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Monday, 22 March 2004
Page: 26836


Mr ZAHRA (7:25 PM) —I want to pick up on some of the remarks made by the member for Maranoa in his contribution to the debate on the Dairy Produce Amendment Bill 2003. It is all well and good for people in this parliament to stand up and say things like the member for Maranoa said. He said that he is very concerned about all dairy farmers and went on to say that there is a market in the dairy industry that is not working effectively. But it rests upon members who make such statements when they are in government to actually do something for their constituents.

You would never get a better example than the dairy industry of where the National Party has let down its constituents. The National Party used to be the party that stood up for country people, the party that was unashamed to stand up to the Liberal Party and any other party in this place and defend the interests of rural and regional Australia. But all we have today is the National Party turning its back on its traditional constituents—just like the member for Maranoa is doing now, as he walks out of the chamber. He is like so many of the other National Party members of this place who have the opportunity to do something for their constituents but do not do anything at all. People do not want hand wringing; they do not want pious statements; they do not want sombre speeches in this place about how one member has a great love for farmers or for a certain industry. What they want is action. They want people to stand up and fight for them in this place. And, when it comes to standing up and fighting, the National Party is the great disappointment of the Australian parliament and a great disappointment to all Australian rural and regional communities.

I want to pick up on a few of the comments that the member for Maranoa made on the issues affecting the dairy industry today. They are not mickey mouse issues that he is talking about. When the member for Maranoa says that he does not think there is a proper, functioning market in the dairy industry, he is the king of understatement. There is something very crook in the dairy industry—very crook indeed. When you, Mr Deputy Speaker Price, and I go down to the local milk bar, we pay $1.60 per litre. Yet, when a hardworking dairy farmer in my electorate of McMillan gets the milk tanker to come round from the cooperative or the milk company, that farmer is only getting between 21c and 28c per litre, on average. I ask you, Mr Deputy Speaker, and the other members of this place: is that fair? Is it fair that the farmer—the person who does the hard work, takes the personal risk, has their money and their family's future invested, and has made all of that commitment—gets paid so little from the final product? And what a huge difference there is. There are many agricultural industries where there is a very large gap between what the producer gets and what the consumer pays, and the dairy industry is a very good example of this.

I make the point that the milk companies are not turning gravel into gold; they are turning milk into milk. There are processes which take place; value adding is done and some science is applied. There are some important stages in the process once the milk leaves the farm in the tanker. I have to ask myself what is going on when a litre of milk costs $1.60 and the farmer in my electorate gets only between 21c and 27c per litre. Something is wrong in the dairy industry. I think there are serious market issues in relation to how the sector operates.

It is interesting to observe that the milk price available to dairy producers is similar from milk company to milk company to milk cooperative. On average people in my electorate are able to get 23c or 24c per litre from the milk companies they are able to supply to; there is not a great deal of difference. When you add into the equation the fact that there are substantial barriers to entry to and exit from the industry, it becomes very clear that we have some serious market distortions which are having a direct effect on the lives of farmers and their families.

The member for Corio mentioned in his contribution today that he had recently visited my electorate to talk to some dairy farmers in West Gippsland and in the South Gippsland district. The farmers we met in West Gippsland, in a little place called Willow Grove, north of Trafalgar, told us very plainly how hard they are doing it and how tough things are for them and their families. The group was largely made up of younger farmers.

Everyone in this place agrees that the dairy industry has great potential. It is an industry which has gone through substantial restructure and change, an industry where we have seen greater focus on value adding over the course of the last 10 years. Members of this parliament must not forget that the dairy industry has no future at all if we do not have farmers who are prepared to be in the industry, contribute the efforts of their labour and make enormous personal sacrifices in order to produce the milk we rely on so heavily. That applies not just to the products we take for granted in the domestic market but also to Australia's export performance.

We need to be conscious of the needs of dairy farmers. We need to understand that they do not have meetings with their neighbours and discussions with members of parliament, shadow ministers and ministers for no good reason; they have these meetings because they are very concerned about the future of their industry. There are no greater stakeholders in the dairy industry than ordinary dairy farmers, wherever they may be.

During the discussion last Friday, when the member for Corio visited my electoral district, a number of farmers in the dairy industry in West Gippsland and South Gippsland mentioned to us that quite a few people had been able to obtain support through the federal government's $2 billion dairy adjustment package, which the government gets from the milk tax they have levied. At that meeting the point was made that a lot of the farmers who took that money have got out of the industry. Many of the people sitting around the table talking to us did not get a brass razoo out of that package, because they did not have a long enough history in the industry to qualify for a grant. That meant they were behind the eight ball straightaway.

A number of young farmers are finding themselves in the same situation as the farmers we met at Willow Grove. Many members of the group told us that they are having to go off farm to earn enough money to keep their families afloat. We heard stories of farmers and their partners who have been working upwards of 80 hours each week, as well as holding off-farm jobs, to try to keep the farm going and keep their families afloat during the particularly difficult period they are going through.

People expressed concern at the failure of the government's package to reorient the industry. They genuinely felt that the package the government has come up with for the dairy industry is not so much a dairy package as a dairy exit package. I think that is a fair enough criticism to make of the package the government brought in. There was a lot of money allocated for people to leave the industry but there was not too much made available for people to make substantial changes to their practices or to substantially change the orientation of the dairy industry towards value adding or perhaps new export markets. This was clearly understood and felt by the people involved in the discussion at that meeting.

