Sharman Stone (Murray, Liberal Party, Shadow Minister for Immigration and Citizenship) Share this | Link to this | Hansard source

The dairy industry is, without doubt, in crisis. An extraordinary overlapping of terrible events has meant that for the first time in 30 years we are seeing prices so low that dairy farmers are right now saying it is just too hard to continue. We have had drought in the southern Murray-Darling Basin and northern Victoria for seven years. We have had the global contraction of credit as a result of the global recession and so the contraction of demand for dairy product. That came on top of a scare in relation to contamination of milk powder in China. Put all that together and we saw the doors to our export industry slam shut some six to eight months ago.

On top of those hard-enough-to-deal-with factors, we have federal and state government policies creating the destruction of the irrigation infrastructure of northern Victoria and southern New South Wales. The economies of scale of production which are needed to sustain dairy manufacturing depend on drought proofing. In some parts of Australia, there has been high rainfall. In most parts of Australia where milk is produced for dairy manufacturing, that production has been sustained over the last 100 years through low-energy, gravity fed irrigation. Unfortunately, through this government’s policies, we are seeing irrigators forced to sell out at prices offered by a federal government with very deep pockets when their lenders say to them: ‘You are in debt. The drought continues. You can leave right now or you can sell some of your water and hang on a little while longer and maybe it will rain.’ The problem with that scenario is that, once you have sold your water, if you are in the Goulburn Valley, the Murray Valley or the Loddon Valley—the homeland of dairy manufacturing in Australia—it is all over; you cannot afford to repurchase water and, with the loss of the security of supply and the contraction of the numbers of dairy farmers in the region, your own dairy manufacturing factories are looking very closely at whether it is a good idea to remain in the region.

You can imagine the distress of dairy farmers when they saw the Rudd Labor government bail out the multinational car industry with nearly $6 billion and the ailing retail sector primed with another $4 billion before Christmas. We have also seen this Labor government look very kindly towards textiles, clothing and footwear. All of these industry sectors have for years battled to be classed as internationally competitive, but these particular industry sectors were handed billions of dollars to stay afloat.

On the other hand we have the dairy industry—the manufacturing or export oriented dairy industry. It has been an industry that has held its head up despite no subsidy for generations. It generates, in fact, billions of dollars—$4.6 billion value at the farm gate and $11.5 billion annually of wholesale value to the economy. The export industry alone contributes $2.9 billion to the economy. Between 30,000 and 40,000 jobs are dependent on the dairy industry. The economic regional multiplier of the dairy industry is estimated to be 2.5. This is a major industry for Australia and it is one which has been world’s best in practice for generations. It is not like our automotive industry—a multinational-led industry that staggers from crisis to crisis; the dairy industry has been superb and supreme. Now is its time of make or break.

We have been appealing to the Minister for Agriculture, Fisheries and Forestry, Minister Burke, now for six months. He says he is very understanding and sympathetic. He has visited my electorate, he has visited other parts of the Murray-Darling Basin to look at the dairy sector, and he has had his advisers come to the region. What he has told them basically is: ‘You’re in a great amount of strife here. You should be sympathised with but, sorry, we are not about to give you a hand.’ What the dairy industry needs is the difference between the below-cost-of-production prices offered and a reasonable return so they can hang on for at least 18 months, when we hope the prices will come back with international credit better restored and international demand back where it used to be. We are looking at only about $74 million. That is all it would take to give a future to Australia’s export dairy manufacturing sector and to protect the jobs for all of those who are involved, not just in the dairy production itself, but in the transport sector associated with this industry, the food manufacturing sector, the research and development sector, and the commercial sector with the retailing that goes with all of this production.

Dairy milk powders were the biggest export by commodity volume and value out of Geelong for years, yet this Rudd Labor government has turned its back on the dairy industry. It is just extraordinary to contemplate. What is the difference between keeping something like automotive, retail or the textile, clothing and footwear sectors afloat and the dairy industry? I am afraid some people simply say it is the way they vote. That should not be the way that this government deals with taxpayers’ funds and with retaining jobs in this economy.

