VICTORIA - by News WeeklyNews Weekly
Gippsland call to reject dairy deregulation
, December 18, 1999
The Moe branch of the National Party has called on dairy farmers across Victoria to vote against the deregulation of the dairy industry, in a plebiscite being conducted between December 6 and 20 by the new Victorian Government.
Moe branch President, Brian Handley, said there was nothing in the proposal for farmers or consumers. A Senate Inquiry has warned that consumers will almost certainly pay more for drinking milk, while dairy farm income is likely to drop by $20,000 for the average dairy farmer in Victoria.
The only conclusion that can be drawn from this report is the big winners will be the processors and distributors, said Mr Handley.
This in fact has been the experience of the UK deregulation, where there was a redistribution of income in the industry. Of one litre of fresh milk, 50% went to the supermarkets, 40% to the processors, and only 10% to the farmer.
Mr Handley said he was mystified as to why the United Dairyfarmers of Victoria (UDV) had made no public comment on this damning Senate report.
This expectation is clearly why another major milk processor, National Foods, has publicly threatened to take the issue to the High Court if deregulation does not proceed.
Unlike the UDV and others in the industry, the Moe branch of the National Party does not believe deregulation is inevitable. It considers that farmers should not be bullied by milk processors and distributors into voting yes.
Mr Handley said that the Victorian Government needed to take a firm stand on the issue, as deregulation is likely to have a further negative impact on jobs in country regions Ñ as highlighted in the Senate report. 'Dairy farmers can give the Victorian Government the political ammunition they need to stop deregulation in its tracks,' he said.
Mr Handley also called on the Federal Government to prolong the Domestic Market Support (DMS) scheme beyond July 1, 2000.
The DMS of $132 million is well within Australia's $470 million limit of the Aggregate Measure of Support allowed for in international trade negotiations, so there is no need to finish it by June 30, 2000.
If not extended, the ending of the DMS scheme will have a major effect on areas of high manufacture milk production like Gippsland.
We should not be rushing into its removal to appease the WTO until the ramifications are clearly understood,' he added.
To do otherwise will be a leap into the unknown, and the political consequences for the National Party could be terminal.
'We are concerned that our two remaining federal seats of Gippsland and Mallee could be lost if deregulation goes ahead, and then implodes on farmers.'
One effect of deregulation is that the capital asset value of dairy farms will fall significantly.
'Already the banks are re-pricing the value of farms in anticipation of the consequences of deregulation. Farmers could suddenly wake up and find their milk cheques don't cover costs. If this happened for a large number of farmers at the same time, the effects on capital values of farms would be self-evident.
'The proposed industry self-funded Compensation Scheme will not offset these capital losses,' Mr Handley said.
'If deregulation was such a positive thing, there should be clear evidence of this in both the sugar and wool industry, but clearly the reverse is true.
'Recent history has clearly shown that on balance, neither the producers nor consumers are the beneficiaries of free trade. Inevitably, it's the top end of town where the wealth is being concentrated.
'The benefits of increased productivity and wealth creation have been dispersed inequitably, as can be witnessed by the widening income gap in this country.'
'He said that the Australian Government should take a lesson from the French Government, which is, in fact providing substantial financial incentives for farmers to stay on the land. The French recognise the long-term economic and social benefits to their rural communities, and indeed the national economy.
'It's a pity our national leaders don't adopt these same far-sighted policies, instead of allowing themselves to become political captives of market forces.
'Economic rationalism and globalisation under the auspices of the WTO have delivered no discernible benefits to regional areas in this country, which is why there has been such a political backlash in the bush,' he concluded.