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Tuesday, 14 October 2008
Page: 9081


Dr KELLY (Parliamentary Secretary for Defence Support) (6:07 PM) —It is an interesting coincidence that I follow the member for Gippsland in this discussion, as we are near neighbours and share many similar issues in relation to the dairy industry. I look forward to discussing with the member the advancement of the interests of our dairy farmers.

The Dairy Adjustment Levy Termination Bill 2008 marks the end of a challenging era for Australia’s dairy farmers—men and women who are used to challenges. Deregulation was a bitter pill to swallow for farmers on the South Coast and Riverina Highlands of New South Wales. They knew it would be tough but they sucked it up and got on with life. They have adapted and innovated in a continual existential battle that most Australians simply cannot appreciate. I am proud to know them, to call them family and to serve them.

In the late 1990s, the dairy industry was facing an uncertain future under the regulations that existed at the time. The dairy package provided assistance to enable farmers to respond to the challenges of deregulation. In opposition, Labor supported the assistance provided under the legislation, although we were critical of some aspects of the program.

Dairy farming, like all sorts of other lives on the land, is always tough going. In the last 30 years the industry has had to adjust to the eternal challenges of drought and disease, as well as seasons when prices forced changes on the industry—changes that led to many people leaving farms which had been in their families for generations. Now dairying must adjust to a new set of challenges that come with the reality of climate change. I am keen to see the dairy men and women of my electorate, Eden-Monaro, learn how to lead the way for the world in making more milk for less gas.

I know that the communities I serve will respond to the need to change in the way they always do, by adjusting to changes they simply cannot ignore. I am keen to do everything I can to help dairy farmers deal with the inevitable environmental challenges we all face, because my connections with dairying in Eden-Monaro are long and strong. My family were pioneers in the region and I am now fortunate to represent this region. It is a great privilege for me to continue in my family’s tradition. Back in the 1850s, my great-great-great-grandfather, Daniel Gowing, was present at the start of settler society on the South Coast of New South Wales. Daniel pioneered much of the early industry, such as building the Tathra wharf, getting shipping going, introducing new technology in milling and other machinery and establishing sawmills. He was a well-known philanthropist as well.

Daniel and his family were also among the early dairy farmers, and his son Benjamin, and his son-in-law, my great-great-grandfather, Thomas Joseph Kelly, founded the Bega Cheese Co-op, with TJ becoming its first chairman. I am proud to say that TJ’s original land in Tanja is still dairy farmed today by Dennis and Michael Kelly. The various branches of the family—Kellys, Russells, Rheinbergers, Gowings, Batemans and others—became dairy farmers and members of the Bega Cheese Co-op. Many of them still are today, with farms in Jellatt Jellatt, Candelo and Tanja. So I can proudly claim not only to descend from men and women who were present at the creation of dairying in the south-east corner of New South Wales but also to represent today’s dairy farmers and manufacturers, people who are doing today what Daniel, TJ and their families did: succeed against the odds.

Dairy farmers across Eden-Monaro should be proud of what they have accomplished. To understand their achievement, you only have to look at the role dairying has played in the electorate’s development. It is certainly a shame that Tilba Cheese is no longer made in Central Tilba, but the memory of the cooperative that was established in 1891 lives on in the shop on the original site. And I was sad to see the end of Kameruka stud dairy herd, which was directly descended from Australia’s first jersey herd, sold off last month after 150 years of farming. The Bodalla Cheese factory closed down in 1987. At the time the Bodalla Cooperative ceased operation, the thirteen farms supplying Bodalla transferred their supply to Bega Cheese. Bodalla Cheese is now a brand associated with Fonterra Brands (Australia) Pty Ltd, formerly Bonland Dairies. Fonterra is a New Zealand owned dairy company.

But the local tradition of entrepreneurs who are game to have a go at adding value to the high-quality dairy products the region produces is being carried on by farmers such as Erica and Nick Dibden, who use milk from their own herd of 350 jersey cows for their South Coast Cheese company. Of course, there is our very own big cheese, Bega, which continues to generate a reasonable living for dairy farmers and 540 jobs for workers of the Bega Valley. Bega Cheese processes 165 million litres of milk a year and exports 30 per cent of its output. Like the advertisement says, ‘Bega is famous for Bega.’

But while there is a great deal to celebrate about everything that dairying has done for Eden-Monaro, there is no doubting that the industry has done it hard over the last 20 years. This bill marks the end of a period of change that may have been unavoidable but still meant the end of many family farms across the country. There is no doubt that the last 20 years have been challenging for everybody involved in dairying, as the states and Commonwealth followed Victoria’s lead and combined to deregulate the industry. There is no doubt that the abolition of production quotas was very unpopular with many dairy farmers in Eden-Monaro. But there is also no doubt that, once the large and efficient Victorian industry abolished the tied market in the 1990s, a national approach to dairy reform was as necessary as it was unavoidable.