Let me say, too, that we have the most appalling water policy now. We have the minister, Penny Wong, thinking that if she puts enough dollars on the table, buys enough water from desperate farmers—who are not willing to sell, who are being pressured by their lenders—she is doing a favour to the environment. We have even the environmentalists, or those who say they have green credentials, now alarmed and disturbed that this water buyback measure has done nothing for restoring wetlands. What it has done is strand the assets of the irrigation sector and drive some of our best performers as dairy producers out of business.

Let me give you an example of how perverse and extraordinary this whole business of the water buyback is for the dairy sector. Here I have from the Australian government Department of the Environment, Water, Heritage and the Arts an offer to buy the water entitlements, for them to be sold to the Commonwealth, under the Restoring the Balance in the Murray-Darling Basin program. The offer to these farmers, who were forced to put their water on the market, was for $2,400 per megalitre. The date of the offer is 26 February this year. Note: 26 February. We have in this case and so many like it not a word since that offer was made—or, rather, their offer was accepted.

The department recommends that this party get some accounting advice in relation to signing the contract. It is supposed to be a done deal. The government has said ‘here is $2,400 per megalitre; get out of business’. They do not even have the gumption or the values to say this particular dairy farmer is completely finished because he has not been able to sell his water to save even part of his herd.

This is the sort of thing our dairy farmers are facing. I have to tell you that it is an industry that has been world’s best practice. It is one that can continue to be world’s best practice and provide dairy food security for Australia ad infinitum, protecting the environment as it goes, building on its fantastic genetic values in its herds. Its human capital is the envy of the world and yet this government has turned its back on this industry. Only $74 million we are asking for—not $4 billion, not $6 billion—$74 million. The time is almost too late but not quite. If this government gets off its backside now we could have a dairy industry for the future.

Mal Washer (Moore, Liberal Party) Share this | Link to this | Hansard source

The question is that the motion be agreed to.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for Murray for introducing this motion and I believe this issue has been long overdue for recognition, as there is a problem with the dairy industry in Australia. However, I think she is only looking for bandaid measures in the short-term, rather than looking to provide a future for the dairy industry in the long-term. Hopefully, some good suggestions will come out of the Senate inquiry but I note it has been spearheaded by our Tasmanian senators. I feel we have to look at the takeovers early in 2000 to see what has been going on and going wrong. I believe there have been some deregulatory changes that have not worked in favour of primary producers but have merely consolidated the market of two major overseas-owned companies.

The recent history is quite interesting. From 1 July 2000 longstanding marketing arrangements, under which state governments regulated farm level prices for an output of fresh milk, ceased to exist. This development is generally referred to as dairy deregulation but it should be noted that post farm gate aspects of the dairy marketing had been progressively deregulated over several years immediately prior to that. The main drivers of market milk-market gate deregulation were the long foreshadowed determination of the Domestic Market Support Scheme, DMS, for manufactured milk on 30 June 2000, the push by Victorian producers and processors for deregulation and the National Competition Policy, NCP.

The above factors were all interconnected to some extent and it is difficult to identify the specific role played by each. The DMS scheme contained a sunset clause in its legislation that would end on 30 June 2000 and it was clear that the main manufacturing milk producer states—especially Victoria and Tasmania—would be the major losers from the cessation of the DMS. Farm gate deregulation was strongly advocated by Victoria, which dominates the national dairy industry. The Victorian major dairy companies and producer organisations strongly sought deregulation to coincide with the determination of the DMS. This is not surprising, given their expected associated income losses. But Victoria’s support for deregulation was not confined to the big players. In December 1999 nearly 8,000 out of 9,000 eligible Victorian farmers took part in a plebiscite on deregulation and 89 per cent of those voting supported deregulation and accepted the Commonwealth government’s assistance package.

