Nola Marino (Forrest, Liberal Party) Share this | Hansard source

Thanks, Mr Deputy Speaker. Obviously the plight of my dairy farmers and industry is not necessarily an issue for those on the opposite side.

We need to better manage the risk along the dairy supply chain, given the vulnerability, the perishability and especially the effects of world dairy prices. This meeting saw producers from many states raise concerns about the way milk is sold and the management of processing and marketing. Fairer contract terms were discussed and there was a strong desire to see the processing sector work cooperatively with farmers to agree to better bargaining and contracting conditions.

In my view the long-term outlook for the dairy industry in WA is positive. We know that global dairy consumption is growing by around 2.2 per cent a year. We just have to keep our critical mass in Western Australia. I think we are down to around 145 dairy farmers, yet Western Australia is so well geographically located to supply quality product to developing countries. Our WA processors have an important role and a vested interest in ensuring local milk production capacity is retained for that inevitable time when domestic consumption once again outpaces supply and, of course, for additional export opportunities ahead.

As a dairy farmer myself, I knew we had a problem when Fonterra sold the profitable brands and therefore reduced the manufacturing opportunities in WA—for instance, Lady Borden ice-cream. You are well aware that the dairy industry underpins small towns and local economies. For many years in this country dairy has been rock-solid in the way it contributes to small towns, particularly through my south-west. Australian dairy is a $13 billion farm, manufacturing and export industry. It is not a small player. We look at all of the careers not just on-farm that go with cows: in the food service sector, in research and development, in the vet industry, in herd recording and right through to in manufacturing and the creation of new products. There is career after career. Many of those, as you would know, are city based. So there are some very genuine reasons that this industry is so important in Australia.

The government has commissioned and announced a review by the ACCC. An in-depth and independent inquiry by the ACCC is probably the only way to uncover inefficiencies and inequities that our farmers face and to identify a way forward—as long as those in the supply chain can give their evidence in confidence without the prospect of retaliation from powerful organisations further along the chain. This has been a problem historically. It was a problem when I was working for the industry with Dairy Western Australia. The very nature of the evidence, in such a small market, naturally identifies its source and, because there are limited outlets for the product, that evidence can put you out of business. I had a personal experience of this some years ago when I was given evidence of four potential breaches of the act to pass on to the ACCC. The individual concerned would only meet me to pass on this evidence in a car park in Perth where there were no cameras.

The ACCC inquiry that we have announced will begin in November. It will investigate the sharing of risk along the supply chain, supply agreements and contracts, competition, bargaining and trading practices in the industry, and the effect of world and retail prices on profitability. It will release an issues paper and engage with stakeholders through public and private hearings and will finally report to government in the second half of 2017.

The ACCC's agricultural unit, which was established through an $11.4 million commitment by the coalition government in the Agricultural competitiveness white paper, will lead the inquiry. I would suggest that a starting point for the review should be the examination of similar legislation in other countries, including the USA, UK and EU. Of course, we need to discover whether the practices currently found in the Australian grocery sector could potentially breach the laws as they apply in those countries. The review needs to consider whether the current law and competition policy reduce incentives for processors and producers to invest and innovate because they are subject to unduly harsh bargaining practices from big players. It needs to consider whether the remuneration structure for buyers and the dominant grocery retailers drive unreasonably aggressive bargaining practices.

I want to finish this particular speech by recognising where those four dairy farmers find themselves. I spoke about it earlier on and I know how they are feeling. I know how the five and their families, who are yet to have their contracts not renewed in January, are feeling. I also know how strongly they feel about their cattle, their farms and the dairy industry. All of these people have spent decades and decades refining their craft and contributing not just to the industry but to their communities. I want to thank them very much for what they have done. It is an appalling situation that they find themselves in. I hope that everybody in this House acknowledges their vulnerability and commitment to the industry over so many years.

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