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Thursday, 11 November 1976

Mr SIMON (McMillan) -The Bill before the House amends the Dairying Industry Research and Promotion Levy Act to clearly impose a levy on whole milk or butterfat vested in State milk authorities. That Act, to quote the second reading speech of the Minister for Primary Industry (Mr Sinclair), requires that the levy be used to finance the research activities of the Dairying Research Committee and of the administration and promotional activities of the Australian Dairy Corporation. It may be of interest to inform the House of the manner in which the levy is spent. I deal first with the Dairying Research Committee. The report of that Committee for 1975-76 will be tabled in the House in the next few weeks. Therefore I shall refer briefly to the third annual report which is for 1974-75. The broad objective of the dairy research scheme is to raise productivity and improve and advance the welfare of the industry. The enabling Act provides that expenditure from the research funds should be within 4 broad categories- scientific, economic, or technical research; the training of people; the dissemination of scientific, economic or technical information and advice; and, finally, publication of scientific, economic or technical reports, periodicals, books and papers. The research program deals with the farm, the manufacturing sector, the question of marketing of dairying products and requisite education programs.

To demonstrate the value of research to the industry I shall refer to one example undertaken by the Committee in 1974-75. In Victoria one project was concerned to obtain information on how best to maintain or improve the productivity of pastures. The results from the investigation will, for example, enable dairy farmers to use fertiliser more efficiently with a resultant boost in winter feed production in non-irrigated dairy farms. It could be argued that any increase in the productivity of dairy products will only propound the problem which has been experienced m the past 12 months with over-production of dairy produce. I would submit, however, that the problem of over-production will not be solved by a cut-back or cessation of research. This Government has emphatically stated its commitment to the value of export earnings from the manufacturing sector of the dairy industry. To compete on world markets Australian dairy farmers must maintain their high standard of efficiency and quality. The application of research findings by the dairy farmer will help in maintaining that standard.

I turn now to the application of the finance raised from the levy to the administrative and promotional responsibility of the Australian Dairy Corporation. In 1975-76 the income derived from the butterfat levy rate was $774,390 for each fund compared with $802,035 for the previous year. Other sources of income for the ADC are derived from the Commonwealth Government's export market development grants scheme and from processed milk manufacturers. The annual accounts of the ADC for 1975-76 disclose that $1,567,506 was paid from the dairy produce fund and $804,779 from the sales promotion fund. Honourable members will be aware that the dairy industry in Australia at present is in a depressed state, particularly in Victoria and Tasmania, States whose dairy farmers rely heavily on the sale of manufactured products overseas. The promotion of dairy produce by the ADC therefore is of utmost importance to the farmer and all those who are indirectly reliant on the industry.

What then are the functions of the Australian Dairy Corporation? They are to promote and control the export of dairy produce from Australia, to control the sale and distribution of produce after its export from Australia, to promote trade in dairy produce among the States and Territories, and to improve the production and encourage the consumption of dairy produce in the Territories. In the past year the ADC's activities have been wide ranging. The Corporation has had to operate against a background of uncertainty on both Australian and domestic markets. In the past 6 months it and the entire dairy industry has experienced drought conditions over a wide area of the best dairy producing farm lands of Australia. In the previous year there was a build up around the world and in Australia of surplus dairy products, particularly skim milk powder.

The international markets are dominated by the common agricultural policy of the 9 member nations of the European Economic Community. In April 1976 the price for skim milk powder trade on the international markets was reduced to the GATT minimum of SUS350 per tonne freight on board with a consequent flow on to depress the price for butter and cheese on the world markets. This gloomy feeling was further depressed by the effect of inflation in Australia. A few examples published by the Bureau of Agriculture Economics in October 1976 will prove this point. Fuel increased by 19.8 per cent in 1974-75 over the previous year and by a further 30.1 per cent in 1975-76. Replacement parts for agricultural machinery increased in 1975-76 by 20.2 per cent on top of an increase of 21 per cent in the preceding year. Fencing materials in 1974-75 increased by 22.6 per cent and in the year just past there was a further increase of 23.1 per cent. Wages in 1973-74 increased over the previous year by 20.4 per cent, in 1974-75 by 37 per cent and in 1975-76 by 13.6 per cent. The Bureau pointed out that prices paid by farmers for their inputs in aggregate have risen at a faster rate over the past 3 years than the consumer price index. To cope with these sharp increases farmers have sought to increase productivity. Hence we come full circle back to the statement I made earlier- that research which assists productivity directly assists the dairy farmer to cope with inflationary on-farm costs.

