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Thursday, 27 April 1972
Page: 2153

Mr GRASSBY (Riverina) - It is evident from what we have heard from the Government benches tonight that there is some dissatisfaction with the structure of the Australian dairy industry and some doubt and uneasiness about Government policies. We on this side of the House would echo that doubt and uneasiness. I rise particularly to support the proposals that have been outlined by the honourable member for Dawson (Dr Patterson) for the development of a national dairy industry with national initiatives and national leadership. The 7 dairy industry legislative measures which come before the Parliament tonight cover the very basis of industry operations.

The essential measure before us provides for a cut - a possible cut, a foreshadowed cut or an actual cut, we are not sure which - of nearly $14m by the Federal Government in the funds made available to the dairy industry. I must say that the cut is diplomatically introduced. It is introduced under the guise of a minimum sum only, but if there is to he further support for the industry, this seems to be entirely contingent on whether the industry and the States do as desired by the Commonwealth Government. If anyone is in any doubt about this, then the Minister for Primary Industry (Mr Sinclair) in his second reading speech has made it clear. He said:

The actual amount of Commonwealth assistance for the next 5 years will be determined each year in the light of the needs of the industry and taking into account the action taken by the States in the adoption of am effective scheme to control production but it will not be less than $27m.

The Minister and the Government are in fact wielding the big financial stick to the dairy industry, and the big stick is being used perhaps to bring about further reductions in that industry, again as the Government sees them necessary. The Minister for Primary Industry has made clear the Government's policies in this regard. Speaking in South Australia, and reported in the 'Victorian Farmer' of 11th April last, the Minister had this to say:

The 2-price scheme . . . provides for the tailoring of production to market opportunities in times of depressed market circumstances . . . the 2-price plan forms part of the industry's proposals for the stabilisation arrangements to apply after 30th June this year, and the adoption of the scheme by the States or their preparedness to adopt it, will be an important consideration in relation to the Government's consideration of the stabilisation arrangements to apply after 30th June.

The Minister has always indicated that the 2-price plan is the brainchild of the dairy industry; that it is in fact the unanimous solution that the industry in all States has put forward to the Commonwealth; and that the Commonwealth, in its generosity, has agreed to do something which the industry is demanding should be done. It is a pretty picture. But the fact is that the idea of the 2-price plan was conceived in Canberra and sold to the industry and with the carrot and the stick the Government is now seeking to get legislative approval for its own proposal. Perhaps it is the solution. But when we try to see what the proposal in detail really amounts to, we find that it tends to disappear. There is in fact no detailed 2-price plan.

Western Australians, and interests in Western Australia, have put forward the proposition that each State's quota should be its own consumption. Another proposition is that the quota should be based on present production so there would be no cut up of reductions as part of the 2-price scheme. A further Victorian view is that the scheme should operate on factory quotes instead of farmer quotas. Under this scheme it would be too bad if a farmer were tied to a low quota factory. Another proposal was called the Gouen plan, under which every farmer would have a home consumption quota and he who wished to follow the export trend could do so; he could follow the market as he chose.

The question to be asked tonight is whether the Government, which has brought in this legislation, has properly worked out a 2-price plan. If it has, we should know how it would operate and whether the States have signified agreement with it. Let us consider what preceded this legislation. First there was a submission by the Commonwealth Government to the Australian Agricultural Council for a 2- price plan. The State Ministers have agreed to seek detailed proposals from the State dairy officers. We could end up with six 2- price plans and perhaps a further 6 plans from the Dairy Board. We could have 12 plans from which to make a selection but tonight we certainly do not know on what basis. It is very likely that the reduced funds now being made available could be dissipated. In fact I think the Minister really has in mind that these funds will not be adequate and that it will be necessary for the industry to come back to the Commonwealth saying: 'We need further funds'. Then the Minister has told us that he will insist on certain market controls being adopted. Let us consider what this means. Surely it means that the Minister tonight is asking for a blank cheque. In the future the dairy farmer could well find himself being squeezed between the Federal Government and State governments wrangling over the details of a scheme not yet finalised. This hardly seems to be the national lead - the national initiative - which the dairy industry surely has reason to expect at this time. The situation as far as the dairy farmer is concerned is that the Government's policy of industry demolition is succeeding. It certainly is reducing his numbers and his returns are being frozen.