The people at that meeting felt overwhelmingly that their families were suffering substantial negative effects from all the hardships the dairy farmers had been experiencing. Some partners told me of the difficulties they were finding in making ends meet with the amount of income being generated from their farm and made plain what this means to them and their prospects in the dairy industry. They made it clear that, unless things improve in the dairy industry, they will get out of it altogether, as many people in my district have done.

In many cases the people who have got out of the dairy industry are the younger farmers. They find themselves in a particularly difficult situation. They have invested a lot of money in farms which are the size and scale that they need to be in order to be competitive, and that has required them to take out substantial loans. You cannot be a dairy farmer in this day and age and run around after 80 cows. Those days are gone. For a dairy farm to be competitive and productive, it has to have at least around 200 cows. Many of us in this place know of herd numbers much higher than that.

People have to make very big financial investments. We have seen that the people who have been prepared to come into the dairy industry and make those investments, that financial commitment, are now very disappointed by the circumstances in the dairy industry and the effect on their weekly income and their ability to plan for a future. It is very hard for dairy farmers to plan for their future when they are getting so much less this year than they did last year, despite the fact that many people's farms are producing substantially more milk. It is not a good market signal when people do everything right, are efficient, are productive and are very good environmentally and yet the return from all of that effort is substantially less than that of the previous year, with the prospect of a lower milk price the following year.

There has been speculation in the Weekly Times that milk prices might fall by another 25 per cent before the end of the year. Dairy farmers in my electorate are saying plainly to me and to other people that they will not be able to get by if the milk price stays the way that it is, because it is not covering their costs, and it is likely that they will have to get out of the industry altogether. Imagine how severe the repercussions will be if milk prices fall by another 25 per cent. I suggest that we might see a very substantial number of people exit the industry if those circumstances eventuate.

There has been a call by the dairy farmers in my electorate—and I think that this call is supported by dairy farmers in other parts of the country—for the federal government to establish an inquiry into why the dairy industry is in such difficult circumstances in terms of the amount that farmers get versus the amount that people pay for a litre of milk at the supermarket or the corner store. I support their call for an inquiry. I think there should be a proper inquiry into issues confronting the dairy industry. In particular, the Howard government should look at why we do not have a proper functioning market in the dairy industry right now. It is important that the Howard government looks at why dairy farmers in my electorate and other electorates have to choose between milk companies and dairy cooperatives, who all happen to be prepared to pay almost identical prices for a dairy farmer's milk. They offer 23c, 24c or 24½c. It is uncanny.

As I mentioned before, there are very substantial barriers to entry and exit, and dairy farmers find themselves in a very weak bargaining position in their ability to negotiate a fair price with milk companies. Every day tens of thousands of litres of milk are produced by their cows and, if there is no tanker to come around and pick it up, dairy farmers cannot very well pour all their milk in the creek. I am sure that the EPA in Victoria would have something to say about that, and probably the farmer would very quickly be stung with a very large fine. Dairy farmers are in a vulnerable bargaining position. It is very evident that the competition that characterises a lot of other agricultural industries is not there in the dairy industry. They have made a very persuasive case to the Howard government to get off their hands in relation to this issue and actually do something to make sure that we have a proper functioning market in operation.

When we talk about the dairy industry it is important that we understand that it is heavily export oriented. In that context, it is very important that we are as productive as we can be. For this reason, I think that it is important not only that we have a proper functioning market in Australia for the milk which our dairy farmers produce but also that we have good infrastructure in place—including roads as well as telecommunications infrastructure—so that our dairy companies and dairy corporations are competing in the most efficient way possible. I used the example today of the Pakenham bypass, which is part of the Princes Highway system and which many farmers and milk companies use. It is a very important road in getting milk products out to the export market. I say to the Howard government: build the Pakenham bypass. Honour your promise and match the state government's $121 million to make sure this project is completed.

It is also important that the federal government address the issue of high-speed Internet to some of these country districts where the dairy industry is also strong. For example, I was just down at Burra Foods in Korumburra in the south Gippsland region. They told me that they are unable to get broadband to their dairy factory because Telstra has decided that it is not going to roll out broadband to Korumburra, despite the fact that the town is almost exactly the same size as Leongatha, which does have broadband. They tell me that it would make an enormous difference to them if they had access to high-speed Internet as opposed to the old dial-up connection which they are forced to use now. An important issue is to make sure that the dairy industry has access to good infrastructure and modern telecommunications and to make sure that it can compete effectively with other countries, regions and cities which have access to that type of quality infrastructure, whether it be roads or high-speed telecommunications services.

The issues that we are discussing today are very important to farmers. We must not allow the parliament to lose sight of the fact that when we talk about the dairy industry we are talking about people. You cannot have a good dairy industry unless there is a proper return delivered to the people who are most important within that industry: the farmers. Farmers work hard. They invest a lot of their own money, time and effort in the farm, they take huge personal risks in the work they do and they work in physically tough occupations. I think the least the Howard government can do is to make sure that the market farmers are operating in functions effectively and that farmers get a decent return for the hard work they do and for the sacrifice that they and their families make. (Time expired)