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Wednesday, 7 March 2001
Page: 25236

Mr CAMERON THOMPSON (11:20 AM) —I am pleased to be able to speak today on the Pig Industry Bill 2000. Unlike the member opposite, the member for Corio, I intend to speak about the pig industry. What we had from him was a veiled attempt to talk about pigs but he then carried on about the dairy industry. The pork industry has been a bit of a revelation to rural communities because, having undergone such an upheaval, it has a positive outcome in the way it is heading. The member opposite referred to the $24 million pork package that was put together some time ago. He also went on at some length about the political connotations of the activities of the pork farmers when they were having difficulties a couple of years ago.

The progress that has been made in the pork industry bears some scrutiny. What is emerging as a result of the difficulty and the government's efforts in dealing with that difficulty is an entirely revised and revitalised industry that is really going places. We see the emergence of completely different structures in the way the pig industry works in Australia. For example, the old co-ops are still functioning but appearing alongside them are various organisations operating with supply chain agreements that represent a change in the way the industry works and one that is very much for the better.

I note that the intent of this bill, to merge and privatise the Australian Pork Corporation and the Pig Research and Development Corporation, is a result of the working party on pork industry restructuring, which reported in March 2000. I think members should be cognisant of that fact. We talk about the industry not being politicised, but that is something the industry itself has very high on its agenda at the moment. I know this because in my area a lot of people are involved in that industry and are very keen not to go down the same dead-end course they went down in the past which got them into great difficulty.

I would like to localise this debate and discuss some of the ramifications of what the government has done in the pork industry, as far as Swickers abattoir in my area of Kingaroy is concerned. Until 18 months ago, Swickers abattoir was a completely domestic abattoir with 85 staff; it could deal with 120 pigs an hour and process between 2,500 and 3,000 pigs a week. That was the throughput for Swickers abattoir at the time of the big crisis in the pork industry. Let us look at that crisis: we had a very high Australian dollar; we had virtually no export capacity in the Australian pork industry; and we had imported pig meat coming in from Denmark and other European countries, together with a local oversupply. In my state of Queensland, the only export abattoir able to send Queensland pork overseas was at Cannon Hill, which was owned by the state government. As the state government was exiting that area, our future in pork exports was really very bleak. In trying to deal with the problem, the federal government faced a concerted political attempt to force the issue of tariffs. As things have turned out, nothing could have been worse for the pork industry than to proceed with what was being proposed by, for example, fellow travellers of One Nation and similar groups that joined in on the hurt, the controversy and the difficulty being experienced in the pork industry at the time. They sucked onto that emotion and exploited it for all it was worth. They blamed tariffs and imports from Denmark and Canada for causing difficulties within the pork industry. That was a gross oversimplification—as we have come to expect from that political area—of the situation. The way the government responded was entirely appropriate. As it has turned out, the government has helped to create a whole new horizon for the industry that it would not otherwise have had.

In the case of Swickers today, it is completely different from the old Swickers that I described a minute ago, as a result of a grant from the Commonwealth under the pig package that the Commonwealth agreed to put together. Remember that the pig package was put together after the Prime Minister went to Wondai. Wondai, which is just outside and to the north of my electorate, is an area with a lot of pig producers. I remember that meeting. The Prime Minister flew into Kingaroy, which is in my electorate, and we drove up to Wondai for the meeting. There were all these concerned pig farmers being spurred along by the newly-elected members of One Nation who were absolutely howling over the question of pork imports. The Prime Minister dealt with the issues in a very up-front and fair dinkum way that I think really impressed the local people. He discussed the core of the issue and did not make over-the-top promises. He did not say, `Let us stop all pork imports tomorrow,' because that would not have solved the problem anyway. He made a promise to come up with a detailed package that would address the issue. To his everlasting credit, he did. That meant for Swickers abattoir a grant of $400,000, 10 per cent of a capital injection of $4 million into that plant, which was spurred on by the government's entirely export focused package. While imports were coming into our country, it gave our farmers an alternative. They were not being jammed in the domestic market. They were not totally shackled to a small market and to antiquated production techniques. They had the opportunity, with the money coming from the Commonwealth, to seek export markets and to develop those export markets.

Under that package, $400,000 was going into Swickers abattoir alone. That money provided a $2.7 million slaughter line. I have seen that line, and the contrast between the old and the new is just amazing. The new slaughter line installed at Swickers can deal with 300 pigs an hour. The line was installed in the middle of last year. It is based on a Danish model and provides a CO2 bath to kill the pigs. It processes them very efficiently in a highly mechanised way and in a very hygienic manner. The second part of that grant, and the capital that it attracted, has gone into value adding in the plant. There was no value adding before. With that extra money, we now have opportunities in exports being developed for the offal that is recovered out of the plant, as well as the development of a new and efficient boning area. The plant now has a completely new business plan and outlook by which it will export and value add. The plant is entirely on an export footing.

You might say that, quite coincidentally, we had the development of the nipah virus in Malaysia. That meant the killing of, I think, a million pigs in Malaysia and the sudden emergence of a huge demand for pork, particularly in Singapore. All that occurred. It is one thing to say that that was fortuitous, but, if the Commonwealth had not acted as it had to have the industry on an export footing at that time, it would not have mattered how many pigs they were killing in Malaysia: there would have been no benefit coming to our pork producers, and there would have been no benefit coming to the Australian economy in general. The fact that the Commonwealth had that in place created that opportunity. Now we see the tragedy of the foot-and-mouth disease infestations unfolding overseas in the UK and other countries in Europe. What is such a tragedy for those people over there is a huge opportunity again for the Australian pork industry to further develop its export markets in Europe and in other places. That will contribute to another huge demand around Asia and will create a further opportunity for this industry to expand.

