Sharman Stone (Murray, Liberal Party) Share this | Hansard source

I rise to speak on the Dairy Produce Amendment (Dairy Service Levy Poll) Bill 2016. The current legislation requires the dairy industry to have a poll held every five years to obtain feedback from the relevant dairy farmers who pay that levy about whether changes should be made to the rate of the services levy. This levy funds the activities of Dairy Australia to undertake research and development to support dairy farmers' sustainability, including systems to improve farm management practices and dairy industry forecasts.

The bill amends the Dairy Produce Act 1986, removing the need to conduct a dairy levy poll every five years. It is a simple act then, in a sense, but it is a sensible move. This piece of legislation has been developed in very close consultation with dairy farmers throughout the country. Dairy farmers had expressed concerns about the money spent on conducting a levy poll every five years. They estimated that to be up to $1 million. Dairy Australia, therefore, commissioned its own independent review of the levy poll process last year. This review, carried out in conjunction with state dairy farmer organisations, came back after extensive consultation with an overwhelming interest in the content of the legislation we have before us today. The result of the discussions will be that dairy farmers will have a simpler process and additional legislation will be enacted to remove the requirement to have a five-yearly dairy levy poll.

As well, there will be a dairy advisory committee set up to review the levy every five years. There will also be a mechanism by which dairy farmers can request a poll if they disagree with a decision of the advisory committee. That seems to me to be very fair and reasonable, and I know my dairy farmers support it.

What are we talking about when we refer to the Australian dairy industry? I think it is important to put its size and value into perspective. The national dairy herd is now at 1.74 million cows. While the average herd size is 284 cows, there are many much larger herds, many herds of 400, 500 or 600. We have milk production at nearly 10 million litres. We have some very high figures for average annual milk production per cow, compared with international figures.

Dairy is Australia's third-largest rural industry. It is a $13 billion farm manufacturing and export industry. It generates a huge volume of well-paid and varied employment: approximately 39,000 people are in the dairy industry workforce, but there are multipliers there which make that employment even greater, including into metropolitan areas.

A big proportion of our milk is manufactured, and that is where a lot of the industry employment is generated. Drinking milk is only about a quarter of the production; the rest goes to cheese, milk powders, butter, whole milk powders and another nine per cent of other varied outcomes. The major export industry that dairy represents is six per cent of world dairy trade. Australia represents six per cent of world dairy trade. I wish that were more. When I was writing my thesis on the Australian dairy industry and its export history and potential, we were a bigger proportion of the world dairy trade, neck and neck with New Zealand. Now New Zealand has substantially overtaken us. But our major export industry value is some $2.88 billion in the last financial year, which is not at all inconsequential. The percentage of our milk exported was 34 per cent in 2014-2015. As Deputy Speaker Mitchell himself, a member from Victoria, would know, one of the biggest exports out of the port of Geelong is Victorian dairy milk powders. We are proud of that.

Our major markets for Australian dairy products are, of course, Australia, which is our biggest market. That includes our drinking milk. Then it is China, Japan, Singapore, Indonesia and Malaysia. You will see that in that list of where our dairy products go to we include China and Japan, and we are very pleased to say the newly signed free trade agreements are going to facilitate even greater exports and greater value exports to China and Japan, but also to South Korea, in the coming years.

As a nation, our per capita consumption of drinking milk is 105 litres and of cheese is 13.6 kilograms. That is way above the consumption of our near neighbours in the Indo-Asia-Pacific, where we are very aware that there is a growing interest in the consumption of dairy products. Indeed, it is often said in export circles that Australia is sitting in the right place at the right time to substantially influence the consumption of dairy products in India and in the Indo-Asia-Pacific region. We can seriously grow not only the consumption of whole milks, infant formulas and cheeses, but also other products like the yoghurts and ice-creams and even pharmaceuticals which are derived from dairy products.

We have an enormous future and great potential in the dairy industry in Australia. One of our major advantages is the fact that we do not depend on what some will refer to more commonly as industrial farming for our dairy production. Many of our cattle are free range. They graze in the great outdoors on pastures. So, for example, the golden colour of our dairy products is often remarked upon. That is a natural consequence of betacarotene, of cows being able to live outdoors in moderate climates and eat green pastures. The goodness of that grazing system is translated into the value and nutritional status of the milks. Other countries have tried to simply dye their cheddars and cheeses a golden colour to mimic what our dairy cows do naturally.

I have to say, though, that not all is well in the dairy industry of Australia. We have a huge issue with being able to attract and keep sufficient labour or workforce, from both those who milk the cows—the most basic labour needed for milk production—through to highly skilled workers in herd management and farm management, through to our manufacturing sector.

