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STANDING COMMITTEE ON RURAL AND REGIONAL AFFAIRS AND TRANSPORT
10/09/2008
Management of the Murray-Darling Basin system

CHAIR —I welcome Mr David Basham, representing Dairy Australia. Do you wish to make a brief opening statement before we go to questions?

Mr Basham —Just a few quick things. I believe the only option is a freshwater option. The dairy industry in the regions, prior to the drought, consisted of about 45 farms irrigating out of the system. We are down to about half a dozen. The main reason the reduction has occurred is because it has got to the point where stock have not been able to exist on the quality of the water; the salt level has been too high. The pipeline is going to help that, that has been put in from Tailem Bend down to Meningie that is going to enable the existing farms to keep going because feed can be brought in on the short to medium term.

The spin-off is not just the irrigators though. The dryland farms also around the region are beginning to struggle due to the fact that services are leaving the area because of the reduced number of farms, so there is a lot of pressure on them. They are also struggling to keep workers; the workforce is basically moving out. So there are a lot of spin-offs. It is not just the actual irrigators themselves. We also have two dairy factories in the region down there and both are getting to the point where they are probably under a bit of pressure too, just because milk flows have dropped so much that the stainless steel is not operating at a very efficient rate. So the companies will be looking at the future of those two plants.

I do feel that the region can recover if water is eventually brought back in the medium term. I feel that there is an opportunity. There is a lot of infrastructure sitting on farms that can be recommissioned once water is back in the system, and they can survive in the short term on this, just stock water, once the pipeline is in existence.

CHAIR —Thank you, Mr Basham. Before we go to questions, do you have any objection to having your photo taken by the media?

Mr Basham —No.

CHAIR —Not at all.

Senator HURLEY —Mr Basham, you said that fresh water is required for the system, from the point of view of dairy farmers.

But the dairy farming industry has been restructuring for some time now and the state government—indeed, not related to this particular issue—started restructuring the dairy industry in South Australia some years ago and put an 11c a litre levy on milk in order to help dairy farmers exit the industry. So it is not as if this restructuring and changing in the dairy industry is new, and certainly we all hope that enough water will come down to enable existing dairy farmers to continue.

If we are to send water down the Murray-Darling system in order to keep dairy farmers operating around those lake areas, it may well mean that other irrigators upstream, say in the Riverland, will then suffer.

Mr Basham —I am not suggesting that we need water for irrigation at this point. We need water just to keep the lake system fresh long term. We have been very fortunate with the rainfall that has occurred in the eastern Mount Lofty Ranges that has flowed through the Currency Creek and Finniss catchments and has enabled those areas to recover to a certain point. It has been suggested to me that it is currently sitting at about minus 0.25. If it can get to minus 0.2, that will probably be enough to make it through until next winter, so we are not talking about a huge difference in the height of the lake: we are talking five centimetres. We are not talking about a huge amount of water to make it through to next winter. Time is what we need. We need to wait until the system recovers.

Senator HURLEY —So are you saying from the dairy farmers’ point of view that you do not need irrigation water in future? What are you asking for?

Mr Basham —No. I am saying that in the short term farmers can cope without the irrigation water. They can buy feed-in from elsewhere. It is not viable in the long term but it is certainly viable short to medium term.

Senator HEFFERNAN —What is the rainfall down there?

Mr Basham —It ranges from 12 to 15 inches.

Senator HURLEY —If the catchment recovers, the dairy farmers around there plan to keep on drawing water out of the system.

Mr Basham —If water was back and available at suitable levels to maintain the system across Australia, I am sure that they would be willing to start dairy farming there again with irrigation.

Senator HURLEY —Those half a dozen dairy farmers that are operating, they are not irrigating at all, I presume.

Mr Basham —I do not believe that any of them are any more, no.

Senator HURLEY —How long has that been the case?

Mr Basham —Basically since last summer.

Senator HURLEY —Only since last summer?

Mr Basham —Yes. They have gradually shut down over time. Different farms have shut down at different times.

Senator HEFFERNAN —So that you do not feel bad about it—and there is the development in the north and Katherine would make fantastic dairy country—the rice industry has gone from 1.2 million tonnes in two years to 18,000 tonnes, so everyone is feeling the pain.

Mr Basham —Yes.

Senator NASH —I would like to ask a question around the numbers of farms. If you do not have the information now, I am happy for you to take it on notice. You said 45 down to six.

Mr Basham —Yes.

Senator NASH —Can you give us the reduction in cattle numbers?

Mr Basham —I cannot give you an accurate figure. Probably those farms were about 250 cows each, on average.

Senator HURLEY —But a lot of that would be due not just to this but to restructuring in the industry.

Mr Basham —No, this would be solely due to this issue.

Senator NASH —So there has been no consolidation with those? I am trying to get a handle on this. There has been no consolidation into those remaining six farms; it is just sheer loss of numbers.

