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Mark Douglass with a news update. is urging Iraqi leaders The United States of national unity to form a government to stop the sectarian violence in the last two weeks. which has sharply increased the latest violence, At least 12 people were killed in including a child in a music shop in Baquba. who died when a bomb went off up his South Asia tour President George W Bush has wrapped Pervez Musharraf by praising Pakistan's to the fight against terrorism. for his contribution Mr Bush played a straight bat for Pakistan. on the issue of political reform understood He said he knew President Musharraf the importance of democracy, his dual role but didn't ask him to give up and head of the army. as head of state leaves for the subcontinent today, The Prime Minister, John Howard, first stop India. in New Delhi tonight, He's expected to land

Prime Minister, Dr Manmohan Singh. ahead of a meeting with the Indian Police have praised the behaviour of people of the hundreds of thousands and lesbian Mardi Gras in Sydney. who attended last night's gay marched in the event More than 6,000 people actually which is in its 28th year. Police made seven arrests,

was generally excellent. but say crowd behaviour and at 7:00pm on ABC TV. Details hourly on abc radio news

that's not the case. but, according to those involved,

Welcome to the programme. Hello. I'm Sally Sara. to South America Selling our top beef genetics may not appear terribly smart, seem to have all the right answers but the Aussies involved the business. as to why they're getting into John Howard has chosen Also today, we meet the man water resources. to look after the nation's governments appeared reluctant For years, state and federal in place. to put firm, workable water policies

the answer? Is the National Water Initiative Malcolm Turnbull is our guest today. First up, the news summary discovery of a fox carcass and today we start with the ominous fox-free Tasmania. in what was thought to be on the Bass Highway The fox carcass was found in the State's north-west. was attempting to cross the road Researchers believe the fox to attack a colony of penguins. is of a young fox, The carcass that we've retrieved probably about four-months-old, the breeding cycle of foxes. which fits with the cane toads. More now on the march of has been found at Palmerston, A large colony of baby toads just south of Darwin. a spraying programme The local council has embarked on but there is an admission to have any hope of eradication. there are just too many Thousands - 10,000. you can still see them there Just even now all over the place. just jumping around has spread to Japan. The boom in lamb exports believed lamb carried a bad smell, Until recently, Japanese consumers but that was largely because Australian lamb. they'd never seen or tasted on the shelves, Consumers never saw the product to buy it in a restaurant so they didn't have the opportunity or at a retail outlet. That's changed. second biggest market Japan is now our now specialising in lamb. with more than 200 restaurants for alternative protein sources We have seen an increased demand

in that segment, one of those that's been used. and lamb has been has had a record year. Australia's largest lavender farm

in Tasmania's north-east Harvesting at Bridestowe Estate was delayed by wet weather, was well worth the wait. but the eventual result of oil per bin of lavender. Normally we would get about 3 litres 4 litres of oil, just from one bin, This year we actually peaked on which is fantastic. A Northern Territory doctor into petrol-sniffing has warned a federal inquiry all its efforts that it should not concentrate on eradicating the problem. Dr Russell Thompson says

the petrol-sniffing takes place. the inquiry must look at why are not addressed, If the underlying reasons then it's quite likely just replace the first one. that another substance will with a simple, non-mechanical device An Australian scientist has come up by more than 10%. which can cut fuel consumption the back of a car. A tiny piece of metal is attached to over the car, Its shape redirects the air reducing turbulence and drag.

in the Clarence River region. The device has been tested on trucks The saving so far - about 11%. "Oh, yes, another gimmick." I thought, per litre, We're saving approximately 0.3km

around about $40 to $45 per trip. which in monetary value is the device works University engineers acknowledge but warn the amount of fuel saved the type of car being driven will largely depend on and the distance travelled. Most Australians are in awe of China and India, at the size and potential Australians are starting to realise but an increasing number of clever looking east rather than north, they might be better off especially in relation to cattle.

