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Tuesday, 5 October 1971
Page: 1904


Mr DAVIES (Braddon) - I have no desire to be unkind to the honourable member for Denison (Dr Solomon). But the honourable member questioned the availability of finance and the position of the Constitution with regard to the setting up of a marketing authority. It is to be regretted, I think, that he and others on the other side of the House do not keep in touch with leaders of industry and, in particular, leaders of the industry that we are discussing tonight. Had they done this, they would have been supplied with a very fine exposition setting out the cost of the authority, the question of constitutional powers and so on. A number of their fears would have been shown to be groundless.

In his second reading speech on the Apple and Pear Stabilisation Bill, the Minister for Primary Industry (Mr Sinclair) referred at length to the industry in Tasmania. I think that, at the outset, I should place on record the considered opinion of the Apple and Pear Growers Federation on the stabilisation plan. The Federation considers stabilisation a very necessary support plan to replace devaluation assistance. However, it nowhere near makes up for the loss experienced by growers through Australia's failure to devalue when Britain did. The plan gives a breathing space during which it is hoped to make the necessary drastic moves to reorganise the marketing of apples. One of these moves occurred at the weekend when the Australian Apple and Pear Board decided to issue one export licence to Tasmania with the 19 exporters working in a type of consortium. It is considered a very necessary adjunct to a marketing scheme such as that proposed in the Grant Report.

The Federation considers, however, that the stabilisation plan has its weaknesses. One of these weaknesses is that it operates on the basis of an average Australian price and takes no account of the wide inequality of market returns experienced by different growers for the same quantity of fruit. The Federation points out that it will need to continue as planned and the amount of support may have to be increased to compensate for costs that are increasing and which are beyond the control of growers. I think that I should reiterate the value of the apple and pear industry to the economy of the State of Tasmania. I agree with the leaders of industry that, comparatively speaking, the apple and pear industry is more valuable to the State of Tasmania than the wool industry is the economy of the Australian nation.

In recent years, the apple and pear industry has been worth between Si 6m and $20m annually. It provides between 45 and 60 per cent of agricultural earnings and 12 per cent to 15 per cent of the total incomes from rural primary industries, including timber and mining. There has been a trend to decrease acreage but to increase production as yields have improved. The average yield per .bearing acre in Tasmania 2 years ago was about 500 bushels of apples as against the Australian average of 300 bushels. In the same year, Tasmania produced 32 per cent of the total production of apples from 19 per cent of the total Australian acreage, that is, 7 million bushels out of a total of 22 million bushels. On an average over the past 5 years, Tasmania has provided 36 per cent of Australian apple production, but 70 per cent of apple exports. It has provided 7 per cent of Australian pear production but 21 per cent of pear exports. Of Tasmania's production over the past 5 years, 76 per cent of apples and 83 per cent of pears were exported. However, all is not well with the industry. Gloom and depression have settled over it.

The industry is carried on in the Huon, Derwent, Tamar and Mersey Valleys. From the Statistician's figures of 1966, only 75 per cent of Tasmanian orchardists are still on their properties. It is a fact that 100 families have left the Huon Valley in the past 18 months. This emphasises the very serious situation that exists. The Apple and Pear Growers Federation has referred to the stabilisation plan envisaged in the present legislation as a support scheme to replace devaluation. I might add that it is a very poor support scheme at that. For many years, we enjoyed the benefits that came from the difference in currency values. The old English £1 was worth 25s Australian when we received the returns for fruit sold in the United Kingdom. This bonus, as it were, of 25 per cent was the cream on the skim milk and for years the industry prospered. Certainly we had bad years. I well remember friends of mine receiving a bill of 2s 6d for 250 cases of apples sold in the old country but these were the exceptions rather than the general rule.

However, 2 matters have caused the present downturn in the industry. The first was the devaluation of the English currency. When this happened in 1967 the cream for us was gone. As the present Minister for the Interior said at that time, this Government had thrown the primary industries to the wolves. He accused the present Prime Minister of smothering the devastating damage done to our export industries under a flood of high sounding economic jargon. And he was right at the time but he has been very silent on this matter ever since. This Government, in its decision not to devalue, agreed to compensate growers and paid about 50c per bushel for apples and pears consigned to devalued markets. But the damage had been done. In the first year following devaluation, 1968, some 68 per cent of growers in northern Tasmania had net farm incomes below S2.000 per annum, despite the fact that they received on an average about $1,900 per orchard in devaluation compensation. If you take out the devaluation compensation the net return for the year was only $1 00.

