Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Thursday, 18 May 1972
Page: 1809

Senator PRIMMER - Perhaps the next most important of these Bills is the Dairying Research Bill 1972. This bill widens the scope in relation to the collection of moneys for the purpose of research. Perhaps the other most important Bill of the 7 is the Processed Milk Products Bounty Bill 1972. As was the case with the 5-year stabilisation plan, this Bill extends for a further 5 years the $800,000 bounty that is paid to the industry in respect of processed milk products which are exported. As to the Dairying Research Bill, I am of the opinion that its introduction is not before time. In the past, research levies have been paid only by that section of the industry that has produced milk to be processed into cheese, butter, butter oil, butter powder or ghee. In fact about 28 per cent or 30 per cent of the milk produced in the Commonwealth has not had a research levy paid on it; that is the percentage of milk that has been processed or sold as liquid milk for human consumption.

I think one is quite justified in saying that in this respect what might be regarded as the poorer section of the industry has been subsidising the richer section, in particular the producers of the 22 per cent or 23 per cent of milk which has been used for human consumption. This is the most lucrative section of the dairy industry and it is not before time that, along with the processed milk section, it is brought within the provisions of the research legislation. All dairy farmers in the Commonwealth will be placed on an equal footing. Quite frankly, this omission in the past has been a bone of contention within the industry and has led to some rather bitter debates at the dairy farmer level. It is to be welcomed by the industry and by anybody who has had anything to do with the industry.

However, I question the allocation of these funds for research. At page 34 of the 1971 report of the Australian Dairy Produce Board is a statement that only 8.6 per cent of the money collected in that year was expended for marketing research. By and large, the remainder was spent on increasing production. If one is to accept the proposals that have been propounded by Ministers for Primary Industry, the Government and other conservative elements within the community that the only future role for the dairy industry is constant contraction, one would believe that some of this research money should be expended in looking for new markets; but it would seem that the Dairy Industry Research Committee has a totally different approach to the industry from that of the Government and other conservative elements in the community.

Its members apparently see no reason why large amounts of research funds should be spent on marketing research. According to the report, research has continued on the following aspects of dairy farm production: pasture and soil, various complaints of dairy cattle, and work on the nutrient requirements of soil types in various dairying areas. Queensland has been part of a comprehensive programme concerned with the breeding, establishment and management of new species of tropical grasses. The report goes on to say that this work has led to substantially increased stocking rates and increases in production from each cow.

I believe I am quite justified in saying that the Dairy Industry Research Committee has a totally different approach to the dairy industry from that of the Government and other people in the community who appear to see the future of the industry as only of constant contraction. The Bill dealing with 5-year stabilisation sets out the sixth such plan. It will be noted that the Government has guaranteed only $27m by way of bounty to the industry for each year of the 5-year plan, as against the sum of $40.8m that was granted to the industry last year. Conditional upon the industry's bowing to the Government's pressure, it is quite feasible to read into the Minister's speech that the industry may receive further funds. There is no guarantee. In fact, I believe that one could quite logically read into it that irrespective of what the industry does, it will receive only $27m a year over the next 5 years.

The Minister has laid a great deal of stress on the need for the industry to oblige him, the Parliament or the Department with a 2-price quota plan. The Minister went to great lengths to stress that the. need for the plan came, not from the Government but from the industry. Honourable senators may recall that I mentioned this in my maiden speech last August. After having been involved in the industry for 40 years at the grass roots level, I cannot accept the Minister's explanation of the 2- price quota plan. As I have already said, the largest section of the Victorian industry at a conference at about this time last year was told that it would either accept the necessity for a 2-price quota plan or the subsidy could be jeopardised. If that is not some form of political blackmail, I do not know what is. I, for one, am not prepared to accept the, Minister's word that the idea of a 2-price quota plan came from the industry. In fact, it came from the Government.