The state NCP dairy reviews, while seeming to coincide with the termination of the DMS, actually had their own momentum and timetable. The first part of the dairy industry examination examined under the NCP was the post farm gate sector and this has been progressively deregulated with all retail pricing and supply controls removed from 1 January 1999. It was the subsequent NCP review of regulation at the farm level which created controversy. The Victorian NCP review of farm level regulation strongly backed deregulation, while other states’ reviews were lukewarm at best. Nationally, however, governments and the industry recognise that national deregulation was inevitable if Victoria chose deregulation.

The Tasmanian picture is interesting. Some 445 dairy farmers are expected to produce 700 million litres of milk in 2008-09. This represents some seven per cent of the national milk output. The dairy industry directly employs 1,475 people on farms and a further 1,250 in the processing sector. Dairy companies manufacturing product in the region includes Fonterra, National Foods and Cadbury. The estimated value of farm gate production in the region in 2007-08 was $275 million. Dairy export from the region was valued at around $260 million.

The farms surveyed in Tasmania were milking around 351 cows and producing 1.9 million litres on average in 2008-09. The average area of dairy land was 160 hectares. Seventy-seven per cent of Tasmanian respondents have been affected by price step-downs. Step-downs had a major effect on 68 per cent of farms in the region. As a result of step-downs, 33 per cent of those affected decided to decrease the level of supplementary feed used. Seventy-four per cent of farmers in the region undertook some capital investments in 2008-09. The average grain usage dropped from 1.2 tonnes per cow per year to 1.1 tonnes; 87 per cent of land set up for irrigation was actually irrigated in 2008-09 and 78 per cent of respondents typically purchased grains and supplements as required while 25 per cent used forward contracts. For 73 per cent of farms in the region, the most common production scheme was seasonal calving. Some 21 per cent of farms used split or batch calving, while six per cent produced milk all year round.

Tasmanians have had a tough time because they have had a very severe drought in recent years, and there has been an enormous effort to start drought-proofing land in order for farmers to plan their future investment. In recent times we had floods which caused problems with spring calving and generally caused problems because of the long-term drought. With the market now concentrated in two companies in south-east Australia, there is little room for proper competition to work.

The changes that occurred after deregulation were largely driven by the impact on farm-gate returns. There have been some important developments in farm-gate milk pricing. These include changes in the price determination process for year-round milk production, the impact of deregulation on average price received for milk and the emergence of distinct regional variations in milk pricing. Deregulation has affected export returns, which now have a greater effect on the average price received for milk as they have taken into account changes in the values of seasonal milk used for manufactured products.

Dairy companies compete for milk supplies on the basis of annual prices offered for seasonal and non-seasonal milk. The RIRDC report Industry adjustment to policy reform suggests that the key is the monthly profile of milk production. Manufacturers are after seasonal milk for cheese, butter et cetera whereas milk processors need the short shelf-life products like fresh milk. It is the milk processors that need a constant supply. Apparently, the RIRDC commercial requirements for the reliable supply of non-seasonal milk have caused processors to introduce supply contracts. They provided a guaranteed source of supply for a significant proportion of their annual milk requirements, according to the National Competition Council in 2004.

Contract pricing conditions have replaced the regulated price controls as an indicator of the farm gate value of year round milk supplies. These prices are set at different levels depending on the monthly cycle. The average price for non-seasonal milk is supposed to be higher than for seasonal milk as it has traditionally worked, but somehow in Tasmania the contracts have failed to hold their price over a 12-month period.

I believe we should have put into place some resource guarantee so that when contracts were negotiated there were some bottom-line principles to work up a sustainable price. I do not see why the manufacturing companies can send the primary producers broke to compete in the world sense. The deregulation in Victoria caused this dilemma and there was no research done to see how some of the levy that was put in place could have been put aside to hedge against lower world milk demand.

