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This Program is Captioned Live. # Theme music On Landline today, the future of Australia's rice industry. We're a very unique company,

we can control our rice right from the farm,

right through to the supermarket shelf. It's our own brand, and we're all very proud of that, and that's the way we want to retain it. The final part of our series on carbon farming. Carbon is money in the bank for us, because it's converted through micro-organisms to fertility. And the tinkering in the farm shed that turned into an export winner - we'll meet the Kelly gang. Hello I'm Anne Kruger, welcome to Landline. A little later we'll hear from one of the most respected names in the northern beef industry, on what's next for those cattle once destined for the live trade, amid concerns for the impact on bilateral relations with Indonesia. The answer to that is how quickly can we get plants certified, that are OK by both the Australian and Indonesian standards? particularly the humane side of it.

I don't know, I've got no idea,

because there are a lot of plants up there, and there's going to have to be a lot of adjustment made, for us to keep control of what's happening in those plants. But first, to one of the worlds staple foods. for us to keep control of what's happening in those plants. and brimming water storages, you'd think it's be full steam ahead for Australia's rice industry. But there are simmering tensions that threaten to boil over. The drought left Sunrice, the grower owned rice company,

under a mountain of debt.

It's shareholders rejected a sellout to a multinational food giant. This week, sunrise CEO Gary Helou resigned, and now some growers are threatening to form a breakaway body.

As this year's rice harvest in the Riverina plateaus to a conclusion... ..amongst rice growers meeting in the nearby town of Jerilderie, there is an atmosphere of tension and consternation. I think it is an important day for Sunrice and I think people have weighed that up with a heavy heart. Today, the growers must decide whether to sell their grower-owned company

to an overseas multinational. A yes vote would wipe off the company's massive $300 million debt. A yes vote would also take away their autonomy. There will be a price-taker Tim, there's no doubt, they'll dictate to us - It's a case of patriotism versus pragmatism. SPC, Heinz, McCain's, it's all happened - there's no good stories with any of the other's that've sold overseas.

Few issues have been so polarising, as the takeover offer by Spanish food giant Ebro Foods. Those for, say it's the only way forward. Those against, say it would be the biggest robbery

since the wild colonial days when the Kelly gang held the town hostage. Ebro foods make their money by re-branding product from other countries. So our Paupa New Guinea crop there - There's 200,000 tonnes goes into Papua New Guinea,

that might be shipped out of Asia by Ebro foods to supply that market. They pick up the freight and they pick up on the cheaper rice, and that's a 200,000 tonne market we'll loose out on. Most were predicting a close result. For some unexplained reason the meeting was closed to the media, The attempted secrecy failed spectacularly. Every word wafted clearly from the tent.

Our shareholders have not approved the proposed scheme, and the supporting resolution. To succeed, the takeover offer needed the approval of three quarters of the A-class shareholders. And the same percentage of B-class shareholders. In the case of B-class shareholders, the vote was 76% in favour. And the A-class shareholders, 67%.

So that's a strong percentage, but we'd have obviously liked it to have been carried. I'm Jill Parke from Deniliquin, I every been growing rice for 40 years. And we are just so happy, we are so happy. Rice growers, Sunrice has stayed Australian. We just can't believe it, we're so happy. The board have put a lot of time into getting this over the line. And a good idea sells it's self, Obviously this wasn't good enough.

Jerry Lawson, was that a surprise, the result there?

I think when a board decides, that an offer that's been made is an appropriate offer, you hope that people will accept that. Ebro, the world's largest marketer of rice, has said its takeover offer of $610 million for Sunrice

was a once only. But who knows what the future holds? Now that growers have voted to reject the takeover offer, they face the next big challenge, and that is reducing the company's enormous debt. $300 million is hardly chicken feed.

And some accused the chairman of running up the debt. In 2006, Jerry Lawson led the board

when Sunrice paid $125 million to buy rice storage facilities, from the New South Wales government. Others accused the board of hiding the extent of the debt.

The amount wasn't known until the Ebro offer came along. I'm a B-class shareholder, and I think OK, they voted that way, what the A-class shareholders have to do now, is put their hand on their heart and say, 'with every drop of water allocation we get for the next 10 years we'll grow nothing but rice.

We'll keep a bit for stock and domestic, 30 to 40 megs, but the rest goes into rice and we'll a pay this off.' We'll keep a bit for stock and domestic, 30 to 40 megs, selling water and all sorts of things. So that's why I think it'll be tough going. Reducing the debt

may mean growers pay a levy for every tonne of rice grown.

It's good to see we're reducing probably about 840,000 tonne, they're talking this year. So, that puts us back in good stead, as our rice comes in, in the Southern Hemisphere, a different time to the other parts of the world that grow rice. It puts us standning in a good place, I reckon. Milton Stimpson and his brother Lloyd grow rice near Coleambally. They voted no to the Sunrice sale.