At the conference to which I have referred the message was relayed by Mr Nixon, the honourable member for Gippsland. If the Government intends to direct the industry towards a 2-price quota plan, I believe that the industry has every reason to be sceptical because senators may recall that I said in my maiden speech last August that the industry was moved to accept a cut of 3.5 per cent in production as a voluntary action. That happened in May 2 years ago. Five or six months later the industry was told to take off all the brakes and go all out for production - that in fact the industry was falling behind and there was dire peril ahead for the marketing of our dairy produce.

We have never been able to find out what person or which department made the decision to have a cut in production of 3.5 per cent. Perhaps we will never know, but it is patently obvious that despite all the information that the Department or the Minister had at their fingertips, a wrong decision was made. The decision was made in the light of a build-up of dairy prodducts, particularly in the European Economic Community and generally across the world. Within 6 months this mountain of butterfat, as it was called at the time, was virtually dissipated and Australia was in a position where we may have been forced to import butter, I believe that the industry will be very sceptical of any approach or suggestion that is made in future to have some form of restriction placed upon production. The old adage of once caught twice shy will live long in the memories of those in the industry.

In this regard it is interesting to note the comment of the soon to be retired Chairman of the Australian Dairy Produce Board, Mr Eric Roberts. Recently be was quoted by the 'Sydney Morning Herald' as saying that one of the lessons he had learned during his chairmanship was never to judge future prospects potential or viability of the dairy foods industry. The report goes on:

Judgments were always difficult, no matter bow the industry was placed. Governments, economists, critics and advisers had all been guilty of judging the industry's worth and future on prevailing situations, rather than on a long term overall picture. Past experience shows that neither the extreme high nor the extreme low has a long or continuing place in the industry.

I believe that that is a warning from a man who has been at the helm of the Dairy Board for some considerable time, a man who grew up in the industry and knows what it is all about.

One other problem has arisen already because of the talk and the pressure that has been applied for the industry to adopt a 2-price quota plan. Japanese buyers of our dairy produce are saying to our exporters: 'What is the future of the Australian dairy industry? Does it have any potential? Can we be guaranteed dairy produce over a long term period?' According to my information the Japanese are inclined to look to New Zealand because that country is prepared to give them guaranteed agreements in respect of the availability of dairy produce for up to 5 years.

There are other things which should be considered when we talk about a 2-price quota plan. One is the fact that the average age of dairy farmers in the European Economic Community is 60 years while that of dairy farmers in this country is 50 years. I point out that last year 1,800 dairy farmers in Victoria left the industry. The number of dairy cattle throughout the Commonwealth fell to some 328,000 in the last decade and the number of holdings with milk cattle fell from 142,000 to 59,500 in the last 22 years. Any imposition on the restriction of production in Australia could lead this country within a few years to the stage where it may well have to import its butter and cheese, and, if the worst came about, even milk for human consumption. On the other hand, despite the bleating of the critics across the nation, the armchair strategists and some dairy farmers in the community, the industry is now earning export income. It did so in the last 2 years to the extent of $115m a year. That is a considerable sum for one of our primary industries to earn in export income.

Other factors have to be considered in relation to the implementation of this 2- price plan. I asked the responsible Minister a question about it some two or three weeks ago and I may raise this matter again during the Committee stage. The Senate is being asked to debate these Bills relating to the dairy industry and to vote on them although we do not know what form this 2-price quota plan will take. The mechanics of it were spelt out to some extent in the report of the Australian Dairy Industry Council some 12 months ago but in the meantime the responsible primary industry Ministers in each State have all come up with their own plan. The industry today has before it 7 proposals for a 2-price quota plan, and at this stage no-one knows what, if anything, is going to be adopted.