In 1961 there were 3.1 million dairy cows in Australia. Last year the number was 2.6 million. In 1961 there were 72,751 dairy farmers but now there are only 59,000. When we look at the returns we find that the dairy farmer has been in a financial strait jacket. Since as long ago as 1952-53 the equalised return for butter has not varied more than $2 either side of $39 per cwt. For cheese the range has not exceeded 2c either side of 22c per lb in 20 years. But that is the return to the industry. The dairy farmer gets what is left after factory costs have been taken out. The farmer's unit return is, in fact, effec tively down. The dairy farmer has managed to keep abreast of increasing costs by increasing productivity per acre and per man and increasing his herd size. The owner-operator is working longer and harder and more efficiently, but there is a limit to how much further he can go along this road. So it is hard to see the justification for any cut back in support by the Commonwealth Government at this time.

The Parliament would be remiss in its duty if it ignored the fact that the dairy industry's supportive services - the freights, the handling and the marketing - are the areas where improvements in performance are needed. The cost of every single service provided for the dairy farmer and for the handling of his product has increased. His return remains static. This means that the return per unit of production is effectively reduced. The cost of every method of handling his produce has risen. Surely if we talk about efficiency in the industry we should go beyond the farm gate for a change and look at the whole pipeline of costs involved in a primary product and its marketing. I represent, I am proud to say, the most efficient dairy farmers in the world but they are confronted with the most inequitable cost system in the world. It is time we had a look at the whole situation. In 20 years farmers have, over a wide range of products, doubled their per man and per acre output and efficiency. The fanners have done this but such results have not been achieved by any of the supporting services. I urge Government supporters to ask any dairy farmer whether he can name one service or one product which he must use which has improved or been reduced in cost in the last 20 years.

Let us examine in further detail the rural cut-back as it affects the dairy industry. Let us look at the State position. It is interesting to note that almost the whole of Queensland's production of factory butter is sold on the domestic market. Its exports have shrunk almost to vanishing point. The disappearance of butter in Queensland amounts to 26,500 tons of which 16,500 tons represents local consumption. In order to maintain exports of butter and butterbased products, such as ghee or butter oil, it is necessary to import approximately 7,500 tons of butter last year. New South Wales is in a similar position. Production has been reduced from almost 39,000 tons to approximately 21,000 tons in the same 10-year period. Butter exports from New South Wales average only 500 tons a year. It is necessary, in fact, to import about 20,000 tons annually to New South Wales. Both Western Australia and South Australia supply only about two-thirds of their own needs. In 4 States, therefore, butter producers are selling virtually the whole of their production on the domestic market.

It is interesting also to note that the number of dairy cows in milk in Queensland had dropped from 963,000 in 1949 to only 532,000 in 1969. This is a trend which is well marked. In New South Wales the number of cows in milk in 1970 was 652,609 as compared with 894,163 in 1961. That is a decline of almost a quarter of a million cows in 10 years; so there have been considerable and almost dramatic reductions in New South Wales. We have a story of a decline in the numbers of farmers and in stock numbers. This has taken place against the situation where dairymen's money in excess of $10m has been poured into the establishment of recombining plants in Asia. These plants have been described by the Australian Dairy Produce Board as vital to the future of the industry. The plants were to utilise the so-called dairy surplus in Australia, so we spent the money and built the plants. But we have been so short of dairy products that we have been buying Irish and New Zealand products to keep our export plants going. As the Minister knows, we came within a week of importing butter to Australia last year.

The Government has put all its emphasis on butter. It bases its support on butter but it seems to me to be a narrow and inadequate base for the industry. The honourable member for Dawson indicated this in some detail. At the same time the United Kingdom butter market of 65,000 tons available to us will receive perhaps only 15,000 tons and at most 17,000 tons because we just do not have the production to meet our United Kingdom obligations. Perhaps it might be said that this does not matter because the British market will go anyway. Be that as it may, we have certainly lost recent opportunities there. We spent a lot of time and money developing a cheese market in Japan. But if further cuts are made and the doctrine of cutback applies we could lose further in this market. We could lose a market on which we have spent a lot of time, effort and money building up. Japanese buyers want to expand. They want to expand on a firm and secure basis of supply. If we fail to supply, they will look for another source of supply. Certainly they will not be harnessed to declining production.

There is no doubt that production control by the Government has cost the Australian dairy farmers thousands of dollars in export orders. Mr E. C. McCartney of the Petersville Dairying Division was one of the protesters about this control. The Australian dairy industry had genuine nonspecultive orders for the supply in 1971-72 of about 200,000 tons of butter - 3 times the quantity that would be available. We have lost about $50m in export orders and dairy farmers may have lost as much as $1,000 each as a result of the confused policies that have been applied. The Government's alibi for its cut-back policies in dairying lies with the European Economic Community. We should examine what is happening in France. The number of French milk cows declined from 8.7 million to 8.4 million between January 1969 and January 1971. Declines also have occurred in Austria, Belgium, Denmark, Finland, Italy, Norway, Sweden, Switzerland, West Germany and in western Europe as a whole. Comparing the mid- 1971 figures with those of 12 months previously it can be seen that dairy herds in the Netherlands, England and Wales have declined by 2 per cent. The future level of European milk production depends on 2 unknown factors - the duration and extent of the further reduction of the dairy herds and the milk yields per cow.