The bill we are considering winds up legislation that assisted many dairy farmers to leave the industry through an 11c a litre consumer levy which raised $1.8 billion. In the eight-year life of the levy, some 6,000 farmers were helped out of the industry. It is good that this assistance is no longer needed and good that consumers will now see a drop in the retail price of milk that reflects the end of this impost. I reiterate the Minister for Agriculture, Fisheries and Forestry’s statement that the government is expecting retailers to lower the price of milk in line with the removal of the levy and that any anticompetitive conduct will be a matter for the Australian Competition and Consumer Commission.

But for all the undoubted anger and anguish the reform process brought to dairy farming families, there is no doubt that the industry as a whole is fitter and more flexible and that it is infinitely more able to compete in the global market than it was a generation ago. In the 2006-07 financial year, Australian dairy accounted for 12 per cent of the world’s dairy trade. Some 50 per cent of our milk production is exported and overall dairy exports are worth around $2.5 billion. Some new research from the Australian Bureau of Agricultural and Resource Economics, ABARE, demonstrates the industry’s changed circumstances. There is no doubting the drought has hit hard and its effects are still biting in Eden-Monaro. Increased input costs for fodder and feed grains, fertiliser and fuel have eaten into farm incomes. However, ABARE also reports some very good news: while production is down, farm-gate milk prices in the last financial year were up 48 per cent over 2006-2007.

But beyond prices and the cycle of the seasons there is another reason for the state of dairying today: farms have got bigger. Less obvious but just as important, according to ABARE, is that the industry’s productivity has improved by an average of 1.2 per cent every year since 1998. Specific areas of improvement identified by ABARE include dairy cattle genetics, herd health, shed management, supplementary feeding and pasture management. These improvements in labour output and milk yields may not sound spectacular, but they demonstrate how dairy farmers probably have more control of their destiny now than when their production was tied to quotas and they milked for a local market. And it is the obvious ability of the industry to innovate that I want to address today, because the challenges dairy farmers now face are entirely different to those the levy was intended to address.

We have to learn how we can keep on producing the world’s best milk and cheese for markets at home and abroad while reducing the greenhouse gases we emit in the process. I am keen to see Eden-Monaro’s dairy farmers lead the way for the world in making more milk for less methane emissions. Under current proposals for the Carbon Pollution Reduction Scheme the agricultural sector would be included from 2015 onwards. This is inevitable as methane is one of the more damaging of our emissions. It is therefore imperative that we start work as soon as possible in planning for the reduction of methane emissions.

The last few weeks have not been good ones in the struggle against global warming. The dire situation of European and American banks and stock markets has focused everybody’s attention on a passing crisis at the expense of the permanent one. I was sorry to see Professor Garnaut’s major report on what Australia can do to reduce greenhouse emissions get lost in a fog of finance stories. Of course I understand why so many people are worried and wondering what the state of the world’s finances will lead to and I certainly do not want to suggest that the situation is anything other than serious, but I am also confident that sooner or later this man-made crisis will pass. Yes, the coming months will be difficult. We are working to ensure they are less so in Australia than overseas, but it is still harder than any of us would want. But I know the financial crisis will pass. The environmental challenge is a man-made crisis on a far larger scale, one that will take decades to address, one that will not go away unless we change the way the world works. We cannot begin to manage global warming unless we bring the same level of effort and attention to it that is now being focused on the world’s finances. We must maintain that focus for not weeks or months or even years but for the next few decades.

There is no doubt in my mind that Australia can and must play a major role in coming up with ways to reduce climate change effects. There is no doubt in my mind that the Rudd government, thanks to the hard work of Minister Penny Wong and other relevant portfolio colleagues, will stay focused on the importance of producing a response to climate change which is responsible and realistic in meeting the needs of Australians now living and the generations to come. It has always been part of my belief—and I know this is the view of the majority of my community—that we can act to address global warming by thinking globally and acting locally. And for me that means working with all aspects of society and the economy across my electorate.

I certainly want to have a go, which is why I am especially interested in the potential for reducing greenhouse gas emissions in Eden-Monaro using two of the electorate’s most important resources: dairy cattle and the energy and enthusiasm of our community for fresh ideas. There is no way that dairy farmers are going to be sacrificed in the struggle against climate change. And it is worth remembering that Professor Garnaut estimates dairying is a relatively low greenhouse gas emitter, with cows producing less than one-twelfth of the emissions that are attributable to beef cattle. Dairy cattle, he says, only account for 11.6 per cent of Australia’s agricultural emissions, but, having said that, I also note that it is impossible to argue against the obvious: dairy cows pump out a lot of methane, which contributes to global warming.

