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Thursday, 6 March 2003
Page: 12458


Mr BALDWIN (10:21 AM) —I welcome this opportunity to speak on the these two bills relating to the dairy industry, the Dairy Industry Service Reform Bill 2003 and the Primary Industries (Excise) Levies Amendment (Dairy) Bill 2003, as it again allows me the time to raise the problems of the dairy farmers in my electorate of Paterson, but first I will speak directly on the legislation before us. The Dairy Industry Service Reform Bill will establish Dairy Australia Ltd as a company limited by guarantee under the Corporations Act 2001 to replace the Australian Dairy Corporation and the Dairy Research and Development Corporation in the delivery of dairy industry services. The Primary Industries (Excise) Levies Amendment (Dairy) Bill 2003 will establish a new levy called the dairy service levy which will replace the current dairy promotion levy, the dairy research levy and the dairy corporation levy.

Dairy Australia will be responsible for the delivery of research and development and promotion services for the dairy industry as well as the administration of the Dairy Structural Adjustment Fund. These new arrangements are the culmination of an extensive legal and financial process undertaken by the Commonwealth and the dairy industry to identify the most appropriate structures to replace both dairy corporations. The arrangement proposed in these bills has the support of the Australian Dairy Industry Council, which has played an integral part in the development of these new arrangements. The Australian Dairy Corporation says:

The creation of Dairy Australia is an important step toward dairy producers having a more active say in the future development of their industry. From a producer perspective, a key aspect of the new structure is that the company will be industry-owned and farmers will be responsible for contributing to Dairy Australia and the longer term development of the industry. It would deliver a company that could meet the specific needs of a deregulated industry and provide a clear focus on delivering returns from a dairy farmer's levy investment.

So it is important to note that the arrangements in this legislation have the absolute backing of the dairy industry for its future investment, and the future of the industry is something I am deeply concerned about.

In my electorate of Paterson, farmers have been hit hard since deregulation, their situation exacerbated by the current drought. I spoke earlier this year about the plight of dairy farmers in Dungog, Raymond Terrace, Gloucester, Nabiac and the Great Lakes region. The problem they face is that the cost of producing milk far outweighs the price they are receiving for milk. They have also been severely affected by the drought. I met with farmers late last year at a meeting attended by over 300 people at the Dungog RSL Club. I would like to formally thank Bluey Watkins from Dungog and Bob Koopman from Nelsons Plains for organising this meeting. They are absolute champions for the industry and deserve more than they receive. Besides running these meetings, they are running their farms and working extremely hard looking for solutions for their industry.

Mr Deputy Speaker Causley, in your role as the member for Page you would understand that at the time farmers were getting about 30c a litre for their milk, and yet it was costing them around 50c a litre to produce it. With figures like those, farmers are really struggling to stay afloat. They are eating into their cash reserves, using their overdrafts and selling off the bottom paddock just to stay afloat, but they have also been hit by a crippling drought—the worst in over 100 years. Most of my electorate has been relatively drought-proofed over the years but the drought has still had a severe effect.

More recently, dairy farmers have met with the leader of the National Party in New South Wales, George Souris, and this week with New South Wales agriculture minister, Richard Amery. I also congratulate Bob Geoghegan, the Liberal candidate for Maitland, for his work in helping to organise meetings with Bluey Watkins and Bob Koopman. I am also pleased to say that the message from all sides of politics so far has been clear in relation to these farmers. Politicians are saying that milk processors and retailers—in particular, supermarkets—should be passing on more of their profits to farmers by way of a better farm-gate price. Given the current climate with the drought, it is only fair that processors and supermarkets, who are making the money out of the farmers' products, should be ensuring that their supply line is intact.

I advise the House that we have had some rain in parts of the Paterson electorate which has brought a great deal of relief for local communities. I was in Dungog last Friday and it amazed me to see the difference that a little rain can make. But it is important to note that, whilst the fields are green, there is very little depth in the feed in the paddocks. It will probably take months for the feed and crops to recover. As farmers know only too well, one day of rain does not break a drought; we need follow-up rain, and plenty of it, to fill the dams and rivers and provide enough feed for stock. From what I hear in the forecasts, rain should be coming in the months ahead, but unfortunately many farmers could not wait for the rain—they have found the situation untenable and have left the land. I have heard heartbreaking stories of farmers who have sold their stock and then the following day the rain has fallen. Some Dungog farmers found that with the drop in milk prices since deregulation and the added blow of a drought their businesses were no longer sustainable.

So the suppliers of milk, the very start of the chain, are doing it extremely tough. The effect this has on the community is tough as well. Young people are leaving the land and do not want to take over the family business. It has an effect on local businesses in the towns as well. If the farmers cannot afford to buy goods, the local shops are affected and then more local jobs are also affected. But the milk processors and supermarkets are the ones making a dollar and they are doing it on the back of very hard work from the farmers.

I also point out that Dairy Farmers corporation took the decision to close down the Gloucester dry milk factory on the basis of financial unviability. That closure started to cripple the town itself. On the back of that, we have now had deregulation, an increase in feed supply costs and a reduction in the amount paid for milk by Dairy Farmers to their farmers. They should be recognising the hardships faced by many communities, such as the farmers in Dungog and surrounding regions, and the fact that their suppliers are leaving the industry under current conditions. To be fair, some companies have recognised the extraordinary circumstances that farmers are in. Bega, for example, on the South Coast of New South Wales, announced a special drought support payment to dairy farmers for the months of November, December and January due to the drought. Chairman of Bega Cheese, Barry Irvin, was quoted in a December media release as saying:

... it was the Board and management's view that increases in returns of this magnitude were necessary to ensure the local industry did not suffer long term damage as a result of the current circumstances.

Bega Cheese believes that this is an investment in the future of our dairy industry.

This is about investing in the future and is an example of a responsible company ensuring the continuation of the supply chain of its product. As those who come from regional electorates know, dairy cows are not something you can put on the back paddock for a month and then bring back on to produce more milk. Once they go dry through lack of feed or lack of milking, it can take up to 18 months to two years to bring cows back on line to produce milk, particularly quality milk. The cost of the feed and the type of feed being given to these cattle have also reduced the quality of the milk, and that has further exacerbated the price returns that farmers have been getting for the milk. It is tough on the land, but that is a risk that dairy farmers accept. But when additional pressures are brought to bear on them by those further up the line, such as the processors and retailers, then unfortunately the buck is stopping with the farmers. I think that is an unconscionable action by the lions above.

This is about the future survival of an industry and the survival of dairy farmers who have been on the land for generations. It is interesting to see in the supermarkets the wide range of prices for various brands of milk. In fact, it is not unusual to see differences between various brands of over a dollar in the price of two litres of milk. It is also interesting to see the price that consumers are prepared to pay for a bottle of water and for coke, for example, in comparison to what they pay for milk. For a 600 millilitre carton of milk, you could pay around $1.10. In comparison, consumers will pay around $2 for a 600 millilitre bottle of coke and around $1.25 for a 600 millilitre bottle of water. It is a sad day when consumers will happily pay more for a bottle of water—when they can readily get water out of a tap—than they will for a carton of milk. It takes a great deal of time and labour to produce milk, yet the producers are getting very poor prices for it.

I call on the milk processors and the supermarkets to give farmers a fair go. Give them the prices they deserve and support the industry that supports the jobs and the many families of Paterson. Without the farmers producing the milk, the processors and the supermarkets will have no milk to sell.