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Dairy crisis is not systemic, and the industry will survive: Barnaby Joyce -

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MICHAEL BRISSENDEN: Dairy farmers affected by milk price cuts will receive some much-needed relief under a Federal Government assistance package.

The Government has been under pressure to offer support to farmers, after Australia's largest dairy processor Murray Goulburn and New Zealand processor Fonterra slashed prices within a week of each other.

The announcement coincides with a regional debate between Agriculture Minister Barnaby Joyce and the Shadow Minister for Agriculture Joel Fitzgibbon, as the pair prepare to go head to head in Goulburn this evening.

For more, I'm joined live on the line by the leader of the Nationals Barnaby Joyce.

Barnaby Joyce good morning.

BARNABY JOYCE: Good morning, Michael, how are you?

MICHAEL BRISSENDEN: Good thank you so what will this dairy package look like and which farmers will it target?

BARNABY JOYCE: We've listened quite clearly to what the dairy farmers want and what the dairy farmers want is to make sure that they get access to concessional loans, concessional loans at the cheapest rates that we can possibly get.

We will do that. What the dairy farmers have also said is that they want access to get money on the table through the farm household allowance. That will allow a couple around about $1,000 a fortnight.

This will keep the bulls from the door and the dignity in their house. We know that there are other issues that are pertinent to the sustainability of the dairy industry that they've been fighting for.

And I'll make sure that we get delivery on that, especially in Victoria.

We will talk to their representative groups, their senior groups and see what further assistance we can do there to further assist them in how they actually deal with this crisis - and we clearly say it is a crisis but not a systemic crisis, that is a long term change in dairy consumption globally.

What we are doing is understanding that this issue will float through, or pull through the supply chain, and when it does we will be back to a position of a better outcome and continue on our long term upward trajectory in dairy consumption, which is about 1 to 2 per cent a year over the long term.

Now...

MICHAEL BRISSENDEN: So concessional loans seem to be one of the key things here. They've come under quite a lot of criticism in the past, that they have been poorly designed, inconsistently managed - and less than half of the billion dollars allocated for drought concessional loans has been taken up because farmers say the eligibility criteria's too strict.

BARNABY JOYCE: Well when we came- when I and the Coalition came into government, the Green Labor Party Independent alliance had successfully managed to lend out eight concessional loans.

We've now lent out more than 800, we have a book well in excess an of $400 million. So people are actually getting access to these loans and when we talk to farming groups - and dairy farmers being one of the most topical right now, that's what they have asked of us.

We've had these crises before, we had one when the live cattle trade shut down and we worked hard and got that up and running again and now we have record prices in beef.

We've had a crisis in the dairy industry before. One of the great things about being Agricultural and Water Resources Minister is that you don't run away from challenges, you actually work with farmers to solve them and that's what we'll do with this one.

MICHAEL BRISSENDEN: Sure. This assistance is coming after Murray Goulburn and Fonterra overestimated the milk quite seriously. Isn't this just putting an unreal floor under that price, because others have made bad business decisions but we don't bail them out?

BARNABY JOYCE: Well, what we've had in this instance - and so your listeners clearly understand - is we've had milk prices that have gone from 42 per cent in some instances farmers have been getting now as low as 14.

Why that is the case is because they are having to repay a loan that they didn't ever expect to get that crystallised against their returns.

That was put on them by the processor Murray Goulbourn. If I was to say to yourself, Michael, well let's say you're on... I don't know what you're on, but let's say you're on $1000 - Oh you're probably worth more than that 2000 bucks a week... and then all of a sudden I say oh no I'm only going to pay you $400 a week.

I think your partner would say "We have a crisis".

MICHAEL BRISSENDEN: Sure. Shouldn't investors who backed the unrealistic expectations of the milk price and subsequently bought into the Murray Goulbourn float, shouldn't they take some of the pain? Because I understand there is a clause in the prospectus that would allow the company to prop up the milk price paid to farmers and reduce the return to investors - should they do that?

BARNABY JOYCE: Well this is something that- as part of our Agriculture White Paper, we had a cell that is specifically there to investigate whether there was any unreasonable inducements.

Now that's happening as we speak, the ACCC (Australian Competition & Consumer Commission) is investigating this and if it was an unreasonable inducement then I'm sure that the ACCC will be having a discussion with those within Murray Goulbourn who promoted that idea.

MICHAEL BRISSENDEN: Do you think the company, Murray Goulbourn itself should actually act on this?

BARNABY JOYCE: I think Murray Goulbourn certainly - I mean, they are a cooperative owned by the dairy farmers, but...

MICHAEL BRISSENDEN: That's right.

BARNABY JOYCE: But you'd have to ask the motivations of those who came up with this idea within Murray Goulbourn. I want to make sure that Murray Goulbourn survives, a massive exporter not just from the dairy industry but for our nation.

And we've had an exponential growth in our dairy exports into Asia - we are riding a good tide there, and we still want to capitalise on that in the future.

We have taken rural exports to the second biggest export after iron ore and we do that not by accident but by management.

MICHAEL BRISSENDEN: As we've seen in the past couple of days, a lot of consumers have now started buying brand name, more expensive milk.

Now a lot of this started with the supermarket cut price war. There are reports major supermarket chains are only restocking empty shelves with their home brand milk.

Is that correct?

BARNABY JOYCE: Well I've had discussions with retailers and we want to make sure that the retailers also put their shoulder to the wheel.

And you're dead right; it's an absurdity that water which in many instances is dearer than milk and as your listeners would know dairy farmers - and I'm standing on the edge of a lucerne paddock as we speak - dairy farmers get up in the morning long before we are listening to this, they'll be milking the cows now and do their size work through the day, do their mechanical work during the day and then they'll come back and do it all again tonight - three hundred and sixty five days of the year.

Cows do not take Christmas off and what that means of course is there's an ordinate amount of work that goes into producing milk - vastly more than putting water in a bottle and why'd water in a bottle be dearer?

There's a good question to all your listeners to take up with their retailers and say 'If you're trying to trick us to come into your shop by offering us a price which really the dairy farmers have paid for - that is, you're not paying them a fair price - then that leaves us with a very bad taste in our mouths about the retailer, not so much about the milk'.

MICHAEL BRISSENDEN: Most of the dairy farmers affected by this are in Victoria and Tasmania, yet you are announcing this package in Tamworth, not many dairy farmers affected by this in Tamworth.

Are you just too busy defending your own seat to be able to go too far?

BARNABY JOYCE: Well, I wouldn't talk too badly about the dairy farmers in Tamworth, there is quite a few dairy farmers around here and I had a dairy farmer group in my office yesterday in Tamworth - and we are about to jump on a plane then and go to Wauchope, literally, and we'll be running from there to a plane in Wauchope - and there are definitely dairy farmers around there, and then we are heading off down to southern New South Wales so I can go on your wonderful network and have a debate with Joel Fitzgibbon and Mr Di Natale.

We're getting around the show, but it just so happens that today we are in the lovely seat of New England in the seat of Tamworth.

MICHAEL BRISSENDEN: We'll leave it there thanks very much Barnaby Joyce.

BARNABY JOYCE: Good on you, mate, see ya.

MICHAEL BRISSENDEN: And since we spoke to the Deputy Prime Minister Barnaby Joyce, he's given a press conference where he's announced $550 million in concessional loans at 2.66 per cent from August the 1st.

He's also announced one-on-one counselling and financial assistance for affected farmers.