We're a very unique company. We can control our rice right from the farm, right through to the supermarket shelf.

It's our own brand and we're all very proud of that. That's the way we want to retain it. As strange as it sounds, the exceptionally wet year and the cool summer were far from ideal. But it's a far cry from the 200,000 tonne crop of last year. This year we're talking over 800,000 tonne. There's talk of drought in China and things like that, so that might play into our hands. We hope it will anyway. In a year like this, the value of rice is staggering. It will earn about $800 million, 500 of that value-added exports. 63 towns have come to rely on rice, none moreso than Deniliquin. It's just been a fantastic outcome,

having a normal crop year in front of us. The Deniliquin mill here, which is one of the biggest mills in the Southern Hemisphere, was regrettably forced to go into care and maintenance mode in 2008. In plain language, it was closed. A victim of meagre harvests during the height of a nine-year-long drought. But late last year, the company decided to reopen it.

Those hundred jobs will expand to around 140 new jobs by the time we finish recruitment, which will allow this plant to go from a six day a week operation, which it's operating at at the moment, to a seven day a week, 24 hour a day production program. So the flow on impact around Deniliquin has been just massive. For every job the agricultural sector creates there is about a four to one flow on. and the economy here in Deniliquin has picked up massively, as it has right across the Riverina. Well, for the turnover for our company, it's well over millions. Aerial agricultural contractors, Field Air, are also slowly rebuilding

after drought almost crippled them. It's affected our business that much, that we've laid all our ground staff off and sold planes to sort of outrun the drought sort of thing, but now we've come back in to good times, we've got no ground staff, no planes...

There are massive fleets of trucks at the moment, which are pretty hard to get hold of. But big fleets of trucks at the moment, taking product to wharf, to head to Japan. But big fleets of trucks at the moment, The mill at the moment's milling orders for both Japan and Taiwan. The refurbished railway has reopened. Rail taking export product to Port of Melbourne for export, that's what the rail line's significance is.

Another rice grower who vehemently opposed the sale is Michael Rosato. Landline viewers met him three years ago, when in the middle of the drought, he was one of the few to have a crop. Like many, Michael Rosato believes the hardest years are now behind them. Very close result. But I think there's a bit of hope now, isn't there. We can go forward, I think people will do it. Rice is only grown in wet years.

During the long drought, there were years of next to no crop. It meant Sunrice bought rice from overseas to meet its customer orders. But that meant a spiraling company debt. Drought also bit into the bank balances of growers. There's no fat left amongst the boys out here. They've been cleaned out with the drought. And so we're all scratching for money. It's really unfortunate

that people have lost a bit of confidence in the industry,

in terms of reinvesting. Then there's the uncertainty of future water allocations under the Murray Darling Basin Plan.

And that has left some growers with little confidence in the future of rice. One of the key things to remember is, as a grower controlled industry, we have always put our money back into it in some form or other - say, for example, like Bonds or shares. And the industry, of course, has relied on those investments. Now, as we've hit significantly difficult periods with the drought, and farmers have had all this negativity coming back towards the industry, and most of it is entirely misinformed. It's just extraordinary, how people have this view of rice

that it's a large water user, and it is not. The dust clouds roll near Deniliquin as a wheat crop is sown on the Burge family's farm. Rice growing is a small but highly profitable part of their mixed farming enterprise. If you look at this type of system here,

we sow our rice, we graze sheep around our rice while it's growing,

and then of course, as soon as the rice is harvested, we would then sow a wheat or another cereal crop straight into it. So we're getting three enterprises out of the water use. Some growers see the rejection of the Ebro takeover offer as an omen. They believe when it comes to talks on water allocations, governments will be more kindly disposed towards an Australian owned company. There's a bit of sense come into the community. Politicians are even starting to turn around. This idea that there was no water,

the dams weren't gonna fill and the rivers weren't gonna flood, we've seen all that. Bit of common sense is coming back in, it's not time to go, We've got to stick with it. We're going into the winter with the dams virtually full and we haven't been in this position for probably 10 or 15 years, back in the '90s was the last time that probably happened. We're pretty good at having brawls in the rice industry, but historically we've always been pretty good at getting back together and that's what we need to do.

If Australia's farmers are to play a part in the reducing the country's greenhouse gas emissions, then some predict that storing more carbon in the soil will be one way of achieving that. The carbon farming initiative, before Federal Parliament, will let farmers sell carbon credits, if they can show they've stored extra carbon in their soils. But before they can do that, there needs to be be an accurate way of measuring soil carbon across the country. There are some who believe, the country's soils hold the key to dealing with Australia's greenhouse gas emissions. Carbon is stored in soil, just as it is in trees. But to date, it's trees we think of mostly as carbon sinks.

