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Thursday, 4 December 1986
Page: 3356


Senator CRICHTON-BROWNE(12.55) —The Senate is debating the Pig Industry Bill 1986, the Pig Industry Slaughter Levy Amendment Bill (No. 2) 1986 and the Pig Industry (Transitional Provisions) Bill 1986. These Bills establish the Australian Pork Corporation, to replace the Pork Promotion Committee. The levy Bill also provides for the imposition of a levy of $1.50 per head payable on the slaughter of pigs. This is a rise of 50c per head on the levy which has previously been payable to the Pork Promotion Committee. The functions of the Corporation are to improve the production of pork and pigs in Australia, to encourage the consumption of these products in Australia and overseas and to encourage exports. There is no doubt that these are important functions and if the Corporation is successful in realising its objectives it will help to continue the expansion which has occurred in the pig industry. The industry has recognised the importance of these aims and in a spirit of self-help and self-promotion it will fund the operation itself. Clause 23 of the Pig Industry Bill clearly indicates that it will be the producers who will be responsible for funding the Corporation through the money raised by the Pig Slaughter Levy Act.

The Australian pig industry has been far more successful than perhaps some other areas of primary produce. In 1974-75 the number of pigs slaughtered was 3.4 million and it is now estimated in 1985-86 to be 4.5 million. This is an increase in production of about one-third. The gross value of production has also increased in this period, from $197m to $450m. So undoubtedly the industry has been more successful than some other areas of primary produce. If one may make predictions, I believe that the success of the industry will continue. It is particularly pleasing to read of developments in genetic research at Adelaide University which have resulted in a 19 to 20 per cent improvement in food conversion efficiency by pigs. Reports earlier this year indicated genetic research had resulted in 19-week-old pigs weighing 90 kilograms, 20 kilograms more than ordinary pigs. At this weight they could be marketed some six weeks earlier than would normally be expected. With this kind of improvement taking place in the industry it should have a bright future.

However, there is no room for complacency. Prices received by the industry have not improved markedly over the last three or four years. The price for baconers is currently at about $1.80 per kilogram and for porkers it is about $2 a kilogram. As I have said, these prices are not significantly higher than the price four years ago but, of course, there have been significant price increases in fuel, labour and interest rates in the meantime. What has helped the industry in recent times is the fall in the price of feed. While the falls in the price of wheat, barley and sorghum have been devastating for most farmers, they have helped to maintain the viability of pig farmers. At the moment it would be foolish to predict the recovery of the grain markets but the point should be made that they have provided a significant cushioning effect for other increases in Australian costs which inhibit our ability to compete on overseas markets and against pork and ham imports.

Perhaps foremost amongst the cost increases which have plagued the industry has been the rise in Australian interest rates. I have stated in this place before, of course, that interest rates for farm equipment can reach as high as 24 per cent, for secondhand goods, if the money is borrowed from a finance company. While this is perhaps the top end of the market, it is almost impossible to obtain finance at a great deal less than 19 per cent. This has a particularly adverse impact on pig producers because this is an intensive industry with a higher reliance on capital than many other rural industries. As one example of this, it has been recently announced in Queensland that the company Specified Pork Abattoir Pty Ltd will construct an intensive breeding and abattoir complex costing $36m. This complex will turn out more than 200,000 carcases a year. The operation will have about 7,000 to 8,000 sows.