This is not something that can be discussed here in a mere 10 minutes. I will be talking to both manufacturers and producers in the next few weeks to see whether I can get a clearer picture. The federal Minister for Agriculture, Fisheries and Forestry has told me that there are measures that farmers can pursue to assist in the short term. Although we have already provided some assistance through the exceptional circumstances program, there may be other assistance for which Tasmanian farmers can apply. I am looking forward to see what farmers need to help them to negotiate sustainable contracts for their domestic fresh milk.

Darren Chester (Gippsland, National Party) Share this | Link to this | Hansard source

I would like to commend the member for Murray for putting this important motion before the chamber and I associate myself with the comments she made, particularly in relation to the need for government assistance for the dairy industry at such a critical time in its history. The member for Murray and the member for Lyons understand the importance of the dairy industry to their communities and the great difficulties that farming families are facing, particularly with reduced prices and the ongoing drought. It does beggar belief that, in that environment, Melbourne Labor ministers at state level would be stealing water from the Goulburn River. But then again they are about to steal another 10 billion litres from the Thomson River in the electorate of Gippsland, and that is an issue for another day.

The dairy industry is as critical to the seat of Gippsland as the car industry is to a city like Geelong and yet we have seen a remarkable double standard in the government’s treatment of the two industries at this time of economic crisis. It is a crisis which I stress is beyond the control of individual dairy farmers. I note with a great deal of interest that the Senate is about to undertake an inquiry into a range of issues which are relevant to the motion which is before the chamber. That inquiry will investigate the economic impact on the dairy industry of the reductions in prices that are paid to producers by the milk processors. There are a whole range of important issues that the Senate inquiry will consider, particularly in the context of the ongoing drought conditions in parts of Australia and the fact that the cost of production for many of our dairy farmers is higher than the prices that are currently on offer at the milk factories.

The dairy industry in Gippsland is concentrated in the Macalister irrigation district, which is the largest irrigation area south of the Great Dividing Range in Victoria. As I have told the chamber previously, our dairy farmers are among the most productive and efficient in the world. They are world-class producers of a world-class product. The dairy industry is quite big business for the people of Gippsland, with the Wellington shire having more than 400 dairy farms, the majority of which are located in the MID. The region has its own major collection and processing facility at Maffra, with the Murray Goulburn co-op, which produces a range of products mainly for the export markets.

My community has been particularly hard hit by the drop in prices and I have sought assistance from both the state and federal agriculture ministers for the development of an industry assistance package. I have argued in my correspondence to the ministers that the dairy industry has a strong long-term future in the region but there is a need to assist my community as it deals with the current difficulties. I am particularly concerned about our younger farmers who may be carrying significant levels of debt. I believe we need to give them confidence in their futures on the land. I have taken up the point in the member for Murray’s motion that the government could provide assistance to ensure our dairy farmers are not forced to sell their herds or their water, destroying the prospects for recovery when export markets inevitably recover.

As I said, I am optimistic about the longer term future but we need to take action now to help our farmers get over the hump before them so that they are in a position to continue to produce quality Australian dairy products in the future. There needs to be a survival plan developed to assist our farmers through what I believe will be a difficult 12-month period. Both state and federal governments need to demonstrate their support for a viable dairy industry right across Australia and be prepared to offer assistance during this period.

As a nation we have bailed out the car industry, as I referred to earlier. We have also handed out billions of dollars in $900 cheques to prop up the retail sector. I think it is reasonable to develop an assistance package for the dairy industry in these exceptional circumstances. It would be a modest package in comparison to those cash splashes that we have seen by the government. I have received a reply from my representations to the federal Minister for Agriculture, Fisheries and Forestry, and I am afraid there is no good news for my local farmers in his response. There is no intention of taking decisive action.