If we look at the effects of the survey carried out recently by the European Economic Community we find that 57 per cent of farms with dairy cows had one to 5 head, 78 per cent of the farms bad one to 10 head and only 9 per cent of the total number of farms had more than 14 dairy cows. Farmers over the age of 50 years without heirs were running 58 per cent of the smaller dairy farms, averaging just over 4 cows a farm. These small farms accounted for one-quarter of the total EEC dairy herd of 22.9 million. The figures I have submitted to the Parliament indicate a continued decline in EEC dairy herds. I think that the exercise of comparing Australian dairy farms, and Australian farms generally, with European farms is futile. It is just not valid. It is true that the protectionist policies of the EEC have made an impact and have created some temporary surpluses but it has been the express policy of the EEC to obviate and reduce the level of production and the level of what they regard as excessive and uneconomic production.

If we are to take the .view that the Australian dairy industry is to be equated with the industry I have just described in precise terms in Europe, I suggest that one just cannot do it and it is not a valid comparison at all. I reject the view that the Australian dairy industry should be further reduced. There is a need for further market development. There is a need to expose what I submit is the stupidity of the refusal to explore the possibilities of the combined butter ofl - vegetable oil blend. This, it seems to me, is compounding the wrong decision made in the wool industry, now being changed, not to get on to the sythetic blend band wagon. After years of delay the thinking has changed but we should recognise the need to explore this development thoroughly and completely. In fact, we have failed to do so. This is a serious omission and the Commonwealth should have shown clear leadership and ensured that at least a proper exploration of market potential was undertaken.

I have a deep fear that our friends and rivals in New Zealand will seize the lead. They have been showing interesting and commendable initiative and I do not want to see us again left behind in this sphere by New Zealand initiatives. I do not mind any necessary national initiatives in the legislation; merely an indication that there is a concern and a preoccupation with what is regarded by the Government as surplus. 1 suggest that if one carries this view further forward one is indulging in what I would describe as economic nihilism. Whenever there is a marketing and selling problem the top shelf of the stone is cut back one year. If marketing difficul ties continue, the second shelf is cut back and so it continues down to the floor where all the shelf goods have been eliminated and production and so the problem is solved. That constitutes economic nihilism and I do not subscribe to it. The Government's solution seems to be in restrictions and cut backs. The Opposition's answer is new national initiatives and improved marketing and handling. Therein lies the difference between us.

We have decided to take all of these Bills together and I shall apply myself briefly to the research sections of the legislation. The dairy industry does contribute substantially to research but there has been a breakdown in communication and a laggard situation has been allowed to develop in regard to the dissemination of information in the industry. I have here a report entitled 'Dairy Research'. It is the most recent report available from the Dairy Produce Research Committee and it describes the progress made in dairy industry research programme of 1958-1966. The calendar tells me that we are now in 1972. It is not good enough to have this sort of delay.

As I understand it, the Australian Dairy Farmers Federation has been concerned to see that the results of research are made available more quickly than has been the case in the past. In fact, there has been pressure at each meeting of the federation that reports on all research projects should be provided with funds supplied by the research levy - the levy we are going to increase - and that the report should contain a brief description of each project, the status of the project, whether it has been completed, abandoned, deferred or is still continuing, and if abandoned or deferred the reason for such action. It has been suggested that the report should contain also a brief statement of the result of each project where completed, or an interim progress report where projects are continuing, deferred or abandoned, and a statement on the extent to which the results of each completed project or the interim results of continuing projects have been adopted by the appropriate sector of the industry. Where it appears that the results of research have not yet been adopted by a sector of the industry the report should contain an assessment of the apparent cause of such situation. - There is obviously a need at all levels of the industry for more involvement in what is going on in research and for results of research to be disseminated more quickly and applied more effectively. This is an age old problem in research and extension where we have in too many spheres the results of research taking 10 years before being applied constructively and properly in the paddock. In the 1970s we cannot afford a 10 year lag, and I suggest that the Minister apply himself to this aspect and also to updating the status of the reports from 1966 to 1972. The delays I have referred to are delays we cannot afford and I ask for some initiative in this direction.

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