Where possible, implementing herd homing in facilities designed to harvest methane waste can make a significant difference to the amount of methane going into the atmosphere. The facilities are covered feeding and holding areas for cattle with slotted floor and manure collection bunkers. The product from the facility is loaded into an anaerobic digester, which generates electricity, heat and nutrient-rich, chemical-free stabilised digestate, or fertiliser. Stabilised, nutrient-rich digestate fertiliser substitutes for chemical fertiliser and provides soil amelioration and water retention benefits. This process results in significantly reduced pasture damage and surface nutrient run-off and significantly increased pasture and milk yields. Another by-product is substantial improvement in herd health and welfare and reduced incidence of lameness and disease. The use and efficiency of recycled energy from herd home facilities is an issue we need to explore because capturing and re-using methane is a quick and cost-effective way of reducing Australia’s output of greenhouse gas. Burning methane turns the gas into carbon dioxide, which the Rural Industries Research and Development Corporation says is 23 times less potent in terms of its greenhouse effect than releasing it into the atmosphere.

In the United States, big 1,000-cow feedlot dairies are already supplying electricity generated by what I can only call moo poo power to the grid. In Germany an 845-kilowatt biogas plant runs on cow manure and maize waste at Reichenbach in Saxony. Last year Israeli dairy farmers combined to create a power scheme based on methane emissions from 12,000 cows which pumps up to 2.4 megawatts into the national grid. That is barely half of one per cent of the national capacity, but it is an obvious improvement on electricity generated by fossil fuels, and the future of our energy needs will depend on a range of methods and efficiency measures. I am in discussions to establish links between Israeli dairy farmers and the farmers in my area so that they can compare notes on this and other matters such as water efficiencies.

At home, experimental work is underway in Victoria, where the Department of Primary Industries is running an experiment at Ellinbank in West Gippsland which shows that a 500-cow dairy can produce enough power to meet its own water-heating and milk-cooling needs. I very much want to see dairy farmers in Eden-Monaro have the chance to participate in this part-solution to climate change. That is why I am working with people who share my commitment to ensuring that Eden-Monaro’s dairy industry can meet the environmental realities of the 21st century.

On 20 August this year I convened a meeting involving the Szencorp renewable energy technology company, Bega Cheese, the Bega Valley Shire Council and our local community organisation Clean Energy for Eternity to discuss a proposal I am pursuing that involves the establishment of a pilot project for demonstrating the merits for our region of the herd home and methane-harvesting concept. There is a great deal of work to be done before it will be possible to make an accurate assessment of what sorts of economies of scale we need to make biogas from dairying viable, and we are in the data-gathering phase with the co-op and council at the moment.

Another major challenge for our dairy farmers in Eden-Monaro is fireweed, which is a toxic plant introduced from southern Africa that is spreading alarmingly. It seeds at a rate of over 20,000 per plant and has made accelerated progress as a consequence of the drier conditions we have experienced in recent years. The plant is more insidious than most weeds in that it is toxic to both animals and people. Over time it will cause liver failure in a beast, and along the way it results in lowered milk production. My family and dairy farmers in the numerous fireweed associations on the coast are fighting a hell of a battle, often down on hands and knees, to keep this challenge at bay. Farmers are spending between 30 and 50 per cent of their income in the struggle. Now the weed is threatening to spread over the ranges, with potentially disastrous effects for our wheat belt.

Fireweed, along with other weed threats, was being researched by the former Cooperative Research Centre for Australian Weed Management, which the Howard government intended to close down by mid-2008. The fact is that invasive noxious weeds costs our agricultural sector billions of dollars a year, so it should be no surprise that I and many in our community were angered by this short-sightedness. Fortunately, I was able to convince my colleagues to adopt a replacement measure for the CRC in the establishment of the National Weeds and Productivity Research Program, with $15 million in funding to ensure the work of the CRC could be carried on. Additionally, I obtained a commitment of $300,000 specifically for biocontrol research for fireweed. I emphasise that this funding is for research. Actual eradication measures that follow on from the research could be funded from the Caring for Our Country program, which has been allocated $2.25 billion.

There are worrying signs that our rainfall will decrease, and we need to prepare for that now. As a consequence, the government has established the Australia’s Farming Future fund, with $130 million available to support farmers to adapt and respond to climate change. I was delighted in July when we were able to award a $250,000 research grant to the Bega Cooperative Society to address the impact of climate change on South Coast dairy farmers and to reduce their dependency on imported fodder and grain. Just as importantly, the government has also allocated $480,000 to help Tuross dairy farmers better manage their effluent run-off.

The passage of this bill marks the end of an era, and I am pleased that the circumstances that led to the dairy levy have passed. It is time now, though, for dairying and indeed for everybody in Eden-Monaro and the nation to step up to the much bigger challenge of climate change.