The only 2 plans that I have been able to get my hands on to study are the one I just mentioned, the plan of the Australian Dairy Industry Council, and the Victorian plan which was released only a week or perhaps 2 weeks ago. Perhaps the most serious omission that I discovered in the Victorian plan is that it proposes quotas only on butter, butter oil, cheese and processed milk products and not on the very important liquid milk section of the industry. The liquid milk section is lucrative by comparison with the products for which the Victorian plan seeks a quota. I suggest that if all dairy farmers in Victoria participated in the liquid milk market and the quotas were averaged out across the entire industry so that everybody would have some 17 or 18 gallons per farm, according to the last estimates I read, then the plan would not be so bad. But at present a select few in the industry have the right of access to this market. In fact, roughly onethird of the industry has access to this market. This means that the other twothirds will be harshly treated. I have with me figures relating to the liquid milk market in Victoria. At 13th April this year there were 17,298 licensed dairy farms in Victoria and of that number 6,628 had access to the liquid milk market. The largest liquid milk contract in Victoria is for 900 gallons a day. I see no reason why that section of the industry should not be brought into any 2-price quota plan and placed on an equal basis with the rest of the dairy farmers in that State. It is noticeable that the report of the dairy industry's federal body on the quota plan makes some provision for including liquid milk in the quota.

As I said, I have seen only those 2 reports. There is little doubt that there will be a great deal of debate within the industry over the next few months in order to come to some rationalised plan whereby each State, each farm or each factory in the Commonwealth will receive a just share of the home market if this 2-price quota plan is ever implemented. One hopes that when that day comes a just plan will have been evolved. If the type of plan proposed by the Victorian Department of Agriculture and the Victorian Minister were implemented it would lead to anarchy in the industry. There is a rather damaging situation apparent today in the industry in Victoria because only one-third of the producers there have access to the liquid milk market. It means, in effect, that while one producer is receiving, say, 25c or 26c a gallon for his milk, his next door neighbour, facing the same costs and input factors involved in the dairying game, is receiving about 42c a gallon for similar milk. This leads to bitterness and unpleasantness within the industry.

The situation has been alleviated somewhat of late because world prices for butter and other export commodities have increased. In fact, they have increased to such an extent that one would be quite justified in saying that at the present time the industry is in one of the most affluent financial positions it has been in for a long time. The present situation will not last and I do not think that anybody in the industry expects it to last. Already, there are indications of quite a substantial buildup of stocks across the world. In fact, in mid- April 1971 butter stocks in storage throughout the world amounted to 235,000 tons. In mid-April 1972, just 12 months later, they amounted to 283,000 tons. In 1971, 245,000 tons of cheese was stored throughout the world. This year the figure is 261,000 tons. At the present time, the European Economic Community countries are subsidising exports to the value of SA342 a ton. We have a situation similar to that which arose two or three years ago.

Whether it will again reach the proportions it reached then, I very much doubt. This is because of the other factors that I have already mentioned in regard to the dairy industry throughout the world.

Over the years the Australian Dairy Produce Board has attempted to set up, and has succeeded in setting up, plants throughout Asia, Perhaps this is one of the better known activities that the Board has undertaken. At times these plants have been something of an aunt sally for critics of the industry. But, by and large, I think that they have proved to be successful. They have taken quite large amounts of Australian dairy produce and reconstituted it into products that have been utilised by the peoples of those Asian countries where the plants have been established. On 16th May this year the honourable member for McMillan, Mr Buchanan, asked a question in another place. I noticed that it was taken up by one of the Melbourne daily newspapers. The question was directed by Mr Buchanan to the Minister for Primary Industry (Mr Sinclair). He asked:

Is the Minister aware of the threat by the Australian Dairy Produce Board that it will confiscate supplies of milk powder to bolster its ailing Asian dairy plants? The Board says that it will pay only cut rates and that it will refuse export permits for contracts that have already been made at the high ruling rates which are current today unless factories agree to the sacrifice of existing customers. I ask: Will the Minister please stop this highway robbery and at least insist on the Board paying the going world prices?