If the Australian industry is to compete against fierce competition from the Canadian, Irish and Danish industries, to name but a few, it will be necessary for it to have the most modern and efficient methods at its disposal. The ability to develop these methods is vastly inhibited by high interest rates at any time. If ever Australia faces higher interest rates than its competitors, the industry will face a relative competitive decline. The fact is that under this Government the industry has had to contend with just that problem. Australian interest rates can be up to double some of the interest rates prevailing in countries in Europe. The ability to modernise some of our more antiquated abattoirs, perhaps in some cases to build newer and better abattoirs closer to areas where pigs are raised, thereby reducing freight costs and increasing the quality of the product, is thus lowered. There is also the question of higher Australian labour rates. Again, as a result of the intensive nature of many of Australia's pig farms, there is a higher labour requirement than that which might exist, for example, in the cattle industry. I have heard people in the industry speak of a ratio of one man to 100 sows. Quite obviously, if Australia's labour costs are increasing at a rate greater than that of its competitors, the industry is again at a significant disadvantage. This is, of course, exactly what is happening. Only two days ago the Secretary to the Treasury, Mr Bernie Fraser, indicated that the forecast outcome for wages in the Budget of 6.25 per cent was not in line with the wages growth of our trading partners, whose wages were increasing at the rate of 4.5 per cent. Australia's labour rates will therefore increase by 1.75 per cent more than those of our competitors.

Australia has also been denied the full effect of falls in the price of fuel, which has been available to our competitors. I am well aware, of course, that a rebate has been provided for excise increases on diesel used by primary producers, but this is not the only fuel used by primary producers. There is also no rebate for fuel used in road haulage-again, another competitive disadvantage. Finally, where accommodation is provided for workers there is a fringe benefits tax. Piggeries, by their very nature, are not the type of ventures people like next door to them. They are therefore built at some distance from population centres and do occasionally have to provide accommodation for staff. This Government then proceeds to declare that a house on a piggery is a perk-some perk, I might suggest. Nevertheless it results in another farm cost increase.

The aims of the Pig Industry Bill are laudable. Everyone wants to see the industry expand and prosper. What the Government must realise, however, is that this cannot occur if the industry faces hard costs and competitors. A significant reduction in some of the fundamental costs in the industry would be better than all of the promotional expenditure in the world. The Government will never see Australia penetrate markets such as Singapore, where the local industry is being phased out and where there is also significant European Economic Community competition, if we cannot sell our products at a profitable but competitive price. We will also not be able to make the necessary improvements to the quality of our product to break into the 240,000 tonnes of pork currently imported into Japan each year from Denmark and Taiwan.

Finally, I would like to raise the matter of imports of pork from Canada. While I am not suggesting that imports should be shut out without very good reason, I have received a significant amount of correspondence from people in the industry expressing fears about possible dumping and disease infiltration. While the Canadians are normally regarded as fair producers of agricultural products, I am also aware that certain subsidies are given to Canadian growers of grain and that Canadian agriculture benefits from certain transport subsidies. I stress to this Government the importance of Australian producers being able to compete against imports on a fair basis. I am aware that the Australian Customs Service has received and acted upon dumping complaints against imported canned hams from the Republic of Ireland, Denmark, Romania and Yugoslavia. I hope the Government will give a guarantee that it will keep a similar close watch on the dumping of imported pork, also.

To conclude on the subject of disease, I am aware that earlier this year the Government acted to prevent the importation of uncooked pork from Canada for fear of the spread of transmissible gastroenteritis in Australian stock. Two other diseases have been raised by the industry, Aujeszky's disease and trichinosis. I understand that trichinosis, which is a parasite, can be killed by freezing the meat for a period and the Canadians will, of course, do this. Aujeszky's disease, though not present in Canada, is present in the United States. One might ask what guarantees the Government can give the industry that there will not be possible contamination from the disease as a result of Canada importing United States meat. I do, of course, realise that the Canadians do not want the disease either. However, I would like to be certain that the Government has convinced itself that there can be no contamination. I recognise that the quarantine service does not work on the basis of being absolutely certain the disease will not be imported, but on the basis of acceptable risk. I understand that this is reasonable because Australia asks that countries which import our meat work on the basis of acceptable risk also, not absolute proof. If we imposed a higher requirement on imports we would soon face the same problems with our exports. In the calculations, however, I would nevertheless like at least to know whether account has been taken of the particular susceptibility Australian stock might face because it has been isolated from these diseases for so long. The essential point is whether an allowance has been made for possibly greater than normal devastation of the Australian herd compared with overseas herds. I commend the Bills.