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Wednesday, 23 October 2002
Page: 5709

Senator HARRIS (1:34 PM) —I rise to speak about the crisis in the Australian sugar industry. In starting my comments, I would like to acknowledge that they are directly from a Mrs Margaret Menzel, who has given her permission for this to be read into Hansard:

... we are being forced to sell our sugar for an artificially low price by a Qld Govt. Ministerial Directive!

NO OTHER SUGAR PRODUCER IN THE WORLD IS FORCED TO DO THE SAME—We are asked to buy water from the same Gov. for $37.34/megalitre which is considerably more than the independent findings of the Marsden-Jacob Report calculations of $25/megalitre as full cost recovery. WE'RE AWAITING A QCA DECISION WE TRUST WILL RECTIFY THIS EQUITY!

The Federal Government have pitted us against the Multinational Corporate giants and the other sugar producing countries of the world, all being paid subsidies on their product. How then is this OUR FAULT if we are being forced to sell our product below the input costs of producing this product? Why is it the fertiliser/ fuel/chemical/water/electricity/wages/machinery etc. costs we pay are not “WORLD PARITY” COSTS also?

... ... ...

Here in Australia, we are paying 1st World costs and receiving LESS than 3rd World countries are paying their sugar producers—the reasons given by the Federal Government include their wanting Australia to show the way for other countries in the Global Trade Market. How is it then that we are asked to bear the full brunt of trade reform; yet wages, input costs, Retail prices, etc. all continue to rise while the world sugar price continues to fall? If we are on a level playing field, how is it that NO-ONE ELSE in the world has shown up to play?

... ... ...

A comment by Pascal Lamy is worthy of note here—what a pity our politicians don't appreciate us the same way and in fact don't seem to understand that “EVEN FARMERS HAVE TO COVER COSTS”.

At a WTO conference in Seattle, Mark Vaile, Then CANEGROWERS chairman Harry Bonanno and General Manager, Ian Ballantyne came up against Pascal Lamy, Trade Commissioner for the European Union who said,

“In Europe, we have seven million farmers who we believe have another function than just producing food. These people are useful for our environment, they're important for family structure, for our society, they're important for our landscape. We have to pay for that. Our taxpayers agree to pay for these functions which our farms, for the number they have and the relatively small size of their farms, do bring to our society. We want to keep these farms by keeping the sort of protection through subsidies which we give to our farmers. If we apply the market rules, they will disappear and we will have problems, which in our view, would be more costly to society.”

I would like to justify a mandate for the ethanol industry. Ethanol is a renewable energy source which comes from cane, grain et cetera and which can effectively replace non-renewable energy sources without material loss in energy efficiency. Ethanol is a non-polluting oxygenate. As a clean-burn fuel, exhaust gases from ethanol blends contain lower particulate mass, posing a lower risk of cancer-forming compounds.

Establishing a defined market for ethanol will create an onshore market for sugar and grain, with great potential for fixing a floor price for produce, based on the less volatile transport fuel industry. At the moment, world sugar prices are very low and are subject to market influences from the Third World production system. The grain price is also affected by US farm subsidies. Direct employment from the operation of the 60 million litre Dalby grain ethanol plant is 34 jobs. The Queensland ethanol 10 market would require approximately 320 million litres of production for ULP and PULP. This equates to the direct employment of around 180 full-time employees. PwC estimates that the Dalby grain ethanol plant will indirectly generate 185 jobs. Thus, indirect employment in the ethanol based industries—transport, distribution and growing opportunities—would be around 990 jobs.

The sugar industry has initiated numerous reforms and has undergone a number of inquiries, all ending at the farm gate. Any schoolchild can work out the maths: if farmers are being paid on average approximately $18 per tonne of cane, equivalent to $220 per tonne of sugar, and customers are paying $1.38 per kilo for sugar, equivalent to $1,380 per tonne of sugar, on the supermarket shelf, consumers are being ripped off somewhere in between. They are definitely not being ripped off by the primary producer.

No other country produces as sustainably or as effectively as Australian producers. Brazil is woodchipping its forests at an enormous rate, to the detriment of our sugar and now our cotton industries, yet our government rewards its environmental vandalism and inefficiency—in some cases they are still hand-cutting cane in parts of Brazil—by providing funds to the World Bank to prop up the Brazilian currency. It seems that the `wealth for toil' part of our national anthem will have to be rewritten, excluding rural Australians who have been reduced to a state of penury while bolstering the profits of corporate Australia and the incomes of subsidised farmers in other countries.

So what are the environmental benefits of ethanol? For each 1,000 litres of ethanol, when mixed with petrol at a rate of 10 per cent, we will reduce carbon dioxide emissions by 1.58 tonnes. Ethanol also stimulates more complete combustion, reducing the amount of carbon monoxide formed by 30 to 40 per cent. Another benefit of ethanol is that ethanol-petroleum blends produce fewer greenhouse gases than straight petroleum equivalents; thus their use enhances management of greenhouse gas emissions and global warming. Ethanol can be produced from organic waste streams such as molasses, a waste product of sugar production, and the use of rain damaged grain and fruit crops, or from other primary produce. Ethanol is a highly biodegradable fuel and there is some potential to make use of 100 per cent ethanol standing generators, as manufactured by Scania, to replace diesels.

Taking an overall view of the sugar industry, the program initially put forward by a group of sugarcane producers in North Queensland was for a levy to be placed on the sale of sugar products within Australia and for that money to go into a pool similar to that which operates in the dairy industry and, for the first year, for the money from that pool to be disbursed to the growers on the basis of their cane allocation. That is critically important because, if we look at the industry right across the board, we have large private producers, we have some corporate producers and we have smaller, family producers. Irrespective of whether producers are corporate, large private entities or medium sized farms, they all have an exposure to debt, an exposure to the costs of the market. It is reputed that, in the North Queensland area, the cost of production of a tonne of standing cane, cut and ready to deliver, is in the vicinity of $23 to $25. The Burdekin area, because of the additional cost of water, has an additional $6 per tonne of cane factored into the cost.

The proposal put forward by both the Commonwealth government and the Queensland state government has been resoundingly rejected by the cane growers because of its intention to distribute the money through Centrelink. A situation is being proposed where farmers would have to go into Centrelink and take in their tax returns and all of their financial details, and only if their fixed assets were under a certain level would they be able to access the benefit of the proposed scheme. The growers were asking for immediate help, right across the range of producers, and to achieve that by having the levy put into a pool and then disbursed based on the per hectare allocation for each of the growers. The growers have met continually in North Queensland to convey this message to both the Commonwealth government and the state government. In concluding, I would like to cite a passage from Mrs Margaret Menzel's letter. She writes:

As supported by grassroots cane growers throughout Queensland and voted unanimously by the state canegrowers council at their June board meeting—support in the form of a domestic levy on sugar consumed in Australia could be collected in much the same way as the airline levy is now collected, Australia-wide and would be distributed equitably across all sugar-producing states to individual growers to enable them to cover their costs of production and remain viable within the current corrupted world market.

I seek leave to table the document entitled Australian sugar industry: the crisis ... the realistic solutions as circulated to senators.

Leave granted.