Australia's herd South America has 10 times from Australia and Brazil has taken over of beef. as the world's largest exporter beef producers? So what's in it for Australian As Landline found out, "If you can't beat them, join them." there's an attitude of UPBEAT MUSIC PLAYS

Gertrudis stud operation become, So successful has their Santa that for Louise and Burnett Joyce, is a rare pleasure. riding these days This is Cracow, Queensland pastoral property, home of the Joyces' Central Gyranda. In South America, with less than 600mm a year country like this is considered marginal. sheltered behind granite talls, Yet in the spectacular valley, Santa Gertrudis' champions Gyranda's grassland has fattened since the breed was recognised in Australia 50 years ago. It was Gyranda's long association with Santa Gertrudis that first led several South American breed associations to invite Burnett Joyce to judge there 16 years ago. They're growing their cattle on lush pasture country, equivalent to our coastal country here, but far more fertile, rainfall of 1,200, 1,000mm whereas we operate in 600mm here, so it's very different. It wasn't the rainfall or the pasture conditions that limit them there, it's parasites. They've got massive loads of ticks and internal parasites, so they have to have very adaptable cattle and that's why tropical cattle suit their conditions so well. The visit left Mr Joyce with a lasting impression of the potential of the beef industry in South America,

particularly Argentina and Brazil, and of the opportunities for Australian cattlemen and women to do business there. People say things are done a big way in Australia. If you go to Brazil and see sugar cane being grown or oranges being grown or cattle being grown, road transport industries - it's all big. They've got a massive population, massive production and they have to mobilise it somehow. The impression I got with seeing some of their operations over there was that us as, I guess, beef cattle genetics producers over here could make great improvements in their production if we could get some Australian genetics in there. Being a Santa Gertrudis breeder, I was obviously biased towards that breed and I could see great opportunities there both in their purebred Santa Gertrudis herds but also in their Nelore herds for cross-breeding. TRADITIONAL SOUTH AMERICAN MUSIC PLAYS With 190 million head, Brazil has the largest commercial cattle herd in the world. 85% of Brazil's cattle have Nelore genetics. A relative of the Brahman, the Nelore, with its distinctive hump and long horns, black skin and white coat is suited to warmer climates. It's hardy and reasonably fertile but has neither the tenderness nor, some say, the eating quality

of European breeds. In contrast, Argentina is dominated by European breeds. Argentina's 50 million head only supply about four-fifths of its domestic demand, and if you thought Australians were big meat-eaters, well, Argentinians eat twice as much beef per person. Both Brazil and Argentina want to improve growth rates, fertility and tenderness -

Argentina, for domestic consumption, Brazil, to increase exports, which currently make up a fifth of its market. And that's where animals like Diplomat come in. BURNETT JOYCE: He is a larger-framed bull than we normally work in our operation here, but he still has the very high fertility traits and big, extreme mobility and very strong carcass characteristics. Since 1990, Gyranda has been sending bull semen to South America, but there have been obstacles. Northern Australian cattle have antibodies to a range of subtropical viruses that disqualify them from export. But the tests aren't always accurate enough to differentiate between viruses that are problematic and those that aren't. Other viruses aren't transmissible through semen, however convincing authorities their product is safe has been a time-consuming and expensive process.

The Joyces also had to overcome deep scepticism of foreigners. There was a lot of cheap North American semen being sold or dumped, depending on how you look at it, onto the South American market and it wasn't performing up to expectations. This left the people that were purchasing that semen very suspicious of people entering their country trying to market genetics. They've had their fingers burnt before. They don't want to go down that track unless they know we are genuine. And I think we've proven that. We've been back many times and we've become very good friends of theirs. Australian producers have advantages in South America that North American cattle breeders don't. The production systems are similar - both predominantly grass-fed. The climatic variation is similar. If anything, Australia's cattle need to be even hardier and more adaptable because of our drier climate. And Australia, Brazil and Argentina share similar pastures, parasites and other pests. It's these advantages over the better-marketed US and Canadian product that Australian producers have realised they must capitalise on if they are to capture a share of the market. Louise Joyce's most recent visit was a part of a tour group of exporters arranged by the Queensland Department of Primary industries to do just that. Mainly cattle producers, but of different breeds. There was Braford, Brahman, Hereford, Droughtmaster and there was one person who was into seed production - that kind of thing, yeah. It was a very nice, small group. It was a very select group and it was excellent. REPORTER: And there is more than enough opportunities for you all over there? Definitely. We're not competing against ourselves, we're trying to compete against other countries for a slice of that export market. There is lots of opportunities in the livestock industry there. We concentrated on a couple. One was beef genetic technology, so embryo, semen, the technology and training that is associated with that. The other is soil production and management systems - soil technologies, pastures, what's going to grow well. I think it's also the tip of the iceberg in some respects because I think these sort of opportunities will pull other technologies through. We had a lot of interesting traceability and management systems and nutrition that Queensland can also provide these countries. The growth in the genetics trade with South America couldn't be more timely. In both Brazil and Argentina, something of an agricultural shift is happening, one which happened in Australia several decades ago. The traditional grazing areas in the lush, fertile soils of the centre and south of each country are becoming more expensive