I was somewhat disturbed when I read the report of that question in the Melbourne newspaper. I was so perturbed that I took it upon myself to contact the Chairman of the Australian Dairy Produce Board. He had not at that stage of the day read the report, but he was very disturbed when I read the newspaper comment to him. We said that there were people who had gone to the extent of employing publicity agents to do what they could to damage the Board. The facts of the matter are that the Board has cancelled some permits, but only where factories have orders for thousands of tons of produce more than they can supply and where permits were granted and have never been operated upon. The Board has advised Australian manufacturers that unless it can find supplies for its plants from Australian sources it may be placed in a situation in which it will be forced to seek produce from New

Zealand. Of course, the New Zealanders are not idiots when it comes to bargaining and long term market arrangements. They would insist on long term arrangements if the Board had to move in there. If this high price bubble burst the Australian dairy industry would find itself in a situation in which it would be stuck with its produce and have nowhere to sell it.

I believe that the Board has adopted a very diplomatic approach to this matter. I believe that if the Australian dairy industry has set up plants in Asia it has an obligation, even at a time when world prices for dairy produce are high, to supply those plants with the produce that they require. It is said virtually in the adverse comment that the Australian Dairy Produce Board is not prepared to pay the going world rates for dairy produce for its plants in Asia. As has been reported to me by the President of the Australian Dairy Produce Board, in Asia the Board is obliged to compete with the New Zealand industry. Therefore, it cannot act in a businesslike way if it pays more for Australian produce than the price at which New Zealand can supply produce. I understand that the going rate for New Zealand powder is about $428 a ton. The price that the Board is paying for produce for its Asian factories is better than the average world trader to trader price. Prices are being quoted in excess of it. But my understanding is that they are rather few and far between and that when they ate all averaged out - this is according to the Chairman of the Board - it is paying better than world trader to trader prices. It would appear that there are people in the industry who, like many other people in our society, seek to capitalise their gains and socialise their losses. I think this is about the best way to describe the people who have started this campaign against the Australian Dairy Produce Board.

I think I have already said that we on this side of the Senate are not opposed to the Bill, with the exception that we intend to make a request in regard to clause 8 (2.) of the Dairying Research Levy Collection Bill 1972 and also to move an amendment to clause 9 (2.) of that Bill. That will be done in Committee. Because the Opposition is not opposed to the Bills, it is rather difficult to talk for hours or really to debate the matter. The situation of the industry has improved immeasurably in regard to our world markets. It will be recalled that when the first intimations were given that Great Britain was to join the European Economic Community a great deal of distress and alarm was expressed. Distress and alarm were expressed as loudly and as clearly in :he industry as anywhere else.

There were fears that the industry would be stuck with huge amounts of dairy produce which it would not be able to dispose of. Those fears were not realised because of several factors - the rather judicious operations of the Australian Dairy Produce Board in opening plants in Asia; the fact that production in Australia had tended to decline; the fact that thousands had left the industry; that those in it were getting older and that the number of holdings had fallen dramatically. AH of those factors have meant that last year only about 8,000 tons of butter were exported to Great Britain. It is currently estimated by those with some knowledge of the industry, including some in the industry, that next year there is a possibility that there will be only 5,000 tons of butter to export to Great Britain. That shows that the industry has not been asleep; rather that it has been working hard during the last decade to shift its export markets away from the traditional market of Great Britain. In this effort it has been successful. I believe that the industry, subject to rationalisation in certain areas, subject to good management and subject to one or two other things, will be around for a long time. As I have said in previous speeches, it provides industry, work and a livelihood for a great many of our rural towns and cities. I think it can be said, without fear of contradiction, that throughout Australia today the only rural areas that still show signs of affluence in the towns and cities are those areas which are engaged in the dairying industry. Once one moves away from the dairying areas, of my State anyhow, and moves into the wheat and wool growing areas, there seems to be a noticeable deterioration in towns and cities and in the rural work force. Admittedly, the position in dairying areas is not good, but I believe that it is out in front of the position, as I have seen it, in the wheat and wool growing areas of Victoria.

