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Tuesday, 5 May 1987
Page: 2649

Mr HOLLIS(10.50) —Over recent weeks some Victorian milk has been sent to retail outlets in New South Wales, raising fears about the start of a milk war. I might say that at this stage only a small number of Victorian farmers have been involved. I hope that the majority of Victorian farmers will bring pressure to bear on their colleagues to see sense and return to the orderly marketing of milk. I have heard this evening that some agreement has been reached and that perhaps temporarily the threat of an all-out milk war has been averted. Almost two years ago many thought a settlement had been reached with the Kerin plan. There was a degree of resentment amongst dairy farmers in New South Wales but it was accepted that the national dairy plan would smooth the necessary Victorian rationalisation. That this is now being flouted by some adds insult to injury. I personally had some reservations about the plan but I saw it realistically as the best way to preserve the industry.

Over the years the dairy farmers of Throsby, like all New South Wales dairy farmers, have borne the pain of market oriented rationalisation. The extent of the rationalisation undergone in New South Wales can be gauged by the drop in dairy farmer numbers of 2,000 in the past 10 years, to around 2,700 today, and a drop of more than half the number of factories. Indeed, my own local factory at Jamberoo had to close a couple of years ago. However, Victorian dairy farmer numbers have declined very little, with the total still about 10,000. Of course, what is at stake-and I think I have a bit of a hostile audience-is the lucrative New South Wales market milk sector. Having spent years gearing their industry to this market, the New South Wales farmers will not stand idly by and see this market destroyed. Who can blame them?

The Victorians claim that they are more efficient than their New South Wales counterparts. We are told that they produce milk for some 13c a litre against the New South Wales cost of around 19c a litre. But this argument, as my farming colleagues must agree, ignores the fact that New South Wales farmers have to produce milk year round to meet a rigid quota, and this inevitably involves supplementary winter feeding to maintain production. New South Wales consumers are guaranteed a year round supply of quality milk. In Victoria most milk is produced in the summer months. We in New South Wales do not want a flood of cheap milk in spring and summer only to have it rationed in winter, with what milk is available being very expensive.

There will be no winners, only losers, from a milk war. I warn my Victorian colleagues that farmers in New South Wales will not continue to pay a levy to Victoria, only to see their industry destroyed. The real sufferers will be the consumers who will be forced in the long term to pay more for an uncertain supply of milk. Also, many farmers will be forced out of the industry in both States. Unfortunately they will mostly be the younger farmers who often have large overdrafts.

I do not go along with plans to give the Victorians a percentage of the Sydney milk market-not even one per cent-because, going on past experience, if we give them one per cent this year it will be 5 per cent next year and more the year after. I would also like to see the 60-day period permitted the Minister-the so-called comfort clause-much shorter.

Finally, let me give my Victorian colleagues a warning. They may in the short term have a victory of sorts but it will be short lived. It will be no good coming to me and other New South Wales members and complaining in a year or so when New Zealand milk is imported and forcing them out of the industry. For all concerned and for the dairy industry I hope that the Victorians see sense and stop their provocative action before real damage is done to the dairy industry.