as higher-value crops like soya beans, citrus and sugar cane move in. The cattle are being forced north into hotter, more marginal land. Morgon Gronold is the Trade Development Manager for Queensland DPI. He says there is no shortage of South American producers with the means and the desire to improve their herds.

What Brazil wants to do in this global market that we operate in,

is buy the last 70 or 80 years of Australian development. This happens in every industry, not just agriculture. It's very difficult to get your head around exactly what you're seeing, to begin with.

A small producer might have 85,000 or 100,000 head of cattle and control parts of a supply chain and want to get into exporting, but also at the same time be a major plastics manufacturer or be involved in another industry. So compared to Australia where the human lineage is a little bit more father to son, there it's much more diverse and people are - wealth is a big impact and, yeah, it's just amazing. Rob and Karen Scanlan are relative newcomers to stud breeding, but in just a few years, their Parawanga Stud Droughtmasters have amassed a trophy cabinet full of ribbons.

We always wanted to breed cattle, mainly initially just to have some peace and quiet, but we're very competitive types, so we pretty quickly got into the high quality end of the breeding cattle. With just 160 hectares at Cooroy, north of Brisbane, the Scanlans never envisaged running thousands of cattle, but with the first packages of Parawanga semen already sold in Brazil and Colombia, they're hoping one day to have thousands of Parawanga-descended cattle in South America. Their big advantage is that like much of northern Brazil and Colombia,

their cattle are exposed to high numbers of ticks and parasites in Queensland's wet south-east.

We initially bought quite a few Brahman cross breeders and we noticed that the Droughtmasters did the best around here by far.

We always say that we have more ticks here than anywhere else in Queensland, and a lot of young calves on other properties around here die, but we find with the Droughtmasters, we never treat them ever for anything at all and that calves do well. I think we've been feeling lately that we have competitive cattle and so we think that our cattle have something to offer the rest of the world. Also the Droughtmaster cattle are very well adapted to the hot, tropical climate, so they suit the Brazil climate very well, and also Colombia. GENTLE, REFLECTIVE MUSIC PLAYS

Chadwick Downs near Coonabarabran in northern New South Wales borders the rugged and dramatic Warrumbungles National Park. Like most of eastern Australia, this land has gone through a dramatic change after four years of dry weather. In places the grass is waist-high, but you wouldn't call it soft country by any means. We have some rough country here, we're volcanic and our cows have got to get out and forage and do a job, and the Braford cows certainly have done that. They've proven to be - they survive better in the droughts than anything else, and we've had enough of those.

At 680m above sea level,

the Lill family found Herefords were particularly susceptible to eye cancers, as well as bloat and pink eye. They soon shifted their herd to Braford and later Red Angus and Red Brangus.

After a casual meeting with some South American breeders at the Sydney Show in '99, Stephen Lill developed close ties with breeders across the Pacific. Following a reciprocal visit to Brazil the next year, Mr Lill jointly established the World Braford Confederation. Today, Chadwick Downs is Australia's largest single supplier of beef genetics to South and Central America, servicing clients in seven countries. The property boasts Australia's only private artificial insemination centre,

licensed to export genetics through AQIS. Animals are quarantined from the rest of the herd for up to six weeks and must pass a battery of tests before their semen or embryos can be harvested.

Each of these straws contains a minimum of 25 million sperm.

They're shipped in drums of nitrous oxide and will sell for $10 per straw. Chadwick Downs sired cattle have performed well in South America. One bull, the product of Chadwick Downs semen, sold two years after insemination for $100,000.