While the minister’s response was certainly sympathetic, reflected an understanding of my concerns for the dairy industry, there is no sign that he is actually prepared to take action. He indicated, on a visit to Shepparton, he is aware of the challenges facing the dairy industry in terms of the ongoing drought, the sharp fall in global dairy commodity prices and the decisions by the European Union and the United States to introduce export subsidies. But that is about where it ends from the minister’s perspective. His response is certainly sympathetic and it reflected that understanding of the concerns. However, I urge him to be more than sympathetic, I urge him to be a champion of the industry that he is commissioned to represent in this place.

Many farmers have suggested options to me, including a range of measures such as temporary income support to underwrite low prices or triggering exceptional circumstances interest rate subsidies and increased assistance to develop international markets. The minister says that he is dealing with that final point and there has been some improvement in the situation with India, along with funding for Dairy Australia to host dairy events in Dubai and Saudi Arabia. I doubt though that we are doing enough and the end result will be more dairy farmers forced off the land.

Referring again to the situation in Gippsland, I would like to comment briefly on the government’s stimulus spending. Apart from the current prices, which hopefully will pass, the biggest issue for dairy farms in my electorate is the issue of water security. It staggers me that this government has been prepared to hand out $900 cheques but has not even looked at a critical issue, such as investing in improved infrastructure delivering increased water security in Gippsland. The dairy industry in Gippsland is faced with ageing infrastructure and an inefficient system. The MID 2030 Strategy was released two years ago and can improve the supply system. This would be a win for the industry and a win for the environment. I urge the minister to be a champion for that cause as well.

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

Let me say from the outset that it is my view that the dairy industry it is extremely important to our nation and to the future of our nation. It is important that we have a viable dairy industry well into the future. Just before I get to the question of the dairy industry specifically, I note that the motion that is before the House talks about doing something equivalent to the support the Rudd government provided to the automotive industry in Australia. I make this point: in respect to the automotive industry in Australia, the support provided by the government was more than simply about providing support to one particular sector. It was about supporting the sector that underpins the manufacturing base right throughout this country. It was broad support to the manufacturing industry which began with the automotive sector. Secondly, it was about providing an investment in reducing carbon emissions into the future; again, one of the most critical challenges we face not only in Australia but right across the globe. Thirdly, it was about investing in more fuel-efficient motor vehicles, because, in the future when petrol prices are likely to escalate as a result of the world oil shortage, it is important that we bring back value for money for the motorists. So it was more than simply about underpinning a particular industry.

Having said that, I do value the dairy industry in this country. It is my view, that, next to water, milk is probably the most critical liquid we have on earth. It sustains life right across the earth. The dairy industry in this country has been in decline for several decades. In about 1980 we had something like 20,000 dairy farmers across Australia, that figure is now down to about 8,000. In my own state of South Australia, in 1980 we had just under 2,000 dairy farmers, today it is around 300 or so. I have seen the decline. Like so many other agricultural and horticultural sectors in this country the decline has been there for a range of reasons. It is not something that I would like to see continued; I make that absolutely clear.

Nevertheless, the dairy industry would not be unique in the agricultural sector in the difficulties it is facing. These difficulties were acknowledge by the previous government when they introduced the 11c per litre levy on milk in order to try to provide some income back to the farmers, but, in reality, led to a rationalisation of the industry but seems to have done very little else in sustaining the industry well into the future. It is an industry which got the benefit of the $1.9 billion from the 11c levy that was raised, but, nevertheless, is still facing very real hardships today which I very well acknowledge. These are hardships that, I believe, arise from two areas. One is because of the water shortages that members opposite have spoken about—and which I acknowledge. As a result of those water shortages, the ability to irrigate the pastures required to sustain their herds has become much more expensive.

Water shortages are a critical issue being faced by orange growers, vignerons and people across the agricultural sectors. They are facing the same cost pressures on their ability to remain viable. Nevertheless, this issue is very real and we need to do what we can to improve water availability for our agricultural and horticultural producers right across this country. I will not labour the point, but the $13 billion that the Rudd government has invested in securing our water supplies for the future will go a long way to doing that. Ultimately, more may need to be done.

