May 25, 2016: Dairy Industry Grievance Debate

Dairy_Farm_shotI rise in the house to grieve — to grieve for my fellow dairy farmers. I grieve for Western Victorian dairy farmers. I grieve for Victorian dairy farmers. Farmers have taken a massive hit in the last few weeks. Two large dairy companies began this. Murray Goulburn started it with a very big oversight in the amount of sales it was predicting to make this year. I am a dairy farmer, and we will see a 70 per cent cut in our income in the next two months. So 10 months into the financial year, when most of the payments that we have had to fork out — for cows to be fed, grass to be sown and costs to be incurred so that we can farm — have already been outlaid.

The CEO is now gone, and this is a time for the board and the governance structures to be examined. Let us not forget that farmers need to have influence over the supply chain, if we are not going to be peasant farmers into the future. So take this opportunity, and make sure you make the best out of it and review how things can be done better into the future. That is Murray Goulburn’s problem, and it will be farmers who help solve it, because farmers need it to survive and do well into the future.

I do not understand Fonterra’s action; I really do not. This is extremely opportunistic, and the CEO said, in his own words, last week that he is going to take the money out of Australia and send it back to another country, because Australian farmers are not really Fonterra’s problem. That is why I talk so strongly about the fact that we need to make sure that we look at the governance, we look at the board’s skill set and we invest in future skills so that we can do this better.

Through my Nuffield scholarship four years ago, I looked at agriculture in 29 countries right around the world and studied the different structures where farmers can have influence over the supply chain. We do not want to be where England is — 25 years after losing control and still trying to claw back.

Things are tough on a world scale. Murray Goulburn made a financial disclosure mistake, but the strategy is right. As a country, we need to value-add. We have good manufacturing in the dairy industry, unlike many other parts of this country where manufacturing has failed. Dairy does have a future, and dairy can persist into the future doing very well and supporting a vibrant manufacturing sector.

Do not get me at all wrong: this is the fault of world milk prices, supermarkets to a degree and the failure of the companies making mistakes in decisions. But farmers are incredibly skilled. I will just let you know that 19 years ago, when I began dairy farming, I was incredibly impressed with how farmers make scientifically sound decisions every single day when they work the land and turn grass into milk, like I do.

Every single day I put 300 cows into a 3-hectare paddock. I know that 2500 kilograms of dry matter is in the paddock — or 3000 or 1100 — and I know they will graze it down to about 1500, so I can work out how many kilograms of energy they get from that part of their diet. I know the fibre content they take in every day. I know the amount of protein that they require to take in, what they get and what they need to lactate and at the time that they are at in their lactation stage. That is pretty impressive stuff that we, as farmers, need to know. We have to understand the science required. We understand the environmental management and I am always impressed with the proactive nature of the farmers of my community.

We talk about the triple bottom line these days in the corporate world, and I believe that that is something farmers invented. We know that people are important, we know that cows and the soil are important and we also know that if we do not get those things right, we certainly do not have any profit at the end of the day. But we will still keep prioritising the cows that we care about and the soil that we understand so that the microbes work together and we get the balance required to be successful.

Our communities, particularly in western Victoria, northern Victoria and eastern Victoria, that are dairy oriented contribute $8 billion to the Victorian economy. My area alone produces a third of Victoria’s milk or a quarter of Australia’s milk. There are over 6000 people employed directly and indirectly in the dairy industry, and that is without the accountants and electricians that also make a living from the economic benefit that dairy brings to my region.

To demonstrate how much we produce every day, if you lined up one-litre milk cartons, not end to end but side by side, you would take that line from Melbourne right through to the South Australian border — it is an impressive amount of milk — or maybe you can picture 2000 Olympic swimming pools more easily. So what we are going to see over the next six months is about $300 million come out of the local economy, just from my region alone.

Like I say, this is not an industry that is a dying industry; it has a bright future and is going through a very challenging time, and the reasons include the sanctions that we have put on Russia, which I am not arguing about, and the quotas that we have seen come off in Europe. It is a complex world market, and this is a problem considering the short period of time and the bungle that Murray Goulburn made with its management issues. So I do think we have a situation we need to deal with, and I do applaud the government putting forward the solutions in the form of some packages that we have heard announced in the last couple of days. I am applauding the social and emotional wellbeing support that we are seeing for farmers.

Farmers are very resilient, and they are very independent. As I said yesterday in the meeting with the Minister for Agriculture, we cannot just give them the opportunity to seek help; we actually need to reach out. We need to make sure we touch base with all the farmers, because unless they have got a plan, it is not just farmers that are going to go to the wall; it is the small businesses, the vet clinics and the feed companies. Together we will work as a team and support each other.