I am pleased to say that we have recently introduced a special visa to facilitate dairy farm workers coming to Australia. They must have at least several years of relevant dairying experience or a relevant qualification in on-farm dairy management. I was very interested recently to meet in Saudi Arabia a lot of Filipino dairy workers in one of the biggest dairies in the world, doing their two years of dairy experience in that country in order to qualify to come to Australia to work in our dairies at, of course, much more reasonable wages. And I have already met some of those Filipino workers doing a great job in our dairy industry in northern Victoria.

While the labour supply is a challenge, so also the margins for our dairy producers are not always adequate. We are always under pressure in our domestic market, given the duopoly of Coles and Woolworths owning some 80 per cent of the retail grocery sector. Clearly, they are then in the position to exert major power on their suppliers, in this case the dairy producers and manufacturers. They have their generic, or 'home', brands produced by the same manufacturers, often at a substantially lower price. It is then put onto the supermarket shelves in direct competition with their own branded product.

Coles and Woolworths do not play fair. Of course, we have had the dollar-a-litre milk enticement—a loss-leader-pricing strategy. In effect, a lot of people said 'No, no—this is just Coles and Woolworths taking a small hit to entice people in to buy a litre of milk at $1.' Let me assure you—it was the dairy industry itself which took the hits in having thinner margins on their dairy farms when milk was offered at a dollar for a litre.

We have also had other experience with the supermarkets. When a big dairy manufacturer refused to have generic product come out of its factory system with a much lower price, in direct competition with its own branded product that it had invested a lot of money into researching and developing to be a premium brand, they were removed from the supermarket shelves. That was a very salutary lesson for that particular great Australian dairy company. I hope that the recent strengthening of the spine of the ACCC will continue and that there will be more action taken to curb the unconscionable behaviour and abuse of market power that has been observed for so long with Coles and Woolworths in particular.

We also have in Australia a lot of competition from imported dairy product. Now, there is nothing wrong with competition: long live competition! But when that dairy product is produced with subsidies in Europe, that is not fair. It is certainly also a very good thing to observe that we have now had a recent strengthening of the national interest and the spine of our Australian Anti-Dumping Authority. In the recent decision about imported canned tomatoes from Italy, we have finally—after what had to be an appeal against the first decision—seen all of the product from Italy on our supermarket shelves with an anti-dumping set of duties placed on it to overcome what was, of course, long-term cheating. In the case of Australian-grown tomatoes, they are, of course, not produced by slave labour—refugee forced labour—as we have found is now the case too often in Italy. Even though we have in Australia our own home-grown magnificent tomatoes, we still have Coles and Woolworths with a huge price differential. That suggests that they have their stores filled to the ceiling with imported, cheap and sometimes slave-labour-picked product. I urge Coles and Woolworths to be fair about this and also to look on their supermarket shelves at imported dairy product, and ask themselves, 'Has this product been produced without subsidies and in a humane environment, in terms of animal welfare?'

Dairy farmers in my area are particularly stressed now, given that they were once water safe and water secure—being located in the biggest irrigation system in Australia, the great Goulburn Murray Irrigation District. Unfortunately, that irrigation system failed for the first time in its 100-year history during the Millennium drought. That would not be a long-term problem if, during that long-term drought, some half of my irrigated dairy farms were forced to sell all or most of their water to the Commonwealth Environmental Water Holder, via a tender—an untargeted, uncapped tender—which was offered by the then minister, Penny Wong. At the end of the day there was up to $2,400 per megalitre paid for permanent sale of high-security water to the Commonwealth Environmental Water Holder.

Tragically, those farmers had no option. They owed double and triple their normal debt to their lenders. The banks said to them, 'You sell down your debt by selling your water or we will sell you out.' At the time, temporary water was only $30 to $40 a megalitre. Today the 50 per cent of dairy farmers in my area who have been trying to continue to farm, relying on that temporary water market, are faced with $300-plus per megalitre prices. That is beyond the capacity of the most efficient dairy farm to pay. So, weekly, I see magnificent dairy enterprises evaluating the costs now of Goulburn Murray Water's delivery of irrigation to them. The fees and charges are extraordinary. After all, they have some 800 permanent Victorian public servants working in that system—a hugely overmanaged and inefficient system.

My dairy farmers need their irrigators' water market to be evaluated and reviewed. They need it to become transparent, regulated and fair, with transmission losses calculated in the sales. And they also need the carry-over entitlements of the Commonwealth Environmental Water Holder and other non-primary-producing players in the market, like the state governments of Victoria and South Australia, evaluated so that our dairy farmers, amongst other food producers, can continue to prosper and to thrive.

There is an enormous future for dairy in Australia. We are one of the world's best, cleanest and most nutritious producers of dairy product, but a lot of that is now in jeopardy in northern Victoria—not because of drought but because of failed state and federal government policy and ineffective management of the system. I commend this bill to the House.

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