fact that, as somebody mentioned earlier—it may have been the member for Blair—the wholesalers totally misread their pricing signals and have absolutely dropped the bottom out of the domestic price, things have not added up, particularly in the last 18 months or so, to any joy for our dairy farmers, particularly those affected by drought, as the farmers in my electorate of Parkes quite obviously are. I do not think all is doom and gloom in the future of the dairy industry; far from it. But at the moment dairy farmers are certainly facing as tough a road as they are likely to face in their financial and commercial lives.

Let me touch on the effects of this bill and why we need to pass it. I hope it will not be too controversial. I take the point of the member for Blair: those who speak loudest, if they cannot find something to be controversial about, do not seem to want to speak about anything which is a normal process and which, one would hope, will not strike any trouble in this House or in the Senate. But the member for Kennedy has been particularly voracious on water issues, and I have noticed that, over the past six months, he has tried to extract totally misleading attitudes from dairy farmers, right from Queensland through to Victoria. I think he has done so with little effect. Perhaps those people he has spoken to have started to wake up, as I think they did in the Queensland election, to the fact that loudness of voice does not always equate to commonsense of mind.

In July 2003 the Dairy Corporation was converted into a private company limited by guarantee, known as Dairy Australia Ltd. Basically, it is becoming the industry services body, as declared by the Minister for Agriculture, Fisheries and Forestry. Its job is to undertake research and development for the benefit of the Australian dairy industry. It is also required to manage the Dairy Structural Adjustment Program in the form of a trust. It has to do all the procedures that used to be done by the Australian Dairy Corporation, and obviously it will do them as a company limited by guarantee. It will be fully indemnified, as the member for Blair mentioned earlier. This will allow it to deal in securities, administer the structural adjustment fund and enter into contracts. It will be able to raise money other than by borrowing. In other words, it will be able to act as a commercial entity. It will finalise the dairy industry statutory reform process that resulted from the decision by state governments around Australia to deregulate farm gate milk pricing from 1 July 2000.

As I said earlier, the Australian government, as a result of all that, put a $1.94 billion package together on behalf of the dairy industry, called the Dairy Structural Adjustment Program. This bill will allow Dairy Australia Ltd to better administer that adjustment program. We need to remember that the dairy industry is worth some $3 billion to Australia's GDP. It runs third behind wheat and beef in agricultural terms in output value at the farm gate, and it adds about $2.5 billion to Australia's export income. Allowing Dairy Australia Ltd to better manage the Dairy Structural Adjustment Program is just one part of the process that is needed to secure the future of Dairy Australia and the industry in general.

I will finish with a few positive things, such as the fact that the US free trade agreement will allow Australia to multiply by 2½ times the value of its current exports to that country. That is $55 million on top of the $36 million it currently exports to the US. We must also remember that we have recently done a free trade agreement with Thailand, which currently takes $150 million worth of Australian dairy exports. This bill must be put through. It is necessary to allow Dairy Australia Ltd to provide an efficient service on behalf of the dairy industry. I commend this bill to the House.

Debate interrupted.