I guess we in Australia have some preconceptions of Latin and Central America, and in my case, they were all wrong. To treat the South American beef production system with ignore would be to our peril, and I believe there is more to be gained by cooperating with the countries of South America than trying to compete with them, because we sure as heck will not be able to win competing against their labour costs,

their cost of production and their level of interested government involvement. (speaks Spanish) Few people are as well-acquainted with the potential and the problems of South American beef production as Don Nichol. Now a beef industry consultant, Mr Nichol managed a cattle station in Venezuela in the '60s

before working for Australia's largest beef producer,

the Australian Agricultural Company. While genetic improvement is happening rapidly, the spectre of diseases and, in particular, foot and mouth, has hampered Brazil's efforts to export into the more lucrative US, European and the wealthier Asian markets. Just as the World Organisation For Animal Health

was close to upgrading Brazil's status to FMD-free with vaccination, an outbreak near the border with Paraguay in October slammed on the brakes. What this has done is that it's going to increase the level of ground truthing that has to be done in Brazil to see that what they say they've put in place to minimise or to eradicate foot and mouth by vaccination is being done correctly because the ability to transfer foot and mouth disease in meat is a danger that importing countries are very aware of. Australia is one of the few countries in the world that doesn't have foot and mouth disease. With no immunity in Australian cattle, an outbreak here would be devastating. When a shipment of half a tonne of frozen Brazilian beef arrived at Wagga Wagga in December 2004, only to be dumped at the local tip after a foot and mouth scare in Brazil came to light, there was widespread alarm in the industry. It highlighted the poorer state of Brazil's borders with other highly prone FMD countries such as Paraguay. You've got huge borders in terms of the distances across the borders between these countries. You've got minimum supervision of those borders,

and so if cattle can cross either on foot or on a barge or down back roads in trucks, it's a huge problem - a huge difficulty they have to get any clarity in their control systems. REPORTER: How long is it going to take Brazil to get back to where it was? I can't give a clear answer. What I can say is that there is now a resolve in those countries to do it better than they have in the past. They've now seen that there are rewards from exporting to the world and so clearly there is now the incentive to export. Argentina also, since its last problem, has taken a much more serious approach in eradicating the problems - through vaccination of foot and mouth disease. Before the latest outbreak, Brazilian trade officials had targeted Japan, Korea and Taiwan, Australia's most lucrative top-end markets, as well as the US for animal health negotiations.

If South America was to eradicate foot and mouth, it would shake up world production of lean grass-fed beef, dominated by Australia and to some extent New Zealand. Leading US industry publication, 'Beef' magazine, in assessing the threat posed by Brazil, warned its farmers not to underestimate the power of cross-breeding in assisting Brazil to catch up.

However, those who have been there say the South American agricultural juggernaut will make its impact

regardless of whether Australian know-how assists them REPORTER: You're looking at exporting some of the best of 100 years of Australian technology and experience in beef to Brazil. Why are you not concerned about them as a potential threat in the future? Yeah, Joanne, there is a lot of, I guess, similarities

with other industries where people have sat back and not taken opportunities of international markets and someone else has moved in and taken the opportunity and made it a good commercial business. My philosophy is that if we don't do it and do it the right way,

someone else will slip in and take the commercial advantage. If you look at someone like the sugar cane producers, I think I they tended to put their heads in the sand a little bit and just assumed that because they were always the best in the world, they always would be. The sugar cane industry now and their beef industry are very similar over there. It's big wedge as a country. It's very low production cost, it's very low labour cost. They can just put it wherever they want. I think our beef industry here needs to look at someone like the sugar industry and say, "Don't do what they did. "Grab this with both hands and run with it," because if we don't, someone else will just smash us. The North Americans have been exporting technology, genetics. The amount of semen going in from USA into South America is in millions of doses, and if we don't do it, someone else will. BURNETT JOYCE: I've got a vested interest in going to South America or China or wherever it is because I like travelling, I like contact with people, and I like to see different things. South America is certainly a place where you see different things, but it is a really nice country - friendly people once you get to know them, and I believe that the opportunities for trading into those countries are massive and I would just like to be part of it when it takes off.

Jo Shoebridge explaining the intricacies of selling beef genetics to South America. Well, he's a former Rhodes Scholar, a journalist, lawyer, entrepreneur and outspoken republican. Now, Malcolm Turnbull has been hand-picked by the Prime Minister to oversee the Government's water policy as the new Parliamentary Secretary. He is taking on one of the most important portfolios for rural Australia. Malcolm Turnbull, welcome to Landline.