The critical issues, however, are the multinational takeover of the milk industries in this country and the subsidies provided to overseas dairy producers by their governments, which we are regrettably unable to match at the moment. The Minister for Trade, Simon Crean, is working through the Doha Round to create a much more level playing field for our dairy farmers. If that can be achieved it will hopefully go a long way to giving them some additional support. No-one would deny we are going through the worst global recession since the Great Depression. That too has contributed to the downward trend in milk prices. What can be done is being done by the government, and I support the measures that are already in place.

John Forrest (Mallee, National Party, Shadow Parliamentary Secretary for Regional Development) Share this | Link to this | Hansard source

I congratulate the member for Murray for bringing this discussion to the attention of the House. It has been quite a useful exchange. Between her electorate and mine we jointly represent the great bulk of the dairy industry of the irrigated region of the Murray Valley. I speak today about an industry very exposed and vulnerable, an industry that is a wonderful regional employer across north-western Victoria.

Dairy is the largest export industry in Victoria. It employs 10,000 people, and last year more than 2.8 billion Victorian dairy products were exported to markets in Asia, Europe and the Americas. That is why it is galling for my constituents to watch this federal government, in league with the state government of Victoria, allow their precious water to be stolen and sent to Melbourne. ‘Stolen’ is a strong word, but it is the truth. It is not moral and there is no limit to the avarice of the Victorian government. Only last week they announced that they want 12,000 megalitres of the water savings from the Wimmera Mallee Pipeline, despite the fact that there are legally constructed agreements between the government of Victoria and the federal government that all the water savings from the $350 million investment by the Commonwealth would go to the environment and stressed rivers, which certainly includes the Goulburn and the Murray.

Dairy farmers are facing the multiple whammy of drought, a surge in production costs caused by the drought, uncertainty about how they are going to be treated in the Rudd government’s proposed Carbon Pollution Reduction Scheme, foreign market manipulation and market domination in the retail sector. I note the comments of the member for Lyons and I accept his longstanding association with the dairy industry in Tasmania. But what he overlooked in his comments on the impacts of deregulation and Victorian dairy farmers’ participation in and desire for that outcome is that an unprecedented crisis arrived after the massive reductions in water allocations right along the Murray Valley and the Goulburn River system. These are unprecedented times. What was once the securest water supply system anywhere in the world has now been reduced to its parlous state. On top of that, greedy, avaricious governments want the politically expedient solution to the water supply problems of Melbourne, a big metropolitan city that is not even trying to reuse its sewage water or harvest its drainage water.

The dairy industry in Australia does have a future. It is optimistic about that, but it is asking for help in its current calamity. It is going to take years to rebuild the dairy industry, particularly in Victoria. We will lose dairy husbandry expertise. We will lose a large slab of the genetic base of dairy herds, which other countries are now taking advantage of. It is an industry fast losing its capacity to survive and it desperately needs help. You just cannot turn a cow’s udder on and off like a tap. You need the breeding stock and long-term planning. Cows have to be milked every morning and evening and they have to be fed. If those things cannot happen they have to be sold.

I note the member for Makin’s comments. He would defend the investments that have occurred in the motor vehicle industry; it is a very strong industry in his electorate. We are not criticising those investment decisions. We are saying that the dairy industry deserves similar consideration. The massive cash injections that have occurred in some sectors of the economy amount to $160,000 to save every job. When the member for Makin talks about the number of dairy farmers, he forgets the huge numbers of jobs—up to 30,000 right across Australia—in the processing sector. Those are the jobs that are at risk, and we are asking for the government to give strong consideration to supporting them. It can support them by making sure it invests in the dairy industry to save the farmers’ herds.