Trees have been importantly initially, because the science that underpins it is well proven. And it takes a long time to get good science to give you the confidence to invest in the technology. It's cause and effect, really. There's not been a strong economic driver over the last 20 years to have a huge body of soil carbon-science undertaken.

If the Federal Government's carbon farming initiative becomes law, farmers might one day be paid for storing extra carbon in their soil. But before that can happen, we need a better idea of how much carbon the country's agricultural lands hold. Soil carbon, what we don't know yet is firstly, how strong is the science?

So how much carbon per hectare, in a variety of landscapes, is actually sequestered? The permanence of that sequestration, so it's not just cycled out of the paddock and into the atmosphere. So, we've got the points picked out? Most farmers know the value of soil carbon, even if they don't know how much carbon is in their soil. Soils that are high in carbon are usually more productive. Randomly selected 40 of those which we're going to sample today, Soils that are high in carbon are usually more productive. and that will give us 120 samples in total, as we go in to measure at three depths. Jeff Balldock and his CSIRO colleagues, are measuring the carbon content of soils. Jeff Balldock and his CSIRO colleagues, and we're implementing a sampling program like this, We're going a little over 3,000 different sites around the country, and we're implementing a sampling program like this, where we'll collect a minimum of 10 samples from each paddock we visit. There are different ways of taking samples, from mobile hydraulic core samplers, to this more painstaking manual method. But accuracy is important and care needs to be taken, since these small samples will ultimately be used to calculate tonnes of carbon per hectare.

And then we'll clean this bit off the outside, so that it doesn't contribute to the actual sample And then we'll clean this bit off the outside, Each of the samples will go back to the lab to be analyzed for organic carbon.

We talk about particulate organic carbon, off the outside,

which is partially decomposed little bits and piece of organic matter that we may or may not be able to see with our own eyes. Sometimes we need magnifying glasses of some kind to see 'em. The next fraction we look at is something we call humus, which is the really well decomposed stuff. That tends to be more molecules or dominated more by organic things stuck on soil particles.

We don't see the structure of a root any more, or the structure of a leaf, It's been broken down to that extent. The last form of carbon we look at, we're calling it resistant but it's dominated by charcoal in the Australian context. So they're taking samples at three depths. That will give an idea of the different types of soil carbon at different sites an how they might change over time. The different colours of the three soil samples

is a rough guide to the different types and densities of carbon. When we're trying to work out carbon accounting, and understand whether a particular management practice,

such as the one that's been employed here, has a chance of shifting soil carbon values around. By doing this staged approach, we get a little bit more detail than we would've if we'd just taken a single sample. CSIRO's soil carbon research program will link these carbon values to soil type, land management, and other factors like rainfall. When we put that whole data set together, it will give us a good idea of what the low-end and the high-end of carbon contents are under the management regimes we've looked at. That hasn't been available to us before. That will give farmers a baseline to measure the carbon on their own properties. But here's where the government's plan, for farmers to earn and sell carbon credits meets, arguably its biggest practical barrier. If you store additional carbon, you have to guarantee it's stored for 100 years. So that's the permanence rule. I think there is a caution to be had here. In that soil carbon, for example, you can lock it up over five good years of Rainfall. Can you have soil carbon build up,

because the rain is allowing more productivity, it's allowing more organic material to go into the soil. It's out of your control really. But then you go into five years of drought, like the last 12 years, and that equation goes into reverse. Out of your control because water's determining the limit, you could actually use carbon. If you've sold that carbon, someone else owns it. While the Government has some methods, to allow that you don't actually have to pay it back, you just have to demonstrate that the buyer still has their carbon. So I think that's a risk. Ian McClelland runs a sheep and cropping enterprise in the Mallee. He knows there are ways of farming to increase the carbon in his soils but would he want to sell carbon credits?

I personally think that carbon is too important a product to sell,

to store it for 100 years. Carbon is money in the bank for us. Because it's converted through micro-organisms to fertility.

Even if you want to store the extra carbon and sell the credits,

what might be an asset to one generation, could turn into a liability for another. See, the other problem is, if you put down carbon and you get paid $20 a tonne for that carbon,

in 30 years' time you want to do something else on your farm

which might reduce that carbon, you have to pay it back. But meanwhile the price of carbon goes to $200 a tonne, you're putting a chain around your grandchildren's necks,

which I think is not really what I want to do. The rule about permanently storing carbon, is farmers' most persistent criticism of the carbon farming initiative. Near Gundagai, Sam Archer is an enthusiastic tree planter.