Thanks very much. Good to be with you, Sally. I read in your biography that you list yourself as a grazier with 20 years or so of experience. I guess farmers are wanting to know where you're coming from. What's your main priority for water when it comes to rural Australia? Well, the main priorities can be summed up in two words - security and sustainability. We need security of water.

Of course, that's all subject to the climate, to rainfall, but insofar as we can manage it, as from a political administrative point of view, users of water should have secure entitlements. Let's bring that down to the paddock. I know one particular example that there has been a lot of attention focused on is Cubby Station and you've been out to have a visit there. Sure. Do you think that the kind of expansion that Cubby Station is talking about may mean security for Cubby Station, but will that threaten sustainability for others who are further down? Well, I think more of the overland flows that Cubby Station or indeed any station intercepts, the less water will be available for those people downstream. Now, Cubby argues that the effect on downstream graziers and farmers is not as great as claimed, but they've got to be - that case has got to be made in a scientific way. I think one thing we can all agree on is that when the original allocations were made in that area by the Queensland Government, there was a failure on the part of the Queensland Government properly to take into account the environmental implications of those allocations and, in particular, a failure to take into account the implications for people living south of the border and NSW. Mr Turnbull, I want to talk to you about the water markets. I know that this is something you've got a particular interest in. At this early stage, what's your priority in terms of making the water markets more efficient? I think the most important objective for any market is that there is able to be free trade and in particular - and this is more of a southern Murray-Darling basin issue - free trade between the states, that's to say between water users on the NSW and Victorian side of the border and with South Australia,too. There has been some obstacles. There are remain obstacles to that level of trading.

We're wok working through them at the moment. Ultimately we have to - it's like any market - it takes two or, in this case, three to tango, and so that is a priority. Now, this is not some sort of free market issue of philosophy.

It enables water to be traded to the more efficient users. It's like any scarce resource - we all have an interest in it being used in the most efficient way possible, and water trading will enable that to happen. So what are the specific changes that you think need to happen to make that market work more effectively? My own feeling is that the important thing is for there to be more trading. Ultimately, once you get more trading, a more active market in water, the market will sort out a lot of these issues, and a lot of the rough edges, if you like, will be knocked off. So the important thing is efficiency and that can only benefit irrigators and the owners of water rights,

and I think we'll, of course, by moving to more efficient use of water, it will encourage irrigators to continue doing the great work they are doing already, which is using technology, science to better infrastructure, to use water more efficiently. What about the issue of infrastructure? How can rural Australia be more efficient in its water use when in some areas water is still being moved from one place to the other in open channels because of a lack of proper infrastructure? You get losses in any system, but very long distribution networks with open channels, with soil types that have a lot of seepage

lose an enormous amount of water. But there isn't just one silver bullet for conserving water. It's an ongoing task. I think rural Australia is embracing it with enthusiasm. Subsoil irrigation - we were talking about cotton a moment ago. That technique of, in effect,

running a dripper line beneath the soil can enable a cotton farmer to reduce his or her water usage by as much as 50%. Now,that's an enormous saving from an additional bit of infrastructure. Of course, there is more capital cost upfront, but over the life of the dripper line, or the tape, as it's called, there are a lot of savings. So there is a host of measures. There isn't a silver bullet, as I said,

but we have to look at all of these technologies and different approaches to infrastructure to ensure we have the most efficient use of this very scarce resource. Malcolm Turnbull, thank you very much more joining us on Landline. It's a great pleasure to be with you.

Ten years ago, Tasmania's cherry industry was a minor player

on the State's horticulture scene. However, the decline in the fortunes of the apple industry has encouraged several apple growers to invest in cherries in a big way. Growers are saying it won't be long before Tasmania is the biggest producer of cherries in the country earning more for the Apple Isle than apples. FLUTE PLAYS This is the new face of the Tasmanian cherry industry. A decade ago, the industry was about small family orchards and domestic sales. Not any more. Now, not only have family operations scaled up, but two export-focused multimillion-dollar broad-acre orchards have been planted. I've just had confirmation of that today. There is a potential investor looking at another 80-hectare development of cherries in the Derwent Valley. So why the rush to plant? Tasmania has several advantages over other states and other countries. First, it's the last place in the Southern Hemisphere to have fruit. There is not too many places in the world that have cherries in the middle to the end of January, so that's our niche. As well as having the latest fruit, Tasmania grows the biggest, and that's where the money is. REPORTER: Dylan, how do the size of the cherries in Tasmania compare to the ones you pick on the mainland? I'd say they are probably about three times the size. These ones, as you can see, are massive. Because our climate is that little bit cooler,