It is not all rosy in the garden. There are things that have to be done. The problem as it stands at the moment is that not only Swickers but also other plants such as KR and Bungees are doing all this upgrading work, and we are going to need many more pigs to kill in these abattoirs. We are going to need much more throughput. We have to really develop the supply base. We have to provide greater throughput and better ways of dealing with pigs so that the industry is more efficient and we are protected from the dangers of things such as disease outbreaks.

One of the longstanding features of the Australian pork industry is that our pigs are relatively very healthy compared to those overseas. For example, if you look at medical bills for support with vaccinations and so on, for each pig grown in Australia the cost of production is something like $6 less than for pigs in the US. That is obviously a significant advantage that the Australian pork producer has there. We now have the opportunity to use that advantage to develop our export markets. Of course, there are downsides. The cost of our grain, for example, is higher than in the United States. But, by working our advantages, we are going to exploit some of those overseas markets.

Let us look at some of the developments. At the moment, out on the Darling Downs, west of Dalby, a Japanese organisation is developing a large pig breeding unit. That will be a sign of things to come. It shows that those Japanese plants see Australia as the place to be if you want to grow pigs. They are producing all those pigs out there for the Japanese market. No doubt they will then want to move on into processing and those sorts of things in our country, but at least in the initial stages a lot of those pigs are going to find their way, I suspect, to Swickers. That will help with the throughput that I am talking about.

What the Commonwealth has done to deal with the problem of throughput is to speak to the local needs of the community. I know that when the development of Swickers was starting to take off we managed successfully, under the Dairy Regional Assistance Program, to get funding for a water pipeline between Kingaroy and the Swickers abattoir to support its growth. People might say—and I have heard members opposite say it—that some of the things that we are providing have nothing at all to do with the dairy industry, that the Dairy Regional Assistance Program is a program to support the communities in which there has been a dairy industry and in which we are trying to seek a transition into other areas to provide economic stimulus. That is true. Providing a water pipeline to support Swickers, you would say, has nothing to do with the dairy industry. But in fact, if you look at the way that is going at the moment, we have a number of local dairy producers up near Kingaroy who are looking at switching over to the pork industry. In the first wave of the new demand for pigs coming through the Swickers abattoir, we have had nine ex-dairy farmers in that area looking at switching over to pork production, looking at making the jump into this highly productive new pork industry. Already, three of those have taken up the opportunity; and the opportunity to go still further will, for the other nine, be there, because, as I said, we need to improve the supply base. We need to get more pigs coming through, and that is exactly what local people up there are setting about doing.

Earlier I mentioned the way Swickers used to be. The fact is that it is going to be a completely different type of plant, not only in the efficiency of its throughput but in the markets that it serves. Already, we have a situation where Swickers is providing 70 per cent of its kill for other operators, and many of those are supplying Singapore and overseas markets. The people being supplied out of Swickers at the moment include BE Campbell, Pacific Meat Packers, Primo, CJ Read and a range of other small operators. The net result of that is that we have eight containers of pig meat every week going to Singapore that were not there at all for Australia under the old arrangements—eight containers a week, and every one of those containers is worth $18,000. There is obviously a big opportunity there, and those containers are providing jobs for Australians and export earnings for Australia. It is a very important and significant change in the way our industry works.

One of the other sides to this is the way in which we deal with the throughput and the need to boost numbers in the pork industry. The way Swickers is dealing with this is to move completely away from the old vision of the way the pork industry should work, with each farmer running their own sows, growing them out and presenting them to the abattoir, according to the tradition of the way that they have produced them and the way their fathers probably produced them for centuries, or certainly for decades. They have moved away from that to a system in which we now have Swickers talking about establishing a 9,000-sow central breeding unit at Mundubbera—9,000 sows in one place just producing piglets, with those piglets then going to grow-out centres, much in the way that you might say the chicken industry has changed so that you have farmers whose job it is just to grow out the chooks. It is exactly the same with pigs: you get farmers whose job is to grow out the pigs.

By concentrating it in that way, you arrange it so that the disease risks are much less, so that you have much more consistency in your product—because of course each one of those growers is using a set recipe for the market that they are targeting, and they have a direct arrangement where everything is being coordinated through Swickers to ensure consistency of quality, to ensure that the product is as good as it can be—and that it is being produced in a timely manner according to the demands of the market. That is such a completely different pork industry from what Australians have been used to in the past. The member opposite said whenever you had a dairy farm you might get a couple of pigs as well. That was the old attitude. The new attitude is that this is an export industry on its own two feet. It is an industry with a big future and the people in it are looking ahead and making their plans to suit.

One thing that I would like to mention in conclusion is the importance of protecting this embryonic industry, because we are going to have to support the development of that supply chain. One of the difficulties that that comes down to is that there has to be very careful planning in local government because we are going to need so many more pork producers and pig farms being set up. The environmental consequences of that need to be very carefully handled by local authorities, so much so that I know that in the area of Kingaroy in the past it has taken up to a year to apply for and to establish a pig farm. We hope to have that down to something like three months and still protect the important environmental goals that have to be realised. It is important that we protect this industry for the future. (Time expired)