He that's not doing it for a carbon credit. I think there needs to be clear cost benefit. If that's there, then farmers will take that on board and take decisions about how their farming system looks and whether there's opportunity to be plant trees to sequester carbon. He doesn't believe the government's carbon farming legislation reflects farm management realities. We work in a very dynamic and fluctuating landscape over which we have some control, but not a lot of control. And therefore the complexities need to be reflected in the legislation to enable us to manage within that dynamic system. The carbon farming legislation before Parliament

does recognise that some things are beyond the landholder's control. For something like forestry, where you might get fires,

You will have a stall on your credits potentially, but the government wants to ensure that if you change your land use to to forestry, that it stays there as forest for a hundred years. Andrew McIntosh specialises in environmental law. There's a real tension, between ensuring that the credits are additional, so that means that they have environmental integrity,

that you're paying for something that is different,

and imposing too many burdens on farmers. Because if there's too much to do, too much for the farmer to prove, and the farmer is simply not going to get involved with the scheme.

Andrew Grant runs CO2 Australia, which plants trees for companies that want to offset their greenhouse gas emissions.

My view is, that the agriculture sector should be excited by this opportunity. because it's ingenuity and entrepreneurship, and really sophisticated management practices that it's brought to a whole range of other commodities,

will similarly be deployed around carbon. He believes there will be plenty of ways of generating carbon credits. In intensive agricultural operations, say feed lots, or large-scale animal husbandry operations, there will be methane capture programs that are cost effective, that will generate good carbon credits.

Nitrous oxide similarly has a much higher global warming potential. So it's value as a carbon offset is much greater again. So, I expect this is why we need the rules and regulation, to enable project participants to find these economic projects. Even if the carbon farming bill becomes law, it's voluntary,

and without a price on carbon it probably won't mean much. It's supporters concede, it's a difficult area to regulate. So this is a very complex thing to do, and that's why we're on baby steps right now. CFI is going to be a first step in what promises to be a very long process. Sam Archer is skeptical about the carbon farming initiative. So, what do you think it would take to make the carbon farming initiative really work? I think there needs to be a lot of education.

Farmers need to be aware of what they're getting themselves into, and there needs to be a price, that is cost effective for them to contemplate doing it and moving from their existing farming system to this changed one, where they're looking to capture carbon. The government hopes to have the legislation through Parliament by the end of the month. As we showed you last week,

Rob Cook has been confined to this rugged wheelchair, since being injured in a helicopter crash in 2008. As you can see, it's scarcely slowed him up. In fact, he spent the past three weeks travelling almost 750km from the property to Alice Springs, to notch up the first wheel-chair-crossing of the Tanami.

CHILDREN: Let's go Rob, let's go! Let's go Rob, let's go! Rob Cook told Landline's Prue Adams, the warmth of the reception in Alice, was in stark contrast to some bitterly cold days on the road.

It's been long, Prue. It's been enjoyable but the finish line has been a welcome sight. You had a dose of frostbite, I hear, along the way? It was something that I never really thought to keep an eye on, you know, with the cold weather, but I got a bit of frostbite on me toes. Especially over this last four or five days, but I got a bit of frostbite on me toes.

Especially over this last four or five days, with the cold snap coming into Alice. And a bit of a tumble at some point as well? We were coming past the gold mine, and even though were only doing only 5kms an hour, I got a bit wobbly in some sand and I hit a bit of corrugation, and it shot me sideways, and ended up rolling the wheelchair on top of myself. But it was nothing a bit of panel beating couldn't fix and we got on the road again. The world has changed a bit since you left on 23 May, The decision to suspend live export of cattle -

What kind of impact will it have on business? I mean, it's incredible, they're talking a six month ban. I think what Julia Gillard forgets is that six months might be the only window we've got into getting cattle into these markets, because of the horrendous road conditions and then the wet season. So, basically they've shut down production with an absolute minimum of 12 months for our family.

I guess what they forget is we've still got wages to pay, and bills to pay, and I don't know how we're supposed to do that now, without having access to a market for money coming in. Will the family business survive it, do you think, or is there a chance that it won't? There's every chance that it won't. That's 95% of our market is into the live export trade in Indonesia.

You know, just because there's a couple of cruel people in Indonesia, and they've wrecked it for everybody, you know. I think it's devastating. It's gonna have a domino effect right throughout the Northern Territory. Right down to guys serving fuel at the service station. We've got all our exporting companies,

and then we've got all the trucking and helicopters, basically everything is just gonna come to a standstill. Thanks for talking to us again, Rob. Yeah, thanks, Prue. As he said, while Rob Cook's been on the road, all hell's broken loose into the Top End beef industry.

The robust debate has stretched all the way from Jakarta to Canberra by the people most directly affected by the suspension of live cattle trade - Beef producers, like the Cook family across northern Australia. The most pressing issue right now,

is what to do with cattle that no longer have a clear destination or meet local market specifications.

back to where they came from, or to agistment. Either way it's going to cost millions of dollars and no one's yet sure who will end up picking up the compensation bill. The ABC's north Australia correspondent, Sara Everingham, looks at the impact the trading halt is already having on exporters, and collateral damage it's having on bilateral relations with Indonesia.