it makes it a lot easier to grow larger fruit. So really, our aim is to produce the bulk of the fruit 30mm and 32mm and above, where we tend to find most of the fruit being produced particularly in Chile and Argentina tends to be 24, 26 and some 28mm. So size is our other competitive advantage. Tasmania's fruit-fly-free quarantine status gives growers another edge. We've just got access to the Japanese market, which no other state in Australia has. to European markets, the UK. We've got access to the Northern American market, which the rest of Australia doesn't have. So our issue is, can we grow enough to supply what the market demand will be out there? All these advantages plus the decline in the apple industry has meant a boom in planting - from five commercial growers in 1980 to more than 100 now. There's not too many apple growers in Australia who haven't got a block of cherries. I mean, everyone is having a go at it because it's another crop that looks as though there is market potential for us.

In 1996, there was only 70 hectares under cherries.

Now there's 400. That's about half a million trees. Probably two-thirds of them are not at full bearing yet. So when we talk about

a potential yield this year of about 2,000 tonne, that means that next year it will probably be at 2,500 tonne,

and then 3,000 tonne, and just without any more plantings at all, by the year 2010, we will probably have a 5,000 tonne crop. That would make the industry worth around $50 million, worth more to the Apple Isle than apples. Ted Domeney remembers what the industry used to be like. Dubbed the father of the industry, he planted this orchard in 1971 to escape poor apple prices. It was nerve-racking though, for every summer, ruin - in the form of rain - loomed. The family lost one crop every five years. If cherries get consistently wet for 10 hours - doesn't have to be heavy rain, just a heavy mist, steady rain, they would split open. And because it's a wet environment, not only do they split open, but they go mouldy

and go rotten as well. Because the market wanted bigger, later fruit, the Domeneys abandoned their orchard several years ago.

We would have had to change a lot of our orchard over to the newer varieties. The size of fruit demands a really higher level of irrigation

than what we've been able to give them. So to rebuild and start again would have been just that - starting again. And at the age my wife and I are, it was not an option.

We didn't feel we had the strength to do it all over again. The orchard will be grubbed out this year, but Mr Domeney is still involved. He is one of 15 investors who spent nearly a million dollars on this 25-hectare orchard in the Derwent Valley, north-west of Hobart. The Tasmanian Cherry Company was born over a bottle of red wine at a growers' meeting nine years ago. Young north-west grower Paul Babcock asked Ted Domeney if he was to start all over again in Tasmania where he would put a cherry orchard. Ted Domeney said he would come here to the much drier Derwent Valley. That's a 20-year project, so we're not quite halfway through yet. We started planning about eight years ago and we're therefore well down the track, and the business at this point is running quite well. Not far from the TCC orchard is the State's biggest - the 60-hectare Redlands. Planting started five years ago after apple grower Tim Reid became dismayed at poor apple prices.

For 150 years, Reids have grown apples at Jeeveston, south of Hobart. To grow cherries, they moved two hours north-west to escape the cherry hell of a 36-inch rainfall. By moving over the mountains into the next valley, the Derwent Valley, we moved into a rainfall area of only 18 inches, and that was the big attraction. We've been able to get strategic investment from the market in Japan. People involved in retailing and importing fruit throughout Japan and even some people involved in packing and growing cherries in the Japanese cherry industry. But the rest of the investors are local investors from here. We're planning to put in another 20 hectares of cherry this coming winter in June, and another further 20 hectares the year after, taking us up to about 100 hectares of cherries. Redlands is the only orchard outside Japan that grows the Japanese varieties, Satonishki and Benishuo. They're sacred and only for the wealthy. This year was the first harvest. We actually achieved retail prices in Japan that varied from AU$150 up to AU$180 per kilo, so you have a 30,000 tonne market in the Japanese summer, and we've got it virtually all to ourselves, the Japanese varieties cherries

in the Christmas/New Year gift-giving period. Some growers think I'm a bit crazy, I think, attempting to do all this, but you have to step a little bit out of your comfort zone, I think, if you're going to be progressive and develop new market opportunities. While the white-fleshed cherry dazzled with extraordinary prices this season, the basis of the industry is the dark-fleshed cherry. Japan takes them, too,

but pays a fifth of what it pays for the white-fleshed ones. This fruit from Redlands is off to Japan. Quarantine is so important, a Japanese inspector stays for the season. Each cherry passes many eyes before making it to an export box. The slightest blemish, leaf rub or bird peck and it's binned.