Mr Basham —Sheer loss of numbers.

Senator NASH —Those six farms have not increased their numbers at all?

Mr Basham —No, they have gone the other way. The six farms have probably decreased numbers.

Senator HURLEY —So since last summer you have gone from 45 down to six. Is that what you are saying?

Mr Basham —Since just before November—October-November; that period of time.

Senator HEFFERNAN —What is happening on those farms now?

Mr Basham —I am not aware of what is happening on all of them. Some people are running some horses; very limited stuff.

Senator HEFFERNAN —To also help you put that into perspective, there is a proposition for a 25,000-cow dairy up our way.

[2.30 pm]

Senator SIEWERT —I want to follow on from there. What is your thinking in terms of climate change and the ongoing dry that we are having? I am looking at the long-term viability of the industry, if we have entered a more long-term drying period—which I think we have. Has the industry given thought to how they cope with that? Where is the industry going in that particular area?

Mr Basham —The industry is certainly looking hard at that issue. They are looking at what options need to be taken by farmers to cope with either lower water allocations or lower rainfall. A lot of research is being done at the moment. Farmers are adaptive; have been adaptive for the whole time that people have been farming—trying to cope with the different scenarios. I feel, though, that this situation is more drought than climate change. It is a very sudden impact so it is hard to adjust very quickly to those sorts of impacts.

Senator SIEWERT —If I understand what you said earlier, you are specifically talking now about water for the lakes, not water for the industry. It is actually for the lakes; you are concerned about the health of the lakes.

Mr Basham —Yes. The health of the lakes maintains options long term.

Senator SIEWERT —If I also understand you correctly, you are very definitely saying, ‘No sea water.’

Mr Basham —Definitely no sea water.

Senator SIEWERT —I think you were here when we had the CSIRO and we were talking about the combination of water and bioremediation.

Mr Basham —Yes.

Senator SIEWERT —Have you looked into those options as well?

Mr Basham —I am not able to add anything to that.

Senator HANSON-YOUNG —Following on from that, putting aside all the other concerns in relation to flooding the lakes with sea water that we have heard from a number of other witnesses, from your perspective, the concern would be that in the medium to longer term, if we were able to increase fresh flows, that option would be cut off. Is that right?

Mr Basham —I see that if we put salt water into those lakes, the long-term damage is basically going to rule that area out of being a long-term irrigation area.

Senator HANSON-YOUNG —Thank you.

Senator FISHER —Mr Basham, what is your priority in terms of solutions? Can you clarify that?

Mr Basham —The No. 1 priority is to get the level of the lake at this time up to a point of minus 0.2. That depends on whether we are extremely lucky and get some more rainfall in the eastern Mount Lofty Ranges in the next three weeks, which is the time frame that we are looking at before the catchments start to dry. That is one wish. The other is whether we can find that water elsewhere in the system. I am probably not the person to identify where that water is.

Senator BIRMINGHAM —Mr Basham, what do you base the minus 0.2 figure on?

Mr Basham —The loss over the summer is suggested to be about 0.7 of a metre, and the level at which acidification starts to occur is about minus 1.5. So if we can get the lake level up to minus 0.2, that will be enough to cover where it will drop back to before acidification occurs. Currently it is suggested that we can make it to about February, so with a bit of extra water we can make it through to the break of the season next year.

Senator FISHER —That is your priority action. What is your organisation’s priority aim? What are you trying to achieve? It may seem obvious, but can you spell it out for those who might not be so smart, like me.

CHAIR —Wow! That is a big statement, Senator Fisher.

Senator FISHER —You can quote it, Chair.

CHAIR —We will have to print the Hansard record of this.

Mr Basham —The aim is to keep the Lower Lakes as a potential dairy area. That is the whole aim, I believe: not to rule that out as a possibility in the future.

Senator FISHER —So it is not the lakes per se, in your organisation’s view. It is to sustain your industry.

Mr Basham —Yes.

Senator FISHER —In that context, there has been a lot of discussion about serving human critical needs across the Murray-Darling Basin. Does your organisation have a clear understanding of what that means? If so, where have you got it from? If so or if not, where do you think your industry fits in that?

Mr Basham —The critical need for humans is an essential part of this whole thing.

Senator FISHER —Do you have a clear understanding of what it means?

Mr Basham —I have a reasonable understanding, but it is probably just through the media that I understand that.

Senator FISHER —Probably like most of us.

Mr Basham —One thing that we do need to highlight is that it is important that we are able to feed the world as well, into the future, and we do not necessarily want to close down potential areas for agriculture here in Australia, because we do not have a lot of agricultural areas, and if there is any possibility of saving this area, we need to save it.

Senator FISHER —And you would have thought food was part of that, wouldn’t you?

Mr Basham —Yes.