I would like to consider the current state of the dairy industry, particularly in Victoria. If ever an industry needs leadership in the areas of promotion, marketing, research and general assistance it is now. Rural poverty has been identified by Professor Henderson in his poverty report and further identified in a number of other surveys. The United Dairy Farmers of Victoria has approximately 12 000 members out of a total of about 13 800 dairy farmers in Victoria and is the largest State dairy farmer organisation in Australia. A survey conducted by the UDF throughout that State showed an urgent need for off-farm income for dairy farmers and further reported that there were no prospects for on-farm employment. These findings are supported by another survey undertaken by the presbytery of the Latrobe Valley of the Presbyterian Church of Australia in Victoria. The presbytery reacted to the rural depression it found in central Gippsland since conducting a survey into the extreme anxiety and discomfort being experienced by rural people in central and west Gippsland in Victoria. The submission was published in June this year and has subsequently received recognition as an invaluable contribution to an understanding of the effects of the depressed dairy industry on farming and rural communities. The presbytery survey found that 43.6 per cent of families in June 1976 had at least one member of the family working away from the farm. I quote from the submission:

In some cases the family member is working in full time employment in an urban centre. Some farmers are travelling 1 60-220 miles each day to work in production line industries, for example, GMH, International Harvester, Heinz factory at Dandenong. This means leaving home in the early morning, arriving home late at night or alternatively, working night shift, wives have been forced to milk dairy herds of up to 120 cows, and family life is shattered.

A further 22.5 per cent of farmers stated that one member of the family was seeking employment away from the farm.

The Industries Assistance Commission report on the dairy industry marketing arrangements, the subject of the Crawford report, underscores the depressed state of the dairy farm, particularly the farm relying on income from the manufacturing sector. In Australia the net farm income for a dairy farmer in the manufacturing sector dropped from $5,532 to a loss of $1,401 in 1975-76. As mentioned earlier, we can see that the decline was principally due to cost increases. In the liquid milk sector the average net farm income showed a small decline by comparison; that is, from a net income of $6,800 in 1973-74 to $5,160 in the past year. The projection for the current year will, in all probability, be lower.

The President of the United Dairy Farmers of Victoria, Mr Bill Pyle, recently commenting on the Bureau of Agricultural Economics figures for 1975-76 on Victorian dairy farms projected the situation for the current financial year in the following terms:

The BAE's estimates reveal an appalling situation. If the position was as bad as the estimates indicated in 1975-76, one shudders to think what has been happening in farms this year, with production and returns both down and costs up still further. One can only conclude that the situation in the dairying areas of Victoria is even more serious than most people m the industry imagined.

The people concerned with the dairy industry in Victoria are in trouble. The mood of dairy men and women in the McMillan electorate is one of depression, particularly in those areas where farmers supply the manufacturing sector of the industry. The Government has done much to assist the dairy industry over the past 10 months. Notwithstanding that assistance, there is a depression in the industry.

In this Bill the Government has once again demonstrated a commitment to the industry. Research and promotion demand time before results are apparent. There is, therefore, a long term commitment to the dairy industry in the terms of the Bill which is before the House. The responsibility which the Australian Dairy Corporation and the Dairying Research Committee are presently shouldering is considerable. With respect to the Australian Dairy Corporation, its responsibility is further demonstrated from the Crawford report in that section which refers to the administration of the proposed new marketing arrangements. It states:

In a previous report the Commission recommended that the administration of manufacturing milk marketing arrangements should be integrated within the one organisation, the Australian Dairy Corporation. This body would regulate exports, act as the agent for equalisation and coordinate domestic promotion. The Commission is still of the view that the Australian Dairy Corporation should be responsible for all national aspects of administration of dairy marketing arrangements.

The Commission's report went further and stated:

As the Australian Dairy Corporation is involved in national promotion of manufactured dairy products it could, in co-operation with State authorities, complement their promotional activities in these areas. In addition, if the recommendations for production levy on fluid milk were accepted the Australian Dairy Corporation could act as the agent of the Commonwealth Government for the collection of that levy.

The Government has a responsibility in relation to the implementation of the terms of the Crawford report. The ADC and the Dairying Research Committee will be able to play their respective parts in assisting the dairy industry through its present crisis. I commend the Bill to the House.

Debate (on motion by Mr Bryant) adjourned.

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