There is absolutely no alternative but to provide the absolute best quality for the market. John Grunseth says whether it's Japan or any one of the 15 countries Tasmania exports to, quality is key. We land our cherries in the US and receive US$50 a box for a 5kg box of 26-plus cherries in the US. Others land the same box for US$9. This year we averaged about $13,500 a tonne for our fruit which is a very, very good price, but you could only attain that by having high quality and in my view that's the only way you can survive long-term. MUSIC PLAYS You need sea legs to visit the Grunseth orchard on Bruny Island. The only way there is by ferry. The American businessman moved to Australia 13 years ago and failed to retire. With advice from another failed retiree, Ted Domeney, he converted his grazing property into a cherry orchard. Why cherries? The one thing that I've learned is that with commodities, you're always at the mercy of someone else, and the thing that makes cherries different is they're highly perishable, so you really can't store them. It's not like fish you can put in a can or wheat you can store or wool you can bale it and store it, or corn you can freeze it. You really have a short shelf life with cherries and that's what makes it attractive. John Grunseth says cherries are like golf - very humbling. We have tried to create a brand, which is black double Tasmanian cherries, that is higher quality as you can achieve in the marketplace. And is it all about growing the biggest cherry you can? For the most part, that's true. The market wants cherries that are 28-plus, 30-plus, 32-plus, 34-plus. That's what the market demands. This year, well in excess of 80% of our fruit fell into that category. We've got about 6,000 trees right now

that aren't fruiting at all,

and probably another 4,000 that are fruiting at low levels, that are still on their way to maturity, and so that will eventually bring our tonnage up over 150 tonnes,

maybe even 200, if we're lucky. While John Grunseth came to horticulture via a desk, Howard Hansen was born to it. A fourth-generation orchardist from the Huon Valley,

he realised apples wouldn't sustain him as they had sustained previous generations. Cherries now make up 50% of their business. In their packing shed, the Hansens' fruit and those of smaller growers

is packed for domestic and export markets.

REPORTER: Can you meet the demand for your cherries? Oh, you can never meet the demand for the bigger-sized cherry.

Probably production is equal to demand already on smaller-sized stuff, but the large-sized stuff, you know, I don't think we'll ever really meet the demand. Howard Hansen says cherries aren't hard to grow but they're very, very hard to grow well. He and other growers are hoping scientists at the nearby grove research station can develop bigger, later and crack-resistant varieties. The most recent breakthrough has been in the discovery of a late variety which the Hansens have just planted. The variety here is a variety by the name of Sweet Georgia, which is the latest variety that we currently know about in the world, so we hope this will be the latest block of cherries in the Southern Hemisphere, and our harvest here will extend easily till the end of February and possibly into early March, which will put us into a window a lot later than the Chileans and the New Zealanders and the Argentinians, and we should have the market to ourselves. And what's this block called? Well, we're calling it Fortune Hill, firstly because that's what it has cost us to establish, but we hope the name will be enduring and eventually it might make us a fortune if we've got cherries when no-one else has got them. A lot of that fruit will end up overseas. While 10% of the State's crop was exported in '02/03, a quarter is exported now, and it's estimated 40% will be exported in two summers' time. Howard Hansen went to school with fifth-generation apple grower, Thomas Frankcomb. The two are often mentioned in the same breath as the young turks of the industry. Both have apple-packing sheds and both have decided cherries can give them the profits apples can't. Thomas Frankcomb, though, has decided to focus on export packing. He and local exporter Top-Qual have built an EU-acredited packing shed to cater for the expected increase in fruit. The predictions are,

from the numbers of trees that have been planted, that the cherry industry, over the next 3 to 5 years will sort of, I think, possibly double in size in production.

And a facility like this, I can see in 3 to 5 years' time will be working 15 to 20 hours a day for 3 to 4 or 5 weeks of the year, packing cherries.