For beef producers in northern Australia it's a time of great uncertainty. The government suspension of live exports to Indonesia has hit both corporate and family owned properties.

We've been here for 30 years. That's about 3 million acres. I think we've got 70 something thousand cattle on it now. Here at the vast Newcastle Waters Station, in the West Barkly, the chairman of the Consolidated Pastoral Company, Ken Warriner, is considering what to do with 1000s of cattle ready for live export. With the length of the Government's suspension still unclear, he's just one beef producer in northern Australia, wondering to what extent he will need to redraw his plans. It will have a big impact. We've still got between 17,000 and 20,000 cattle we've got programmed to go up there and they're all in the north west. They will now have to come into Queensland, to be fattened for the trade next year, or down to South Australia. But, yeah, it will be a big impact. Ken Warriner says the suspension will come at a big cost, but he expects the property will weather the difficult times. He says smaller operators in the region will be the hardest hit. I think the little fellas up here are going to be devastated by it. It's a trade that's really kept them going for quite a while. And they don't have the ability to fatten down south.

They'll just have to take the market what it is. I think the entire future of our operation here is somewhat up in the air, as it is with all our neighbours. Tom Stockwell has been running Sunday Creek Station, 300 kms south of Katherine for 17 years. Hello boys.

He runs 7,000 head of drought-master cattle over 85,000 hectares. We really don't know what our future is, you know. It could be the end of a dream. Like at many stations in the north, his livelihood is the live export trade. The country here is perfectly suited to live exports, because we can breed cows and young cattle fairly cheaply,

compared to other areas of Australia. But we do not have the nutrition or the productive capacity to actually grow animals out to finish-quality. It takes us too long to grow an animal up in this country. So having Indonesians being able to do that is good. But his best plans have come unstuck. When images of cattle being mistreated in Indonesian abattoirs were recently broadcast on national television, the Federal Government came under intense public and political pressure to stop the live export trade to Indonesia. The Government eventually responded by suspending all live exports to Indonesia for up to six months.

Straight ahead, too small - Tom Stockwell heard the news, not from the Commonwealth but from industry contacts in Indonesia. I think we were completely taken by shock

when we found out that the trade had just been stopped dead, with no warning and no real light at the end of the tunnel. Beef producers in northern Australia such as Tom Stockwell are anxious to know the government's next move. We're more fortunate than a lot of people, in that we have had some income this year, so we're not financially at risk for the next couple of months

and we can keep staff on and keep things going as we'd like to, but every day that goes on longer puts us at financial risk. There are also concerns jobs could be lost. and that the economic effects will be felt well beyond the stations, to regional towns that service the industry. In the Northern Territory, the cattle industry might be small in comparison to mining and tourism. But the mayor says it still plays a vital role. We're the centre of the cattle industry really. The Katherine region is very large, and many businesses in Katherine depend on that industry, the money that is spent in town in food and other supplies. That will have a big impact. We also have a cubing factory here which will be affected immediately. So it's quite frightening really.

A common argument made by beef producers is that trade should be restored to those Indonesian abattoirs working to Australian standards. They argue a six month ban is too long. A six month ban takes us back into the wet season, by which time we won't be in a position to make any money, if they do pull it out there. So, a six month ban is as good as a 12 month ban. But beef producers could be facing a much longer ban than six months.

There's political pressure on the government,

to ban live exports for good.

Opponents of the trade say the industry has had long enough to improve the way cattle are slaughtered in Indonesia. They suggest producers switch to packaged beef. We've got another 500,000 cattle to be killed, and that's probably 80 or 90,000 extra tongues to exports.

These boys tell me they don't have the markets for it, on the international market at this stage. Ken Warriner says that's an unviable option, that will affect beef prices for producers,

not just in the north but around the country. I think the wider industry in the north, is probably greater than in the south but in the south, talking to the processors, they're telling us, that they're flat out selling the meat that they're processing right at the minute into the international market, and you suddenly get another 5,000 cattle coming into it, it's going to take them a while to find markets for those cattle. In recent years, the industry has recognised the need to diversify beyond the live export trade to Indonesia.

Discussions about an abattoir in northern Australia have resurfaced.

It's an idea being considered by AAco, but it's still not clear if it's a viable option. They're sort of having a very close look at it. So, let's have a look and see what they do, If they do do something, it will be a couple of years before they get it operational. If anyone knows the difficulties of operating an abattoir in northern Australia, it's Ken Warriner. He says abattoirs have closed across northern Australia, because of unreliable supply and labour. He says abattoirs have closed across northern Australia, It's pretty hard to make them work up here now. And that labour force just coming up for a six or seven month period is very expensive. And shipping the meat out - You may be able to ship it to Indonesia simply on small ships,

but to generally ship meat out of Darwin is not an easy thing. The next few weeks will see heavy lobbying

from both sides of the debate. The Government's inquiry into the live export trade is due to deliver a final report at the end of August. But there's concern among producers that the ban has already damaged relations with Indonesia, and that the longer the ban continues,

the higher the risk of collateral damage.