Senator HEFFERNAN —Can I just say that there is a solution. I know there are a lot of sceptics on the science, but even if the science is only half right, with a rise in the sea water, all this area is going to go under sea water. It is only half a metre now, isn’t it? So a half a metre rise in the sea will put sea water into where we are talking about. So, if all that happens, they are talking about a 1½-metre sea rise. We have not even touched the northern parts of Australia. Even The Peanut Company has gone to Katherine.

CHAIR —And in this inquiry—

Senator HEFFERNAN —I know, but this is about giving farmers hope, Mr Chairman, and recognising the reality of climate change. Climate changes says that these lakes are going to go under sea water in 40 years time.

Mr Basham —I cannot—

Senator FISHER —It was not really a question.

CHAIR —You do not have to answer, Mr Basham.

Senator FARRELL —Mr Chairman, it is worth pointing out that about 30 years ago this very site was going to be under sea water, and one of the previous Labor premiers, Don Dunstan, came down and stood just here and stopped it!

Senator HEFFERNAN —The Arctic was not melting then. That is the vagary in the debate. But you have to have a plan.

Senator XENOPHON —I think it has been mentioned that in years gone by the dairy industry has rationalised; it has been restructured. I think Senator Hurley referred to that. What packages were available? Thirty-nine dairy farms have closed down. Has there been any assistance to them in the last 18 months when all this has happened?

Mr Basham —The only assistance that has been available is through the exceptional circumstances system, and I believe very few of them have been able to access those funds because they are not seen as long-term viable, which is part of the criteria, because of the situation. They also have had a water asset that most of them have leased out, which means they have had an income stream, which has probably distorted the whole picture. But, no, they have not really received much assistance at all.

Senator SIEWERT —Chair, if we have time, can I follow that up?

CHAIR —There is time. There are another seven minutes to go, so please follow on.

Senator SIEWERT —I would just like to follow that up in terms of the number of people getting out of dairy farming and going into dryland farming. Are they looking at options to help people do that, or staying on the land but in fact going dryland farming instead of some sort of irrigated agriculture?

Mr Basham —In the dairy industry there has been some work done on helping to set up feed pads so that people can bring feed in to their animals. The dairy industry has certainly done a lot of that, in northern Victoria as well as here in South Australia. It is not probably long-term sustainable to feedlot in those environments. Carting all the feed in to cows is probably not long-term sustainable but, at these current milk prices, people are able to survive.

Senator SIEWERT —But what about if you were getting out of dairying into other dryland farming?

Mr Basham —There is potential for some dryland farming but, up until the pipeline going in, running of stock in that region has been very limited because of the lack of stock water supply.

[2.40 pm]

Senator NASH —Mr Basham, you said it had gone from 45 farms down to six. Of those 39 that have disappeared, how many would you say were family farms and how many would be what you would term corporate farms?

Mr Basham —Ninety-five per cent of them have been family farms.

Senator NASH —Do you have any information on what those families have gone on to do?

Mr Basham —Some of them have relocated to other regions within the state. Others have semi-retired. Others have basically just walked off the farm, left it there and have gone and got jobs elsewhere.

Senator NASH —I am not from South Australia, so I have not got a clue what the land values are here, and I am not asking for a dollar figure, but in terms of the sales prices for those family farms where they had to leave, relative to an average year-on-year value did they receive the sale they—

Mr Basham —I can only comment on one or two sales that I am aware of that have occurred. For one of them there was an auction held to sell one of the properties and they could not get a bid. No-one wants the land.

Senator HEFFERNAN —Can I give you a bit of hope? I will tell you a story. There is a bloke called Malcolm Bishop who was farming in South Australia in the lower rainfall area. He had three crop failures, and he put all his gear on a truck and took it to Katherine. He bought 14,000 acres at Katherine for $95 an acre. I met him two years later. He had grown two soybean crops and I said, ‘What’s it worth?’ then. He said, ‘Oh, the country is probably worth $3 million or $4 million now.’ I rang him this year to do a story with the ABC and I said, ‘How are you, mate?’ ‘Good.’ ‘Will you do the story?’ He said, ‘I feel a traitor. I’ve sold out.’ I said, ‘How much did you sell out for?’ He said, ‘Thirteen million dollars. I’m just going to go contracting and invest the money.’ There is potential in the north. We generally—Australians; the greater family of Australia—have to recognise that, if Mother Nature is going to change, we can still deal with it.

Mr Basham —Yes, there certainly is potential there, but there is probably a lot of work that needs to be done. Some of the tropical dairies have not survived.

Senator HEFFERNAN —Yes, all of that. We have to apply the science, but we can get off our arse and get up there and do it.

CHAIR —In terms of the terms of reference of this committee’s inquiry, are there any other questions from senators to Mr Basham? There are not. Mr Basham, thank you very much.

[2.43 pm]