The response to the auto industry investment has been huge. There has been massive investment in the financial sector through bank guarantees, which have reduced competition in the market. The government has made the decision to invest there. We are asking that it recognise the massive significance of the dairy industry across Australia to the GDP and stand by our dairy farmers in the electorates of Mallee and Murray. I support this resolution and am grateful that there has been an opportunity to bring the concerns of my constituents to the attention of the House.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for Murray, with whom I share an identical birth date, for raising issues affecting an important Australian industry, particularly in my region, which is one of the most productive dairy districts not just in Tasmania but in the country. In Tasmania dairy represents 24 per cent of the value of farm production and underpins significant downstream processing. Tasmania’s dairy industry supports some 460 farms, producing over 640 million litres annually, and is a vital regional employer, directly employing 2,200 people on-farm and a further 675 in the processing sector. Tasmania is the third biggest dairying state, behind New South Wales and Victoria.

In the last five years production has grown by about 20 per cent. Indeed, it is a growing industry not just in terms of output but in terms of capital investment, as some 25 per cent of farms undertook some form of capital investment in 2007-08. About eight per cent of Tasmania’s milk production is consumed as drinking milk. The balance is manufactured by dairy companies such as Fontera, National Foods and Cadbury into products such as cheese, milk powder, butter and confectionery. The gross value of Tasmanian dairy products after manufacturing is nearly $600 million. In the year 2007-08 this was worth $332 million at the farm gate but, as a stark indicator of the problems facing our farmers, this will drop to less than $300 million this year.

This drop has been forced by a number of factors, including seasonal conditions and a falling international milk price. In my part of the world a huge rainfall has made it difficult for some farmers just to get the herd to dairy. In January Fontera announced a cut of about 32 per cent to its suppliers, which I am told is worth between $50,000 and $80,000 to the bottom line of a typical supplier. Fontera is by far the largest player in the Tasmanian industry and has been hit by the global financial crisis and its impact on world markets, where much of its produce is traded. I note that some optimism remains in the sector and a few indicators are starting to show light at the end of the international price tunnel.

In more recent times suppliers of whole milk in my state have been hit particularly hard by a cut to prices from dairy company National Foods. The reason for this cut in prices has been the subject of much debate and comment, particularly in my state. It led me to write to National Foods to seek their perspective on what it is a complex situation. In direct correspondence with National Foods on this matter the company tells me its price is aimed at sustaining the company and farmers through what is a difficult time for all with reduced prices across the board.

While I am no authority on pricing, what I would seek from both National Foods and farmers is an arrangement where, in effect, they share equally both the gain and the pain. When prices are strong and a market buoyant, then both parties should be rewarded. But, when times are tough, then a company should be staring down a barrel just as much as its suppliers. National Foods says it was forced to pay a competitive price to its whole milk suppliers two years ago when the processing milk price was high. Further, it argues, while the farm gate price rose by more than 50 per cent, the supermarket price for branded milk rose by about 10 per cent and private label pricing rose even less and has since dropped. During this time of price scrutiny, the major supermarket chains must also look closely at their responsibilities. They have a major say over the volume of milk that flows to consumers and the price that they pay. They must consider the big picture and the future of the industry as a whole, and not be completely price driven.

We are at a crossroads for some dairy farmers, and the risk to the industry cannot be understated. On the price front, I hope that the current inquiries by the Senate will look more closely at what influences the price milk suppliers of any type receive. I am concerned however that the lack of competition in Tasmania may lend itself to greater market variability when compared with other states. When massive price distortions occur and long-term contracts are subsequently locked in, there is a real risk that producers will be forced out of the industry—and I do not need to remind members what this will mean to the future viability of the local industry in Tasmania.

Given the difficulties facing many of my local farmers, farmers in financial hardship can access free and impartial financial advice through the Rural Financial Counselling Service, co-funded by the Australian and Tasmanian governments, and these services are located throughout Tasmania. We need to strive to find the answers to sustain both our farmers and the companies that they supply so that the industry can survive to a time when prices are again strong and all can reap the benefits.

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

Order! The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.