The answer to that is how quickly can we get plants certified,

that are OK by both the Australian and Indonesian standards? Particularly the humane side of it?

I don't know, I've got no idea. Because there is a lot of plants up there, and there's going to have to be a lot adjustment made for us to keep control of what's happening in those plants. Ken Warrinor and the Consolidated Pastoral Company are among major players in the market that have spent plenty of time and money developing first rate facilities and relationships in Indonesia.

As part of efforts to get trade back up and running, Consolidated Pastoral has sent staff to Indonesia to oversee the slaughter of their cattle. We're going to put people in the plants to make sure that we're in charge of it right through until they start. We're installing the stunning guns

and taking them through to the stunning, having a person there at those plants each night. That's going to take a lot of doing, to do a lot of plants, but a few of us will do that for a start anyway. The Federal Government says, it's committed to getting guarantees about animal welfare standards in Indonesia so trade can resume. But a full restoration seems some way off. We understand that some Australian exporters and their Indonesian partners, will be better placed than others to move quickly on that. Some others may take additional time. But I certainly anticipate that even if the even if the trade is to be resumed quickly,

it will certainly not be at the same level, as it has been previously for some considerable amount of time. The RSPCA says it understands beef producers face difficult times, but it says the industry must take responsibility. Remember, animals have been going into this market for 18 years, 6.5 million cattle have gone into Indonesia, under the sort of conditions and to meet the sort of fate, that everyone who say Four Corners now knows about. So, if anyone is responsible for this, it's the industry, and specifically Meat and Livestock Australia and LiveCorp, who allowed that to happen.

The debate over responsibility and compensation will no doubt last well beyond the resumption of the live trade. But at Sunday Creek Station, compensation is the last thing on Tom Stockwell's mind. We'd like to fix up the animal welfare issues, but we don't want to end up on welfare ourselves, we want the problem fixed, we need to get it going again.

The live cattle export ban continues to dominate agribusiness. While a resumption of trade appears possible within a few weeks, two issues are bubbling. One is, obviously, compensation the other is the status of contracts - and does government intervention count as 'force majeure'? Force Majeure is French for 'superior force' - and is a common clause in contracts that essentially frees both parties from liabilities when events beyond the control of one or other of the parties prevents the contract from being fulfilled. Now, those events usually mean

war, strikes, riots, earthquakes, floods or volcanic eruption. But government edict? A legal nightmare or legal picnic depending whether or not you're the one paying the bill.

The compensation issue is so complex it's almost impossible to define. If MLA hands over the five million demanded by the Government, who gets compensation? The queue would start with the out-of work ringers,

include the chopper owners, the truckies etc, etc, and end with the shipowners. And five million would last about two or three days. Moving on now to the markets, and first to the saleyards, where the live export fracas has had little impact on prices - so far. MLA analyst Tim McRae says southern producers should not be concerned about cattle from the north for several weeks and possibly months. Undoubtedly for northern producers this issue is impacting them immediately but for southern, it's once those cattle start to flow into southern and eastern markets where we'd really feel the impact of those greater numbers and that's 6 to 18 months down the line I think. In the meantime, is the dollar having the major impact? Look, ever since post-Easter the high dollar has really been hitting exporters hard. That's flowed right back through the chain. The heavy end of the market has been getting a hit very hard. It's both the higher dollar hurting us into Japan but also a very weak US dollar helping US product into north Asia. So, prices came back in most categories. The biggest problem appears to be at the feedlots where the dollar is making margins very, very tight. Now, another point worth noting is the price of hides - down 15% in past two months.

Now to grains, where the latest forecast from ABARES is promising. The experts theere are tipping 2011 - 2012 winter grain production to reach 40.8 million tonnes - 32% higher than the five year average. The ABARES forecast of wheat production to be 26.2 million tones varies somewhat with estimates from other industry bodies.

Australian crop forecasters, Rabobank, the United States Department of Agriculture and the Commonwealth Bank are all tipping smaller crops than ABARES. Last week local old crop demand weakened. Canola also dropped, while sorghum fell with a bit of a thump. It should be noted that despite the falls, these prices are all well in advance of this time last year. To the key Chicago board of trade,

and there was red ink everywhere as the American senate voted to end $6 billion in subsidies for ethanol. So corn, which is used in the making of ethanol, crashed, and wheat followed, so too did soybeans. On top of this, Russia announced it would soon be back in the export game for wheat and in the background is the sliding price of oil It's all linked and it's all price negative.

Australian futures reacted much the same.

Falls were in excess of 5%. Back to New York, where strong data from China failed to halt the cotton slide. India is reporting weak demand and the bears are well in control. Sugar bounced a fraction and closed stronger. That sugar price is the best for several weeks while further out, cotton contracts are much weaker than that July figure.