If there had been no devaluation compensation, growers in northern Tasmania in 1968 would have had a net farm income of minus $1,200. Growers in southern Tasmania would have been little better off with a net farm income of plus S600. Taken over the whole State of Tasmania in 1968 devaluation payments represented $2,513 of the average net farm income of $2,744 for each orchard. These figures come from the survey conducted by the Bureau of Agricultural Economics. From this it can be seen that devaluation compensation has helped, but not enough, and now it is to be replaced by a support scheme through stabilisation. The support price this year will be even less than the devaluation compensation. So how are they to exist? The Bill before us provides that the basic limitation of fruit forwarded on consignment is a total quantity of 4.4 million bushels. This quantity could attract the maximum payment of 80c per bushel.

As the quantity exported at risk goes above 4.4 million bushels, the maximum rate of payment per bushel will be reduced pro rata. Mr Jenkins of the Australian Apple and Pear Board announced recently that the quantity forwarded on consignment this last season amounted to 7.5 million bushels. So by working on the formula 4.4 multiplied by 80c divided by 7.5 the support price for this season will mean a return of 47c to the grower if his fruit does not reach the price listed in column 2 of the Second Schedule of the Act. And of course, in many cases, the fruit will not reach the prices listed in the Second Schedule and so all the grower can expect is 47c in place of the previous devaluation compensation of around 50c per bushel. I spoke with some exporters in the Huon Valley last week and they estimated a stabilisation return of about 45c. If, as the BAE survey showed, we were going from bad to worse with the 50c odd under devaluation, what will be the position when this is reduced to about 45c? 1 have with me the returns only recently received by some growers. The first applies to 173 cartons of Jonathans shiped on the Britannic' to Liverpool at an f.o.b. return to the grower of $304.20 - an average of $1.75 per carton. In view of the large quantity shipped from Australia on consignment and the support price for jonathans as listed in the Second Schedule being $2.58, this grower can expect to receive an additional 47c from the pool, making a total of $2.22 f.o.b. for his fruit. It costs a grower $2.91 to put a case of apples on the wharf in Tasmania, so this grower will show a loss of 69c a bushel even after receiving his contribution from the stabilisation plan. Even with stabilisation he loses $119 on this shipment. For the sake of the record, with the concurrence of honourable members I incorporate in Mansard an analysis of production and marketing costs as determined for the 1971 season in Tasmania. It is on this table that I base my calculations.

 

I thank the Minister for his courtesy.


Mr SPEAKER -Order! I have reminded the House a couple of times recently when honourable members have asked to have documents incorporated in Hansard that it is not necessary for honourable members to acknowledge the courtesy of a Minister. I again draw the attention of honourable members to this matter.


Mr DAVIES - That table itemises the production costs at 76c per bushel. The harvesting costs are 20c; presentation costs $1.65; interest and depreciation 30c. It costs a Tasmanian grower a total of $2.91 to put a case of apples on the wharf in Tasmania. If you add the shipping and marketing charges which come to $3.33 the total cost is $6.24 which the grower must receive in the United Kingdom before he makes a penny for himself. From this, it can be seen it costs $1.65 simply to present a carton of apples and this does not allow for any return to the grower for his labour, sprays or fertilisers and all the expenses that go to putting the fruit on the trees. He has to get $2.91 at the wharf before he breaks even.

The exporter in Tasmania takes 25c for every carton. The freight to the United Kingdom is $2.23 per carton. The person who sells the carton in the United Kingdom gets 85c. And all this means that the grower who sells at risk must get $6.24 for each carton overseas before he breaks even. Herein lies another weakness in the stabilisation plan. It is related to f.o.b. returns and has no relation to shipping and marketing charges in the United Kingdom and on the Continent. These can continue to sky-rocket as they have in recent years and the grower has no control over them and yet we have to face the prospect of another 22 per cent freight increase this year. I simply ask: How many people in the United Kingdom can afford to pay $6.24 for a carton of Tasmanian apples, and this charge is soon to be increased to almost $7 if the freight increase is to apply?

I turn to another export return. This grower receives $150.31 for 103 cartons of jonathans shipped in the 'Britannic' to Hamburg. This gives him a return of $1.46 f.o.b. and does not even cover the presentation costs of $1.64. In other words he is down the drain 20c a carton simply after packing them in a carton and transporting them to the wharf. After taking into account his labour, spray and fertiliser costs, he will lose $1.45 on each carton and this loss will be reduced to $1 after he receives his contribution from the stabilisation plan. The grower does all the work and takes all the risks, yet the middle-men and the freight people take all the profit. Let me point out the expenses in connection with this shipment of 103 cartons in another way to highlight how everyone else gets his cut and the grower is forced to take what is left over - and as I have pointed out, this left over will not cover his costs of production.

