Ken O'Dowd (Flynn, National Party) Share this | Hansard source

I would like to speak in support of the Primary Industries (Excise) Levies Amendment (Dairy Produce) Bill 2014. Firstly, I would like to acknowledge the good work done by Australian Dairy Farmers Limited, the national representative body for the dairy industry. This bill proposes amendments to the act to increase the maximum rate of the Australian Animal Health Council levy on milk fat and milk protein. These amendments are clearly necessary for the industry to meet its obligations in relation to the important animal health and welfare initiatives that have to be agreed to for the Emergency Animal Disease Response Agreement, the EADRA. Importantly, this bill will not increase the actual levy payable by the industry and its members. It does not impose a financial burden on dairy farmers. Furthermore, it will have no financial impact on the Commonwealth. Any increase to the levy rate will require a case to be put forward by the dairy industry. The case must demonstrate widespread consultation and support in accordance with the Australian government's Levy Principles and Guidelines.

The levy has not been increased since 1999 and ADF have indicated that they have no current plans to increase it. However, the proposed increase in the levy cap will give the industry the flexibility it needs to invest in preparedness for foot-and-mouth disease and emergency disease response capability and surveillance. For the dairy industry this is a particular priority. FMD, foot-and-mouth disease, has been described as the single greatest threat of any disease to Australian livestock. A large outbreak of FMD has the potential to reduce Australia's gross domestic product by $10.3 billion to $16.7 billion, which would have a very significant effect on our economy.

We, the coalition government, are proud of the industry and have confidence in its future. We want to help the dairy industry, along with the agricultural sector generally, to grow and prosper and achieve our goal of helping Australia become a world leader in sustainable food production. Our focus is on securing market access, cutting red tape and ensuring that farmers can continue to get a fair price. The government is active in encouraging the development of productive farming systems and world-standard resource management practices.

In my electorate of Flynn and, indeed, in Queensland, the dairy industry is somewhat different from what our good members from Tasmania have been telling us about the industry there. While the demand in Queensland for milk products is increasing by seven per cent a year, our dairy farmer business is declining. The Port Curtis Co-operative Dairy Association is a co-op that I have lived with ever since I was born—my family had a dairy farm where I grew up. Unfortunately, in Queensland we have become price takers and we cannot justify the low price of around 55 cents a litre for milk. Some of my farmers three or four years ago were getting 60 cents a litre and we have found that the drop to 55c was unjustifiable.

The three main players in our industry in Queensland are the dairy farmers themselves, who have little or no say in their industry; the processors, who are generally overseas owned; and, of course, the big Coles and Woolworths stores, who sell the bulk of milk. I do believe that the future is in the overseas markets and that for Queensland, as a growing state, the ability to give fresh milk to the population is a must. The industry itself is sometimes struggling. I have 29 farmers in my electorate who supply milk to Rockhampton PCD. The big danger is that if too many more dairy farmers drop out of business then we are afraid that the Rockhampton branch could close. If that happened it would be a tragedy, so we have to encourage our farmers to hang in. I think the future is in Korea and the other Asian markets, and I have to thank Andrew Robb for the good work he has done on tariffs and the free trade agreement with Korea. That can only help the farmers' cause and it means so much.

In terms of the eastern states, including Tasmania, Queensland still plays a part but it is the minor player and I think our farmers are the worst off. I was at a meeting with the dairy farm group where they were talking about a world price. I said I had not heard of a world price. They said it is about 40 cents or 45 cents a litre. I think Victorian farmers are on something like that. I asked what the price was for Queensland milk. They said, 'You can easily work that out—it is world price plus freight from Victoria to Queensland.' That is the way they will work it out. So I went around and I asked a few dairy farmers how much the price of freight was from Victoria to Queensland, because that is what they are thinking in the long term if things get worse in Queensland, and I was told it was 18c. That would put milk in Queensland at about 58 cents a litre.

If we were able to get our dairy farmers up from 55c to 65c, that would ensure the viability of the dairy farms in my electorate. I hope that can be achieved one day. I do not think 10 cents a litre to our dairy farmers would hurt the consumer. Surely if we can work around our processors, Woolworths and Coles et cetera, I think that is very achievable. At the present rate of 55 cents a litre, it is not on.

To give you some facts and figures on Queensland, we produce about 500 million litres of high-quality fresh milk a year. The industry generates $240 million worth of milk products. It adds $2 billion to the Queensland economy. The dairy industry in Queensland is quite a large employer, with around 3,000 people having jobs in the dairy industry. Of course, the industry throughout Queensland, not just in Flynn, still faces massive challenges. The ongoing supermarket price war has forced the processors and the farmers into an unprofitable situation—I refer you back to the 55 cents a litre. The farmers have to put up with drought and increasing costs, and the wretched carbon tax is not helping their cause one little bit. Where you have dairy farms you have irrigation, crops of lucerne to grow and cattle to feed on a 24-hour basis, and when you start pumping water from one place to another it is very costly, with electricity bills going through the roof.

However, the coalition government is working in partnership with the industry to ensure a balance of market power for the dairy farmers in Queensland and throughout Australia. We are trying to cut red tape. We are trying to get rid of the excise fuel levy that is going to come in on 1 July. If we do not get rid of the 6½c diesel impost from the carbon tax then our dairy farmers, especially the 29 farmers I talked about in my electorate, will have their business go down the gurgler. They cannot pay that extra fuel price when they are already producing at below cost. It is a dire situation.

To get back to the measures in this bill, the dairy industry is the third largest rural industry in our economy, coming in just behind beef and wheat, so it is important to Australia. We have 6,770 farms with, on average, 240 cows per farm. Each cow produces about 5,926 litres a year or 16 litres a day. That is much bigger than it was before.

Debate interrupted.

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