Finally to wool, which had yet another strong week. The news from Greece slowed the market but analysts insist the major problem with wool is, and will continue to be, supply. And this is reinforced by the actual bales coming up for auction. Over the next three weeks, the number is down nearly 20% on this time last year. Last week the Eastern Market Indicator lifted just under 1% to close at 1,431 cents.

So that's the Landline check on prices. As sowing continues in many parts of the country, extra stubble from last year's heavy rains and bumper crops is proving a challenge for farmers. While some have resorted to burning, light till equipment is also getting a workout. And as Kerry State reports, one of the most sought after machines comes from a South Australian farming family that's built up a major export business through hard work and hardship.

It may not make the sweetest music, but this machine makes light work of last year's leftovers. Farmers in the Flinders Ranges prepare for the season ahead. Not far away down a dirt track in an unlikely spot, an identical machine is under construction. Destination, the United States. ... where they can do it pretty well, I get a bit of a buzz when I sit and think about the likelihood of that actually happening. Shaun Kelly runs his family's engineering company, which is gaining plenty of recognition these days, despite its remote location. Late last year, it was named Australia's regional exporter of the year. But take a peek behind the glass and glory Australia's regional exporter of the year. you find a hardworking family which hasn't forgotten its humble beginnings. So this is where it all started? Into yes, Kerry.

Father put this shed up in 1955. This was the farm workshop. Albeit a bit small by today's standards. No electricity. And basic tools. I had a grinder here, and a petrol engine up there. And I'd only grind for about 10 minutes then it would get too smokey. I would have to rush out and get a few breaths. Fresh out of school and with not much spare cash out, Shane Kelly's father started fixing his family's machinery

just to keep the farm functioning. He may not have had much formal training, but his self taught talents had the neighbours knocking and he never knocked them back. We would just manufacture day and night, we've worked all through the night a number of times just to get guys going. Peter Kelly decided to invest more heavily in his hobby

when his two sons grew up. Building a bigger workshop which he could run, while handing over much of the responsibility of the farm to his boys. Shan and his brother left school. I was determined not to stay in charge of the farm as my father did to me, he handed over to me

and gave me a pretty free rein. He was running the stock and I was doing all farming. And I just wanted that to happen again. Sadly, after just a year of working side by side,

the youngest brother, Kim Kelly, died in a light plane crash. I just lost interest in everything for a couple of years. And farming was everything I wanted to do all my life and it just went out the window. It took a couple of years, we'd just bought the neighbour's farm out for the lad we lost and we were seriously going backwards financially because of the high interest rates at 24 or 25%.

Like many farmers, the Kellies had switched to continuous cropping during the tough times to boost returns,

adding field peas to the rotation. Harvesting the peas proved a challenge, so Peter Kelly came up with his own pickup device which was soon in high demand. And suddenly, Mr Fix-it had a new business, designing farm machinery. He actually started with paper clips and Lego, would you believe? And then he'd be drawing on the floor and I don't think either of us imagined that it was ever going to be like it is now. Audrey and I just needed a break from grief, I guess, and it was the thing that did it. She was down here all the time. She was cutting nylon rod and grinding it up and doing the books and bringing the scones down lunchtime and everything, and yeah, it just went from there. As the business unfolded,

so did Peter Kelly's plans to build a machine that could manage crop stubble so there was no need to burn it. We started with 400 feet of anchor chain between two four wheel drive tractors at 20 kilometres an hour. We could do 400 acres an hour. It was absolutely magic but we lit too many fires. We've got a lot of stone that's fixed in the ground

and it would just tear across and rip a bit of steel off and then we'd have a fire but none of them ever burnt more than about 10, 20m square. 'Cause we were always prepared. But the neighbours, I could tell, were getting a little bit nervous. (Laughs) Long before this curved creation,

Peter Kelly also tried dragging tyres across the paddock. He then shifted to the pointier end of the market, designing prickle chain harrows. It was a more successful move but one that also hit a few unexpected bumps early on when he started sourcing chains from China. When we were unloading them the spikes were falling off them. It was a nightmare.

We recalled the chain off 50-odd machines right across from Australia from Queensland to the west, re-welded it and returned to the people all for nothing. It cost us a serious amount of money but it was the greatest advertising we could've ever done.

People suddenly knew that we were going to stand behind what we made. A lot of farmers have heard of prickle chains, probably used them. What's so different about this one?