But can we do more? Absolutely, we can do more, and what I see in my region is a community crying out for assistance with the roads. The roads, my friends, take our product to market, and every day those roads are crumbling. From the potholes that those tankers hit and the grain trucks that bring grain to my farm hit, they pass that cost straight to me, the farmer, because the truck drivers do not pay for those trucks alone — they hand those costs back to me.

We have $345 million sitting on the table from the federal government waiting to be matched by the state government to address country roads. There is $700 million that we are supposedly seeing out of the port of Melbourne coming to fix our roads. Where is the plan? I want to hear about it. My community wants to see this. We do not want what we saw last week, and that was the suggestion we reduce speeds to fix this problem. It is quite clear that that will reduce productivity, that it is inefficient and that it will result in costs being passed back to the farmer. This is not helpful, and we can do better.

We cannot cross the bridges in my community with trucks loaded with milk or hay because we do not know if they are safe. VicRoads has not been given enough money to assess the bridges, so drivers go around the long way. It takes twice as long and it reduces productivity. Is this good for our state? Is it good for the economy if we cannot get product to market efficiently?

Then, my friends, we talk about electricity costs. We are tripling the cost of electricity — are you serious? I milk the cows for 3 hours in the morning, I milk them again at night and then I cool the milk to 4 degrees or less within 2 hours so that we can have a product that is wanted all around the world — a quality product. That is pretty electricity intensive, but it is bringing money to Victoria, so do not harness me. Embrace me as a farmer. Stop tripling taxes and then claiming you are not.

What about employment? We heard from Geelong that they have got an industry that is closing down. Our industry has a future, and we need jobs. We need people filling jobs. We cannot get people into jobs. What an opportunity! The government promised 100 000 jobs to Victoria within two years and is failing dismally on that. Well, here is its opportunity. Get the employment agencies, develop the programs and put people in the dairy industry where we are wanting people and will provide opportunities.

But I am very heartened, and just to make more clear what I am saying about the opportunity here, in 2008 Australia exported 300 tonnes of milk powder — that sounds like a lot — but in 2013 we exported 2.4 million tonnes to China.

That is absolutely correct. The opportunity is real. This is an industry we need to look after because the potential is enormous. But I am extremely heartened by the strong message we have received from the community, a message about how they value Australian agriculture and how they value Australian farmers. I think it is a loud message being sent to Coles and Woolworths to stop bullying the farmer. As Chloe Scott, a 16-year-old who started a petition, said on ABC News Breakfast this morning, ‘Hopefully in a couple of months time there won’t be such a thing as $1 per litre milk’. Now I know it is only 10 per cent of the income, but there is nothing more insulting, let me tell you, than for farmers to walk into supermarkets and sees the milk on the shelf selling for less than what it costs to make it.

Okay, sell your milk for less than $1 if you want to do that as a loss leader — which means getting people into the supermarket so you can sell them chocolates and all the things they do not need — that is fine, but pass back to the farmer an honest amount so that the farmer can be paid for an honest day’s work. That is all they are asking for. Renegotiate your contracts, Coles. The CEO has gone. The opportunity is now. Your community are telling you, Coles, to renegotiate that, and 2500 farmers will benefit from that alone. As for Woolworths, do not tell me that you are helping the farmers by having Farmers’ Own brand because at the end of the day, when you sell it for $1 there are only 23 farmers right across this country that benefit from the Farmers’ Own brand. So get real and listen to Chloe on the principle of the matter. Sell your milk for $1 but find a way to pass back that profit to farmers to keep them in business. I am saying to the supermarkets, ‘If you get this wrong, you’ve read the tea-leaves wrong’. I would respond to the consumer and turn the whole business of bullying around.

But today I say thank you to the people of Australia. You are truly demonstrating your support for the Australian farmer and standing up to corporate bullying. It is also pressuring the Andrews government. Your power will stop — better than anything — unconscionable conduct by the supermarkets, the dairy processors or the Premier. I say to the Premier: the rural community needs you and we want you to really care, not just by standing in the paddocks for the television cameras but by fixing roads because our agricultural products need to get to market efficiently; by reducing costs to small businesses, not by tripling the price of electricity; and by creating employment opportunities. Here is a chance to transition people from a defunct industry into a much-needed, regionally benefiting and contributing-to-Victoria industry — that is, the dairy industry.

There is so much the government can do to keep farmers farming, but that means getting into the country and making it a truly better place to live. I urge the Premier to use this time of crisis for the benefit of the community, to see how our crumbling roads are affecting our hardworking, much-desired farming community and to fix them. Do not pretend that raising electricity prices is not simply a tax. Govern for all of Victoria and stop this city-centric approach. People in the city are telling the government they care about the country. That is the message I hope the Premier receives loud and clear, because that is the message they are telling him. The city care about the country, and if the Premier did not hear this, he too has missed reading the tea-leaves properly.