While plantings in Tasmania are set to slow in the next few years, production will continue growing until an expected peak in the '08/09 season. Packers like the Hansens and the Frankcombs are headed for some very busy summers. As with any case of rapid development, growing pains are to be expected. Mr Frankcomb says growers need to understand that cherries are not a license to print money. Varieties have to be right and the quality has to be A1. The only way we are going to make money out of cherries in Tasmania is to have a really good product and find someone who wants to pay us lots of money for it. Howard Hansen says the Tasmanians will be aiming to do what the mainlanders just can't - to grow the biggest cherry possible. Currently it's 30 and 32mm fruit that we need to be growing, but I bet in another year or two it will be 32 and 34mm fruit. A cherry that takes a few bites to get through - now that sounds like a worthy goal.

It's been a varied week - cattle remain firm,

but there's been an extremely gloomy forecast about beef prices.

There's brighter news for sugar, the bulls are circling the wheat waggons, and a dampener put on the wool revival. We begin our price check with export cattle: American feedlots are said to be bulging. How this will impact on demand for our beef is very iffy.

Seasonally this is a quiet time, so the price hike is significant. And that price is a high for the year.

ABARE told last week's outlook conference that beef has hit the top of its price cycle and is tipping a solid drop in prices over the next year from 325 cents a kilo dressed now to 288 cents a kilo next year, and if that's not bad enough, ABARE says the price will be 212 cents a kilo in just over four years from now. Lambs on offer at NLRS saleyards last week - just under 300,000 head. To pigs now, in a steady to firm market: Looking at the international dairy market:

Now the national water index for the past month. That's down just under $5 from the preious month and came after trading at just a fraction under 42,000 megalitres.

Despite this, wheat futures remain the hot game - these have lifted 20% since December and the guessing game is now on about how much upside is left.

Quality is becoming an issue here,

and ProFarmer says the crop looks highly unlikely to reach ABARE's prediction of 2.3 million tonnes. Barley prices:

The International Sugar Organisation is tipping consumption of sugar to continue to outpace production in coming years. The difference - well above two million tonnes - thus keeping prices high for another year or so. The latest forecast is for a 7.5% lift in world cotton consumption to 117 million bales. Production should be about the same. And finally to wool. ABARE told the outlook conference in Canberra last week that the outlook for wool is bleak, which must be a real challenge to all woolgrowers because the current market is way above ABARE's forecast average for this year. A huge offering last week led to a fractional slip across the microns. First to the regional indicies:

Sales this week will be in Sydney, Melbourne and Fremantle where just over 61,000 bales will be rostered for sale. And that's the commodities report

for the week ending Sunday 5 March. We should expect good rain at this time of year and that's been the case for the east coast and much of WA. Elsewhere - nothing flash. We certainly need a good drink over eastern states.

There's the map, and the standout is the rain over the Little Sandy Desert region of WA and you can see the influence of the low across the east. I'm told that strip of country from Charleville south to Bourke is bordering on desperate for rain. Let's look at numbers:

And that's where the rain has been falling over the past week. We've had a lot of calls to Landline asking the question, "Where is Joanne Shoebridge?" Well, I'm happy to tell you Jo is on maternity leave and here is the reason. There's Joanne, brand new baby son John and Jo's partner, Greg. All are doing extremely well. And there's another Landline milestone - reporter Peter Lewis, who has been with the show for eight years, has just been appointed the ABC's correspondent in New Zealand. He's already in Auckland and I'm sure Landline watchers will join me in wishing Pete all the very best. Now to next week - rabbits. There's a rabbit farming boom with turnover last year exceeding $5 million. Restaurants are serving up such exotic rabbit names as Flemish Giant, Californian and New Zealand White. The taste is said to be far superior to the wild rabbits of yesteryear. People think you've gotta cook the hell out of rabbit, but not with this.

So you just have a nice high heat and that gives it that colour and the flavour and cooks it really quick. Oh, it's fantastic. I mean, it's got wonderful flavours. It's one of my favourite meats. We sell bucketloads of this, we really do. The rabbit farming boom - one of our stories next week. Well, that's it for today. I'm Sally Sara. Until next time, goodbye from Landline. Closed Captions produced by Captioning and Subtitling International Pty Ltd