This one is a successor to the prickle chain. It's the disc chain. So these discs are our innovation. The way it works it's rolling at an angle. It's only got its own weight and the tension and the shape and the weight of the chain to force it into the ground. It does sort of resemble those disc ploughs. That's what people might go is that conservation farming? That's it. A lot of people say the plough has been invented many thousands of years ago, what are we doing different? It's more about the application. So rather than being a heavy plough being forced into the ground it's more of a really light shallow harrow. He may be talking up this patented design now, but Shane Kelly admits he wasn't as sold on his dad's idea to scratch the surface initially. I was a little bit sceptical the time. It was early 2000s. It was a time when no-till was really starting to take hold and spread around the country. It was certainly the direction I was heading in, farming. But I think the concept he come up with, he was a good many years ahead of the rest of us. Local farmer Peter Barry is among the more recent converts.

He spent more than $70,000

on the latest version of the machine last year. Well, I bought it for a number of reasons.

Things like I've been able to use for breaking up stubble, bearing weeds, using it as an alternative to all chemical spraying for weed-control over summer. Peter Kelly had to drag his discs a lot further

to find buyers for the earlier models. He spent weeks on the road taking his oversized invention to field days across the country.

Pete and I took it as far as we could until 2001. We were both tired, Peter said he didn't think he could keep going like he had been going, and we had a family discussion, and Shane said, 'how about I have a go at being manager?' It worked. Worked well. While his dad may be the mastermind behind the machine,

it's the next generation that has taken it to the other side of the world. We'd had four years there where nearly the whole country had below average yields and below average crops. So although we were exposed to as much of Australia as we could be,

we still weren't getting ahead with the business.

Then in '06 we took a big risk and made a deliberate decision to make a machine to the States. The gamble paid off when he met a Missouri supplier who was on the look-out for a replacement for Canadian prickle chains. Those boxes are all working out alright, fabrication-wise? Five years on and the Kellies have leased their farm and quadrupled production out of this Bullaroo base.

When it's use-by date will be, we don't know. We're extending that by appearing in different countries around the world. I think the real benefit in the battle against herbicide resistance is going to give it longevity but we need to be thinking what the next invention is. Like many exporters, the more immediate challenge is riding out the high Australian dollar. While annual turnover has increased from 3 to 17 million dollars since the company went global,

Mr Kelly says margins have been eroded by up to 90%. But the company is still expanding overseas and at home, hoping to cash in when the currency settles down. Economically, the smart thing would be to pack up and move somewhere near and export port, near supplies,

closer to a whole lot of facilities, but we've been here for a hundred odd years and don't intend to move in a hurry. I think we can make a big difference in a small community, We can employ 40 people in a town of 400-odd. That's making quite a difference. As for his own kids, well, right now, they're more focused on building something fun rather than functional.

But the father of four is hopeful the family business may be equally appealing in the future. But the father of four is hopeful the family business There are a lot of opportunities that all four children may choose to come back to and bring a variety of skills. They don't have to necessarily learn how to farm or learn how to weld to be part of the family business. And it's the family, not the business,

that Audrey Kelly is proudest of. Being proud of what we've done I suppose is the biggest achievement that I can think of. Yes, being associated with those two guys. What would you say has been the secret to your success? The satisfaction of fixing something for somebody.

I've never been money-driven.

But if someone brings something in broken, it's throw-away. You can't hurt it. You so might as well try and fix it. And yeah, 10 times out of 11, we would. As for the man who started it all, he's still never far from his tools.

Whether he's indulging in his hobby of fixing up old Volkswagens in his sizeable shed at home or doing odd jobs out of the factory, building is clearly in Peter Kelly's blood. I'm trying to be retired, but if you've been in a business that you've built up and you can see that work needs to be done, it's pretty hard not to do it.

If you were in northern New South Wales last week you would have certainly felt the weather - Rain and more rain. But elsewhere there was a fairly typical winter pattern -

dry and cold. First up let's check on the Southern Oscillation Index. And once again, very little movement just settling in positive territory at plus 3.9. Now to rainfall across the country. The obvious highlight is that coastal strip south from the Queensland border, very, very heavy rain. Central Queensland had some handy rain as too did parts of the dry corner of Western Australia - but more is needed in that region.

To numbers now - Charters Towers in Queensland had 26 millimetres, Woolgoolga on the New South Wales coast had a massive 498, Club Terrace in Victoria scored 47,

most of the good rain in Tassie was in the hills where Mount Barrow registered 62 millimetres South Australia's Kangaroo Island was damp with Cape Willoughby recording 24 millimetres, a place called Gallipoli in the Barkly area of the Territory registered four millimetres, while the reading at Busselton in Western Australia was 35 millimetres. And that's the Landline check on rainfall. Next week we will bring you Kerry Staight's feature on food security we had planned to run this week. We'll also join a city family getting a taste of life in the bush as part of 'Farm Day' - A scheme designed to help agri-business

explain to the wider community what it really does, and why. ...and everything that we can to actually get people out there and get them to understand where their food comes from and how it's produced and what farmers are actually doing out there on a daily basis. I think it's really important. Changing hearts and minds, one family at a time. That's one of our stories when landline returns next week.

I hope you can join us then.