The main expenses for this shipment are: Freight $229.69 - mind you that is for 103 cartons; the freight charge was $229.69; exporters fee $25.75; importers commission $31.50; handling charges $34.75; landing charges $41.62. The fruit realised $525.55 but charges after leaving Tasmania amounted to approximately $374. Thus the grower is left with $150 to cover all the expenses of his own labour, packing and presentation costs and freight in getting his 103 cartons on to the wharf in Tasmania ready for export. In other words, the expenses after leaving Tasmania amounted to 75 per cent of what the fruit brought overseas and to me this is the weakness in the stabilisation plan because the grower is still at the mercy of the shipping companies and fruit importers and exporters.

There is no doubt in my mind that the figure of 4.4 million as appearing in section 1 1 , sub-section 2 (b) of the Bill is totally unrealistic when compared to the total exports at risk of Australian apples and pears. This figure should be amended to a more realistic figure. Much play has been made of the fact that the pool payment to the grower is 80c but this is misleading, and as the quantity on consignment rises the pool payment is reduced. As I have indicated, the pool payment this year will bc about 47c based on an export figure of 7i million bushels.

There is another aspect that amazes me and this is the different support prices for various varieties of apples and pears. I know the excuse that the experts put up. A greater support price is given for granny smiths but they are going out of popularity. This extra support is to try to encourage more people to grow them but the returns this year do not indicate that the granny smiths warrant this additional support price. 1 cannot see why we did not have the one support price because it costs the same amount to grow a bushel of apples whether they are jonathans sturmers or democrats or any other variety. I realise there has been this move to encourage the growing of granny smiths but this move is not justified by the figures. I consider too that section 7 of the Act relating to support prices for the different varieties of fruit should be amended to allow for the increases in the cost of cartons and wages, components of the f.o.b. price, which have risen since the support prices for last season were determined and listed in column 2 of the Second Schedule of the Act. To illustrate my point, there has been a rise of 6 per cent in national wages since these prices were determined on 1st October 1970. The Act provides for the support price for each variety of fruit to be determined on 1st October in the year preceding the export season under consideration. In view of this it is only reasonable to request that an escalating clause or arrangement be included to make provision for any increase in the components of the f.o.b. price for the particular season. 1 have referred to the rot that set in in this industry when this Government decided not to devalue in 1967 and offered the fruit industry compensation for devaluation. 1 have some knowledge of the fruit industry, having been associated with a fourth generation fruit growing family for over 30 years. The industry prospered right through from the turn of the century to the 1960s and, contrary to what the Minister for Primary Industry said in Hobart last week the industry has put its house in order with marked improvements in harvesting and packing to meet the rising costs. I admit that it desperately needs a single marketing authority. Credit must go to the exporting firms and I deplore the action of the Government members who write them down. Credit must go to these exporting firms which in recent difficult years have kept the orchards afloat through their advances to enable orchardists to buy sprays and manures and packing material so that the crop can be harvested. The Chairman of the State Fruit Board, Mr Walker, also was critical of the Minister's comments in Hobart. The industry has pruned out the unwanted sizes and varieties to which the Minister referred and the fruit has arrived at overseas markets in better condition than fruit from other countries. As Mr Walker points out, the biggest problem facing the industry is the increase in the basic freight rate.

I pointed out that in 1968 the devaluation payments represented $2,513 of the average net orchard income of $2,744, leaving only $213 after the payment for devaluation for a year's hard work in tilling the soil, picking and packing and putting the crop on the seas. I do not know how much longer the industry can continue. Unless the Government accepts the amendment moved by the Opposition there will be a mass exodus of growers. I have not much time remaining. The returns T quoted earlier were from an orchard in the Mersey Valley but I draw the attention of honourable members to another case. For 220 cartons of democrats that were sent on the Rockhampton Star* to Rotterdam and Florence there was a return of 2,365 Danish florins. The cost of getting them there was 2,783 Danish florins and the debit return to the grower was 418 Danish florins or, converted to our currency, $104.50. That was for 220 cartons of democrats. He had to receive a return of at least $650.20 in order to break even. He had to pay that $650.20, and in addition to that had to pay $104 in order to satisfy the debit that these apples attracted. I close on this point because time is not on my side. I should have liked an opportunity to expand on the single marketing authority in support of the Opposition's amendment I appeal to the Minister, who I think realises that we are in a desperate position. The figures that I have cited prove this to be so. I have stacks of returns from the Huon, the Tamar and the Mersey valleys, if the Minister is interested in them.


Mr SPEAKER -Order! The honourable member's time has expired.


Mr Giles - 1 seek the indulgence of the House to withdraw certain remarks that I made during the debate.


Mr SPEAKER - The honourable member may proceed.


Mr Giles - 1 had been told, and 1 said, that 9 ships had been held up in Port Adelaide recently for 10 days. The honourable member for Sturt (Mr Foster) has informed me that my remark was incorrect and, furthermore, that Port Adelaide has an outstanding record for the small number of hours lost due to strike action of the wharves. If this is so, I certainly withdraw the remarks that I made.

Debate (on motion by Mr Corbett) adjourned.







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