Another factor is starting to develop in the industry. In the past it has always been orientated largely around butter. Butter has been the mainstay of the industry. Today it has become a by-product of the industry. The milk powders and solids not fat have become the cream of the industry, and this influence is starting to show at the end of the production line. Another trend which is starting to show loud and clear is the swing to cheese. It is a growth factor in the industry. The Australian Dairy Produce Board has prophesied that in the 1980s - within the next decade - cheese will take the place of butter as the main product of the industry. Cheese has been introduced into the bars, clubs, hotels and what have you throughout the nation, lt has been promoted successfully by the Board, in conjunction with the wine industry. Wine and cheese tasting nights have become a part of Australian society. They are very pleasant nights, too, if I might say so. That is another trend in the industry.

However, one long term matter does concern me, and that is the matter to which I referred earlier - the age group of those who are still in the industry today. The average age of the Australian dairy farmer is 50 years. I believe that in the past the Government has fallen down. Because of inflation and because of high land prices, it is extremely difficult for young people to enter the industry today. I can quote only my own experience. In 1946 or 1947, under a Labor government, when land prices were pegged at £20 an acre for dairy land, I bought some land. About 8 years ago I bought the adjoining 50 acres at £143 an acre. That gives an indication of the rise in land values in Victoria during those years. There is no possible hope of young people entering the industry today unless they go on dad's farm or unless dad has made a mint and is able to set them up on their own. Any person who tries to enter the dairying industry today with less than $50,000 or $60,000 in cash is probably placing such a millstone around his own, his wife's and his children's necks that he would find himself in the position in which the industry was placed in the 1930s. If the industry is to survive the only solution to the problem, as I see it, is for long term loans to be made available at low rates of interest. That would allow young people to enter the industry. Despite the hours that are worked 7 days a week, a considerable number of young people are desirous of entering the industry. The young fellow who is brought up on the farm today cannot get to the city quickly enough, but some of those who have never had the opportunity to be on a farm are breaking their necks to get into the game. The only way that they will be able to do so is for the Government to legislate to provide long term loans at low rates of interest.

I mentioned the situation in Victoria where there is a 2-price industry - one price for those who supply liquid milk and another price for those who supply milk for manufacture. There has been agitation to try to iron out the problem to give all sections of the industry a cut off that most lucrative side of the industry. It is very interesting to note that in April last year, from memory, in the Tasmanian Parliament there was tabled a report of an inquiry into the dairying industry in that State. The report spelled out what those who sat on the Committee believed to be the correct attitude to take for the future of the industry in Tasmania. The report recommended the establishment of a dairy board along similar lines to the authority which operates in Great Britain - a milk marketing authority to take unto itself all the milk. Then users of the milk would purchase it from that body at different prices, according to the end product which they hoped to make from it. This would equalise the position of all dairy farmers. It would mean that every dairy farmer in Tasmania would receive the same price for each gallon of milk supplied.

Senator Young - They would be following the milky way.

Senator PRIMMER - That is right. It has long been my contention that a great deal of the problems in the industry in Australia today will be solved only by Commonwealth action which I suppose would have to be taken in conjunction with the States. They would have to forego certain rights. It does seem to me to be rather strange that the Commonwealth can set up a single authority to take over wheat. The woolgrowers have long been crying out for a similar kind of authority to take their wool. I believe that the long term future of the industry in Australia would be better served and that many of the parochial attitudes which are expressed from State to State in the industry would be pushed aside if a Commonwealth milk marketing authority were established along the lines of that which has evolved in Great Britain. In that way everybody in the Commonwealth who milks cows would receive the same price for his milk and that milk would be distributed by the marketing authority to the end users. That would get away from the bitterness that prevails in the industry, particularly the bitterness between those who have access to the liquid milk market and those who do not.

Suggest corrections