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Monday, 27 June 1994
Page: 2045

Senator WOODLEY (6.12 p.m.) —I move:

  That the resolution of the Senate of 24 March 1994, referring issues relating to the Rural Adjustment Scheme to the Standing Committee on Rural and Regional Affairs, be modified as follows:

After paragraph (c), add the following paragraph:

"(d)examine through the exceptional circumstance provisions of the Rural Adjustment Act, the necessity to put additional support mechanisms in place for farmers in farming areas where soil type and/or rainfall and/or location prevent diversification".

I wish to speak to this motion to indicate that there has been quite a long process through which this issue has gone in order to arrive at this point. I did originally propose a much longer reference to the Standing Committee on Rural and Regional Affairs and, after discussion with a number of senators, withdrew that motion and sought to add an additional clause to the current reference before the committee—that is, a reference relating to the rural adjustment scheme. I want to add these words so that inadequacies in the terms of reference which were identified by my colleague Senator Lees and me might be rectified. The words we want to add are printed in the Notice Paper, and they are:

. . . examine through the exceptional circumstance provisions of the Rural Adjustment Act, the necessity to put additional support mechanisms in place for farmers in farming areas where soil type and/or rainfall and/or location prevent diversification.

The reason for moving that is that we believe that particular issues relate to these farmers, especially those in South Australia, which need to be addressed by this additional reference.

  I thank the Minister for Primary Industries and Energy (Senator Collins), who, following the original terms of reference which I moved and this new term of reference, sent me a number of documents. These were very helpful in assisting me to understand what has already been done in this area. However, I still wish to press the additional term of reference and particularly quote from the documents which the minister has sent to me. The first one was the malting barley strategic planning unit report on the progress of the work of this particular unit. This unit, as the report says:

. . . has adopted a three stage approach and engaged a consultant to develop a strategic plan for the malting barley industry.

I am interested that stage two of the plan involved:

. . . determining key performance indicators, benchmarking against international best practice, assessing customer needs and market opportunities, production constraints, variety development processes, receival procedures and quality control.

. . . . . . . . .

At a meeting on 23 May, the MBSPU's Steering Committee (SC) endorsed a completed report on stage 2 and a work plan for completing the project.

One of the problems with the barley industry is that it is not simply the malting barley industry which is a problem but even more so the feed barley industry. I note the comment in the report which says:

In relation to marketing structures and arrangements, the consultants acknowledge that the State marketing authorities provide a focused selling effort and that marketing arrangements are suitable in some market segments, but not in others.

The Australian Democrats really have to disagree quite fundamentally with that comment because we believe one of the real problems with the barley industry is the various independent state marketing bodies which compete with each other for markets. So, although I thank the minister for that report, it really simply confirmed the problems and fears that we have.

  Another report the minister sent me is entitled Grains industry strategic planning: the processes for inventing the future. This was a helpful document to read but again it raised problems for me. It certainly presented a very comprehensive inquiry which is being conducted but it does not answer all the questions which we have. It is worth recording the purposes and charter of each strategic planning unit. The document states:

In broad terms the basic purpose of each Strategic Planning Unit is to identify and analyse all of the factors which relate to—

then a number of different categories are listed, namely:

* the current and future requirements of markets and customer specifications;

* the current and future capability of the Australian industry to supply the markets and meet customer requirements;

* the factors which affect the relative competitiveness of the Australian industry;

* the opportunities, challenges and impediments identified for the Australian grains industry—

and so on. Then it goes on to say:

While SPU's—

that is, the strategic planning units—

share the same basic purpose, their specific objectives differ slightly—

then listed is the malting barley PSU. I note that this was:

. . . convened to identify and remedy structural, operational, technical and agronomic impediments to the development and prosperity of the Australian malting barley industry.

But, again, it does not mention the feed barley industry. I will comment on this report of the Grains Council of Australia a little later.

  The concerns of the Democrats, we believe, still need to be covered by this additional reference. I want to read from a letter from a South Australian barley grower who is concerned that the grain growers inquiry will not get at the problems which he faces. He writes:

  I guess two things come to mind, firstly, yes, the Strategic Planning Unit goes part of the way—but does not address the issues that confront farmers who do not have a readily available, commercially viable, field proven alternative to barley. Most of, if not all, the opposition I hear to the issues that we have raised comes from people who have these alternatives via higher rainfall & better soil types, but these same people will move back into barley production tomorrow, if they see a profit.

  These same people appear to not want to tackle the hard issue of what to do in marginal lands, and to say close them down is no answer, probably would tend to create more problems than it would solve.

Secondly, we accepted from day one that this would not be easy, but some recent research into farming in the UK only makes me more determined to pursue the issue of farm income, because it would appear that we in Australia could be the only developed nation in the world to treat our food producers in this manner.

Also, remember that the Strategic Planning Unit are looking at Malting Barley—not feed barley, which makes up the bulk of our crop annually, and is worth some $30 per tonne less than malting.

Also Sen Collins likes to refer to GATT being of a greater benefit to wheat or more immediate than barley—what he forgets is that wheat is also a feed grain and is sold into exactly the same markets in direct competition with barley, so therefore having a direct impact on price.

To return to the Grains Council inquiry, the Australian Democrats certainly support the thrust of that inquiry, we wish it well and we want to take note of the results and support its progress. However, we have concerns about some of the directions of the inquiry. For example, it appears that the Grains Council believes that the future of the industry lies in its becoming much more market oriented than production oriented. That sounds all very well, and it is in line with much of the rhetoric about the efficiency of market forces; however, it does not address the question of the kind of market forces and which markets.

  A simple illustration of the problem lies in a critique of one of the fundamental laws of the marketplace, the law of supply and demand: that is, as long as there is demand for a product and the grower can supply the product, the market should operate to enable both ends of the market to meet. Yet, Australian grain producers are being told that their problem is overproduction of grain in a world in which millions of people are starving. The law of supply and demand is rendered inoperative by an international financial system in which money has become a commodity rather than a means of exchange.

  In this kind of world real commodities such as food and fibre are stockpiled instead of being delivered to where the demand is greatest. Thus commodities which sustain life are rendered immobile and money, a pseudo commodity, is universally and constantly mobile.

  The Democrats are also concerned at the pressure on farmers to diversify their investment interests and areas of production. This is good advice for those farmers who have moved back into solid profitability and who live in areas where diversification is an option; however, many farmers do not have a readily available commercially viable field proven alternative for their present narrow range of cropping and grazing options. It was with these farmers in mind that the Democrats moved the original terms of reference for an inquiry by the Senate Rural and Regional Affairs Committee.

  Certainly senators from the government and the opposition were sympathetic to what we were proposing. They feel, however, that our concerns are covered by current Rural and Regional Affairs Committee inquiries into land care and the rural adjustment scheme. The Democrats are committed to the issues referred to in our final term of reference. We intend to pursue these issues through those inquiries. However, we are also hopeful that the additional terms of reference to the RAS inquiry may be accepted.

  In conclusion, some media commentators have described the 33 per cent rise in farm income forecast for 1993-94 as evidence that Australia's struggling rural sector is on the road to recovery. But one does not have to dig very deep into the Australian Bureau of Agricultural and Resource Economics figures to realise that things are not as rosy as we might all hope. The bottom line for farmers is and always has been farm profitability, and on this measure we see that only one quarter of farm businesses are likely to be in the black this year.

  This means that for the average farmer this will be the fourth year in a row of farm losses. Of course, the average farmer does not really exist, so many are looking at the sixth or seventh year behind the eight ball. The implications of this for Australia's entire farm sector are enormous as the investment for capital replacement necessary to maintain our farmers' efficiency and margin over competitors is simply not able to be made.

  The Democrats called on the government to take urgent action to address crippling farm debt and to extend the 10 per cent investment allowance to primary producers for a further 12 months, and that was supported by the National Farmers Federation. We also urge support for the additional reference which we are debating today. Until these calls are heeded Australian farm families will continue to be driven from the land. Indeed, if the current exodus of family farmers continues, I predict that in 20 years time the only place where we will be able to see family farmers will be in a rural museum because by then they will all be stuffed.